AFFX Affymetrix, Inc.

Luminex Corporation (LMNX), a developer of biological testing technologies, posted first-quarter fiscal 2011 earnings per share of 11 cents, comfortably beating the Zacks Consensus Estimate of 6 cents and exceeding the year-ago earnings of 5 cents. Profit more than doubled year over year to roughly $4.5 million owing to higher sales.

Revenues shot up 30% year over year to $43.3 million, ahead of the Zacks Consensus Estimate of $40 million. The growth was led by solid consumables and assay sales. Consumable sales rocketed 53% to a record $15 million, buoyed by healthy demand from the company’s major partners. 

System revenues climbed 15% to $7.7 million, helped by healthy shipments of multiplexing analyzers. The Texas-based company shipped 197 analyzers (including 38 MAGPIX systems) in the quarter, flat year over year. Royalty revenues surged 24% to roughly $7.3 million while assay sales spurted 25% to $9.6 million.

Gross margin improved to 71% from 68.5% a year ago. Operating expenses climbed roughly 18% year over year to $22.4 million with operating margin increasing to 19.2% from 11.3% a year ago. Margins in the quarter improved on sales boost. Luminex ended the quarter with cash and cash equivalents of $94.6 million, up 8.5% year over year, with total long-term debt of $4.4 million (down 6.8% year over year).

On the guidance front, Luminex continues to expect revenues between $163 million and $170 million for fiscal 2011. The current Zacks Consensus Estimate is $167 million.

Luminex’s proprietary open-architecture xMAP technology enables fast, cost-effective and accurate conduct and analysis of biological tests. The company remains committed to expanding its xMAP technology-based installed instrument base and continuing to spend on assay development. Luminex recently received the prestigious Medical Design Excellence Award (“MDEA”) for its MAGPIX analytical instrument, which is capable of producing up to 50 tests on a single sample.

Luminex, in February 2011, collaborated with Massachusetts-based integrated health system Partners HealthCare to discover novel biomarkers and develop clinical assays. The partnership underscores the sustained commitment of both these entities in improving treatment and patient care by leveraging genetic testing and personalized medicine. 

Luminex has an extensive product portfolio and a healthy pipeline which are expected to support growth going forward. The company expects to launch the NeoPlex 4 newborn screening assay and the RVP Fast assay in the U.S. in fiscal 2011.

However, Luminex operates in the highly competitive life sciences industry and competes with Affymetrix (AFFX), Life Technologies (LIFE) and Sequenom (SQNM). Moreover, the company depends significantly on its partners to market its instruments and assays. We currently have a Neutral rating on the stock.

 
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