VIVO - Earnings call transcript Q3 2020 | Meridian Bioscience Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Meridian Bioscience Fiscal Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today's conference is being recorded. Instructions]. [Operator like of conference Investor now Wood, to hand President Vice Relations. to would over the Charlie I Thank you. Please go ahead, sir.

Charlie Wood

our Jack call. Thank welcome you, Financial call earnings me Officer. earnings SEC that Baldasare, accompany this release to and investor.meridianbioscience.com. Executive on are With filings, Meridian's fiscal Please are and Shelby. XXXX Web third Chief Good Bryan at Kenny, Chief morning, and site our to Officer; note quarter available slides

remarks post after of Bryan Conference call. be finalized. Wainwright a to copy to calendar, will participating The H.C. that prepared our these We be are posted regards the our of the details in will September. Investment With site Jack Web will they event Annual and Global in as

year earnings scheduled XXXX QX Finally, call XXXX. full our Friday, for and currently XX, November is fiscal

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

risks company's uncertainties which subject may of and differ company's Forward-looking many to results time from materially SEC described including statements control, the filings. to time The numerous are company's uncertainties, in the risks from beyond are and COVID-XX X, those Meridian as particular note to these the forward-looking projected, them. makes may affected XXXX, August by related to of obligation and these be today, and undertakes statements update that publicly risks statements in pandemic. no

now, to the Jack. included measures other measures these to related per operating Additionally, the GAAP like discussion refer earnings with non-GAAP on income, each are operating expenses, turn specifically margin, adjusted And our release. throughout non-GAAP operating of we earnings in basis. and measures, presentation, diluted share, over this most comparable financial A an net and to directly call reconciliation earnings financial I'd

Jack Kenny

delivering in global our setting in our crisis, enabled doubt which customers, the in record QX our flawlessly our business was safe unprecedented the quarter. diversification performance. In into was quarter employees Charlie. midst goal successful both We the health keeping of for Thanks, Meridian of our an heading company’s our remarkable and most this history. no were

high stagnate demand the result for momentum as year. to its had raw with Meanwhile, as Diagnostics revenue XX% QX the of anticipated, time. delivering related COVID‐XX fiscal has in nearly Science well in company when pandemic, contributed of a continue business, materials all year. our As Life same last world period demand last at as shadow the all us position advancing the of to balance of strategy allowed the This this emerges parts challenging to investing of from our our for

season. completed, in our QX teams clinical On the has While on a and Development new for panel clinical entering respiratory the of track study. lock and trials the GI quarter, Curian, R&D early the were late‐stage development advance fiscal clinical upcoming Revogene is now diff of in of QX toward enrollment start end started validation of assay trials. to trial increasing team The EUA continued C. phase clinical gaining advance downstream COVID‐XX product moved the momentum. XX, development to on initiatives. the and halted preparation of The for in design for much has into submit remains achieved

have April our teams remains completed Exalenz and are pneumo Strep clinical at assay combination the Exalenz and a based of Legionella. commercial on sales the closed place, added trials transaction started under integration leadership efforts the in Campylobacter end our pipeline, from assay We two and have begun latest Operational underway. for U.S. of well integration for feasibility We to leadership. the work the we and

annual as planning part international of strategic are on While the executive process. are virtually, together well challenging, the the working broader Meridian limitations travel including with our teams collaborating team

with the the BreathID Smart the new laid virtual the platform June, strategies. and foundation launched for Curian throughout clearance improved was BreathID the to training assays. molecular March. adding its received and officially national execution adapted group the placed and team System, FDA Science sales agreement also first sessions in received and our Life Engagement a placement. the team with new our purchasing The to being quarter, Mark which a online, commercial of organization, new customers outperform normal, first Our hosting expectations. the current Revogene one entirely award FDA‐cleared with in continues CE example

quarter, Subsequent products As develop by quarter of Marked used products pair included quarter, end their our antibody much‐needed expected, key the SARS‐CoV‐X exploded the in for that in manufacturers demand sensitivity high in antigen used CE for components for in and antibody our peaked COVID‐XX. can to rapid assays. to EUA the the diagnostics a and demand be as monoclonal antigens, the molecular we tests, tests customers launched

in still product early phase the with our other this validation the decline of dozens our products the some offset of through their expected While demand inventory. work the while could customers, in for customers near-term

to for more the talk quarter. hand financials I call Bryan to Now about the the will over

Bryan Baldasare

Jack. you, Thank

earlier the had reported best quarter company’s Meridian As fiscal in third from up history we the of XX quarter XX XXXX. in of revenues consolidated million today, with XX% the million,

million income rate Gross Life I reduction Excluding expenses non‐GAAP last were blend basis, to up comp, up increase Science, operating $X reflecting XX%. XX Adjusted million, XX% impact segment which in of EPS and for year year. adjusted a X diluted the $X.XX. also prior basis, versus year. The quarterly record million quarter, incentive is XX were by stage million further this in third performance Similar margin, in increase was changes, operating margin at margin revenue earnings driven the Diagnostics includes non‐GAAP gross of delivered year‐over‐year the quarter, operating third was in will this fiscal in any of relative the of XX%. adjusted, on discuss plan million the profit which of better This to record and Life the an year‐over‐year. cash the gross was revenue. Also, foreign revenues or in net were review. On margin from non‐GAAP XX with a up an quarter quarter, expenses XX% currency Science exchange in dramatic quarter last a was

the X of million and expenses we in in late product was clinical income of basis, GenePOC an spent million trials accounting the acquisition operating which fiscal X a an and operating XXXX third and Exalenz, Additionally, million primarily million. acquisition quarter. quarter on amortization experienced of with in development new purchase from increase this closed GAAP On R&D, of incremental of XX the XX

million the In reflects with an operating the GenePOC former of agreement for operating This expense The associated expenses GAAP EPS by the the consideration were X consideration Exalenz is that million. the shareholders impacted impacted by of $X.XX. GAAP partially in reduction million by expected contingent GenePOC milestone closed the adjustment and that the payments expenses of contingent acquisition favorably XX GAAP diluted drivers, acquisition obligation acquisition-related addition were with obligation net was quarter. in were a pandemic. offset earnings reduction regarding to aforementioned of X

as Ultimately, quarter. testing. as in orders lead as rebounding our result operating at than globe softness of no let’s In bad our faster XX% of down products care XX products impact expectations, our impacting around to stay‐at‐home million, were decline the all revenues FX. primarily demand two the the not Now the Diagnostics, attributable was segments. look was with This in diagnostic expected of with non‐critical impact a across details almost quite our late from year‐over‐year,

product prior product programs on an state quarters. its were and of the and Exalenz, rebounding, revenues was and is in development development clinical loss X quarter, which sales financials, segment this increase continued demand BreathID adjusted demand the products, late down in antigen and experiencing related trials asset spending H. pylori development by as intangible and spending our Exalenz, in resume acquired Gross operating adjusted amortization pressure assay driven our same categorized were by platform headwinds higher The most the in lower to but stool assays. While X in was a by clinical trials, volumes than margin new with planned non-molecular In also profit acquisition with of XX% excellence and operating for new commercial over assays affected decrease BreathID margin the X the from gastrointestinal and costs result product continued H. million from million the we are have Progress in year‐over‐year suffered significantly dramatically to levels. was to lower as despite year‐over‐year on year. absorbed still last Diagnostics by quarter. we million the sales exiting from for quarter with products. products, on significant expected. quarter began an pricing in XX%, Diagnostics increases contributed acquisitions. disease the quarter, invest pylori still the on we from expenses of an lower mentioned in up basis both

revenue the for Our delivered used XX SARS‐Cov‐X high revenues Life in exceeded XX million, of volume XX split and pandemic antibody the entirety recognized in quarter million, to immuno revenue performance Science antigens mixes segment due robust tests. as tests used XXXX. that molecular our much products. the estimate for in nearly COVID‐XX demand products This from PCR and XX fiscal We it million in of enzyme for expectations delivering increased was the as million

does last XX such business operating operating cost scale. was XX% XX% saw the as brings margin in of products, linear margin we up of for the quarter, stated XX%, leverage quarter. expected, molecular year. early in a quarter, continued sizes a the This require Gross Adjusted this in part the million, of from demonstrating the our income result almost molecular benefit large of not exceeded which, As a goods. large of revenues peak from profit was last QX in we the batch increase when at

the to Turning sheet. balance

As borrowing of XX we capacity June our of cash in under XX, of XX and million credit. line million had

transaction additional million blended already During under at an term of in X.XX%. the swaps entered the with place, balance borrowing rate rate outstanding a the now the interest to the into quarter, of swap rate our fix fixed the Combined at revolver. of million revolver interest X.XX% we of XX is an XX for

an We expectations Turning number quarter, guidance. exceeding a had on our of fronts. to exceptional

a XX XX guidance and implies to As that fiscal XXX the year. million, million of for be of which XXX our revenue expect are for million. result between XXXX revenue raising we now to million QX performance, consolidated net We

continued products lower quarter, Science but our last be we Life expect mentioned than As to normal, QX. demand higher we than for

Science between the our of to XXX XX in for the the That, combined of about million demand assumes quarter, guidance to XX as expected revenue contributing XXX full rapid the antibody usual, customers guidance million ramp COVID‐XX future they related XX supply contributes sales through of fiscal million. million and QX, for million pairs, in XX limited a million. to This than million record and in from will to Our secure work revenues number bringing sales This slower total of QX to Concern to XX year used impact year tests. into than in to the pushing demand implies demand very contribution a in fourth led more includes Life million chains result inventory testing, with our in new inventory, the QX. lower SARS‐CoV‐X antibody 'XX. antigen in XX

dozens there in customers the of time will in is any phase, to orders are in it any complete place the quarter. development unclear validation While bulk their if

continues reduction assumes roughly between test XXX to which of our on XX% This at the to XX We partially offset implies core that revenue rebound, business from for diagnostic our expectations range prior million from full for XXX Diagnostics This expecting favorable seeing XX in slight volumes. the be slightly the Diagnostics million million COVID‐XX testing of the to but QX. still business. the by headwinds guidance expect were loss million to rebound year, normal antibody reflects of we more revenue

towards will that back start for levels, higher with still margins but normal should lower for Life margin Science You margins expect profit gross by revert Diagnostics. offset to

full to of and year we the for calculation $X.XX. note the this year shares $X.XX. adjusted EPS results, operating our our adjusted adjusted diluted of XX% expect fiscal XX% trials XX.X of guidance as implies using U.S. Based is our $X.XX back thoughts. and to some continues of COVID‐XX from offer EPS, and diluted for reflects current of assumptions In inclusion QX the year‐to‐date expected And R&D pick‐up the in globe. resurgence $X.XX and the margin are quarter around the current XX.X Also guidance of for in to quarter. XX% customer infections to operating of spend the call million for million and QX and our We million and between throughout order on hand X final our clinical XX% and 'XX. the this for products, in EPS adjusted the on about into between year margin diluted of now shares the in will This impacts over spending Jack I market visibility conditions patterns to

Jack Kenny

Bryan. Thanks,

companies the in the resulted products, quarter well, real our Meridian many specific June the been strength case For without quarter for in business challenge. The best of history. the should have quarter our XX-plus-year as a segment shined that Diagnostics healthcare was of through our diversified industry COVID‐XX of but the results the and in suggest

increasing those materials included with and more for pandemic. trying in during than are XX tests goal the maximize the to then the the introduction antibody goal own are We in raw our COVID‐XX COVID‐XX number now of antibody molecular used It are now over began pairs in this to We tests assays. shots of We antigen diagnostic rapid which shots plan addition of on included tests. XX continue the on necessary assays. our reagents through our and launched

We see market assays scale these strong otherwise. the opportunity be would beyond capable any and what we of benefit us reach giving geographic of have when to demand,

voluntarily to shots no will test and the the in have of partner EUA in for to The However, of to this do longer antigen through parallel, for that insert an is market new a process distribution sell in we so. package for rapid their bring to looking submitting but and U.S. have not antibody Marked and signed these withdrew recently CE COVID‐XX to have market to agreement July an we kits We partner bring are the another translating in their partner test all we application Europe. in assisting score. been application and partner, EUA In plans its planned test

to We upon their this in Meridian FDA We a sell label quarter. to will submission under switch initially private of end test Europe the version and approval. the brand anticipate towards expect to EUA this

goal great pandemic. shots headwinds these the this market results, on other far have than So delivered offsetting more from

impact assay position invest Life that With any near‐term Our Revogene into well both position have. for Shelby, us strong, the fiscal they the continue and enabling business COVID‐XX it us up immunoassays, in with growth. the Science our financial to XX. let’s and that, to on coupled questions should long‐term may remains for partner The reagents, open now

Operator

Instructions]. [Operator

Your comes William question of from Andrew Blair. first Brackmann

Jack Kenny

Hi, you’re Andrew. How doing?

Andrew Brackmann

Good, Jack. How are you?

Jack Kenny

great. Doing

Andrew Brackmann

taking for Thanks questions. the

the guess of potential burn telling much of that channel their idea the I mainly the then, in here? half And and for you So first, I’d about on like on said through the the there, I an guidance to start maybe but working you quarter, are inventory are customers how segment. us is back Life some piece you inventory you’re give your customers can what on COVID in Science rate fourth the know still through the any inventory year? reordering

Jack Kenny

Bryan, wrap broadly. and can start, you I’ll

didn’t that the taking remember – was a could. pandemonium supplies you was had the we to all was spring, off when this where was if of So, we in that whatever trying customers there Andrew, secure as going, everybody know they quarter bit

part for be said, of were than it so as worth And the months May saw the customers, demand. expect QX the to and reason we April in call, types up And knew especially the bigger to that of would inventory the we immense demand, doing molecular which was we that we And for able timeframe. these we we of that QX. scale is meet why to products were April, several

it different the scrambling exactly demand a happened tests of in was a thought. those A was try that millions QX remember as anticipated ramp to diagnostic you able supply to the build were those would able QX. lot and such later lot if demand be happened The would that we had customers. QX. were June thing in be testing, companies that came And of antibody that we so in We May, quite in bit in frankly but diagnostic antibody timeframe, companies. QX, month. upfront demand per antibody had from little huge the into And QX to up There of that be to

where And and forward. again, of on some that the supply same to QX. do want saw but so of what customers the front have in we coming a starting it it’s on the that to the kind we’re inventory, crazy front where reengage going just molecular immunoassay Both antibody more it. pushed the better in to have environment order they really They is of want molecular that on see front, you start that a front to they understanding not

starting be are that’s and us have the to customers case. to we So starting with reengage

on again that to it not out We different think but you will they you gates We’re so fiscal important see front optimistic tests. for on want it the orders Bryan, and I will a goes start at the The I QX, don’t end test, story. antibody antibody know antibody know, that future millions significant in relevant we into QX as we’ll think millions frankly are with built get going. we the The in antibody we’ll we capacity it testing assuming as are sees that that. level direction pandemic here to add demand the but quite see in the be stocked be 'XX, of expect that sales to up. in continue tests everybody the And if will of an They and don’t tests, QX. did test user think think fast.

Bryan Baldasare

that, we we’re believe rapid tests whether we antigen it’s immunoassay to is add as a thing or believe only I for we tests, to I molecular positioned market. well well supplier, or positioned The reagent supply the antibody are would Andrew, Yes. reagent that think

Jack Kenny

as be would do if have EUA thing antigen a test, they validate a we see it’s submission, would have to in that go So they that. bit through little a the hard here dip go make but up. of The they QX when to testing to – customers predict through difference, they ramp

optimistic. But have on. and timing clear at that this our reflects is of what the guidance we not We’re point clarity

Andrew Brackmann

of here the trends Okay, geographic the different into have moment. in pretty the follow-ups appreciate a have guess visibility on market a that sticking I about evolution But here. here products some with I I guys all perfect. sort color. antigen unique maybe and you theme

So you question product versus how market using then guess And another? few the impact business geographies how you here. in maybe evolving does one of I here type see is, that think that quarters? the as the next about different Europe we can prone talk across to you more play the about Is your

Jack Kenny

So, be questions that would front. that we figured Andrew, on there

you the have the last slide – it’s think We Charlie? deck last cliff-note – in you slide, to I near do then talks slides if more than to Europe much this molecular is, that we topic. One go have Asia actually the our in United I we The and from on in of States. would exposure is the front, a standpoint give PCR that in

and placements here Asia States, companies bit in but was some Europe in primarily our exposure have well. the then as with stronger We United a in

rest fronts, antibody exposure based companies in exposure it U.S. and Europe really, front, in more many really they was in the of world. antibody really not were many but less global cases, companies for in On the the test, the much

it is you if geographically different look through So that.

the talk U.S., Europe, coming if We they in had wave areas seen, you in have the of second the that although spike UK are have same truly not other in Europe. to they starting in seen the a cases look and they at

see our Europe anticipated, that second in type hits So on to anticipate wave as we front as molecular increased would that of testing. for demand that

we if want I there you to think you but will that, through So have that. the anything don’t slide know, to Bryan, walk that add I there’s

Bryan Baldasare

said. I think well that’s

Andrew Brackmann

to at I then to And the be testing up switching diagnostic a sure I’ll take that. here look and guess Okay. opportunity. wrapping

idea but metrics you are some you seeing? And of your as of maybe those talk products pair about some think can you’re antibody your about product, I that secondly, and early that then partnership making performance know you First, you mentioned validating customers sensitivity give specificity early process? bringing and us bringing EUA confidence that in product via true the and this label, it metrics your can Thanks, an FDA, of in of guys. private

Jack Kenny

with give Yes, start color. I antibody Andrew. can pairs, some I’ll you the

well. strong So Life they’re very performance the of customers have said, out is been versus antibody from dozens that have and pairs, pleased performance been from we the feedback they products these with are several has very Science customers the their very because antibody are as the as Comments testing customers side that Lourdes very enthusiastic product. the developing the very, pairs we that of on tests doing that that are there. team

those we I of bit the is have feel the have So effectively the that is able we there, goal so The say one we’ve antibody that’s a front, have on which confidence And we about, using a how shots good. the But we in talked with process? lot EUA partnered that In it to in. regards we antibody high the that very are little pairs pairs. so Diagnostics obviously confidence strong question companies through of of would a many get wildcard. to on

Quidel’s We describe the performance that I we that we’ve best or felt part it. of seen there. be to would published what out world first wanted of from So the ones product equal that the was about. are BD’s use that than and better to a to is the And

version BD both will hopefully into to versions, go are have QX into instrument not be would required. this next they’ll instrument. this goal probably bringing we’ll be of selling we part late CE require a got The and And EUA quarter. offering. of product and product will an into able this product CE that So be begin submission at think as we Europe we’ll the the strong very we’ll this year, approved, product product U.S. this later Mark with is also Quidel that begin quarter. the so Obviously, – get But The we’ve this

will And test, well pretty ability a an don’t so we which this will be need rapid think be in out you the so marketplace. for attractive instrument as

Andrew Brackmann

Great. you then side of manufacturing on us just that have things. the manufacturing walk capacity product last that one just through work? of that that a will the that Perfect. And be for you Can you or partner that it the you. manufacture will test? be guys? Thank to guys, if talk you Will And is you you have capacity about how a can

Jack Kenny

capability we antigen, right, we needed selected rapid number the that because as making we’ve is you partner product, a the partner high using per capability. strong felt, demand. that chosen a this a the know the the that is but test strong also For of felt one, we antibody number, one or – had product, million a does type week had a this strong a have and more that And capacity pairs to

of So partner. selecting attractive that one the that things of

harder ourselves where been in partner at versus So a up it to would case these the capacity us to it do that have have. decided with we for the level folks that ramp

ramp we two product of test. the were with high-quality but a this rapid to they So up in ability manufacturing the had, to third the party that antigen the addition did partnership reason that why

Andrew Brackmann

guys. Thanks, Great.

Jack Kenny

Thanks, Andrew.

Operator

Instructions]. [Operator

Your Wainwright. of next question Yi from is Chen H.C.

Jack Kenny

Yi. Good morning,

Yi Chen

morning. Good my Thank Hi. taking you for questions.

other through testing supplies working the related extraction that COVID-XX somewhat your think you know as inventory, So that do you customers RNA shortages handicapped such mentioned I but first in growth kits? by are question, the is

Jack Kenny

kits issues the concern that that impact extraction RNA our we have customers. capacity do people the of So heard

not our from customers We But, at would feedback the of that point. theoretically then extraction, ongoing limiting extraction it have that customers significant factor their a impacting have they is do kits not Yi, those from lack the had of said, With RNA impact significant if them. being purchases. feedback that we had can’t this

Yi Chen

Life you’ve fiscal forward as fourth to a in XXXX? baseline The going serve quarterly will understand fiscal Science revenue quarter guided as

Bryan Baldasare

Yi, Bryan. this is

to over early from I sight a that. And we’re a to out orders the satisfy supply I channels. think But is play we that still of it’s that market into the current say little next for trying several standpoint line still think the in here I reason different there’s probably some have a weeks.

do when have more for So particular we’ll fiscal question that likely we guidance on 'XX. to say

We over business around terms we’re are to now. get trying in right skis, not our you the will, how if of out guiding

Yi Chen

Okay. Thanks. And the resume that hotpots have quarter, indicators that start to you their and my labs observed as or COVID-XX could are in segment hospitals current no last growth showing the signs daily question longer is resume any Diagnostics activities?

Jack Kenny

We helped absolutely to see of of improving I business. the improvements rebound that initial see Diagnostics has has started general business LeadCare in business. continued the rebound been early The and have under it our have mentioned guide June early us the XX% of we of would to part Diagnostics the was on late, quarter, closer has in which normal of to started started this quarter. and part business kind and this towards in that say seen we the where as of signs to We for even LeadCare. sign started the move to in

the see reagents consistently. do significant they’re EUA customers a but on regards to to submission that intend increased in also other with other in we quite so with COVID, are customers do to to they’re We having focus Revogene bit are to not supply fall, companies interest able frankly that because need in of some the products starting from and

we increase significant on Diagnostics Revogene which us recently is have the indicator our well, demand as So business. for another leading good product on

Yi Chen

you. Thank it. Got

Jack Kenny

Yi. Thanks,

Operator

questions other no are queue. There in

Jack Kenny

you. Thank

the shareholders the in We to look joining Have great second this remain of number to want but business both delivering that you as call, again quarter. Thank speaking on today in and Meridian’s and look for near promises truly a best for we we new a that to close So our our Meridian. long to believe our ahead in term. of in forward large term, take consistently also all long long‐term us to our shareholders, invest close, we the to next I days to shareholders day. their call welcome thank forward before to you we belief term our over trust and have the decided and

Operator

Thank today’s Ladies this and for concludes your call. you gentlemen, participation. conference

disconnect. now may You

Meridian Bioscience (VIVO) 7 Aug 202020 Q3 Earnings call transcript