Putting germs to the test
Speedy diagnostic tests are driving recession-resistant growth for this Midwest biotech firm.
CINCINNATI (Fortune Small Business) -- One man's germ is another man's gem, or so it is for Bill Motto, the 67-year-old cofounder and executive chairman of Meridian Bioscience (VIVO), based in Cincinnati. Motto's company makes diagnostic kits for diseases ranging from hospital bacterial infections to the flu.
Meridian ranked No. 58 on last year's FSB 100 list of the fastest-growing small public companies, and sales of its kits keep rising as doctors scramble to diagnose and treat more and more threatening outbreaks. Revenues for fiscal 2007, ended in September, topped $123 million, up 13% from 2006, the fifth consecutive year of double-digit increases; net income jumped 46%, to $26.7 million.
Despite a soft economy, Meridian's profits for the first half of fiscal 2008, ended in March, rose 29% on a 15% bump in sales. Spurring growth is an expanded product lineup, now including rapid-test kits for E. coli infections and also for bacteria that can lead to stomach ulcers.
"They've got a terrific niche market," says Elliott Schlang, an analyst with Great Lakes Review, a unit of Soleil Securities, based in Cleveland.
Schlang, who holds Meridian stock, points out that the company can capitalize on the booming health-care sector without suffering a big negative that commonly bedevils its industry peers - shrinking reimbursements from insurers or the government. Why? Meridian's kits employ cutting-edge technology to provide fast, accurate diagnoses, making the tests a hit with doctors. And because the kits are inexpensive - they average just $6 apiece - the cost is included in the office-visit charge.
Meridian's biggest growth challenge going forward may be the weight of its own success. Profits are up almost fourfold since 2003. With revenues now topping $100 million, Schlang expects the heart-pounding 33% annual growth rate in earnings per share over the past few years to slow to a 22% rate for the next three to five years.click here.