Our expectations going forward are for continued organic growth, although at a moderated rate in the near term. Our simple-to-use molecular platform, illumigene ® has continued to perform well. We now have approximately 900 customers servicing over 1,000 hospitals and private labs. Growth in this category continues to come primarily from illumigene C. difficile, and illumigene GBS is gaining traction for prenatal screening. During July, we submitted illumigene Group A Strep (GAS) for FDA marketing clearance. In the strep testing market, many labs must perform a back-up test for all negative quick tests. Today, most of those back-up tests are 1-2 day cultures. We believe illumigene GAS, once cleared for use in the U.S., will be a better alternative due to its faster time-to-results and its potentially greater accuracy. illumigene is approaching its second year anniversary and, while results have been quite good thus far, we believe that the customer uptake can accelerate, especially as our menu evolves with the addition of Group A strep followed by Mycoplasma pneumoniae and Whooping Cough (Pertussis) later this year.
Overall, Meridian has multiple innovations and a powerful pipeline that can drive our organic growth in all reporting units. Our operating capabilities continue to meet supply and quality demands. Our focus continues to be on the refinement of our global capability to execute our plans rapidly, uniformly and with the highest standards of professionalism.”
William J. Motto, Executive Chairman of the Board, commented, “Although we were pleased to see our gross profit margin increase to 66% and our operating income margin reach 30% of revenues, we were disappointed that net sales fell short of target. We continue to operate very efficiently, have strong cash flow, regularly introduce new products, see broader acceptance of our illumigene molecular testing platform, and maintain a strong and unlevered balance sheet. Our principal challenge is to accelerate our organic growth in net sales which, of course, we are actively addressing. During the most recent quarter, we generated $4.3 million in cash after capital expenditures and payment of dividends. We continue to look for accretive acquisition opportunities. We look forward to continued long-term growth in net sales and earnings and expect to provide guidance for fiscal 2013 in late August or early September.”
CASH DIVIDEND MATTERSThe Board of Directors declared the regular quarterly cash dividend of $0.19 per share for the third fiscal quarter ended June 30, 2012. The dividend is of record August 6, 2012 and payable August 16, 2012. This annual indicated rate of $0.76 per share remains the same as the rate in fiscal 2011. Guided by the Company’s policy of setting a payout ratio of between 75% and 85% of each fiscal year’s expected net earnings, the actual declaration and amount of dividends will be determined by the Board of Directors in its discretion based upon its evaluation of earnings, cash flow requirements and future business developments, including potential acquisitions.