Diagnostic test-kit maker Meridian Bioscience, Inc. VIVO reported second-quarter fiscal 2015 (ended Mar 31, 2014) EPS of 24 cents, in line with the Zacks Consensus Estimate. Earnings also remained unchanged on a year-over-year basis.
Quarter Details
Net revenue increased 2.8% year over year to $51.5 million and beat the Zacks Consensus Estimate by a narrow margin, primarily on the back of solid contribution from the company’s key operating units.
Revenues from the Diagnostics segment increased 4.3% on a year-over-year basis to $38.7 million. The upside can be attributed to increase in revenues from the illumigene product line. During the reported quarter, Meridian Bioscience added 33 new illumigene customers and 63 new assays. The company also reported strong top-line growth in both the foodborne and H. pylori categories.
In February, Meridian Bioscience launched illumigene Chlamydia and illumigene Gonorrhea in the international markets. The TRU STREP PNEUMO immunoassay test was also launched outside the domestic market.
In April, the company filed FDA 510(k) application for its illumigene HSV I & HSV II tests.
Revenues from the Life Science segment declined 1.5% (up 1% on constant currency) to $12.8 million. Revenues at the core immunoassay components business declined 1% in the reported quarter. The Bioline molecular components business at Meridian Life Science reported revenue growth of 5% on a constant currency basis.
Gross margin increased 10 basis points (bps) on a year-over-year basis to 63.1%.
Operating expenses spiked 5.4% year over year, primarily due to higher research and development (R&D) expenses and selling and marketing expenses.
R&D expenses, as a percentage of sales, expanded 10 bps on a year-over-year basis. Selling and marketing expenses, as a percentage of sales, contracted 30 bps.
Operating margin contracted 80 bps on a year-over-year basis, on the back of higher expenses.
Financial Position
As of Mar 31, 2014, Meridian Bioscience had cash and cash equivalents of $42.7 million compared to $49.5 million at the end of the previous quarter. After the end of the second quarter, the company had 100% borrowing capacity under its $30.0 million commercial bank credit facility, which has been renewed through April 21, 2018.
2015 Guidance
Management has reaffirmed its guidance for fiscal 2015. Net revenues are expected in the range of $193 million to $200 million. EPS is expected in the band of 85–91 cents.
Our Take
Meridian Bioscience reported a modest second quarter of fiscal 2015.
The Chinese market continues to be a strong spot for the company. In order to gain better market penetration in China, the company’s Life Science division recently set up a new office in the country.
We are encouraged by new product launches and a healthy Bioline product pipeline. Despite that, profitability remains an area of concern due to higher operating expenses and increasing competition.
Zacks Rank
Currently, Meridian Bioscience has a Zacks Rank #2 (Buy). Other well-ranked stocks in the medical sector are LeMaitre Vascular LMAT, SurModics SRDX and Capricor Therapeutics CAPR. While LeMaitre Vascular and SurModics sport a Zacks Rank #1 (Strong Buy), Capricor Therapeutics holds a Zacks Rank #2 (Buy).
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