Luminex Corporation (NASDAQ:LMNX) Q3 2017 Earnings Conference Call Transcript

Oct 30, 2017 • 04:30 pm ET

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Luminex Corporation (NASDAQ:LMNX) Q3 2017 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and welcome to Luminex Corporation Third Quarter 2017 Earnings Conference Call. My name is Carmen and I will be your coordinator for today. Today's call is being recorded.

(Operator Instructions)

I would now like to turn the call over to Matthew Scalo, Senior Director of IR for opening remarks. Please proceed.

Executive
Matthew Scalo

Thanks, Carmen, and good afternoon and welcome to Luminex Corporation's conference call for the third quarter 2017 financial and operational results. On the call today are Homi Shamir, President and CEO; and Harriss Currie, SVP and CFO.

We'll be following our standard agenda today. Homi will review our corporate highlights. Harriss will review the financial performance, and after that, we will open the call for your questions. As a reminder, today's conference call is being recorded and a replay will be available for six months on the Investor Relations section of our website.

(Forward-Looking Cautionary Statements)

Also, certain non-GAAP financial measures, as defined by SEC Regulation G, may be covered in this call. To the extent that any non-GAAP financial measures are covered, a presentation of, and reconciliation to, the most directly comparable GAAP financial measures is included in our earnings release, which is available on our website in accordance with Regulation G.

I'll now turn the call over to our President and CEO, Homi Shamir.

Executive
Homi Shamir

Thank you, Matt. Good afternoon, and welcome to our third quarter 2017 earnings call. We continue to execute well in the third quarter, led by another strong performance in our molecular diagnostic business. MDx revenue grew 15%, driven by 55% growth we've seen our Sample-to-Answer molecular portfolio.

We placed over 60 Sample-to-Answer systems this quarter, and now have over 600 molecular Sample-to-Answer system under contract at over 400 active customers. In addition, an average VERIGENE customer now generates approximately $95,000 in assay revenue a year, while ARIES is generating over $40,000 a year as a reference.

Multiple factors contribute to this positive ongoing trend in our molecular business, including our extensive molecular product offering and differentiated pricing strategies. These strategies provide our customer with a solution that address the specific lab needs while potentially minimizing unnecessary cost.

On VERIGENE 2, we have made good progress and overcome obstacles discussed on our second quarter call. Our platform is working very well. And due to the ongoing success of our VERIGENE 1 platform, our go-to-market strategy for VERIGENE 2 will now focus on a multi-assay launch. We will commence multiple clinical trials in 2018, with the first trial commencing in the second quarter of 2018.

Before we move on to other areas of our business, I wanted to also highlight the multiyear extension our CF product to LabCorp. This amounts to approximately $10 million to $12 million in revenue a year.

Trends in our Licensed Technologies Group remained positive, although not as strong as earlier in the year. This business posted year-to-date 2017 growth rate of 1%. Strong demand for our FLEXMAP 3D system continued in the third quarter, offset by