Meridian Bioscience, Inc. (NASDAQ:VIVO) today announced that based on preliminary results, it expects revenues for fiscal year 2016, ended on September 30, 2016, to be approximately $196 million, an increase of 1% compared to the prior year. Diluted earnings per share are expected to be $0.75 to $0.76, including costs related to acquisition activity and costs associated with the reorganization of Diagnostics sales and marketing leadership (in the aggregate, $1.7 million after tax or $0.04 diluted earnings per share). This compares to diluted earnings per share of $0.85 in fiscal 2015.
These preliminary results reflect fourth quarter revenues of approximately $47 million. Our fourth quarter revenues reflect a combination of ongoing competitive pressures during the quarter within the C. difficile and food product families, distributor order patterns, and the timing of respiratory season stocking orders within the core diagnostics business. Despite these negative factors, we experienced continued growth in our H. pylori product family and benefited from the addition of revenues from our March 2016 acquisition of Magellan Diagnostics. Life Science revenues were flat for the quarter due to a large immunoassay component order that was shipped in the third quarter versus the fourth quarter at the customer’s request. The resulting revenue shortfalls produce the shortfall in earnings compared to guidance. Our recent acquisition of Magellan has gone well. Magellan performed above revenue expectations and is expected to be a penny dilutive to earnings per share for the six months since the acquisition, also better than expected.
FISCAL 2017 REVENUE AND EARNINGS GUIDANCE
Based on planning and budgeting activities for fiscal 2017, incorporating the recent Magellan acquisition and new Diagnostics sales and marketing leadership, net revenues for fiscal 2017 are expected to be $205 million to $210 million, representing growth of 5% to 7%. Per share diluted earnings for fiscal 2017 are expected to be between $0.81 and $0.85, representing 1% to 8% growth, excluding costs associated with acquisition activities and the reorganization of sales and marketing leadership in 2016. The per share estimates assume an increase in average diluted shares outstanding from approximately 42.4 million at fiscal 2016 year end to approximately 42.6 million at fiscal 2017 year end. The revenue and earnings guidance provided in this press release does not include the impact of any acquisitions the Company may complete during fiscal 2017.
COMPANY COMMENTS
John A. Kraeutler, Chief Executive Officer and Chairman of the Board said, “For the past several years, as we have been making investments to drive growth in the future, we have experienced weakness in certain areas of our business that have limited our growth. We believe the fundamental changes initiated over recent months, namely changes in key leadership, aggressive M&A efforts and global expansion, are already having a positive effect, and with our broad portfolio of product opportunities, we are guiding to mid-single digit revenue growth expectations for fiscal 2017.
Core diagnostics revenue growth in fiscal 2017 is anticipated to come from continued emphasis on our broad menu, best value illumigene® molecular platform. The illumigene system now includes ten tests and larger growth opportunities are expected to come from our Group A Strep, Mycoplasma Direct, Pertussis, HSV and Malaria tests. Testing for C. difficile and Group B Strep will continue to be highly competitive; however, we expect to maintain our current levels of revenues. In addition to mid-single digit illumigene growth, we are expecting low single-digit growth in our H. pylori product line, including several newly introduced tests. With new leadership focus, we anticipate growth in most of our international markets. Weakness in the foodborne products is expected to continue, but moderate, and slightly declining sales in this product family are considered in our guidance.
Magellan Diagnostics, acquired in March of 2016 and included in our Diagnostics Segment, has exceeded expectations thus far. For fiscal 2017, we are expecting low double-digit revenue growth on a normalized annual basis from continued success in placing the LeadCare II platform in the domestic market. Expansion into international markets, including China following the recent CDFA approval of LeadCare II, is expected to contribute to revenues and may generate revenue upside. Capitalizing on the increased awareness of lead poisoning, we also expect to begin selling into OB/GYN offices.
Life Science segment revenue is expected to grow at a mid-single-digit rate driven by continued success with our expansion into China where we see strong interest in our high-value biological raw materials, and by a rebound in our Bioline molecular product sales led by products such as JetSeq™, MyTaq™ Plant and others. Importantly, in order to increase focus and capacity for higher growth Life Science products, we have made a strategic decision to exit our biopharma enabling services which has represented $2 to $3 million in revenue annually, but has lower profit margins and very limited growth potential.
Finally, our entire team recognizes that fiscal 2017 has to demonstrate that Meridian is moving and growing again. We believe the opportunities we have been building will provide that positive inflection that increases shareholder value.
Our financial condition remains strong and we continue to be one of the most financially efficient companies in our space, generating strong returns on invested capital. Our cash position and cash flows from operating activities remain strong. We plan to recommend to the Board maintaining our dividend at its current annual indicated rate of $0.80 per share. We continue to seek acquisition and collaboration opportunities to expand and extend our core capabilities to attractive markets that have demand for high quality diagnostics and components.”
