Mesa Laboratories (NASDAQ:MLAB) reported higher revenue and earnings for its fiscal 2027 second quarter and issued full-year guidance, while outlining plans to restructure its Clinical Genomics business and repurchase up to $40 million in shares.
The company expects fiscal 2027 revenue of $250 million to $255 million and adjusted EBITDA of $66 million to $68 million. That implies adjusted EBITDA growth of approximately 5% to 8% from about $63 million in fiscal 2026, on revenue growth of approximately 0% to 2%, Chief Executive Officer Siddhartha Kadia said.
Second-quarter revenue rose 2.6% to $62.3 million. Net income was $4.3 million, or $0.75 per diluted share, compared with $0.45 per share a year earlier. Adjusted EBITDA increased 21.1% to $17.3 million, with its margin rising to 27.8% from 23.5%.
Kadia said the full-year outlook incorporates lower Clinical Genomics revenue and reinvestment under the company’s savings plan. It excludes restructuring charges. Mesa expects third-quarter revenue to be approximately flat year over year, mainly because of the Clinical Genomics changes.
Manufacturing Fixes Remain Incomplete
Sterilization and Disinfection Control, or SDC, grew organic revenue 14.6% in the quarter. Kadia cautioned that much of the increase reflected a comparison with the prior-year quarter, when delivery delays had caused past-due backlog to build. First-half growth was approximately 5%.
Kadia said manufacturing issues had been resolved on most product lines, but one key line responsible for the largest share of past-due backlog was only partially fixed. Past-due backlog remained roughly steady during the quarter and was substantially lower than a year earlier, he said.
“The durable fix is in place for most of the franchise. It is not yet in place for all of it,” Kadia said. He added that the Food and Drug Administration inspected Mesa’s Bozeman facility in September and issued no observations.
Calibration Solutions organic revenue grew approximately 3.5%, following nearly 11% growth a year earlier. Biopharmaceutical Development organic revenue fell 8.2%, which Kadia attributed to export-control processing delays and shipments that missed the quarter’s close by a few days. Those shipments were completed by mid-October and will be recorded in the third quarter, he said.
Kadia maintained that Biopharmaceutical Development would grow for the full year and said the next-generation Gyrolab platform remains on track for a fiscal 2028 launch.
Clinical Genomics Restructuring
Clinical Genomics revenue declined 8.8% in the quarter, primarily because of the timing of consumables orders from a large customer, Kadia said. Mesa plans to focus the business on pharmacogenomics, oncology and customers that use its microarray at scale.
The company expects revenue in the division to decline as a result, but expects higher profitability in dollar terms as costs are reduced. Its three largest Clinical Genomics customers renewed contracts for terms of two to three and a half years, Kadia said. In response to an analyst’s question, he estimated that the three customers account for roughly 25% of the business.
Mesa’s broader savings plan is expected to reduce annualized operating costs by approximately $9.3 million. The company plans to reinvest about $4.3 million, producing an expected net annualized reduction of approximately $5 million. The actions are expected to be substantially complete by the end of fiscal 2027, with the full benefit in the cost base by the end of fiscal 2028.
Chief Financial Officer John Sakys said Mesa expects $2.6 million to $3.4 million in pretax restructuring charges, primarily in the second half of this fiscal year. No restructuring charges were recorded in the second quarter because the plan was approved after quarter-end.
Debt Reduction and Capital Allocation
Mesa repaid $20.1 million of debt on a net basis in the first half and ended the quarter with $22.3 million in cash. Its net leverage ratio was 1.75 times, down from 1.85 times at the end of June. Sakys said the company repaid an additional $5 million of revolving debt after quarter-end.
Kadia said internal investment and maintaining a strong balance sheet remain priorities. Mesa also expects to bring a small number of distributors in-house and, once its earnings record is established, consider small acquisitions in its Quality Control businesses.
The board authorized a share repurchase program of up to $40 million through December 2028. Kadia said purchases would be opportunistic and would not come at the expense of the balance sheet.
About Mesa Laboratories (NASDAQ:MLAB)
Mesa Laboratories, Inc develops and manufactures products used for quality control, monitoring, and measurement in healthcare, pharmaceutical, industrial, and other regulated applications. The company’s offerings are designed to help customers verify the performance of processes, equipment, and environmental conditions.
Mesa Laboratories’ product portfolio includes sterilization assurance products, such as biological indicators and related monitoring systems, as well as instruments and consumables used in healthcare and laboratory settings.
