Third-quarter revenues for IBO’s Laboratory Instrument Sales Index grew 8.5% to $5,761.23 million, including 2.6% growth from currency. Operating profit improved 11.3% to $1,167.67 million, but operating margin slipped 100 basis points to 18.9% of sales. For the three companies (Analytik Jena, Spectris and Tecan) that did not report earnings before this issue’s publication, estimates are included.

Affymetrix’s third-quarter revenues contracted 13.5% to $64.0 million (see page 12) due to lower microarray sales for gene expression. Total Product revenue fell 15.3% to account for 89% of sales, including a decline of 14.4% and 24.8% in Consumables and Instrument revenues to $52.9 million and $4.1 million, respectively. Within the Consumables segment, RNA and DNA revenues declined 21.6% and 4.0% to $20.9 million and $24.0 million, respectively, while other protein product revenue grew 50% to $8 million. Royalties and Other revenue declined 2.6% to make up 3% of revenues. Service revenue improved 6.7% to account for 8% of sales. Adjusted operating loss more than doubled to $4.1 million. Total gross margin and product gross margin were each 56.8% of sales, climbing 208 and 109 basis points, respectively, as a result of a higher percentage of Consumables revenue. During the quarter, the company lowered its R&D head count by 20% but shifted some of those resources to sales and marketing. The R&D reorganization is projected to reduce annual expenditures by $5 million. The company also reorganized into three business units: gene expression, life science reagents, and genetic analysis and clinical diagnostics. In its conference call, the company stated it would focus on growth opportunities in the cytogenetics, genotyping and validation markets, as well as expand in Asia. The company plans to file for FDA approval of a cytogenetic product in mid-2012. Affymetrix expects to achieve revenue growth in 2012.

Third-quarter sales for Harvard Bioscience slipped 0.3%, down 6.3% organically, to $26.4 million (see page 12). Acquisitions and currency contributed 4.2% and 1.8% to revenue growth, respectively. Organic sales declined 4% and 1% due to lower Biochrom and Heofer sales to GE Healthcare as a result of excess inventory. Harvard Apparatus sales were negatively impacted by lower US research-related funding, and Denville sales declined due to an understaffed sales force. Adjusted operating income fell 48.7% to $1.5 million. Gross profit margin declined 250 basis points to 45.0% of sales. The company had net debt of $0.1 million, but $16.3 million remaining under its credit facility. The full-year revenue forecast was lowered by 5% to $107.5–$108.5 million primarily due to the excess inventory at GE, which is estimated to lower organic growth by 4% for the year. Fourth-quarter sales are expected to be $27.5–$28.5 million.

For the third quarter, HORIBA’s Process and Environmental Instruments & Systems (P&E) revenue climbed 47.7%, 48.6% excluding currency, to ¥3,810 million ($49.0 million = ¥77.69= $1) (see page 12). Backlog expanded 11.4% to ¥3,731 million ($48.0 million). Segment sales increased due to continued strong demand for stack gas analyzers and radiation measurement equipment in Japan. Japanese sales soared 76.6% to account for 77% of segment sales. However, sales to Asia fell 5.4% to represent 10% of P&E revenue, and sales to the Americas and Europe each declined 2.5% to make up 5% and 8%, respectively. P&E operating income jumped 442.0% to ¥813 million ($10.5 million). Sales for the Scientific Instruments & Systems (SI) segment grew 8.0%, 10.7% excluding currency, to ¥5,336 million ($68.7 million). Backlog was unchanged at ¥6,047 million ($77.8 million). Segment operating profit declined 3.7% to ¥338 million ($4.4 million). Japanese sales grew 5.8% to make up 32% of segment sales. Sales to Asia, Europe, Japan and the Americas grew 13.4%, 11.0%, 5.8% and 3.5% to account for 21%, 24%, 32% and 22% of SI sales, respectively. The company raised its full-year P&E revenue and operating income forecast by 3.4% and 29.4% to ¥14,300 million ($179 million = ¥80.00 = $1) and ¥2,200 million ($27.5 million), respectively. Full-year sales and operating income forecast for the SI segment was unchanged at ¥21,000 million ($263 million) and ¥800 million ($10 million), respectively.

Luminex’s quarterly revenues climbed 34.5%, 26% organically, to $45.6 million (see page 12) due to Assay sales, which jumped 70.7% to account for 29% of sales. Assay sales included 36% revenue growth from the acquisition of EraGen (se IBO 6/30/11) and organic growth of 35%, driven by higher sales of cystic fibrosis and respiratory viral panel products. Consumables sales increased 38.6% to make up 26% of sales, benefiting from a large bulk order. Royalty revenue expanded 31.6% to represent 16% of sales. Systems revenue grew 6.8% to make up 19% of sales. However, the total number of analyzers sold declined 2.2% to 226 systems. The company placed 60 MAGPIX systems, as sales grew 48.9%, as well as 41 sample preparation systems and 13 FLEXMAP systems. Service contracts and Other revenue grew 12.3% to account for 9% of revenues. Overall, sales to the clinical diagnostic and life science research markets accounted for 61% and 39% of revenues, respectively. The company emphasized that only 10% of its sales are exposed to capital equipment spending. Adjusted operating profit soared over 3000% to $5.1 million, which included $2.0 million in fair-value markup of inventory from the acquisition of EraGen. Adjusted gross profit margin improved 240 basis points to 66.9% of sales. Technology and Strategic Partnerships revenue grew 21.7% to $29.9 million, and operating income climbed 147.5% to $5.4 million. Revenues for Assays and Related Products improved 68.5% to $15.6 million, and adjusted operating loss narrowed by 85.6% to $0.3 million. The company reaffirmed its full-year revenue outlook of $180–$140 million for growth of 27%–31%.

QIAGEN’s third-quarter revenues grew 5.3% but fell 3% organically to $288.9 million. Currency and acquisitions increased revenue growth by 4% each. Organic sales were negatively affected by lower US HPV test screening and delays for a large HPV order outside the US. All figures below are at constant exchange rates. Consumables and related revenue were flat to account for 87% of sales. Instrument sales increased 8% to make up 13%. Demand for the QIAsymphony remained resilient, and the system is projected to reach an installed base of more than 550 units by year end. Molecular diagnostics revenue declined 5% to account for 46% of sales. However, non-HPV-related molecular diagnostics sales, which account for 25% of sales, increased due to strong demand for profiling and personalized health care products. Pharmaceutical and academia revenues grew 6% and 7% to make up 21% and 26% of revenues, respectively. Applied testing sales were flat to make up 7%. Academic sales to Europe grew in the single digits and increased slightly in the US. Overall, sales to the Americas declined 12% to represent 48% of sales, sales to Europe/Middle East/Africa grew 15% to account for 33% and sales to Asia-Pacific/Japan expanded 19% to account for 17%. Adjusted operating profit declined 7.7% to $69.7 million, and adjusted gross profit margin slipped 13 basis points to 71.5% of sales. The company reaffirmed its full-year currency-neutral sales growth forecast of 3% including acquisitions, with 4% additional growth from currency. Fourth-quarter sales are expected to grow 15%, including 1% growth from currency.

Third-quarter SDIX sales fell 7.5% to $6.9 million (see page 12). Life Science revenue grew 9.9% to account for 59% of sales, driven by demand from in vitro diagnostic customers. Kit revenue fell 24.6% to make up 41% of sales, including a 41% decline in Water & Environmental product sales to $0.9 million as demand for water-testing equipment declined in China. Food pathogen product sales slipped 4% to $1.5 million due to less E. coli testing in the beef industry. Ag-GMO product sales contracted 37% to $0.4 million as a result of excess inventory from its US distributor. Operating loss widened to $0.7 million from close to breakeven a year ago due to lower revenues and increased R&D expenses. Gross margin declined 107 basis points to 58.6% of sales.

 Column Chart: Quarterly Organic Sales Change

 January 2008–September 2011    

         Q1      Q2     Q3       Q4

 2008    5.6%    8.2%    4.3%    1.1%

 2009   -2.2%   -5.7%   -4.5%    0.5%

 2010    8.0%    9.1%   10.5%    7.1%

 2011    7.1%    8.3%    5.9%

 Column Chart: Quarterly Operating Profit Margins

 January 2008–September 2011

        Q1      Q2      Q3      Q4

 2007   16.6%   15.7%   16.5%   19.2%

 2008   17.6%   17.2%   18.1%   19.1%

 2009   17.4%   17.9%   18.3%   19.9%

 2010   19.8%   18.9%   19.8%   19.9%

 2011   19.2%   18.9%   18.9%

 Laboratory Instrument Index, Total         % Change    

                                  2008       2009      2010      2011     08/09    09/10     10/11

 Total Annual Revenues ($M)    $20,660    $19,756   $21,505     -----     -4.4%     8.9%     -----

 Annual Oper. Profits ($M)      $3,719     $3,676    $4,308     -----     -1.2%    17.2%     -----

 Annual Oper. Profits (%)        18.0%      18.4%     19.6%     -----     -----    -----     -----

 3rd Quarter Revenues ($M)      $5,131     $4,843    $5,308    $5,761     -5.6%     9.6%      8.5%

 3rd Quarter Oper. Profits ($M)   $926       $873    $1,049    $1,168     -5.7%    20.2%     11.3%

 3rd Quarter Oper. Profits (%)   18.1%      18.3%     19.8%     18.9%     -----    -----     -----