Diagnostic test-kit maker Meridian Bioscience Inc. (VIVO) reported fourth-quarter fiscal 2014 earnings of 20 cents per share, which missed the Zacks Consensus Estimate by a couple of cents. Earnings per share (EPS) also plunged 9.1% from the year-ago quarter due to 4.6% decline in revenues. Revenues of $46.7 million also lagged the Zacks Consensus Estimate.
Quarter Details
Revenues from Diagnostics segment (73.7% of total revenue) declined 7.6% year over year to $34.4 million. The decline was primarily due to higher competition from rival testing platforms, which negatively impacted illumigene sales. During the quarter, Meridian Bioscience added 68 new illumigene customers.
Moreover, decline in foodborne and legacy immunoassay lines and weaker shipments to a Japanese distributor also hurt revenues.
Life Science segment revenues (26.3%) increased 4.7% to $12.3 million. The year-over-year growth was driven by new molecular products from Bioline, coupled with expansion in Asian markets and new industrial customers.
Gross margin contracted 230 basis points (bps) to 60.8%.
As percentage of revenues, selling & marketing (S&M) and research & development (R&D) expenses increased 160 bps and 120 bps on a year-over-year basis, respectively. However, this increase in S&M and R&D expenses was fully neutralized by a 460 bps decline in general & administrative expense (G&A).
As a result, total operating expense as a percentage of revenues declined 80 bps in the fourth quarter.
Despite this decline, operating margin contracted 150 bps on a year-over-year basis to 25.6% due to lower gross margin base.
As of Sep 30, 2014, Meridian Bioscience had cash and cash equivalents of $43 million as compared with $39.3 million as of Jun 30, 2014. The company had 100% borrowing capacity under its $30 million commercial bank credit facility.
Guidance
Meridian Bioscience reiterated its outlook for fiscal 2015. Revenues are expected in the range of $193 to $200 million, while EPS is estimated between 85 and 91 cents.
Our Take
Although Meridian Bioscience is benefiting from new product launches, multiple new technologies and increasing popularity of the novel illumigene platform, tempered margins are affecting profitability.
Zacks Rank
Meridian Bioscience presently has a Zacks Rank #4 (Sell).
Better-ranked stocks in the medical products industry include OraSure Technologies (OSUR), Abaxis Inc (ABAX) and Boston Scientific (BSX). While OraSure Technologies sports a Zacks Rank #1 (Strong Buy), both Abaxis and Boston Scientific carry a Zacks Rank #2 (Buy).
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