VIVO - Earnings call transcript Q1 2020 | Meridian Bioscience Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Meridian Bioscience Fiscal First Quarter 2020 Earnings Conference Call. [Operator Instructions].

I would now like to hand the conference over to your speaker today, Bryan Baldasare, Executive Vice President and Chief Financial Officer. Thank you. Please go ahead.

Bryan Baldasare

to First welcome Conference and morning, Meridian's Quarter XXXX Call. Good to you was of morning. should now a published have this that By release access copy press the earlier earnings

the a access to copy of and please received our release a not press morning's have section of you go If to this Investor the Relations website copy, presentation.

begin remarks statements. include today, me you remind let we forward-looking Before that company's the

uncertainties subject results control, filings. of are statements and from which obligation including update forward-looking to company's projected. beyond the The materially to and time many Forward-looking to any no those numerous statements. uncertainties, are SEC risks company in may described time company's undertakes The publicly from risks the differ company's

operating per income, and of is Additionally, the net our directly earnings each expenses, share, these margin, website. with most throughout basis. GAAP on available presentation, measures, comparable operating non-GAAP refer this operating A earnings we our an to on press is measures adjusted non-GAAP measures release, reconciliation which in financial specifically included financial

turn this over Jack. to me let Now

John Kenny

the going I'm of Page X it. may for copy those starting who on Brian. to have be a Thanks, presentation of

Before I to a during would of financial the highlight accomplishments we of the Meridian's like major fiscal quarter into few first XXXX. jump results,

have of part gone well, reaching particular, customer diagnostics. improvements assays when first quarter product through with the start Let's the large our additional diagnostic to team's great with within be business. Customer revogene fiscal our led over adopt seen acceptance steps line about the XXX in to take Diagnostic Thanks new enthusiasm systems. In our highest the revogene base revenues this platform This several progress XXXX. of our significant strategy. since converting level install of Diagnostics forward system. the very has has of we to continued in execution, in to made In achievement turning QX, can we our execution around commercial of

into our II sales fiscal improved went drive a LeadCare delivering has new for in change a marketplace. for of we our system our execution in commercial XXXX, area double-digit Early of efforts point-of-care organizational point-of-care to our QX team focus strong As led to commercial consumables the executed growth. in we increased indicators

in to refine performance look for area our and continue We blood commercial overall efforts a chemistry this fiscal strong to products. our XXXX in

ordering to our for let's Now customers. IVD our during our Science our manufacturing top declined attention business Revenues lower turn Life patterns business. Life the quarter, Science with reflecting

were our XX% partner did While over across We revenue products improved for $X.X believe revenue of the including these levels Life of product quarters last strategy China from portfolio, test. and customer million of reagents Chinese approximately manufacturing molecular achieve China, Science in disappointing, the increase representing choice continue in quarter. we year's for performance customers IVD strong mixes our year. of being demand deliver immunoassay the expect strongly see to molecular supplying master We remaining a in help first coronavirus the to and

results. financial Bryan turn back the QX walk to going I'm to through Now XXXX it to

Bryan Baldasare

Thank you, Jack.

right quarter first move Let's on into our X. Slide results

currency excluding revenues the in an for exchange $XX.X to XXXX. decrease This first of decline, quarter earlier fiscal as million changes. impact reported represented the about the we $XX.X of As compared rate quarter or consolidated were XXXX million X% a today, of fiscal first X% foreign

X%, Diagnostics were down revenues business our segment revenues about for the Science quarter. and were a basis, business about our XX% On down Life

were better XX%. expecting, somewhat Our particularly than in blood we revenues were and actually point-of-care strong we're up chemistry, which segment Diagnostics were

our quarter, in generally delivered expectations. with Our respiratory categories gastrointestinal the and revenues for line

the lower by remainder these turn customers. our ordering year. patterns IVD do expect We revenues were patterns for to top Science with affected Life around Our ordering of manufacturing the

products basis product quarter, XXX Similar manufacturing well particularly reagent for Life unfavorable Diagnostics over with Diagnostics to of declined margin. immunoassay and recent instruments diagnostic And between reagent Life test for on molecular our revogene devices an molecular an facility both for in was Expectedly, segment, margins. segments are the made. quarters during margin and our as lower mix experiencing segment, activities our our also segment the pricing, profit impact our as Science products, had for affected Gross sales product our products profit on level impact overall lower our Science points where margin pylori Québec margin. gross and Diagnostics unfavorable by ramp-up had H.

in from the accounting $XXX,XXX were of through these business the from streamlining GenePOC XXXX. third amortization quarter operating cost expenses in of approximately the first new as non-GAAP quarter able and well million approximately the absorb basis, approximately in $X and million a $X.X increases last year's adjusted in product purchase margin acquisition an spending reorganization of On efforts. as We to development include operating fiscal income Diagnostics was Adjusted or segment XX%. higher savings

$X.XX. $X.X of Also net on earnings obligation, last selective cost quarterly and to on a restructuring was operating was a and million million earn-out GAAP GenePOC net legal basis, in earnings costs diluted of compared $X.XX. this $XXX,XXX $X.X $X.X approximately million acquisition selective income an results. legal and including basis, change EPS of million, was $X.X in a the GAAP in were costs On year's EPS basis, approximately adjusted fair diluted quarter, were value Also

the which starting our segment Now quarter, results to slide, highlights next let's Diagnostics. operating the with turn for

revenues declined actually but As to somewhat were million, Diagnostics better $XX.X expecting. were previously than we mentioned, X%

customer showed account include our over XX% X% being the products of significantly for after competitive category. national down Our fiscal acquisition within for decline a pressures portfolio, well for effects in year largest of in the the full as product as changes pricing has laboratory Revenues this products other us category our our pylori XXXX. H. gastrointestinal with contract which in customers revogene reference continued molecular losses product molecular our system helped reduce

the XXXX/'XX of respiratory the seeing year. our product double by the quarter the of strategy grew for first new Revenues chemistry implemented last category, sales volumes lighter the products season. our respiratory positive experienced sales For product blood effects as our are during late part we we for digits influenza for

operating affected basis XXXX XX.X%. $X.X as and lower accounting purchase of business was in related on where devices molecular in expectedly and revogene the development to of and pricing income acquisition made. $XXX,XXX manufacturing lab the by the were adjusted a volume the margin Québec $X margin channel; H. compared of level of pylori This Diagnostics in million; higher income an [Technical products products Difficulty] are effects as cost million of of GenePOC instruments fiscal research facility declines spending and our amortization third test of of quarter diagnostic molecular our for our well in higher-margin reference and XXXX; to

Now constant revenues on on down Life currency the in XX% million Science Life Science. a were quarter basis. to to down XX% or $XX.X

in reflected around expectations. year. distributors. in contributions level. the the Adjusted top IVD over from customers for the was the quarter lower ordering Life points down transition for of Revenues We in to ago. the $X.X line in business from as reagents our with nearly result revenue Life remainder margins such and mentioned, during previously Customer the strong were pricing Science the our XX% a order million during quarter. XXX lower a of were income activity operating for quarter molecular independent our by the revenue As expect decreased quarter quarter affected Science to to academic of China year XX%, adjusted operating basis also our lower do the from patterns patterns turn ordering during

quarter, Next, but moving aiming level XXXX. We to a not going low sustainable Slide with from segment's X. we back the We revenue return for also trend million stabilization as point Diagnostics the view which $XX second to of the performance and consistent were pleased segment the the the to quarter Diagnostics are to only revenue revenue fiscal growth.

presented to on Simply move Slide investment product of segment. new fiscal guidance X. to reaffirming our by are development on Diagnostics stand XXXX for like major and would in commitment I year XXXX for we our guidance the stated, our fiscal Next,

are providing the selective guidance share a As a operating our spending, per or GAAP-based for margin we on not basis. diluted of given earnings reminder, legal nature

over let turn me back to it Jack. Now

John Kenny

be we is would in to global In Life business participating crisis. regarding Brian. our recent opportunity Science Thanks, discuss it the this how to coronavirus, light news response of great a thought

Let's to now move XX. Page

the in With increase be for our to in coronavirus. the specific the customers. development mix a coronavirus. is high-quality recent when manufacturer outbreak looking Meridian's designed designed companies products mix developing of support demand the this as test 'XX this stable molecular crisis. add help is lyophilized. immediately master in example test reliable test being molecular well test, to primers, coronavirus, combined with that in introduced to to to an mix seen the it of a can in the to being into enables of and run master product led as on instrument. running for lyophilization-ready PCR the PCR a customers sample strong develop tube Lyophilization The the the a the mix for very master coronavirus RNA-based starting dramatic This demand test for combat This performance in Lyo-Ready master coronavirus mixture the patient lyophilized our we case that The fiscal and strong help is PCR January, tests customer has we diagnostic to have product for a product RT-qPCR deliver our of then rapidly format.

this on portfolio. used within are strong including move that veterinary, diagnostics. to offer and of reagents, and types mix offerings molecular has environmental, Slide is large and immunoassay revenue streams, recurring of in antibodies we one Life available well #XX. food This number for Science Let's is our overall. Meridian's all needs, products, broad fraud master RT-qPCR of positioned Lyo-Ready diagnostic antigens Meridian of The our develop products with along prevention to testing human, market business the product

to spend our turn and on business initiatives and Diagnostics few business key attention the segments, let's you some Now our updating activities. of minutes a

#XX. Moving Slide on to

implementing. previously have base element area to of we is the at-risk critical our revogene our of acquisition ability install was we that strategy discussed, alethia As The convert platform a the focus. are an GenePOC diagnostic with important

team for and to diligently our commercial grow been the working Our months since molecular protect acquisition X-plus has our business.

we QX, X% in reduction versus the Bryan saw a dramatic with year. in stabilization business our business only previous the As molecular mentioned, a of

over systems. and now install Our continues to base well at stands XXX grow

targeting XX month. are and placements system around for funnels new strong per systems have We

has the The goal capacity demand manufacturing progress making of worked production customer strong to instruments and increasing to the consumables. pressure for summer to demand, up Québec ramped and Consumable order instrument year. per progress fall continue the XXX-plus positive production build to we in midterm steadily on capacity. make to with in increase and meet manufacturing diligently some instruments capacity capacity, both has Québec our The the team our and increase the at is over team great created

committed from business. as greater the alethia While the team capabilities to is is converting placements, system, customers upgrades have of revogene about been to new system new ramp move seen we We assays alethia customer the up deliver excited Québec converting business we on greater-than-anticipated system. of the majority of alethia. and to our the contracted that customers revogene our for onto of as a XX%, product than from the when Approximately the This revogene the onto we XX% remain combination additional business Meridian. in response the to of have customers new that have have adding well tests willingness both to as

with our further to last done enable strategic also shareholder dividend. Diagnostics XX. In of into spring, announcement business. investment invest our Page of our molecular we strengthening Diagnostics the committed plan, to the diagnostic to us revogene to conjunction system our now Turning business. acquisition eliminated in was In we the This increasing

of be and into trials. across high multiple R&D across as more business we In XX% move active remainder fiscal comparing development have and We increases fiscal investment and of year anticipate the XXXX. increase versus spending XXXX clinical our have all spend platforms, the revenues. in Diagnostics as of a over 'XX, our as QX Curian, We increased X to of programs XX% QX further revogene, saw products PediaStat the anticipate we we

to on #XX. Moving Slide

trial through investment market. the and leads is new in R&D phase. product This On our the working critical to late the I trial we clinical towards new which clinical bringing our to term. and shared previously, previous highlights moving The towards increased investment slide, process products a have the into actively to products increased step development we slide, spoke phase near have

year's Our respiratory GI the the submission. RI over and taking are year's next this in platform C. panel test FDA on clinical to trial trial the place and our seasons planned specimens our us into platform moving on revogene panel Curian clinical get stage the for to QX. is difficile necessary here The enable

which on our progress a good business. product our make efforts in of key health across the all play to areas, role of our development long-term continue We will

to we We in XXXX. -- me, results excuse anticipate of appreciate QX share the opportunity our

on We our that knowing plans we Meridian business, with this track come. days the are of of around as are still work to execution our turn to best

that With that up said, open have. questions to for may any our would like I the now call listeners

Operator

Instructions]. [Operator

Bill question Piper Your comes Quirk first from from Sandler.

William Quirk

if number a So you'll questions of me. here, permit

So ongoing first appreciate the quarter? in given huge off, that of season, start the the kind to company, bad that good. the for with let's strategic But of how, here let's focus pipeline transition I negative a given respiratory was development. -- isn't flu maybe

John Kenny

of you if strong had significant flu type a I'll remember, years and QX. up this, season. our can Last flu we it distributors, around of X incredibly season, ordering from an inventory ago, algorithms year, Last their Bryan and once-every-decade So stuff, their start, bunch flu patterns stocked year's they right, season, was in inventory wrap Bill.

And QX patterns virtually and from so products and describe no orders our for QX sales pattern example, from normal flu beyond. us. more the higher year's for what we year distributors This our last would was of, a ordering as distributors I in in ordering saw

in did respiratory. our a so decline And see we

it as ends up As flu for we the will versus year the Bryan you, not us, being a up, full previous did still, the end would but we respiratory see that throughout likely tell a is product positive probably year. think decline But year. huge the --

Bryan Baldasare

on that just things more point. Bill, two

distribution think you'll flu XXXX. even for patterns our quarter-to-quarter this I order us patterns more see relates the from as because it revenue to year of product

William Quirk

about Got that. forward, Okay. going And how thinking maybe appreciate that? we I then be should Tax one Bryan, you. rate it. for

Bryan Baldasare

In to XX% range. the XX%

thing, sure, quarter. would year. notice a I as. something technical blip rest of itself But a the was it characterize normalize did, the the to It I first do, annual pretty our awards You accounting we I'm equity during specific that should it guess, throughout

William Quirk

But is modeling every just to quarter, the it going though, first reasonable to purposes? we're that in assume for see that longer-term year

Bryan Baldasare

of stock date value our it our the all on depends vest. awards grant when is So fair equity price versus they what

John Kenny

So our hope the we other could is not. way. go It answer

William Quirk

Got Okay. it.

the in the That little a some quarter. Okay, of the understood. Jack, the overall was a And then nice you sustainability over flipping revenue more here of maybe blood growth? positive positive really elements can kind to of talk the tap. as chemistry bit through about surprise we look

John Kenny

customers. simple lot systems. the the still a blood had provider in organizational together keeping a of like enhance. chemistry why late bottom growth say, of chemistry anticipated some customers late to the our were things the my we summer, back is the and moves We and they -- fundamentals, But describe of in hole we're we're describe So the as getting as what stop new new a were And a as would I group I it as seeing a practice, very get diving to to weren't things doing that that where some ensuring said, really deep-dive new on products, on pulled and we another blood continuing focus that I using some we on in wanted lot doing alluded would had goes bucket side. comments, that fundamental We close customers, some we I the year. really to close the changes, is to let's to basics we last to of product. to made summer we

point-of-care probably We specialists made. team QX. year. change also strong was big of we There our very last collaboration a with to versus refocus that regional inside a the So our work QX was a had in sales lighter

blood stronger the necessarily we year So that much of through But remainder the a year. don't this in chemistry see year do trend good we that growth. we have that of XX% will have same confidence

never stopped have of amount placements. We the

in doing of keeping we stop some maybe that to neighborhood the having growth The year. do and of X,XXX that testing we could placements continue the from big the have. difference that new aren't that folks We is per

of So we've which better you on with if keeping fixed, of bucket kind part will, as discipline forward. will continue of the job a business, in done the we that leaky that move

William Quirk

Okay.

to pivoting Sounds then molecular here business. maybe good. of the And side the

So X questions.

the is the it guess, quarters. And appreciate First comment that substantially that the couple Meridian. first as here relaunch higher under were about XX I revogenes. in of you're targeting placing I than

higher slow down of numbers I can So are why should customers? Or about alethia. that not skewed there having revogene evolving then guess, or these little here case, talk, it why kind picture you're orders the And mean, effectively? number clearly, down? in secondly, slow guess, bit the nice I if early molecular I should you this that's there's on Or to a a with that of some bigger to XX? conversation Jack, the buy-in relative multisystem

John Kenny

I'll with So per month. XX the start

out of So us, that. nature manual the like of were Bill, lot with of customers quite got that working quick. but had the gate tired working the with really pretty a we of alethia We frankly, system, that loyal

some we contracting But into down. a very continue you And factors the couple from we that come does you're response, process of into existing it not play on had customers. GPO contract, have if some to get GPO initial so positive that our contracts play. and that There a that are come slow

more situations We just business also trying now we're our install competitive existing competitive getting where to into have converting base. versus into getting we're win we're where -- environments

a disclosure, had produce is ability also in range part to our are the per target. full reasons to think why ramp those of we up instruments. solid the month XX So we And

we that do. instruments have of to sure capacity build need number so we're the we that trying And the to make to

We have of a have customers where a we got had with through customers. our in to that work have backlog bit way our orders

X of XXX-plus still instrument to we there. So combination that believe ramping per instrument We the manufacturing we it's we things on wise. can capability year environment do get side up those are really systems of work get side the into towards. that But our

views. customers, competitive very a environment. from but positive no it's It's our So negative been highly

a initial little Our and sales of had it's bit the good take has GPOs some and a does contracting response of team very little longer.

some a complex in a less are got the facilities standpoint. of of large some of closes from customers Some physician and we that our -- of lot offices contracting our

where we're work their months Now can getting these in health through into take places to systems. systems the contracts the several way

we're on very that's range going probably still but forward So to we likely we think we have positive it, time. what it's an think And in confidence this at forward more to on but ongoing accelerate basis. we that in it, that look trying

menu As far limited -- we as this a on the evolving have relatively we platform. have limited conversation, a still

customers our breadth so company And the discussions no now is molecular has with plus of the that in menu. -- a --

platforms So their customers needs. testing to are to having meet multiple used

our panel can multiplex opportunity Customers That spending Group submitted panels, a do. about do the we're to we're to fair be core are the really our offense. playing we this Strep later B where where on assays, will that a we little working year. a testing the bit big panel to going start the time which hard Strep, excited some we're diff in Group GI those future in A regards clearly, the with regards amount So FDA, to of and of and C. more and very getting

to come seeing business, offense And new begins the install ability next a to some So we from on market. see we to when base play year products the months. we our to hope start stabilize that the starting our X to think of over now molecular really about really XX coming

So hopefully, Bill. that helps,

Operator

Instructions]. [Operator

question Your Brackmann from next from comes Andrew William Blair.

Andrew Brackmann

more do on there. you start think And to broader that the in the year? to that on than business share? Life it's guess, you to gives delays wanted and market I this pattern related then, going that? come anything order timing that, what slowdown, else you caught out can back to Science Just it's Why add or competition that confidence end related Anything shifts you

John Kenny

they'll look we patterns X have lighter if batches of X they largest quarter. have our production, just they quarters, in It So X customers, a or they'll depends order at Andrew, if their during where in quarter. a that certain big all where quarter large or We ones unusual pattern. a or fell don't or X situation any had into that lighter of test not they an X quarter if our have order

So in our entirely had we virtually, versus or were on that the business a X amount quarter. year last essentially that based negative customers off in is X

We quarters that. have seen like

or We X of them it haven't necessarily the seen at time. X have same

customers, But in very still with not were excited as The the the are the they us. business, we tailwind into not customers, it. a those that that, certainly continue declining. we at occurred. haven't bit volumes And we those to with that dove So lost have discussions for of comfortable assays little to run those customers does market

the over So they companies diagnostic making the less building ultimately are road, a little grow bit. that do are down time not tests

million. do confidence be our us customers will large when approaching predict a we orders hard normalization. orders for The have Hard $XXX,XXX, of at to $X $XXX,XXX, part occur biggest So with these even places. can the some biggest is, these of

the can X X make case, this to all quarter quarter in or or with that swing a in the hit time. a So negative. same positive that at it that big later But was the

Andrew Brackmann

I Okay. commentary the That's the here helpful. minute. And then a business just appreciate Science the coronavirus. for sticking Life on on

from you from playing can might in be you're provide standpoint, a else right now? just are seeing Now of financial the guys what what that Anything you that. sort impact

John Kenny

mean. to So Andrew, financial we're entirely on coronavirus what full is not the clear of implications going the

a tests a that number are of number customers in of developing China. We have double-digit had customers,

is how going guidance. do But not it our know changing And a is good to our that that sign. perspective, From go. so see we we don't testing

We are still our holding guidance range.

positive type to is see lift. situation. some be it's be So positive I think for life-changing message to of going We but the a not it's going here do us,

used my can make development more that exciting tests. that this with component go is mind in coronavirus with customers molecular tests molecular is and in that's think key we them all help I other a these of thing the and

So that road. molecular down the have an sell product that into for creates tests to this opportunity us other they

really with quickly on "Can will China this be And and our opportunity respond." to the with opportunity use they they're "Hey, so we what open coronavirus to that's regards molecular will Hopefully, happy working you that the towards to team for an business in we future door sales helped of, performance, which anticipate be. we've as with testing?" in other places

Andrew Brackmann

And this and the launch of Got about revogene Curian coming on Diagnostics the just my the as been online side questions of answered. PediaStat lot it. of systems we the business, think then a on products sort What's later But help opportunity as exit here? 'XX expectations your bit Can of a market maybe little initial XXXX? sort and frame of sort go we us you the those for of year. into

John Kenny

to be as first significant. think would the describe the we is that defensive but I necessarily going Curian positive But up us Will a it opportunity a amount improvement won't some test business. to as of Curian improvement stool us. and customers. accounts? don't there. that our we H. of an not the necessarily we 'XX, growth to 'XX, to Sure, I for pick the significant bring fiscal pylori and new a see that antigen test significant new on win move for to the The fiscal that it's product impact of market more intend So itself

that other out of XX% as start start the in. provide is tests effectively we get to as Curian that are more that we we 'XX, part them into about some time. we we market particular, and onto them we But a that multimillion-dollar that, will we opportunity describe that fiscal the believe in think size or bringing is think participate market. types one new Curian play of a getting believe over to that's that, the for of products, good protection can offense we're with. We C. system XX% will moves XX% to products the of in there difficile I would 'XX, bringing important And can

I that's describe an how protection. element So Curian. It's would of

testing what a And can improve that long our offer immunoassay to our large it of business for we piece was us invest to We area. there. the customers rapid have for term in is important

so there's then the some significant of being offense level of And a bit test with and stabilization first difficile for offense. C.

the the of as PediaStat PediaStat, 'XX opportunity. get we type is a not a It's 'XX-and-beyond really well. opportunity of more to When

We standardize tests, tests types think, a as to that run hematocrit, pediatrician tests opportunity. to tests on that total are have like a to other large beauty an able amount also pediatricians' bilirubin, our we that install with would those would which of to a the and one other are to very example, anticipate base cholesterol, testing, of time like be that would but those would be platform, of we over PediaStat Lead running convert PediaStat, fair is offices an

as and see So we 'XX PediaStat 'XX a beyond. really and

playing Curian, what with think us offense is XXXX 'XX Andrew, before, C. coming and to -- more products R&D we've of is consistent in we stabilization when So we and then can the that start fiscal the for and fiscal said offense, on continue 'XX year bring our coming a start comes investment will on panels -- to we difficile molecular, and from market. new ultimately, from really develop

So start to and 'XX 'XX, diagnostics company. like look a and 'XX beyond, different 'XX -- we

fix. quick a not is this So

into in and that's we've move into think good investments make, we're to and 'XX. our as that we feel we're position the consistent on of fiscal before, that 'XX We're had but we with of all head to forward I need making track it. with a we discussions remainder that --

Operator

this closing further Jack at back Kenny to no questions for the over There I time. turn are call remarks.

John Kenny

listen positive as talking We in Have path you well, and our that a for believe Well, once you in the look we appreciate to taking QX. performance a again, future. in hope that are and day. we We on company we forward our to see shareholders, the to can direction. we this firmly come moving to appreciate good time that you the near

Operator

for participating. you gentlemen, call. and this Thank Ladies concludes today's conference

now may disconnect. You

Meridian Bioscience (VIVO) 7 Feb 202020 Q1 Earnings call transcript