Meridian Bioscience, Inc. (NASDAQ: VIVO), a provider of diagnostic
testing solutions and life science raw materials, today provided a
business update including preliminary sales results for its second
fiscal quarter and revised financial guidance for fiscal 2019.
Preliminary Second Quarter ResultsThe Company
expects second fiscal quarter 2019 revenues to be approximately
$50.0 million, compared to $56.5 million in the second fiscal
quarter of 2018. This decline is being driven by Diagnostics
segment revenues, which are expected to be down approximately 14%
to 16% for the quarter, and relatively flat revenues for the Life
Science segment compared to the second fiscal quarter of 2018. The
Company expects that the operating income impact of this revenue
decline will be offset partially through expense management during
the quarter supported by organizational streamlining and other
actions initiated in fiscal 2018.
The Diagnostics segment experienced greater than
anticipated weakness in the quarter, with revenues for molecular
platform products down nearly 30% from the second fiscal quarter of
2018 as a result of increasing competitive pressures and revenues
for respiratory assays down approximately 20% from the second
fiscal quarter of 2018. The weaker demand for respiratory assays
was impacted by a lighter flu season compared to a year ago. H.
pylori product revenues were consistent with expectations, but
continued to reflect price reductions implemented at the end of
fiscal 2018.
Revenues for the Life Science segment continued
to reflect inconsistent ordering patterns for IVD customers in
China that carried over from the first fiscal quarter. The
conversion of sample and validation sales into higher volume bulk
orders in China has been lower than expected, and there is
increasing evidence of heightened competition from local
suppliers.
Revised Full Year Fiscal 2019 GuidanceAs a
result of expected second quarter results, the Company reevaluated
its outlook for fiscal 2019. Although the Company continues to
pursue new product and commercial initiatives to improve its
performance, competitive pressures in the Diagnostics segment,
particularly in molecular products, are expected to persist.
Furthermore, the Life Science segment is experiencing more
uncertain demand in China than expected and continues to work
through integration activities that were initiated late last year.
The Company also expects to continue to incur costs for legal,
restructuring and other activities it would consider to be
non-routine and not representative of on-going operating expenses
for the business, and is excluding such costs in its guidance.
Revised financial guidance for the fiscal year ending September 30,
2019 is as follows:
Consolidated
- Net revenues: down 3% to 6%
- Non-GAAP operating margin: ~17% to ~18%
- Tax rate: 24.5% to 25%
- Non-GAAP earnings per share: $0.60 to $0.65
Diagnostics
- Net revenues: mid to high-single digit decline
- Operating margin: down from FY2018
Life Science
- Net revenues: low to mid-single digit growth
- Operating margin: significant improvement from FY2018
The Company’s projections for GAAP operating
income and GAAP net income are currently being reviewed.
Magellan Remediation UpdateAs previously
disclosed, Meridian’s subsidiary, Magellan Diagnostics, submitted
510(k) applications in December 2018, seeking to reinstate venous
blood sample-types for its LeadCare® II, LeadCare® Plus™
and LeadCare Ultra® testing systems. The FDA has informed
Magellan that each of these 510(k) applications has been put on
Additional Information (AI) hold. Further, while Magellan’s
LeadCare testing systems remain cleared for marketing by the FDA
for use with capillary blood samples, the FDA advised that it has
commissioned a third-party study of Magellan’s LeadCare testing
systems using both venous and capillary blood samples. According to
the FDA, the results of the field study will be used in conjunction
with other information to determine whether further action by FDA
and CDC is necessary to protect the public health. Meridian intends
to fully cooperate with the FDA as it completes its third-party
study and continues to work to complete remediation actions at
Magellan’s blood–chemistry manufacturing facility to the FDA’s full
and complete satisfaction. Meridian remains confident in the
performance of the LeadCare products and believes that they serve a
critical role in promoting the public health.
Jack Kenny, Chief Executive Officer, commented,
“Revenue growth in both of our business units has been more
challenging than we expected this year. After consolidating
activities and driving organizational efficiencies in fiscal 2018,
we continue our work to execute our strategy and re-position the
Company for sustainable growth. Managing this longer-term
imperative while facing increased competitive pressures,
particularly in our molecular diagnostics business, is likely to
remain a challenge for the Meridian team. We will continue to work
to streamline and improve the operations, while maintaining and
investing in the business in ways that are expected to positively
address our competitive weaknesses and yield future growth. We also
continue to implement near-term commercial and product initiatives
we believe will help to offset pressure in our Diagnostics business
and push our Life Science business back to higher growth
expectations consistent with our strategy.”
FORWARD-LOOKING STATEMENTSThe Private Securities Litigation
Reform Act of 1995 provides a safe harbor from civil litigation for
forward-looking statements accompanied by meaningful cautionary
statements. Except for historical information, this report contains
forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, which may be identified by
words such as “continues,” “estimates”, “anticipates”, “projects”,
“plans”, “seeks”, “may”, “will”, “expects”, “intends”, “believes”,
“should” and similar expressions or the negative versions thereof
and which also may be identified by their context. All statements
that address operating performance or events or developments that
Meridian expects or anticipates will occur in the future,
including, but not limited to, statements relating to per share
diluted earnings and revenue, are forward-looking statements. Such
statements, whether expressed or implied, are based upon current
expectations of the Company and speak only as of the date made.
Specifically, Meridian’s forward-looking statements are, and will
be, based on management’s then-current views and assumptions
regarding future events and operating performance. Meridian assumes
no obligation to publicly update or revise any forward-looking
statements even if experience or future changes make it clear that
any projected results expressed or implied therein will not be
realized. These statements are subject to various risks,
uncertainties and other factors that could cause actual results to
differ materially, including, without limitation, the
following:
Meridian’s operating results, financial
condition and continued growth depends, in part, on its ability to
introduce into the marketplace enhancements of existing products or
new products that incorporate technological advances, meet customer
requirements and respond to products developed by Meridian’s
competition, its ability to effectively sell such products and its
ability to successfully expand and effectively manage increased
sales and marketing operations. While Meridian has introduced a
number of internally developed products and acquired products,
there can be no assurance that it will be successful in the future
in introducing such products on a timely basis or in protecting its
intellectual property, and unexpected or costly manufacturing costs
associated with its introduction of new products or acquired
products could cause actual results to differ from expectations.
Meridian relies on proprietary, patented and licensed technologies.
As such, the Company’s ability to protect its intellectual property
rights, as well as the potential for intellectual property
litigation, would impact its results. Ongoing consolidations of
reference laboratories and formation of multi-hospital alliances
may cause adverse changes to pricing and distribution. Recessionary
pressures on the economy and the markets in which our customers
operate, as well as adverse trends in buying patterns from
customers, can change expected results. Costs and difficulties in
complying with laws and regulations, including those administered
by the United States Food and Drug Administration, can result in
unanticipated expenses and delays and interruptions to the sale of
new and existing products, as can the uncertainty of regulatory
approvals and the regulatory process (including the currently
ongoing study and other FDA actions regarding the Company’s
LeadCare products). The international scope of Meridian’s
operations, including changes in the relative strength or weakness
of the U.S. dollar and general economic conditions in foreign
countries, can impact results and make them difficult to predict.
One of Meridian’s growth strategies is the acquisition of companies
and product lines. There can be no assurance that additional
acquisitions will be consummated or that, if consummated, will be
successful and the acquired businesses will be successfully
integrated into Meridian’s operations. There may be risks that
acquisitions may disrupt operations and may pose potential
difficulties in employee retention, and there may be additional
risks with respect to Meridian’s ability to recognize the benefits
of acquisitions, including potential synergies and cost savings or
the failure of acquisitions to achieve their plans and objectives.
Meridian cannot predict the outcome of goodwill impairment testing
and the impact of possible goodwill impairments on Meridian’s
earnings and financial results. Meridian cannot predict the
possible impact of U.S. health care legislation enacted in 2010 –
the Patient Protection and Affordable Care Act, as amended by the
Health Care and Education Reconciliation Act – and any modification
or repeal of any of the provisions thereof initiated by Congress or
the presidential administration, and any similar initiatives in
other countries on its results of operations. Efforts to reduce the
U.S. federal deficit, breaches of Meridian’s information technology
systems, trade wars, increased tariffs, and natural disasters and
other events could have a materially adverse effect on Meridian’s
results of operations and revenues. In the past, the Company has
identified a material weakness in our internal control over
financial reporting, which has been remediated, but the Company can
make no assurances that a material weakness will not be identified
in the future, which if identified and if not properly corrected,
could materially adversely affect our operations and result in
material misstatements in our financial statements. In addition to
the factors described in this paragraph, as well as those factors
identified from time to time in our filings with the Securities and
Exchange Commission, Part I, Item 1A Risk Factors of our most
recent Annual Report on Form 10-K contains a list and description
of uncertainties, risks and other matters that may affect the
Company. Readers should carefully review these forward-looking
statements and risk factors, and not place undue reliance on our
forward-looking statements.
About Meridian Bioscience,
Inc.Meridian is a fully integrated life science company
that develops, manufactures, markets and distributes a broad range
of innovative diagnostic products. We are dedicated to developing
and delivering better solutions that give answers with speed,
accuracy and simplicity that are redefining the possibilities of
life from discovery to diagnosis. Through discovery and
development, we provide critical life science raw materials used in
immunological and molecular tests for human, animal, plant, and
environmental applications. Through diagnosis, we provide
diagnostic solutions in areas including gastrointestinal and upper
respiratory infections and blood lead level testing. We build
relationships and provide solutions to hospitals, reference
laboratories, research centers, veterinary testing centers,
physician offices, diagnostics manufacturers, and biotech companies
in more than 70 countries around the world.
Meridian’s shares are traded on the NASDAQ
Global Select Market, symbol VIVO. Meridian’s website address is
www.meridianbioscience.com.
Contact:Jack KennyChief Executive
OfficerMeridian Bioscience, Inc.Phone: 513.271.3700Email:
mbi@meridianbioscience.com
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