Meridian Bioscience Reports Strong Fourth Quarter and Record Full-Year Fiscal 2020 Operating Results and Provides Fiscal 2021 Guidance

Rhea-AI Summary

Meridian Bioscience reported a 26% increase in consolidated net revenue for Q4 2020, totaling $64.2 million, and a record annual revenue of $253.7 million, attributed largely to its Life Science segment's growth of 106%.

However, the Diagnostics segment faced an 11% revenue decline year-over-year, despite a 38% rebound from Q3 FY20. The company anticipates continued strong performance in fiscal 2021, projecting revenues between $290 million and $310 million and adjusted earnings per share of $1.14 to $1.28.

Positive

• Consolidated net revenue increased by 26% to $64.2 million for Q4 2020.
• Life Science segment revenue grew by 97% year-over-year.
• Record annual revenue of $253.7 million, a 26% increase from FY 2019.
• Operating income for the year totaled $61.3 million.

Negative

• Diagnostics segment revenue declined by 11% year-over-year.
• Molecular product revenues decreased by 17% in FY 2020.

CINCINNATI, Nov. 13, 2020 (GLOBE NEWSWIRE) -- Meridian Bioscience, Inc. (NASDAQ: VIVO) today announced financial results for the fourth quarter and fiscal year ended September 30, 2020.

Fourth Quarter 2020 Highlights (Comparison to Fourth Quarter Fiscal 2019):

• Consolidated Net Revenue of $64.2 million, up 26% year-over-year
• Life Science segment delivers revenue of $34.4 million, up 97% year-over-year
• Diagnostics segment revenues decreased 11% year-over-year to $29.8 million, a stronger than expected rebound from Q3 FY20, up 38% quarter-over-quarter
• Launched various SARS-CoV-2 antibody pairs, designed for highly sensitive rapid antigen tests (for saliva and nasopharyngeal samples)

Full Fiscal Year 2020 Highlights (Comparison to Full Year Fiscal 2019):

• Consolidated Net Revenue of $253.7 million, up 26% year-over-year
• Life Science segment delivers record revenue of $132.5 million, up 106% year-over-year, with the contribution of $71.5 million from COVID-19 related products for immunological and molecular tests
• Diagnostics segment revenues decreased 11% year-over-year to $121.1 million, due to headwinds from COVID-19 pandemic in the second half
• Launched the Curian^® analyzer and HpSA^® assay, the first internally developed new product in several years
• Completed assay design lock of a PCR COVID-19 test on the Revogene^® system and preparing submission to the FDA for Emergency Use Authorization
• Closed the acquisition of Exalenz Bioscience, adding the BreathID^® instrument and its Urea Breath Test for H. pylori to the diagnostics product portfolio

Fourth Quarter Fiscal 2020 Results (Comparison to Fourth Quarter Fiscal 2019)
Consolidated revenue for the fourth quarter of fiscal 2020 increased 26% to $64.2 million, compared to $50.8 million last year.  Diagnostics segment revenues rebounded strongly from the pandemic headwinds seen in the third fiscal quarter, but were still down 11% year-over-year.  Life Science segment revenues were up 97%.  Our Diagnostics segment experienced a 23% decrease in revenues from our molecular products and revenues from our non-molecular assay products decreased 8%.  Our Life Science segment revenues for the quarter included $18.1 million in revenue from COVID-19 related products with $14.6 million coming from molecular products and $3.5 million coming from immunological products.

Reported operating income for the fourth quarter of fiscal 2020 was $9.5 million.  Operating expenses included: (i) higher research and development spending in the Diagnostics segment; (ii) acquisition-related costs in connection with the recent Exalenz acquisition; and (iii) purchase accounting amortization related to the acquisition of Exalenz in April 2020, as well as an upward adjustment in the fair value of the earnout obligation for the acquisition of the GenePOC business in 2019.  On an adjusted basis, operating income was $12.0 million, a margin of 19% (see non-GAAP financial measure reconciliation below).    

Jack Kenny, Chief Executive Officer, commented, “This was truly a transformative year for Meridian.  All our hard work over the previous two years prepared us to both weather the storm in Diagnostics and excel as a critical partner to the IVD industry battling a global pandemic.  Heading into fiscal 2021, we will build on the momentum in Diagnostics and continue the strength in Life Science to deliver another record year.”

Full Fiscal Year 2020 Results (Comparison to Full Year Fiscal 2019)
Consolidated revenue for the fiscal year ended September 30, 2020 increased 26% to $253.7 million, compared to $201.0 million in fiscal 2019.  Diagnostics segment revenues were down 11%, while Life Science segment revenues were up 106%.  Our Diagnostics segment experienced a 17% decrease in revenues from our molecular products and revenues from our non-molecular assay products decreased 10%.  Our Life Science segment revenues for the fiscal year included $71.5 million in revenue from COVID-19 related products with $52.2 million coming from molecular products and $19.3 million coming from immunological products.

Reported operating income for fiscal 2020 was $61.3 million.  Operating expenses included: (i) higher research and development spending in the Diagnostics segment; (ii) acquisition-related costs in connection with the recent Exalenz acquisition; and (iii) purchase accounting amortization related to the acquisitions of Exalenz and the GenePOC business in April 2020 and June 2019, respectively, as well as a net downward adjustment in the fair value of the earnout obligation for the acquisition of the GenePOC business.  On an adjusted basis, operating income was $61.7 million, a margin of 24% (see non-GAAP financial measure reconciliation below).   

Bryan Baldasare, Chief Financial Officer, commented, “Fiscal 2020 marked not only a record year in revenues and earnings, but also cash flows from operations, allowing us to repay borrowings under our revolving credit facility and increase our available credit capacity.”

Fiscal 2021 Guidance
Our fiscal 2021 guidance reflects a big rebound of the Diagnostics segment and continued strong demand for our Life Science reagents used in COVID-19 assays.  We expect continued headwinds to our core diagnostics products through the first half, with anticipated full recovery in the second half of the fiscal year.  COVID-19 related diagnostics products are expected to supplement that recovery in the fiscal second quarter.  Life Science demand is expected to be strong throughout fiscal 2021, between $80 and $85 million, albeit, subject to the same quarter-to-quarter volatility that was seen in fiscal 2020.  Adjusted operating margin reflects significant investment in R&D and manufacturing, coupled with costs associated with the acquisition of Exalenz and annualization of headcount increases during fiscal 2020.  Gross margin is expected to be relatively flat on a consolidated basis, reflecting a modest improvement for Diagnostics driven by higher volumes from rebounding demand, and a modest decline for Life Science driven by investments to fortify capacity for larger scale manufacturing.  Diagnostics investment in new product development is forecast to be 18% of Diagnostics revenue as a result of costs for clinical trials delayed from fiscal 2020, which are added to anticipated spend on products advancing through the development pipeline.  Life Science is also investing in infrastructure across sales and R&D to support the new scale of the business.

Revenues

• Consolidated – $290 to $310 million
• Diagnostics segment – $140 to $150 million
• Life Science segment – $150 to $160 million

Adjusted Operating Margin

• Consolidated – 23.5% to 24.5%

Effective Tax Rate

• 23% to 24%

Adjusted Earnings Per Share on a Diluted Basis (based on 44.3M shares)

• $1.14 to $1.28

The higher tax rate compared to 2020 reflects a larger amount of taxable income coming from the United States.  Adjusted operating margin and adjusted earnings per share on a diluted basis for fiscal 2021 exclude costs associated with restructuring activities, changes in the fair value of the earnout obligation and selected legal matters that we expect to continue in fiscal 2021.  Current customer order patterns for our Life Science segment coupled with the current trends with the pandemic, indicate revenues for the segment could favor the first half of the fiscal year and are incorporated in our guidance.  Finally, this guidance reflects our current line of sight and assumes that we do not encounter any significant reductions in manufacturing capacity as a result of the pandemic causing either partial or full site closures for an extended period of time, or adversely affecting our supply chain for raw materials.

Financial Condition
At September 30, 2020, cash and equivalents were $53.5 million and the Company had $91.2 million of borrowing capacity under its $160.0 million commercial bank credit facility.  The Company’s bank-debt obligations under the bank credit facility totaled $68.8 million as of September 30, 2020.

Conference Call Information
Jack Kenny, Chief Executive Officer, and Bryan Baldasare, Executive Vice President and Chief Financial Officer, will host a conference call on Friday, November 13, 2020 beginning at 10:00 a.m. Eastern Time to discuss the fourth quarter and full fiscal year financial results and answer questions.  A presentation to accompany the quarterly and full fiscal year financial results and related discussion will be made available within the Investor Relations section of the Company’s website, www.meridianbioscience.com, prior to the conference call.

To participate in the live call by telephone from the U.S., dial (866) 443-5802, or from outside the U.S., dial (513) 360-6924, and enter the audience pass code 3958286.  A replay will be available for 14 days beginning at 1:00 p.m. Eastern Time on November 13, 2020 by dialing (855) 859-2056 or (404) 537-3406 and entering pass code 3958286.   

FOURTH QUARTER AND FISCAL 2020 UNAUDITED OPERATING RESULTS
(In Thousands, Except per Share Data)

The following table sets forth the unaudited comparative results of Meridian on a U.S. GAAP basis for the interim and annual periods of fiscal 2020 and fiscal 2019.

			Three Months Ended								Twelve Months Ended
			September 30,								September 30,
			2020				2019				2020				2019
Net revenues			$	64,153			$	50,846			$	253,667			$	201,014
Cost of sales				25,822				21,664				97,419				82,286
		Gross profit		38,331				29,182				156,248				118,728
Operating expenses
	Research and development			6,983				5,607				23,729				17,760
	Selling and marketing			7,210				7,140				26,486				27,995
	General and administrative			12,109				8,872				44,345				34,044
	Acquisition-related costs			462				363				3,890				1,808
	Change in fair value of contingent
	consideration obligation			1,135				-				(6,293	)			-
	Restructuring costs			67				1,138				687				2,839
	Selected legal costs			891				213				2,080				1,583
		Total operating expenses		28,857				23,333				94,924				86,029
Operating income				9,474				5,849				61,324				32,699
Other expense, net				(1,727	)			(493	)			(2,031	)			(1,142	)
	Earnings before income taxes			7,747				5,356				59,293				31,557
	Income tax provision			1,254				1,253				13,107				7,175
	Net earnings		$	6,493			$	4,103			$	46,186			$	24,382
Net earnings per basic common share			$	0.15			$	0.10			$	1.08			$	0.57
Basic common shares outstanding				42,940				42,711				42,855				42,571
Net earnings per diluted common share			$	0.15			$	0.10			$	1.07			$	0.57
Diluted common shares outstanding				43,642				42,916				43,174				42,899

					Three Months Ended										Twelve Months Ended
					September 30,										September 30,
					2020					2019					2020					2019
Adjusted Financial Measures
(see non-GAAP financial measure reconciliation below)
Operating income		$			12,029			$		7,563		$			61,688			$		38,929
Net earnings					8,289					5,399					46,301					29,142
Net earnings per diluted common share		$			0.19			$		0.13		$			1.07			$		0.68

Condensed Balance Sheet Data

		September 30,
		2020			2019
Cash and equivalents	$	53,514		$	62,397
Working capital		109,666			123,847
Long-term debt		68,824			75,824
Shareholders’ equity		247,629			190,967
Total assets		405,261			325,478

Segment Data
The following table sets forth the unaudited revenue and segment data for the interim and annual periods in fiscal 2020 and fiscal 2019 (in thousands).

		Three Months Ended										Twelve Months Ended
		September 30,										September 30,
		2020			2019							2020				2019
Net Revenues - By Product Platform/Type
Diagnostics
	Molecular assays	$	4,648		$			6,074				$	21,907			$			26,283
	Non-molecular assays		25,153

FAQ

What are the financial results for Meridian Bioscience (VIVO) for Q4 2020?

Meridian Bioscience reported Q4 2020 net revenue of $64.2 million, a 26% increase compared to Q4 2019.

How did the Life Science and Diagnostics segments perform in fiscal 2020 for VIVO?

The Life Science segment achieved a revenue growth of 106%, while the Diagnostics segment saw an 11% decline in revenues.

What is the revenue guidance for Meridian Bioscience (VIVO) in fiscal 2021?

The company expects consolidated revenues between $290 million and $310 million for fiscal 2021.

What was the adjusted earnings per share forecast for VIVO for fiscal 2021?

Adjusted earnings per share are projected to be between $1.14 and $1.28 for fiscal 2021.