Affymetrix, Inc., (NASDAQ: AFFX) today reported its operating
results for the three months ended March 31, 2013.
Results for the three months ended March 31, 2013:
- Total revenue was $77.9 million, which
included revenue from eBioscience of $19.0 million.
- GAAP net loss was $15.4 million, or
$0.24 per diluted share, as compared to a net loss of $4.2 million,
or $0.06 per diluted share, in the first quarter of 2012.
- Non-GAAP net loss was $0.9 million, or
$0.01 per diluted share, as compared to a Non-GAAP net loss of $1.8
million, or $0.03 per diluted share, for the first quarter of 2012.
Please refer to the “Itemized Reconciliation Between GAAP and
Non-GAAP Net Loss” for a reconciliation of these GAAP and non-GAAP
financial measures.
- Total balance in cash and cash
equivalents was $38.2 million at the end of March 31, 2013, net of
payment of $3.9 million to redeem all of the remaining 3.50% notes
and a $3.2 million payment on the Term Loan during the quarter.
Total cash and cash equivalents included a prepayment of
approximately $13.4 million from customers.
Product revenue for the first quarter of 2013 was $71.6 million
and service and other revenue was $6.4 million. This compares to
product revenue of $58.5 million and service and other revenue of
$6.8 million in the first quarter of 2012. Product revenue for the
first quarter of 2013 included Affymetrix core consumable revenue
of $49.1 million, instrument revenue of $3.5 million and revenue
from eBioscience of $19.0 million. Product revenue for the first
quarter of 2012 included Affymetrix core consumable revenue of
$53.8 million and instrument revenue of $4.7 million.
Total gross margin was 51%, as compared to 58% in the same
period of 2012. Excluding non-GAAP adjustments such as the
amortization of step-up in inventory fair value, total margin was
59% for both years. Please refer to the “Itemized Reconciliation
Between GAAP and Non-GAAP Gross Margin” for a reconciliation of
these GAAP and non-GAAP financial measures.
For the first quarter of 2013, operating expenses were $52.2
million on a GAAP basis as compared to $41.3 million in 2012.
Excluding non-GAAP adjustments such as the amortization of acquired
intangible assets and non-recurring charges, operating expenses
were $43.6 million, compared to an adjusted total of $39.3 million
in 2012. The increase in 2013 is primarily due to the acquisition
of eBioscience in June 2012 offset by net savings in Affymetrix
Core operating expense of approximately $4.4 million primarily
driven by lower headcount and variable compensation expenditure
following the restructuring announced January 11, 2013. Please
refer to the “Itemized Reconciliation Between GAAP and Non-GAAP
Operating Expenses” for a reconciliation of these GAAP and non-GAAP
financial measures.
“Although the quarter was a challenging one, we continue to
focus on opportunities in translational science, molecular
diagnostics and applied markets. We again demonstrated strong
growth in our Genetic Analysis business segments of cytogenetics
and genotyping and a modest increase in eBioscience,” said Frank
Witney, President and CEO. “In addition, we continue to pay down
our senior debt which we have reduced from $85 million to
approximately $70 million over the last 9 months.”
Recent developments:
- The Company recently signed a contract
with UK Biobank to genotype 500,000 DNA samples donated by UK
residents as part of a prospective epidemiological study of complex
diseases that are of great relevance to public health. Affymetrix’s
Axiom® Genotyping Solution will be used to generate billions of
high-quality genotypes which will provide UK Biobank and the
research community with valuable insight to genetic factors
underlying human diseases for improved prevention, diagnosis, and
treatment of conditions such as heart disease, cancer, and
diabetes. The Company expects to begin processing these samples in
the second half of 2013.
- In February, the Company submitted a
510K for its CytoScan Dx whole genome cytogenetics test intended to
detect chromosomal copy number variants (CNVs) and loss of
heterozygosity associated with developmental delay, intellectual
disability, congenital anomalies, and dysmorphic features.
- The Company announced a collaboration
with Aqua Gen and Center for Integrative Genomics (CIGENE) at the
Norwegian University of Life Sciences (UMB) to genotype more than
900,000 markers per sample from the Atlantic salmon (Salmo salar),
thereby achieving the capability to implement genomic selection and
improve their salmon breeding program at Aqua Gen.
- During the first quarter the Company
redeemed all of the remaining $3.9 million of its 3.5% convertible
notes (due in 2038). In April 2013, the Company entered into an
amendment to its credit agreement to provide a limited waiver and
to amend certain covenants with respect to fiscal year 2013. In the
first quarter the Company prepaid an additional $3.2 million of its
senior-secured debt, reducing the total balance outstanding to
$70.1 million.
Affymetrix will host a conference call on April 30, 2013 at 2:00
p.m. PT to review its operating results for the first quarter of
2013. A live webcast can be accessed by visiting the Investor
Relations section of the Company’s website at www.affymetrix.com.
In addition, investors and other interested parties can listen by
dialing domestic: (877) 407-8291, international: (201)
689-8345.
A replay of this call will be available from 5:00 p.m. PT on
April 30, 2013 until 8:00 p.m. PT on May 7, 2013 at the following
numbers: domestic: (877) 660-6853, international: (201) 612-7415.
The conference call passcode to access the replay is 411930. An
archived webcast of the conference call will be available under the
Investor Relations section of the Company's website.
About Affymetrix
Affymetrix technology is used by the world's top pharmaceutical,
diagnostic, and biotechnology companies, as well as leading
academic, government, and nonprofit research institutes. More than
2,300 systems have been shipped around the world and more than
48,000 peer-reviewed papers have been published using the
technology. Affymetrix is headquartered in Santa Clara, California,
and has manufacturing facilities in Cleveland, Ohio, and Singapore.
eBioscience is headquartered in San Diego, California and has
manufacturing facilities in San Diego and Vienna, Austria.
Including eBioscience, the Company has about 1,100 employees
worldwide and maintains sales and distribution operations across
Europe, Asia and Latin America.
All statements in this press release that are not historical are
"forward-looking statements" within the meaning of Section 21E of
the Securities Exchange Act as amended, including statements
related to our plans to return to growth and profitability in 2013
and our estimated annualized cost savings as well as other
statements regarding Affymetrix's "expectations," "beliefs,"
"hopes," "intentions," "strategies" or the like. Such statements
are subject to risks and uncertainties that could cause actual
results to differ materially for Affymetrix from those projected,
including, but not limited to: Affymetrix's ability to stabilize
its business and grow revenue, Affymetrix’s ability to timely and
successfully integrate and realize the anticipated strategic
benefits and costs savings or other synergies of the acquisition of
eBioscience in a cost-effective manner while minimizing the
disruption to its business; risks that eBioscience’s future
performance may not be consistent with its historical performance;
risks relating to Affymetrix's ability to make scheduled payments
of the principal of, to pay interest on or to refinance its
indebtedness; risks relating to Affymetrix's ability to
successfully develop and commercialize new products, including its
ability to successfully develop and commercialize novel molecular
solutions based on eBioscience’s portfolio of reagents; risks
relating to past and future acquisitions, including the ability of
Affymetrix to successfully integrate such acquisitions into its
existing business; risks of Affymetrix's ability to achieve and
sustain higher levels of revenue, higher gross margins and reduced
operating expenses; risks relating to Affymetrix’s ability to
generate cash after interest and principal payments; uncertainties
relating to technological approaches; risks associated with
manufacturing and product development; personnel retention;
uncertainties relating to cost and pricing of Affymetrix products;
dependence on collaborative partners; uncertainties relating to
sole-source suppliers; uncertainties relating to FDA and other
regulatory approvals; competition; risks relating to intellectual
property of others and the uncertainties of patent protection and
litigation. These and other risk factors are discussed in
Affymetrix's Annual Report on Form 10-K for the year ended December
31, 2012, and other SEC reports. Affymetrix expressly disclaims any
obligation or undertaking to release publicly any updates or
revisions to any forward-looking statements contained herein to
reflect any change in Affymetrix's expectations with regard thereto
or any change in events, conditions or circumstances on which any
such statements are based.
In addition to providing financial measures based on generally
accepted accounting principles in the United States (GAAP),
Affymetrix has disclosed in this press release its net loss and net
loss per share as well as its total gross margin and operating
expenses for the first quarter of 2013 and 2012 excluding specified
items. Reconciliation of GAAP to non-GAAP measures can be found in
the tables included in this press release. Affymetrix has
determined to disclose this financial information to investors
because it believes it will be useful, as a supplement to GAAP
measures, in comparing Affymetrix’s operating performance in the
first quarter of 2013 as compared to the prior-year period. These
non-GAAP financial measures should not be considered in isolation
from, or as a substitute for, financial information prepared in
accordance with GAAP.
PLEASE NOTE:Affymetrix, the Affymetrix logo, GeneChip,
and all other trademarks are the property of Affymetrix, Inc.
AFFYMETRIX, INC.
UNAUDITED CONDENSED CONSOLIDATED
BALANCE SHEETS
(IN THOUSANDS)
March
31,
December 31, 2013 2012 ASSETS:
(Note 1) Current assets: Cash and cash equivalents $37,496 $25,671
Restricted cash 690 699 Available-for-sale securities—short-term
portion - 9,366 Accounts receivable, net 52,111 53,893
Inventories—short-term portion 74,196 72,691 Deferred tax
assets—short-term portion 317 359 Prepaid expenses and other
current assets 10,076 10,126 Total current assets 174,886 172,805
Property and equipment, net 25,868 28,663 Inventories—long-term
portion 8,876 11,772 Goodwill 158,338 159,736 Intangible assets,
net 145,785 152,718 Deferred tax assets—long-term portion 1,916
3,394 Other long-term assets 13,707 15,206 Total assets $529,376
$544,294
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current liabilities: Accounts payable and accrued liabilities
$49,019 $50,355 Convertible notes—short-term portion - 3,855 Term
loan—short-term portion 12,750 12,713 Deferred revenue—short-term
portion 18,911 8,498 Total current liabilities 80,680 75,421
Deferred revenue—long-term portion 4,041 3,450 Convertible notes
105,000 105,000 Term loan—long-term portion 57,338 60,563 Other
long-term liabilities 21,010 22,689 Stockholders’ equity: Common
stock 711 710 Additional paid-in capital 761,435 759,549
Accumulated other comprehensive income 3,988 6,302 Accumulated
deficit (504,827) (489,390) Total stockholders’ equity 261,307
277,171 Total liabilities and stockholders’ equity $529,376
$544,294
__________________
Note 1: The condensed consolidated balance sheet at December 31,
2012 has been derived from the audited consolidated financial
statements at that date included in the Company’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2012.
AFFYMETRIX, INC.
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
(UNAUDITED)
Three Months Ended March 31, 2013
2012 REVENUE: Product sales $71,557 $58,491
Services and other 6,388 6,756 Total revenue 77,945 65,247
COSTS
AND EXPENSES: Cost of product sales 34,433 23,565 Cost of
services and other 3,507 3,779 Research and development 12,248
13,331 Selling, general and administrative 35,121 27,924
Restructuring charges 4,842 - Total costs and expenses 90,151
68,599 Loss from operations (12,206) (3,352) Interest income and
other, net 342 26 Interest expense 2,898 980 Loss before income
taxes (14,762) (4,306) Income tax provision (benefit) 675 (89) Net
loss $(15,437) $(4,217) Basic and diluted net loss per common share
$(0.22) $(0.06) Shares used in computing basic and diluted net loss
per common share 70,919 69,977
AFFYMETRIX, INC.
RESULTS OF OPERATIONS –
NON-GAAP
(IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
(UNAUDITED)
ITEMIZED RECONCILIATION BETWEEN GAAP
AND NON-GAAP NET LOSS
Three Months Ended March 31,
2013 2012 GAAP net loss - basic and diluted
$(15,437) $(4,217) Amortization of inventory fair value
adjustment 4,589 - Amortization of acquired intangible assets 4,635
1,361 Acquisition-related transaction costs - 1,057
Acquisition-related integration costs 515 - Restructuring charges
4,842 - Non-GAAP net loss - basic and diluted $(856)
$(1,799) Basic and diluted net loss per common share $(0.01)
$(0.03) Shares used in computing basic and diluted net loss per
common share 70,919 69,977
ITEMIZED RECONCILIATION BETWEEN GAAP
AND NON-GAAP GROSS MARGIN
Three Months Ended March 31, 2013
2012 GAAP total gross margin $40,005 51%
$37,903 58% Amortization of inventory fair value adjustment
4,589 6% - 0% Amortization of acquired intangible assets 1,366
2% 450 1% Non-GAAP total gross margin $45,960
59% $38,353 59%
ITEMIZED RECONCILIATION BETWEEN GAAP
AND NON-GAAP OPERATING EXPENSES
Three Months Ended March 31, 2013
2012 Total GAAP operating expenses $52,211
$41,255 Amortization of acquired intangible assets (3,269) (911)
Acquisition-related transaction costs - (1,057) Acquisition-related
integration costs (515) - Restructuring charges (4,842) -
Total non-GAAP operating expenses $43,585 $39,287
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