LUMINEX : MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q) – marketscreener.com

The following information should be read in conjunction with the condensedconsolidated financial statements and the accompanying notes included in Part I,Item 1 of this Quarterly Report on Form 10-Q, and the "Risk Factors" included inPart I, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended March31, 2020, and as updated by Part II, Item 1A of our 2019 10-K, as updated byPart II, Item 1A of this Quarterly Report on Form 10-Q.

SAFE HARBOR CAUTIONARY STATEMENT

risks and uncertainties relating to market demand and acceptance of ourproducts and technology, including ARIES, MultiCode, xMAP, xMAP INTELLIFLEX,VERIGENE, VERIGENE II, Guava, Muse, Amnis, and NxTAG products;

timing of and process for regulatory approvals;

our ability to scale manufacturing operations (particularly with respect to ourproducts that recently received U.S. Food and Drug Administration (FDA)Emergency Use Authorization (EUA) clearance) and manage operating expenses,gross margins and inventory levels;

potential shortages, or increases in costs, of components or other disruptionsto our manufacturing operations;

our ability to obtain and enforce intellectual property protections on ourproducts and technologies;

our ability to successfully develop and launch new products in a timely manner;

competition and competitive technologies utilized by our competitors;

dependence on strategic partners for development, commercialization anddistribution of products;

reliance upon the accuracy and completeness of the information received fromstrategic partners to determine the appropriate financial reporting;

risks and uncertainties associated with implementing our acquisition strategy,and our challenge to identify acquisition targets, including our ability toobtain financing on acceptable terms;

our ability to integrate acquired companies or selected assets into ourconsolidated business operations, and the ability to fully realize the benefitsof our acquisitions;

our ability to comply with applicable laws, regulations, policies andprocedures;

changes in principal members of our management staff;

our increasing dependency on information technology to enable us to improve theeffectiveness of our operations and to monitor financial accuracy andefficiency;

implementation, including any modification, of our strategic operating plans;

uncertainty regarding the outcome or expense of any litigation brought againstor initiated by us;

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reliance on third party distributors for distribution of specificLuminex-developed and manufactured assay products; and

risks related to the issuance of the Notes and with respect to the ConvertibleNote Hedge Transactions.

OVERVIEW

Flexibility/scalability

Both protein and nucleic acid applications on a single platform

High throughput

Ease of use

Most xMAP-based assays are simple to perform. A test sample is added to asolution containing microspheres that have been coated with reagents. Thesolution is then processed through one of our xMAP Systems, which incorporateproprietary software to automate data acquisition and analysis in real-time.

Cost-effective

Our Amnis/Guava Technologies

Our Non-Automated Technologies

We have multiple assay development activities ongoing and these activities arefocused in the areas of infectious disease, human genetics and pharmacogenomics.

Our ARIES Technology

Our Market Approach

Second Quarter 2020 Highlights

Record revenue, profitability and cash flow generation in the quarterended June 30, 2020.

Consolidated revenue was $109.5 million for the quarter ended June 30, 2020, a32% increase over the prior year period.

Total assay revenue increased to $61.2 million for the quarter ended June 30,2020, a 95% increase over the prior year period.

Sample-to-answer assay revenue increased to $25.8 million for the quarterended June 30, 2020, a 56% increase over the prior year period.

Profitability increased to $12.5 million for the quarter ended June 30, 2020,an increase of more than 350% vs. the prior year period.

Issued $260.0 million principal amount of Notes due in May 2025.

Cash generation of approximately $31.0 million for the quarter ended June 30,2020, before the net proceeds of $217.6 million from the issuance of the Notes.

Received FDA EUA for the ARIES SARS-CoV-2 Assay on April 6, 2020.

Submitted EUA request to the FDA for the xMAP SARS-CoV-2 Multi-Antigen IgGAssay on June 29, 2020, which was subsequently issued on July 16, 2020.

COVID-19 Considerations

BARDA Contracts

Consumables Sales and Royalty Revenue Trends

Growth in Inventory

We expect our areas of focus over the next twelve months to be:

delivering on our revenue growth goals;

accelerating development and commercialization of the assays on oursample-to-answer diagnostic systems;

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Table of Contentscompleting development and commercialization of the next generationsample-to-answer system, VERIGENE II, our next generation xMAP System, xMAPINTELLIFLEX, and our next generation Guava instrument, Guava Next Gen;

improvement of ARIES and VERIGENE gross margins;

placements of our VERIGENE and ARIES Systems, our sample-to-answer platformsand assays;

increasing the growth of our LTG revenue through enrichment of our existingpartner relationships and the addition of new partners;

maintenance and improvement of our existing products and the timelydevelopment, completion and successful commercial launch of our pipelineproducts;

adoption and use of our platforms and consumables by our customers for theirtesting services; and

expansion and enhancement of our installed base of systems and our marketposition within our identified target market segments.

KEY PERFORMANCE INDICATORS

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Table of ContentsRevenues, disaggregated by revenue source, into the following primarycategories:

The Company's ability to meet anticipated product development timelines and todeliver on our planned commercial product launches.

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RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2020 COMPARED TO THREE MONTHS ENDED JUNE 30, 2019

The following table presents our revenues disaggregated by revenue source forthe three months ended June 30, 2020 and 2019 as follows:

SIX MONTHS ENDED JUNE 30, 2020 COMPARED TO SIX MONTHS ENDED JUNE 30, 2019

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LIQUIDITY AND CAPITAL RESOURCES

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LUMINEX : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q) - marketscreener.com

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