In the third quarter of 2009, revenues for IBO’s Laboratory Instrument Sales Index declined 3.0% to $4,405.53 million, while operating profit decreased 2.3% to $762.90 million. Operating margin slipped 10 basis points to 17.3% of sales. For the three companies (Oxford Instruments, Shimadzu and Tecan) that did not report earnings before this issue’s publication, modest growth rates are included.

Third-quarter sales for Harvard Bioscience rose 5.0% to $21.1 million, including a 9.5% gain from the Denville Scientific acquisition (see IBO 9/15/09). Foreign currency transactions reduced revenue growth by 4.4%. Adjusted operating income fell 1.4% to $2.5 million due to higher SG&A expenditures. Gross profit margins rose 150 basis points to 48.7% of sales. Due to the acquisition, the company’s full-year revenue guidance grew 6% to $83–$84 million for a sales decline of 5%. Fourth-quarter revenues are expected to grow about 13% to $25–$27 million.

Illumina’s third-quarter revenues grew 5.4% to $158.4 million as demand for whole-genome genotyping chips was weak. Consumables sales fell 3.7% to $87.0 million due to a $20.1 million decline in microarray sales. Sequencing consumables sales grew over 100%, or by $16.8 million due to an increase in installations of Genome Analyzers. In addition, sequencing-reagent quality issues negatively impacted revenues by $68 million. Product revenue climbed 7.1% to account for 95% of company sales, including a 29.7% jump in instrument sales to $60.7 million. Higher demand of Genome Analyzers offset lower unit pricing and flat sales growth for the Infinium BeadChip product lines. Service revenue fell 19.0% to make up 5% of sales. Adjusted operating profits grew 11.8% to $32.3 million, while gross profit margin rose nearly 500 basis points to 68.7% of sales, benefiting from a shift in product mix. For the fourth quarter, a negative impact of up to $15 million is anticipated due to sequencing-reagent issues. Also, revised expectations for stimulus and genome wide associated studies–related purchases led the company to lower its full-year revenue growth by an average of 8% to $651 million for growth of 14%. Fourth-quarter revenues are anticipated to grow at least 3% to $165 million.

Third-quarter revenues for Luminex grew 0.8% to $29.1 million (see page 12) led by a 17.7% increase in system sales, which accounted for 31% of total sales. Consequently, gross profit margins contracted 320 basis points to 64.5% of sales due to the shift to instrument sales. Operating loss was $0.5 million, compared to a profit of $3.0 million a year ago, as additional hiring increased operating expenses. Technology segment revenue slipped 2.4% to account for 76% of total sales, as Consumables and “Other” revenue fell 27.3% and 9.5 % to $6.1 million and $1.4 million, respectively. This decline was partially offset by Systems, Royalty and Service contracts revenue, which climbed 13.6%, 21.6% and 1.1% to $8.5 million, $4.7 million and $1.4 million, respectively. The number of systems shipped systems rose 8% to 259 and included 11 FLEXMAP 3D instruments. Operating profit for the Technology segment contracted 83.0% to $0.5 million, while gross margins fell 190 basis points to 62.5% of sales following a shift in product mix. Revenue for the Assay segment climbed 12.2% to represent 24% of total sales, led by sales of test kits, led by demand for the Respiratory Viral Panel and cystic fibrosis test. Operating loss for the Assay segment more than quadrupled to $1.1 million, while its gross profit margins contracted nearly nine percentage points to 70.6% of segment sales due to favorable pricing adjustments in the previous year. The company also received FDA clearance for a new version of its xTAG Cystic Fibrosis test. The company narrowed the upper range of its 2009 revenue forecast by roughly 5% to $118–$126 for growth of 13%–18%.

OI’s revenues fell 26.2% in the third quarter to $4.9 million. Operating income rose 13.1% to $0.3 million due to lower expenses, while gross margins rose 200 basis points to 51.8% of sales. Laboratory Product sales fell 32.4% to account for 73% of sales, including a 40% and 26% decline in domestic and international sales. Service revenue was unchanged. Laboratory segment operating profit fell 58.2% to $0.2 million, while gross margins slipped 30 basis points to 47.3% of segment sales. Sales for the Air-Monitoring Systems segment fell 1.8% to make up 27% of sales. Segment operating income was $0.1 million, compared to a $0.1 million loss a year ago, while gross margins jumped 530 basis points to 64.0% of sales. During the third quarter, the company received a $5.7 million contract for MINICAMS systems, but revenue is not expected to be recorded until 2010.

QIAGEN NV’s third-quarter revenues rose 12.5%, 15% organically, to $259.7 million (see page 12). Acquisitions contributed 3%, while currency transactions and the divestiture of the HLA business reduced revenues by 3% and 2%, respectively. Sample and Assay Technologies revenue grew 12%, 16% on a currency-neutral basis, to account for 86% of sales. Revenue growth was driven by a 28% jump in sales of molecular diagnostics products, including sales of HPV and influenza tests. Instruments sales grew 18%, 23% on a currency-neutral basis, to represent 14% of sales, while “Other” revenue fell 12%, 9% on a currency-neutral basis. Molecular diagnostics product sales accounted for 50% of company sales, while sales of applied testing, pharmaceutical and life science research products represented 6%, 21% and 23% of sales, respectively. Sales to the Americas, Europe and Asia climbed 12%, 16% and 41% to make up 51%, 35% and 11% of sales, respectively, while sales to rest of the world accounted for the remaining 3%. On a currency-neutral basis, sales to the Americas, Europe and Asia grew 15%, 24% and 37%, respectively. Adjusted operating profits grew 22.3% to $79.4 million, while gross margins rose roughly 40 basis points to 66.6% of sales. For the fourth quarter, the company forecasts revenue to grow 6%–10% to $250–$260 million.

Strategic Diagnostics’ third-quarter revenue grew 4.4% to $7.2 million, driven by a 29% rise in sales of Life Science products, which accounted for 60% of revenues. Segment sales benefited from strong demand for in-vitro diagnostic products. Kit revenues fell 18% to make up 40% of sales, including a decline in Food Safety, Water and Environmental, and Ag-GMO product revenue of 7%, 26% and 33% to $1.4 million, $1.1 million and $0.4 million, respectively. The company’s operating loss narrowed to $0.3 million, compared to a loss of $1.1 million in the previous year due to lower R&D expenses. Gross margins soared nearly nine percentage points to 57.2% of sales as manufacturing efficiency improved.

Chart: Quarterly Sales Performance January 2006—September 2009

Year Q1 Q2 Q3 Q4

2006 3638 3588 3710 4067

2007 4073 4064 4229 4671

2008 4520 4632 4543 4571

2009 4258 4203 4406

Chart: Quarterly Operating Profit Margins January 2006—September 2009

Year Q1 Q2 Q3 Q4

2006 15.1% 13.6% 15.3% 17.2%

2007 16.2% 15.2% 15.9% 18.1%

2008 16.6% 16.3% 17.2% 18.3%

2009 16.4% 17.0% 17.3%

Laboratory Instrument Index, Total % Change

2006 2007 2008 2009 06/07 07/08 08/09

Total Annual Revenues ($M) 15002 17037 18266 —- 13.6 7.2 —–

3rd Quarter Revenues ($M) 3710 4229 4543 4406 14.0 7.4 -3.0

Annual Oper. Profits ($M) 2306 2796 3124 —- 21.3 11.7 —–

Annual Oper. Profits (%) 15.4 16.4 17.1 —- —– —– —–

3rd Quarter Oper. Profits ($M) 569 674 781 763 18.3 15.9 -2.3

3rd Quarter Oper. Profits (%) 15.31 5.9 17.2 17.3 —– —– —–