Affymetrix, Inc., (NASDAQ: AFFX) today reported its operating
results for the third quarter of 2013.
Results for the three months ended September 30,
2013:
- Total revenue was $80.4 million, which
included revenue from eBioscience of $19.9 million.
- Product revenue was $74.8 million, as
compared to product revenue for the third quarter of 2012 of $72.7
million, an increase of almost 3%.
- GAAP net loss was $4.2 million, or
$0.06 per diluted share, as compared to a net loss of $17.9
million, or $0.25 per diluted share, in the third quarter of
2012.
- Non-GAAP net income was $3.3 million,
or $0.05 per diluted share, as compared to a Non-GAAP net loss of
$2.4 million, or $0.03 per diluted share, for the third quarter of
2012. Please refer to "Itemized Reconciliation Between GAAP and
Non-GAAP Net Income (Loss)" for a reconciliation of these GAAP and
Non-GAAP financial measures.
- Total balance in cash and cash
equivalents was $50.6 million at the end of September 30,
2013.
Product revenue for the third quarter of 2013 was $74.8 million
and service and other revenue was $5.6 million. This compares to
product revenue of $72.7 million and service and other revenue of
$6.9 million in the third quarter of 2012. Product revenue for the
third quarter of 2013 included Affymetrix core consumable revenue
of $52.1 million, instrument revenue of $2.8 million and revenue
from eBioscience of $19.9 million. Product revenue for the third
quarter of 2012 included Affymetrix core consumable revenue of
$50.5 million and instrument revenue of $4.6 million and revenue
from eBiosciences of $17.6 million.
Total gross margin was 55%, as compared to 52% in the same
period of 2012. Excluding Non-GAAP adjustments such as the
amortization of step-up in inventory fair value, total margin was
61% compared to 60% for the third quarter of 2012. 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 third quarter of 2013, operating expenses were $45.1
million on a GAAP basis as compared to $52.8 million in 2012.
Excluding Non-GAAP adjustments such as the amortization of acquired
intangible assets and non-recurring charges, operating expenses
were $41.9 million, compared to an adjusted total of $46.0 million
in 2012. The decrease in 2013 is primarily driven by lower
headcount and variable compensation expenditure following the
restructuring announced on January 11, 2013 and due to
non-recurring acquisition- and integration-related costs incurred
during 2012. Please refer to the "Itemized Reconciliation
Between GAAP and Non-GAAP Operating Expenses" for a reconciliation
of these GAAP and Non-GAAP financial measures.
"We generated another quarter of strong growth in our Genetic
Analysis business and improved results in our Expression and
eBiosciences businesses," said Frank Witney, President and CEO.
"From a geographic perspective Europe and North America delivered
stronger results as compared to last quarter. We are encouraged by
the progress we made in the third quarter."
“In the third quarter, stronger revenue and prudent working
capital management combined with continued careful control of our
operating expenses allowed us to generate approximately $10.5
million in cash flow from operations," stated Gavin Wood, EVP and
CFO. "Since June of last year we have reduced our senior-secured
debt by nearly 45%."
Recent developments:
- The Company launched the OncoScan FFPE
Assay Kit, which enables a whole-genome copy number assay for
highly degraded FFPE solid tumor samples in 48 hours. Despite the
growing need of cancer researchers and clinicians, obtaining
high-quality, whole-genome copy number data from degraded
FFPE-derived tumor DNA has remained extremely challenging due to
the limitations of current methods such as FISH, array CGH, and
next-generation sequencing technologies. The new OncoScan FFPE
Assay Kit, utilizing Affymetrix’s unique Molecular Inversion Probe
(MIP) technology, is capable of analyzing small amounts of highly
degraded DNA from FFPE samples quickly and affordably, providing a
significant step forward in solid tumor cancer analysis.
- Earlier this month the Company divested
its Anatrace product line and used the proceeds, as well as
cash-on-hand, to reduce the Company’s outstanding senior-secured
debt.
- In October the Company also refinanced
$48 million of its remaining senior secured debt on revised terms
including lower interest rate margins.
- As of October 25th, 2013, the Company’s
cash-on-hand exceeded the principal amount of its senior-secured
debt.
Affymetrix will host a conference call on Wednesday,
October 30, 2013 at 2:00 p.m. PT to review its operating
results for the third 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
October 30, 2013 until 8:00 p.m. PT on November 6, 2013 at the
following numbers: domestic: (877) 660-6853, international: (201)
612-7415. The conference call passcode to access the replay is
421484. 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, San Diego,
California, Singapore and Vienna, Austria. 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 third 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
third 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)
September 30,2013
December 31,2012
ASSETS: (Note 1) Current assets: Cash and cash equivalents $
50,151 $ 25,671 Restricted cash 412 699 Available-for-sale
securities—short-term portion — 9,366 Accounts receivable, net
48,547 53,893 Inventories—short-term portion 62,665 72,691 Deferred
tax assets—short-term portion 265 359 Property and equipment,
net-held for sale 2,486 — Prepaid expenses and other current assets
10,124 10,126 Total current assets 174,650 172,805
Property and equipment, net 20,265 28,663 Inventories—long-term
portion 6,357 11,772 Goodwill 160,778 159,736 Intangible assets,
net 136,013 152,718 Deferred tax assets—long-term portion 385 3,394
Other long-term assets 12,193 15,206 Total assets $
510,641 $ 544,294
LIABILITIES AND STOCKHOLDERS'
EQUITY: Current liabilities: Accounts payable and accrued
liabilities $ 40,300 $ 50,355 Convertible notes—short-term portion
— 3,855 Term loan—short-term portion 12,750 12,713 Deferred
revenue—short-term portion 19,540 8,498 Total current
liabilities 72,590 75,421 Deferred revenue—long-term portion 3,021
3,450 Convertible notes 105,000 105,000 Term loan—long-term portion
50,963 60,563 Other long-term liabilities 21,515 22,689
Stockholders' equity: Common stock 719 710 Additional paid-in
capital 764,967 759,549 Accumulated other comprehensive income
6,956 6,302 Accumulated deficit (515,090 ) (489,390 ) Total
stockholders' equity 257,552 277,171 Total
liabilities and stockholders' equity $ 510,641 $ 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)
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2013 2012 2013 2012
REVENUE: Product sales $ 74,776 $ 72,685 $ 220,505 $ 189,681
Services and other 5,578 6,939 17,258 21,593
Total revenue 80,354 79,624 237,763
211,274
COSTS AND EXPENSES: Cost of product sales
32,600 33,979 100,621 81,907 Cost of services and other 3,915 3,959
11,128 11,057 Research and development 11,478 16,498 35,686 43,417
Selling, general and administrative 33,646 36,302 102,286 104,752
Restructuring charges (2 ) — 4,484 — Total
costs and expenses 81,637 90,738 254,205
241,133 Loss from operations (1,283 ) (11,114 ) (16,442 )
(29,859 ) Interest income and other, net 68 (3,933 ) 501 (1,631 )
Interest expense 2,652 2,993 8,274 4,191
Loss before income taxes (3,867 ) (18,040 ) (24,215 )
(35,681 ) Income tax provision (benefit) 289 (181 ) 1,485
(37,254 ) Net (loss) income $ (4,156 ) $ (17,859 ) $ (25,700
) $ 1,573 Basic net (loss) income per common share $
(0.06 ) $ (0.25 ) (0.36 ) $ 0.02 Diluted net (loss) income
per common share $ (0.06 ) $ (0.25 ) (0.36 ) $ 0.02
Shares used in computing basic net (loss) income per common share
71,600 70,403 71,227 70,181 Shares used
in computing diluted net (loss) income per common share 71,600
70,403 71,227 70,610
AFFYMETRIX, INC.
RESULTS OF OPERATIONS –
NON-GAAP
(IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
(UNAUDITED)
ITEMIZED RECONCILIATION BETWEEN GAAP
AND NON-GAAP NET INCOME (LOSS)
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2013 2012 2013 2012 GAAP
net (loss) income - basic and diluted $ (4,156 ) $ (17,859 ) $
(25,700 ) $ 1,573 Amortization of inventory fair value adjustment
2,896 4,536 11,980 4,855 Amortization of acquired intangible assets
4,536 5,016 13,691 7,919 Acquisition-related transaction costs —
326 — 6,093 Acquisition-related integration costs — 1,541 748 1,541
Share-based compensation charge related to acquisition — — — 8,265
Recovery of notes receivable — — — (2,215 ) Impairment of
held-for-sale property — 4,000 — 4,000 Income tax benefit related
to acquisition — — — (37,462 ) Restructuring charges (2 ) —
4,484 — Non-GAAP net income (loss) - basic and
diluted $ 3,274 $ (2,440 ) $ 5,203 $ (5,431 )
Non-GAAP basic net income (loss) per common share $ 0.05 $
(0.03 ) $ 0.07 $ (0.08 ) Non-GAAP diluted net income (loss)
per common share $ 0.05 $ (0.03 ) $ 0.07 $ (0.08 )
Shares used in computing Non-GAAP basic net income (loss)
per common share 71,600 70,403 71,227 70,181
Shares used in computing Non-GAAP diluted net income (loss)
per common share 71,600 70,403 71,227 70,610
ITEMIZED RECONCILIATION BETWEEN GAAP
AND NON-GAAP GROSS MARGIN
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2013 2012 2013
2012 GAAP total gross margin $ 43,839
55 % $ 41,686 52 % $ 126,014 53 % $
118,310 56 % Amortization of inventory fair value
adjustment 2,896 4 % 4,536 6 % 11,980 5 % 4,855 2 % Amortization of
acquired intangible assets 1,332 2 % 1,613 2 % 4,023
2 % 2,530 1 % Non-GAAP total gross margin $ 48,067
61 % $ 47,835 60 % $ 142,017 60 % $ 125,695
59 %
ITEMIZED RECONCILIATION BETWEEN GAAP
AND NON-GAAP OPERATING EXPENSES
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2013 2012 2013 2012 Total
GAAP operating expenses $ 45,122 $ 52,800 $ 142,456 $ 148,169
Amortization of acquired intangible assets (3,206 ) (3,403 ) (9,670
) (5,389 ) Acquisition-related transaction costs — (1,867 ) —
(7,634 ) Acquisition-related integration costs — (1,541 ) (748 )
(1,541 ) Restructuring charges 2 — (4,484 ) —
Total Non-GAAP operating expenses $ 41,918 $ 45,989 $
127,554 $ 133,605
Affymetrix, Inc.Doug Farrell, 408-731-5285Vice President of
Investor Relations
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