LUMINEX CORP - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - November 4, 2013

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Exhibit 99.1


LUMINEX CORPORATION REPORTS THIRD QUARTER 2013 RESULTS


AUSTIN, Texas (Nov. 4, 2013) - Luminex Corporation (NASDAQ:LMNX) today announced financial and operating results for the third quarter ended September 30, 2013. Highlights include the following:

•
Consolidated third quarter revenue of $50.8 million
•
Third quarter assay revenue of $16.1 million. Infectious disease sales comprised approximately 64 percent of total assay sales, with genetic testing representing 36 percent.
•
Third quarter royalty revenue of $9.0 million
•
Shipments of 280 multiplexing analyzers, which included 135 MAGPIX systems, 128 LX systems, and 17 FLEXMAP 3D systems
•
Cumulative life-to-date multiplexing analyzer shipments of 10,410
•
Realized a gain of $5.4 million from the sale of our minority interest investment in a private company that was acquired by a third party in July 2013
•
Received FDA and European Clearance for an updated version of Comprehensive Genotyping Assay, xTAG® CYP2D6 Kit in July
•
Received FDA and European Clearance for a new personalized Medicine Genotyping Assay, xTAG® CYP2C19 Kit in September
•
Proceeded with the restructuring plan announced during the quarter, focused on the Newborn Screening Group and our Brisbane, Australia office to allow for increased focus on the molecular diagnostics market

“We are disappointed that the reimbursement issues concerning certain tests included in the new molecular diagnostic code system in the U.S., which we commented on during our second quarter call, have not been resolved and continue to affect the entire industry including Luminex, as we experienced a significant order delay from our largest customer at the end of the quarter. As we evaluate the recently published reimbursement rates for 2014, we agree with our customers’ public comments that this is a transient issue and we expect to see resolution in the near future,” said Patrick J. Balthrop, president and chief executive officer of Luminex.

“We strongly believe in our strategic initiatives and that the Company is well-positioned for substantial growth across our entire portfolio when the transient reimbursement problem is resolved. Among these initiatives is the development of our unique ‘sample-to-answer’ system, Project ARIES, which will be demonstrated at the upcoming Association for Molecular Pathology Annual Meeting in Phoenix on November 14-16th. In addition, we are pleased with the progress our direct sales force made during the quarter selling our family of diagnostic tests including GPP, RVP and our recently approved genotyping assay,” added Mr. Balthrop.





REVENUE SUMMARY
(in thousands, except percentages)

 
Three Months Ended
 
 
 
 
 
September 30,
 
Variance
 
2013
 
2012
 
($)
 
(%)
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
System sales
$
7,568

 
$
8,550

 
$
(982
)
 
(11
)%
Consumable sales
12,837

 
12,898

 
(61
)
 
—
 %
Royalty revenue
8,996

 
7,690

 
1,306

 
17
 %
Assay revenue
16,115

 
16,439

 
(324
)
 
(2
)%
All other revenue
5,264

 
4,470

 
794

 
18
 %
 
$
50,780

 
$
50,047

 
$
733

 
1
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
 
 
 
 
 
September 30,
 
Variance
 
2013
 
2012
 
($)
 
(%)
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
System sales
$
21,772

 
$
23,934

 
$
(2,162
)
 
(9
)%
Consumable sales
36,484

 
35,600

 
884

 
2
 %
Royalty revenue
27,683

 
23,647

 
4,036

 
17
 %
Assay revenue
56,138

 
51,246

 
4,892

 
10
 %
All other revenue
16,190

 
12,620

 
3,570

 
28
 %
 
$
158,267

 
$
147,047

 
$
11,220

 
8
 %
 
 
 
 
 
 
 
 










LUMINEX CORPORATION
REPORTABLE SEGMENT HIGHLIGHTS
(in thousands, except percentages)

 
 
Three Months Ended
 
 
 
 
 
 
September 30,
 
Variance
 
 
2013
 
2012
 
($)
 
(%)
 
 
(unaudited)
 
 
 
 
Revenue
 
 
 
 
 
 
 
Technology and strategic partnerships
$
33,335

 
$
31,584

 
$
1,751

 
6
 %
Assays and related products
17,445

 
18,463

 
(1,018
)
 
(6
)%
Total Revenue
50,780

 
50,047

 
733

 
1
 %
 
 
 
 
 
 
 
 
 
Operating income (loss)
 
 
 
 
 
 
 
Technology and strategic partnerships
9,293

 
7,205

 
2,088

 
29
 %
Assays and related products
(13,487
)
 
(3,838
)
 
(9,649
)
 
(251
)%
Total Operating income (loss)
(4,194
)
 
3,367

 
(7,561
)
 
(225
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
 
 
 
 
 
 
September 30,
 
Variance
 
 
2013
 
2012
 
($)
 
(%)
 
 
(unaudited)
 
 
 
 
Revenue
 
 
 
 
 
 
 
Technology and strategic partnerships
$
96,352

 
$
91,358

 
$
4,994

 
5
 %
Assays and related products
61,915

 
55,689

 
6,226

 
11
 %
Total Revenue
158,267

 
147,047

 
11,220

 
8
 %
 
 
 
 
 
 
 
 
 
Operating income (loss)
 
 
 
 
 
 
 
Technology and strategic partnerships
23,368

 
21,725

 
1,643

 
8
 %
Assays and related products
(24,073
)
 
(6,264
)
 
(17,809
)
 
(284
)%
Total Operating income (loss)
(705
)
 
15,461

 
(16,166
)
 
(105
)%


FINANCIAL OUTLOOK AND GUIDANCE

The Company has revised its 2013 annual revenue guidance to a range of between $212 and $217 million from $220 and $230 million.


CONFERENCE CALL

Management will host a conference call to discuss the operating highlights and financial results for the third quarter ended September 30, 2013, at 4:00 p.m. CST/5:00 p.m. EST, Monday, November 4, 2013. The conference call will be webcast live and will be accompanied by a slide presentation, both of which may be accessed at Luminex Corporation’s website at http://www.luminexcorp.com. Simply log on to the web at the address above, go to the Company section and access the Investor Relations link. Please go to the website at least 15 minutes prior to the call to register, download and install any necessary audio/video software. If you are unable to participate during the live webcast, the call and slides will be archived for six months on the website using the ‘replay’ link.





Luminex develops, manufactures and markets proprietary biological testing technologies with applications throughout the life sciences industry. The Company’s xMAP system is an open-architecture, multi-analyte technology platform that delivers fast, accurate and cost-effective bioassay results to markets as diverse as pharmaceutical drug discovery, clinical diagnostics and biomedical research, including the genomics and proteomics research markets. The Company’s xMAP technology is sold worldwide and is in use in leading research laboratories as well as major pharmaceutical, diagnostic and biotechnology companies. Further information on Luminex or xMAP can be obtained on the Internet at http://www.luminexcorp.com.

Statements made in this release that express Luminex’s or management’s intentions, plans, beliefs, expectations or predictions of future events are forward-looking statements. Forward-looking statements in this release include statements regarding: the expansion of our installed base of multiplexing systems; our efforts to sell our molecular diagnostic products directly to end users; the development progress of our pipeline products, market acceptance of our genetic and infectious disease products, regulatory clearance of our products; the ability of our investment in current initiatives and new products to deliver high performance solutions, and drive long-term value for our shareholders, the financial impact of recent corporate restructuring, status of molecular codes, the impact of delays in Medicare reimbursement on our customers and current and future impact on our business; and, projected 2013 revenue. The words "believe," "expect," "intend," "estimate," "anticipate," "will," "could," "should" and similar expressions are intended to further identify such forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. It is important to note that the Company’s actual results or performance could differ materially from those anticipated or projected in such forward-looking statements. Factors that could cause Luminex’s actual results or performance to differ materially include risks and uncertainties relating to, among others, market demand and acceptance of Luminex’s products and technology, the Company’s dependence on strategic partners for development, commercialization and distribution of products, concentration of the Company’s revenue in a limited number of strategic partners, fluctuations in quarterly results due to a lengthy and unpredictable sales cycle and bulk purchases of consumables, our ability to sell products directly to end users, our ability to satisfy market needs with products that we sell, Luminex’s ability to scale manufacturing operations and manage operating expenses, gross margins and inventory levels, potential shortages of components, competition, the timing of regulatory approvals, the implementation, including any modification, of the Company’s strategic operating plans, the uncertainty regarding the outcome or expense of any litigation brought against Luminex, risks relating to Luminex’s foreign operations, risks and uncertainties associated with implementing our acquisition strategy and the ability to integrate acquired companies, or selected assets into our consolidated business operations, including the ability to recognize the benefits of our acquisitions, as well as the risks discussed under the heading "Risk Factors" in Luminex’s Reports on Forms 10-K and 10-Q, as filed with the Securities and Exchange Commission. The forward-looking statements, including the financial guidance and 2013 outlook, contained herein represent the judgment of Luminex as of the date of this press release, and Luminex expressly disclaims any intent, obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in Luminex’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.






LUMINEX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
 
 
 
 
September 30,
 
December 31,
 
2013
 
2012
 
(unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
57,169

 
$
42,789

Short-term investments
5,497

 
13,607

Accounts receivable, net
30,210

 
33,273

Inventories, net
29,742

 
29,937

Deferred income taxes
1,603

 
4,783

Prepaids and other
5,749

 
4,388

 
 
 
 
Total current assets
129,970

 
128,777

 
 
 
 
Property and equipment, net
32,788

 
26,229

Intangible assets, net
61,320

 
65,218

Deferred income taxes
14,462

 
14,360

Long-term investments
—

 
3,000

Goodwill
50,853

 
51,128

Other
4,503

 
8,463

 
 
 
 
Total assets
$
293,896

 
$
297,175

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
9,038

 
$
9,650

Accrued liabilities
11,756

 
12,866

Deferred revenue
4,949

 
4,134

Current portion of long term debt
924

 
1,138

 
 
 
 
Total current liabilities
26,667

 
27,788

 
 
 
 
Long-term debt
788

 
1,702

Deferred revenue
2,508

 
2,933

Other
5,038

 
5,085

 
 
 
 
Total liabilities
35,001

 
37,508

 
 
 
 
Stockholders' equity:
 
 
 
Common stock
41

 
41

Additional paid-in capital
291,156

 
293,392

Accumulated other comprehensive gain
585

 
1,101

Accumulated deficit
(32,887
)
 
(34,867
)
 
 
 
 
Total stockholders' equity
258,895

 
259,667

 
 
 
 
Total liabilities and stockholders' equity
$
293,896

 
$
297,175

 
 
 
 






LUMINEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2013
 
2012
 
2013
 
2012
 
(unaudited)
 
(unaudited)
 
 
 
 
 
 
 
 
Revenue
$
50,780

 
$
50,047

 
$
158,267

 
$
147,047

Cost of revenue
19,999

 
15,002

 
51,472

 
43,830

 
 
 
 
 
 
 
 
Gross profit
30,781

 
35,045

 
106,795

 
103,217

 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
Research and development
10,346

 
11,186

 
34,852

 
31,467

Selling, general and administrative
21,466

 
19,462

 
67,429

 
53,075

Amortization of acquired intangible assets
1,021

 
1,030

 
3,077

 
3,214

Restructuring costs
2,142

 
—

 
2,142

 
—

 
 
 
 
 
 
 
 
Total operating expenses
34,975

 
31,678

 
107,500

 
87,756

 
 
 
 
 
 
 
 
(Loss) income from operations
(4,194
)
 
3,367

 
(705
)
 
15,461

Interest expense from long-term debt
(16
)
 
(40
)
 
(67
)
 
(162
)
Other income, net
6,638

 
25

 
6,730

 
124

 
 
 
 
 
 
 
 
Income before income taxes
2,428

 
3,352

 
5,958

 
15,423

Income taxes
(1,632
)
 
(1,676
)
 
(3,978
)
 
(7,268
)
 
 
 
 
 
 
 
 
Net income
$
796

 
$
1,676

 
$
1,980

 
$
8,155

 
 
 
 
 
 
 
 
Net income per share, basic
$
0.02

 
$
0.04

 
$
0.05

 
$
0.20

 
 
 
 
 
 
 
 
Shares used in computing net income per share, basic
40,752

 
41,000

 
40,712

 
40,995

 
 
 
 
 
 
 
 
Net income per share, diluted
$
0.02

 
$
0.04

 
$
0.05

 
$
0.19

 
 
 
 
 
 
 
 
Shares used in computing net income per share, diluted
41,919

 
41,887

 
41,771

 
42,117

 
 
 
 
 
 
 
 






LUMINEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2013
 
2012
 
2013
 
2012
 
(unaudited)
 
(unaudited)
Cash flows from operating activities:
 
 
 
 
 
 
 
Net income
$
796

 
$
1,676

 
$
1,980

 
$
8,155

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
3,994

 
3,613

 
11,747

 
10,668

Stock-based compensation
1,889

 
2,338

 
6,733

 
7,552

Deferred income tax expense
1,989

 
1,987

 
3,415

 
2,916

Excess income tax (benefit) expense from employee stock-based awards
(15
)
 
590

 
274

 
(2,183
)
Gain on sale of assets
(5,388
)
 
—

 
(5,305
)
 
—

Non-cash restructuring charges
3,695

 
—

 
3,695

 
—

Other
(34
)
 
472

 
(1,115
)
 
655

Changes in operating assets and liabilities:
 
 
 
 
 
 
 
Accounts receivable, net
1,384

 
(5,043
)
 
3,076

 
(8,226
)
Inventories, net
1,769

 
(877
)
 
(1,914
)
 
(2,604
)
Other assets
(415
)
 
(663
)
 
(2,058
)
 
(2,294
)
Accounts payable
2,215

 
1,637

 
(718
)
 
1,706

Accrued liabilities
(1,184
)
 
(792
)
 
(2,727
)
 
(2,007
)
Deferred revenue
439

 
(330
)
 
409

 
(237
)
 
 
 
 
 
 
 
 
Net cash provided by operating activities
11,134

 
4,608

 
17,492

 
14,101

 
 
 
 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
 
 
 
Purchases of available-for-sale securities
(2,997
)
 
(2,994
)
 
(8,489
)
 
(13,489
)
Sales and maturities of available-for-sale securities
2,996

 
13,070

 
19,632

 
43,075

Purchase of property and equipment
(6,914
)
 
(2,152
)
 
(15,136
)
 
(7,509
)
Business acquisition consideration, net of cash acquired
—

 
(48,277
)
 
—

 
(48,277
)
Purchase of cost method investment
—

 
(1,000
)
 
—

 
(1,000
)
Proceeds from sale of assets
9,533

 
—

 
9,564

 
—

Acquired technology rights
—

 
(51
)
 
(930
)
 
(342
)
 
 
 
 
 
 
 
 
Net cash provided by (used in) investing activities
2,618

 
(41,404
)
 
4,641

 
(27,542
)
 
 
 
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
 
 
 
Payments on debt
—

 
—

 
(1,105
)
 
(1,025
)
Proceeds from employee stock plans and issuance of common stock
5,973

 
861

 
7,891

 
3,224

Payments for stock repurchases
—

 
(11,036
)
 
(14,343
)
 
(20,916
)
Excess income tax (expense) benefit from employee stock-based awards
15

 
(590
)
 
(274
)
 
2,183

 
 
 
 
 
 
 
 
Net cash provided by (used in) financing activities
5,988

 
(10,765
)
 
(7,831
)
 
(16,534
)
 
 
 
 
 
 
 
 
Effect of foreign currency exchange rate on cash
(49
)
 
149

 
78

 
179

Change in cash and cash equivalents
19,691

 
(47,412
)
 
14,380

 
(29,796
)
Cash and cash equivalents, beginning of period
37,478

 
75,898

 
42,789

 
58,282

 
 
 
 
 
 
 
 
Cash and cash equivalents, end of period
$
57,169

 
$
28,486

 
$
57,169

 
$
28,486

 
 
 
 
 
 
 
 





LUMINEX CORPORATION
NON-GAAP RECONCILIATION
(in thousands)
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2013
 
2012
 
2013
 
2012
 
(unaudited)
 
(unaudited)
 
 
 
 
 
 
 
 
Net income
$
796

 
$
1,676

 
$
1,980

 
$
8,155

 
 
 
 
 
 
 
 
Stock-based compensation
1,889

 
2,338

 
6,733

 
7,552

Amortization of acquired intangible assets
1,021

 
1,030

 
3,077

 
3,214

Costs associated with legal proceedings
105

 
—

 
358

 
—

Resolution of molecular diagnostic distribution agreements
—

 
—

 
7,000

 
—

Acquisition and severance costs
216

 
2,895

 
1,031

 
3,419

Restructuring costs
4,343

 
—

 
4,343

 
—

Gain on sale of cost method equity investment
(5,452
)
 
—

 
(5,452
)
 
—

Contingent consideration adjustments
(1,220
)
 
—

 
(1,370
)
 
—

Income tax effect of above adjusting items
637

 
(1,518
)
 
(376
)
 
(2,993
)
 
 
 
 
 
 
 
 
Adjusted net income
$
2,335

 
$
6,421

 
$
17,324

 
$
19,347

 
 
 
 
 
 
 
 
Adjusted net income per share, basic
$
0.06

 
$
0.16

 
$
0.43

 
$
0.47

 
 
 
 
 
 
 
 
Shares used in computing adjusted net income per share, basic
40,752

 
41,000

 
40,712

 
40,995

 
 
 
 
 
 
 
 
Adjusted net income per share, diluted
$
0.06

 
$
0.15

 
$
0.41

 
$
0.46

 
 
 
 
 
 
 
 
Shares used in computing adjusted net income per share, diluted
41,919

 
41,887

 
41,771

 
42,117

 
 
 
 
 
 
 
 

The Company makes reference in this release to “non-GAAP net income” which excludes the impact of costs associated with the ENZO Life Sciences, Inc. complaint discussed in the Legal Proceedings section of our 10-Q and certain other recurring and non-recurring expenses. The Company believes that excluding these items and their related tax effects from its financial results reflects operating results that are more indicative of the Company’s ongoing operating performance while improving comparability to prior periods, and, as such may provide investors with an enhanced understanding of the Company’s past financial performance and prospects for the future. This information is not intended to be considered in isolation or as a substitute for income from operations, net income, net income per share or expense information prepared in accordance with GAAP.


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