IVAX Diagnostics, Inc. (NYSE Amex:IVD), a fully integrated in
vitro diagnostics company, reports its financial results for the
quarter ended June 30, 2011.
Kevin D. Clark, Chief Executive Officer, Chief Operating Officer
and President of IVAX Diagnostics, said, “We are pleased to report
our financial performance for the second quarter of 2011. Our
operating expenses and operating loss were lower in the second
quarter of 2011 compared to the corresponding period in 2010. Our
revenues for the second quarter of 2011 were approximately at the
same level as the second quarter of 2010. Our cash and cash
equivalents balance improved from $1.8 million as of December 31,
2010 to $5.2 million as of June 30, 2011.
Mr. Clark continued, “The improvement in our liquidity position
is primarily the result of the previously announced consummation of
the initial transactions contemplated by our stock purchase
agreement with ERBA Diagnostics Mannheim GmbH, an in vitro
diagnostics company headquartered in Germany which, as of the date
of the stock purchase agreement, beneficially owned, directly or
indirectly, approximately 72.4% of the then-issued and outstanding
shares of our common stock. At the initial closing of the
investment contemplated by the stock purchase agreement, we issued
to ERBA Diagnostics Mannheim 6,666,667 shares of our common stock
for an aggregate purchase price of $5,000,000, or $0.75 per share,
and we also issued to ERBA Diagnostics Mannheim warrants, which
have a five-year term and an exercise price of $0.75 per share, to
purchase an additional 20,000,000 shares of our common stock. As
previously announced, under the terms of the stock purchase
agreement, we have also agreed to issue to ERBA Diagnostics
Mannheim an aggregate of an additional 13,333,333 shares of our
common stock for an aggregate purchase price of $10,000,000, or
$0.75 per share, in two equal installments, the first of which
installment is to be consummated on or prior to January 1, 2012 and
the second of which installment is to be consummated on or prior to
July 1, 2012. Our liquidity position also improved during the
second quarter of 2011 as a result of Diamedix Corporation, our
wholly-owned subsidiary in Miami, Florida, entering into a secured,
revolving credit facility of up to $975,000 with City National Bank
of Florida.
Mr. Clark continued, “Our initiatives to improve our operating
results and performance are ongoing. We have made placements at
customer sites in the U.S. of the Mago® 4S, our next-generation
fully-automated Enzyme-linked Immunosorbent Assay (ELISA) and
Immunofluorescence Assay (IFA) instrumentation system, which
received clearance from the United States Food and Drug
Administration (FDA) during January 2011. Further, as previously
announced, Diamedix entered into a three-year distribution
agreement with Laboratory Supply Company (LABSCO) earlier this
month which provides for LABSCO to act as a distributor in the U.S.
for Diamedix’ suite of instrumentation systems and test kits,
including the Mago® 4S. LABSCO is the largest privately-held
supplier of diagnostic instrumentation and clinical laboratory
products to hospitals, physician office laboratories, reference
labs and other non-acute care settings in the U.S. This agreement
is anticipated to expand our market reach into the 3,900 hospitals
in the U.S. with less than 150 beds, a new market segment on which
we have not previously focused with our existing sales force. Our
decision to engage LABSCO on a nationwide basis under this
distribution agreement is another step toward one of our strategic
goals directed at increasing our presence in the U.S.
Mr. Clark concluded, “We will continue with our efforts to
reduce manufacturing costs and carefully manage our operating
expenses while implementing other initiatives designed to improve
sales in the U.S. and in other markets.”
Financial Highlights for the Quarter and Six Months Ended
June 30, 2011
Net revenues for the quarter ended June 30, 2011 were $4,375,000
compared with $4,394,000 in the same period of 2010, a decline of
$19,000, or 0.4%. This decrease was composed of a decrease of
$57,000 in net revenues from domestic operations, partially offset
by an increase of $38,000 in net revenues from European operations,
which includes a $102,000 increase related to the impact on
European revenues of the fluctuation of the U.S. dollar relative to
the Euro. As measured in Euros, net revenues from European
operations for the second quarter of 2011 decreased by 11.3%
compared to the same period of 2010 primarily as a result of volume
declines. Net revenues from domestic operations for the second
quarter of 2011 decreased by 1.8% compared to the same period of
2010 primarily due to declines in volumes of raw material and
instrument sales, partially offset by an increase in reagent sales.
Net revenues in the six months ended June 30, 2011 decreased by
$540,000, or 6.0%, from the same period of 2010. This decrease was
composed of decreases of $307,000 in net revenues from domestic
operations and $233,000 in net revenues from European operations.
The impact on European revenues of the fluctuation of the U.S.
dollar relative to the Euro was an increase of approximately
$144,000. As measured in Euros, net revenues from European
operations for the six months ended June 30, 2011 decreased by
13.2% compared to the same period of 2010 primarily due to reagent
volume declines. Net revenues from domestic operations for the six
months ended June 30, 2011 decreased by 5.0% compared to the same
period of 2010 primarily as a result of declines in volumes of
antigen and instrument sales, while reagent sales remained at
approximately the same level.
Gross profit for the quarter ended June 30, 2011 increased by
$25,000 to $2,360,000 from $2,335,000 in the same period of 2010.
Gross profit as a percentage of net revenues increased to 53.9% for
the second quarter of 2011 from 53.1% for the same period of 2010,
principally as a result of higher sales of reagents in the second
quarter of 2011 by our domestic operations, which enabled
additional absorption of fixed overhead. Gross profit for the six
months ended June 30, 2011 decreased by $348,000, or 7.2%, from the
same period of 2010. The decrease in gross profit was primarily
attributable to the decline in net revenues, as described above.
Gross profit as a percentage of net revenues decreased to 52.6% in
the six months ended June 30, 2011 from 53.3% in the same period of
2010, mainly due to lower margins at our European subsidiary.
Operating expenses decreased in the quarter and six months ended
June 30, 2011 compared to the same periods of 2010, in each case as
a result of a decrease in general and administrative expenses,
partially offset by increases in selling expenses and research and
development expenses. For the quarter ended June 30, 2011,
operating expenses decreased by $60,000 to $3,521,000 from
$3,581,000 in the same period of 2010. This decrease was composed
of a $324,000 decrease in general and administrative expenses, a
$247,000 increase in selling expenses and a $17,000 increase in
research and development expenses. For the six months ended June
30, 2011, operating expenses decreased by $306,000 to $6,643,000
from $6,949,000 in the same period of 2010. This decrease was
comprised of a $619,000 decrease in general and administrative
expenses, a $177,000 increase in selling expenses and a $136,000
increase in research and development expenses. The decreases in
general and administrative expenses primarily related to severance
costs incurred during the 2010 periods, as well as a decrease in
the number of executive officers and other reductions in spending
for general and administrative expenses during the 2011 periods.
Selling expenses increased primarily due to salaries for newly
hired sales personnel and marketing expenses related to the launch
of new products and trade shows. The increases in research and
development expenses were due principally to an increase in new
product development activities, including additional staff
allocated to research and development activities.
Loss from operations totaled $1,161,000 in the quarter ended
June 30, 2011 as compared to loss from operations of $1,246,000 in
the same period of 2010. Loss from operations totaled $2,168,000 in
the six months ended June 30, 2011 compared to loss from operations
of $2,127,000 in the same period of 2010. Net loss for the quarter
ended June 30, 2011 was $767,000, or ($0.03) per share, compared to
net loss of $1,311,000, or ($0.05) per share, in the same period of
2010. Net loss for the six months ended June 30, 2011 was
$1,787,000, or ($0.06) per share, compared to net loss of
$2,268,000, or ($0.08) per share, in the same period of 2010.
About IVAX Diagnostics, Inc.
IVAX Diagnostics, Inc. (www.ivaxdiagnostics.com), headquartered
in Miami, Florida, is a fully integrated in vitro diagnostics
company that develops, manufactures and distributes in the United
States and internationally, proprietary diagnostic reagents, test
kits and instrumentation, primarily for autoimmune and infectious
diseases, through its three subsidiaries: Diamedix Corporation
(U.S.), Delta Biologicals S.r.l. (Europe) and ImmunoVision, Inc.
(U.S.).
Safe Harbor Statement
Except for the historical matters contained herein, statements
in this press release are forward-looking and are made pursuant to
the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Investors are cautioned that forward-looking
statements involve risks and uncertainties that may affect the
business and prospects of IVAX Diagnostics, Inc., including,
without limitation: the risks and uncertainties related to the
transactions contemplated by IVAX Diagnostics’ stock purchase
agreement with ERBA Diagnostics Mannheim GmbH, including that the
transactions contemplated to be consummated at the future closings
under the stock purchase agreement may not be consummated on the
contemplated terms, in the time frame anticipated, or at all, that
net proceeds of the investment may not provide adequate cash
resources to fund IVAX Diagnostics’ operations or liquidity needs
for the reasonably foreseeable future, that IVAX Diagnostics may
not achieve or sustain profitability from its operations or
otherwise secure funds to provide the basis for its long-term
liquidity, that IVAX Diagnostics’ has broad discretion in its use
of the net proceeds from the investment, that IVAX Diagnostics may
not be successful in identifying or consummating acquisitions or
other strategic opportunities and any identified and consummated
acquisition or other strategic opportunity may not be successfully
integrated and may not result in synergies, operational
efficiencies or other benefits anticipated and may not otherwise
improve IVAX Diagnostics’ financial condition, operating results or
cash position, that IVAX Diagnostics may not be able to expand its
business or operations, that the warrants may not be exercised, in
whole or in part, by ERBA Diagnostics Mannheim, that ERBA
Diagnostics Mannheim has the sole discretion regarding its decision
of whether or not, and if so when, to exercise the warrants, in
whole or in part, and such decision will be based upon
considerations ERBA Diagnostics Mannheim deems to be appropriate,
which may include, among other things, the future market price of
IVAX Diagnostics’ common stock, which is subject to volatility and
a number of other factors, many of which may be beyond IVAX
Diagnostics’ control, and that, when deciding whether or not, and
if so when, to exercise the warrants, in whole or in part, ERBA
Diagnostics Mannheim’s interest may conflict with IVAX Diagnostics’
interests; the risks and uncertainties related to the $975,000 line
of credit described in this press release and any additional
indebtedness that IVAX Diagnostics may incur in the future,
including that IVAX Diagnostics may be required to use a portion of
its cash flow from operations for the payment of principal and
interest due on its outstanding indebtedness, that IVAX
Diagnostics’ outstanding indebtedness and leverage will increase
the impact of negative changes in general economic conditions,
including interest rate increases, as well as industry conditions
and competitive pressures, that IVAX Diagnostics’ outstanding
indebtedness may adversely impact its ability to obtain additional
financing for working capital, capital expenditures or general
corporate purposes, and that positive and negative covenants
contained in loan documents could restrict various aspects of IVAX
Diagnostics’ business, operations and finances; the risks and
uncertainties related to the Mago® 4S, including the ability of the
Mago® 4S to perform as expected, the ability of the Mago® 4S to be
a source of revenue growth for IVAX Diagnostics, IVAX Diagnostics’
ability to receive financial benefits or achieve improved operating
results from the Mago® 4S, and the ability of the Mago® 4S to be a
factor in IVAX Diagnostics’ growth; the risks and uncertainties
related to the distribution agreement with LABSCO, including that
anticipated levels of sales may not be achieved under the
agreement, that the agreement may not be able to expand IVAX
Diagnostics’ market reach or penetration, that the agreement may
not assist IVAX Diagnostics in its goal of expanding its presence
and market reach in the U.S., and that the agreement may not
provide IVAX Diagnostics with, or otherwise allow IVAX Diagnostics
to achieve, its intended results, whether business, financial or
otherwise; IVAX Diagnostics’ ongoing initiatives to reduce
manufacturing costs, manage operating expenses, increase sales in
the U.S. and other markets and otherwise improve its operating
results and performance may not be successful or result in the
positive financial impact expected, whether in the time frame
anticipated, or at all; economic, competitive, political,
governmental and other factors affecting IVAX Diagnostics and its
operations, markets and products; the success of IVAX Diagnostics’
technological, strategic and business initiatives; IVAX
Diagnostics’ ability to achieve cost advantages from its own
manufacture of instrument systems, reagents and test kits; voting
control of IVAX Diagnostics’ common stock by ERBA Diagnostics
Mannheim; conflicts of interest with ERBA Diagnostics Mannheim and
with IVAX Diagnostics’ officers, employees and other directors,
including, without limitation, directors that are also executive
officers of ERBA Diagnostics Mannheim; and other risks and
uncertainties that may cause results to differ materially from
those set forth in the forward-looking statements. In addition to
the risks and uncertainties set forth above, investors should
consider the economic, competitive, governmental, technological and
other risks and uncertainties discussed in IVAX Diagnostics’
filings with the Securities and Exchange Commission, including,
without limitation, the risks and uncertainties discussed under the
heading “Risk Factors” in such filings.
IVAX DIAGNOSTICS, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
Period Ended June 30, Three months
Six months 2011
2010
2011
2010 Net revenues $ 4,374,998 $
4,394,303 $ 8,509,355 $ 9,049,324 Cost of sales
2,015,080 2,059,308
4,034,222 4,226,582
Gross profit
2,359,918
2,334,995 4,475,133
4,822,742 Operating expenses:
Selling and marketing 1,508,527 1,262,179 2,734,016 2,557,193
General and administrative 1,577,071 1,901,226 2,924,072 3,543,034
Research and development
434,867
417,668 985,102
849,290 Total operating expenses
3,520,465 3,581,073
6,643,190 6,949,517
(Loss) from operations (1,160,547 ) (1,246,078 )
(2,168,057 ) (2,126,775 ) Other income: Interest income
(3,829 ) 666 (7,220 ) 807 Other income (expense), net
19,745 (38,527
) 38,937
(87,065 ) Total other income, net
15,916 (37,861
) 31,717
(86,258 ) (Loss) before income
taxes (1,144,631 ) (1,283,939 ) (2,136,340 ) (2,213,033 )
Provision for income taxes
(377,146
) 27,351
(348,838 ) 55,685
Net loss
$ (767,485
) $ (1,311,290
) $ (1,787,502
) $ (2,268,718
) Net loss per share Basic and diluted
$ (0.03 ) $
(0.05 ) $ (0.06
) $ (0.08 )
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING:
Basic
27,763,532
27,649,887
27,707,023
27,649,887
Diluted
27,763,532
27,649,887
27,707,023
27,649,887
IVAX DIAGNOSTICS, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
2011 2010
ASSETS
Current assets: Cash and cash equivalents $ 5,232,359 $
1,826,228 Accounts receivable, net of allowances for doubtful
accounts of $581,079 in 2011 and $399.376 in 2010 6,259,276
5,344,205 Inventories, net 4,540,017 4,077,896 Other current assets
337,392 146,366
Total current assets 16,369,044 11,394,695 Property,
plant and equipment, net 1,582,388 1,618,136 Equipment on lease,
net 628,540 679,438 Product license 282,936 282,936 Goodwill
870,290 870,290 Restricted deposits 89,632 228,680 Other assets
48,489 26,847
Total assets
$ 19,871,319
$ 15,101,022
LIABILITIES AND
SHAREHOLDERS’ EQUITY
Current liabilities: Accounts payable $ 2,827,548 $
1,597,555 Accrued license payable 143,900 132,521 Revolving line of
credit 83,426 - Accrued expenses and other current liabilities
2,621,738 2,511,698 Capital lease obligation, current
75,102 71,826 Total
current liabilities
5,751,714
4,313,600 Other long-term liabilities:
Capital lease obligation, long-term 62,396 100,612 Deferred tax
liabilities 396,930 365,184 Other long-term liabilities
1,074,852 955,056
Total other long-term liabilities
1,534,178
1,420,852 Shareholders’
equity: Common stock, $0.01 par value, authorized 100,000,000
shares, issued and outstanding 34,391,554 in 2011 and 27,649,887 in
2010 343,915 276,498 Stock subscription receivable (10,000,000 ) -
Capital in excess of par value 56,072,578 41,389,404 Accumulated
deficit (33,473,974 ) (31,686,472 ) Accumulated other comprehensive
loss
(357,092 )
(612,860 ) Total shareholders’ equity
12,585,427 9,366,570
Total liabilities and shareholders’ equity
$
19,871,319 $
15,101,022
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