BLUD and other stuff

Immucor (BLUD) reported last night and had a call this morning -- didn't listen to the call but I did read some reports that basically said they didn't provide any new info on the call that wasn't in the PR. Well they beat by a lot both in terms of revenues and earnings. Its all about pricing and new instruments. JNJ is their main competitor in the US and they supposedly raised prices by as much as 100%. Obviously BLUD didn't raise by that much or they would have beaten by even more.

I think they are raising prices but also trying to use price to encourage people to buy their echo instruments -- paradoxically the traditional reagents get their prices increased so that the reagents with the echo look cheaper/more attractive even before the labor cost savings. I say paradoxically because it just seems odd that the old product would have more pricing power than the new. That's not the way tech or health care usually work. Echo's come with their new reagents (capture? -- name escapes me for the moment) -- buy an echo you HAVE to use Blud's reagents. Right now most use some BLUD and some JNJ so an echo would mean only using BLUD -- that's a pickup in market share of high margin consumables.

So this quarter they raised prices on their traditional reagents and they sold 70 new echo's. Their guidance is pretty conservative but the deal is closing sometime too and that's dilutive if you remember.

I now understand there could be a different reason for why they might have done such a dilutive deal -- if management realized that their actual earnings would be well in excess of estimates then they could do the deal and suffer the dilution but use the upside to earn what the original estimates said they were going to earn in the first place. So I would expect them to earn about 1.20 which was the pre-deal estimate and they get the potential upside in a few years for the DNA analysis stuff they bought.

One issue for me and owning BLUD -- the market for blood testing is flat to down overall -- units that is -- so without price increases would have been flat at best. When I say secular growth stories that is suppose to mean unit growth. BLUD does have some secular attributes -- pricing power and the automation product cycle but its more of a special situation -- a long product cycle. Right now I will keep owning BLUD but I'm always thinking.....