Affymetrix, Inc., (NASDAQ:AFFX) today reported its operating
results for the fourth quarter of 2015.
Results for the year ended December 31, 2015:
- Total revenue was $359.8 million,
compared to $349.0 million in 2014.
- Reported revenue increased 3.1%, or
6.8% on a constant currency basis.
- GAAP net income was $10.1 million, or
$0.13 per diluted share, as compared to a GAAP net loss of $3.8
million, or $0.05 per diluted share, in 2014, an increase of $13.9
million or $0.18 per diluted share.
- Non-GAAP net income was $33.7 million,
or $0.42 per diluted share, compared to a non-GAAP net income of
$22.3 million, or $0.30 per diluted share, for 2014. 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 $88.8 million, short term investments were $50.0
million and senior debt was $19.1 million as of December 31,
2015.
- On October 9, 2015, we entered into a
settlement agreement with Enzo Life Sciences, Inc. ("Enzo") and
agreed to pay $10.0 million with respect to the lawsuit filed by
Enzo in April 2012.
- On October 28, 2015, we entered into a
five-year Senior Credit Facility Agreement with Bank of America in
an aggregate amount of $100.0 million of revolving commitment. We
borrowed $20.1 million under this Senior Credit Facility and used
the proceeds to pay off all of our outstanding senior debt under
our credit agreement entered into in 2012.
Product revenue for the year ended December 31, 2015 was
$327.0 million and service and other revenue was $32.8 million.
This compares to product revenue of $310.5 million and service and
other revenue of $38.6 million in 2014. Product revenue for 2015
included consumable revenue of $311.7 million and instrument
revenue of $15.3 million. Product revenue for 2014 included
consumable revenue of $294.2 million and instrument revenue of
$16.2 million.
Total GAAP gross margin was 64%, as compared to 59% in the same
period of 2014. Excluding non-GAAP adjustments such as the
amortization of acquired intangible assets, non-GAAP gross margin
for 2015 was 65% compared to 62% in 2014. This improvement was
driven by higher sales as well as favorable manufacturing variances
in the year and continued focus on cost control. 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 year ended December 31, 2015, operating expenses
were $212.5 million on a GAAP basis as compared to $203.7 million
in 2014. Excluding non-GAAP adjustments, such as litigation costs
and the amortization of acquired intangible assets, non-GAAP
operating expenses for 2015 were $193.9 million, compared to an
adjusted total of $187.7 million in 2014. The increase was
primarily caused by higher headcount and associated compensation.
Please refer to the "Itemized Reconciliation Between GAAP and
Non-GAAP Operating Expenses" for a reconciliation of these GAAP and
non-GAAP financial measures.
Results for the three months ended December 31,
2015:
- Total revenue was $95.6 million,
compared to $93.5 million in fourth quarter of 2014.
- Reported revenue increased 2.2%, or
6.7% on a constant currency basis.
- GAAP net income was $4.1 million, or
$0.05 per diluted share, as compared to a GAAP net income of $5.2
million, or $0.05 per diluted share, in the fourth quarter of 2014,
a decrease of $1.1 million.
- Non-GAAP net income was $7.4 million,
or $0.09 per diluted share, compared to a non-GAAP net income of
$8.9 million, or $0.09 per diluted share, for the fourth quarter of
2014. Please refer to "Itemized Reconciliation Between GAAP and
Non-GAAP Net Income (Loss)" for a reconciliation of these GAAP and
non-GAAP financial measures.
Product revenue for the fourth quarter of 2015 was $87.7 million
and service and other revenue was $7.9 million. This compares to
product revenue of $82.8 million and service and other revenue of
$10.7 million in the fourth quarter of 2014. Product revenue for
the fourth quarter of 2015 included consumable revenue of $83.5
million and instrument revenue of $4.2 million. Product revenue for
the fourth quarter of 2014 included consumable revenue of $78.0
million and instrument revenue of $4.8 million.
Total GAAP gross margin was 65%, as compared to 63% in the same
period of 2014. Excluding non-GAAP adjustments such as the
amortization of acquired intangible assets, non-GAAP gross margin
for the fourth quarter of 2015 was 66% compared to 64% in the same
period of 2014. This improvement was driven by higher sales as well
as favorable manufacturing variances in the quarter. 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 fourth quarter of 2015, operating expenses were $56.9
million on a GAAP basis as compared to $52.7 million in the same
period of 2014. Excluding non-GAAP adjustments, such as the
amortization of acquired intangible assets, non-GAAP operating
expenses for the fourth quarter of 2015 were $54.8 million,
compared to an adjusted total of $50.2 million in the same period
of 2014. The increase was primarily caused by higher bonus
attainment and commissions. Please refer to the "Itemized
Reconciliation Between GAAP and Non-GAAP Operating Expenses" for a
reconciliation of these GAAP and non-GAAP financial measures.
Recent developments:
- On January 8, 2016, the Company entered
into an Agreement and Plan of Merger with Thermo Fisher, and White
Birch Merger Co, a Delaware corporation and a wholly owned
subsidiary of Thermo Fisher, providing for, subject to the
satisfaction or waiver of specified conditions, the acquisition of
the Company by Thermo Fisher at a price of $14.00 per share in
cash. Subject to the terms and conditions of the Merger Agreement,
the closing of the merger is expected to occur during the second
quarter of 2016.
- The Company entered a partnership with
United Kingdom-based Bio-Genesys Diagnostics to offer commercial
genotyping services. Under the terms of the agreement, the genetic
testing services offered by Bio-Genesys Diagnostics for cattle,
pigs, goats and sheep will be run exclusively on Affymetrix’s
technology. The partnership leverages the broad range of
reproductive and diagnostic solutions offered by Bio-Genesys
Diagnostics to professional farming operations and veterinarians
and the strong technical and customization expertise
from Affymetrix in developing custom genotyping arrays
and panels in agrigenomics.
- The introduction of several new
agrigenomic genotyping solutions at the annual Plant and
Animal Genome Conference (PAG XXIV). Following the Company’s
acquisition of Eureka Genomics in mid-2015, Affymetrix is
introducing Eureka™ Genotyping Solution for low-cost, low-plex
genotyping by sequencing (GBS). The company also introduced two new
array configurations for the Axiom® genotyping platform,
providing customers with a complete range of options for varying
sample numbers and throughput goals.
- The Company entered into a partnership
with Reveal Biosciences LLC, an advanced tissue technologies
company, under which Reveal will use Affymetrix ViewRNA®
ISH for tissue samples to provide RNA in
situ hybridization (ISH) staining, imaging, and quantification
services using the company’s proprietary image analysis software,
ImageDx™.
- The introduction of the Axiom® Turkey
Genotyping array, developed in collaboration with the United
States Department of Agriculture - Agricultural Research Service
(USDA-ARS) along with Aviagen and Hendrix
Genetics. The array will help breeders better understand the
genetics of turkeys in order to improve meat characteristics and
health. It will enable scientists and breeders to quickly evaluate
genetic markers that can be associated with improved traits such as
health outcome and fertility.
- The Company entered into a
collaboration with XRGenomics LTD, a UK-based biotechnology
company, to research and develop a new generation of diagnostic
tests for age-related diseases. Over 50% of healthcare costs are
spent on those aged 65 and older and according to the G8 Summit
2013, age-related diseases could bankrupt Western medicine by 2050.
New solutions are required to deliver efficient and effective care.
XRGenomics is using Affymetrix technology to develop
novel gene expression-based signatures that enable translational
research and biomarker test development activities in areas such as
dementia, Alzheimer’s, and other age-related diseases.
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
110,000 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
1,150 employees worldwide and maintains sales and distribution
operations across Europe, Asia and Latin America.
All statements in this press release that are not historical in
nature, are predicative in nature or that depend upon or refer to
future events or conditions are "forward-looking statements" within
the meaning of Section 21 of the Securities Exchange Act of 1934,
as amended, and the Private Securities Litigation Reform Act of
1995. These include statements regarding our strategic initiatives,
market expectations, the consummation and timing of the proposed
acquisition of us by Thermo Fisher Scientific, Inc., anticipated
product and revenue growth, financial strength and regulatory
environment, as well as all other "expectations," "beliefs,"
"hopes," "intentions," "strategies" and words of similar import and
the negatives thereof. Such statements are based on our current
expectations and are subject to a number of factors and
uncertainties that could cause actual results to differ materially
from those described in the forward-looking statements. We cannot
assure you that actual results or business conditions will not
differ materially from those projected or suggested in such
forward-looking statements as a result of various factors,
including, but not limited to, those discussed in “Risk Factors”
contained in Part I, Item 1A of our Annual Report on Form 10-K for
the year ended December 31, 2014. These forward-looking
statements speak only as of the date of the press release. Unless
required by law, we do not undertake to release publicly any
updates or revisions to any forward-looking statements contained
herein to reflect any change in our 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 income
(loss) and net income (loss) per share as well as its total gross
margin and operating expenses for the fourth quarter of 2015 and
2014 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 fourth quarter of 2015 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. Our management uses our
supplemental non-GAAP financial measures internally to understand,
manage and evaluate our business and make operating decisions.
These non-GAAP measures are among the primary factors management
uses in planning for and forecasting future periods.
PLEASE NOTE:
Affymetrix, the Affymetrix logo, Axiom, Eureka, and ViewRNA
trademarks are the property of Affymetrix, Inc.
- Financial Charts to Follow -
AFFYMETRIX, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (IN
THOUSANDS) December 31, December 31,
2015 2014 ASSETS: (Note 1) Current assets:
Cash and cash equivalents $ 88,767 $ 79,923 Short-term investments
50,000 — Accounts receivable, net 58,970 46,896
Inventories—short-term portion 54,131 50,676 Deferred tax
assets—short-term portion — 3,778 Prepaid expenses and other
current assets 7,655 9,197 Total current assets
259,523 190,470 Property and equipment, net 21,000 18,087
Inventories—long-term portion 2,207 5,956 Goodwill 154,539 156,178
Intangible assets, net 102,398 106,183 Deferred tax
assets—long-term portion 567 303 Other long-term assets 6,657
9,371 Total assets $ 546,891 $ 486,548
LIABILITIES AND STOCKHOLDERS' EQUITY: Current
liabilities: Accounts payable and accrued liabilities $ 56,037 $
53,063 Term loan—short-term portion 4,000 4,000 Deferred
revenue—short-term portion 8,605 9,210 Total current
liabilities 68,642 66,273 Deferred revenue—long-term portion 2,161
2,372 Convertible notes 105,000 105,000 Term loan—long-term portion
15,088 18,950 Other long-term liabilities 16,747 21,626
Total liabilities 207,638 214,221
Stockholders’ equity: Common stock 805 743 Additional paid-in
capital 847,266 781,747 Accumulated other comprehensive income
(9,380 ) (612 ) Accumulated deficit (499,438 ) (509,551 ) Total
stockholders’ equity 339,253 272,327 Total
liabilities and stockholders’ equity $ 546,891 $ 486,548
Note 1:
The condensed consolidated balance sheet
at December 31, 2014 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,
2014.
AFFYMETRIX, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Three
Months Ended Twelve Months Ended December 31,
December 31, 2015 2014 2015
2014 REVENUE: Product sales $ 87,707 $ 82,814
$ 327,011 $ 310,458 Services and other 7,865 10,716
32,775 38,561 Total revenue 95,572 93,530
359,786 349,019
COSTS AND EXPENSES:
Cost of product sales 29,270 28,288 110,770 117,499 Cost of
services and other 4,491 6,300 19,775 25,659 Research and
development 14,865 12,784 52,900 50,227 Selling, general and
administrative 42,038 39,866 149,638 148,411 Litigation settlement
— — 10,000 5,100 Total costs and
expenses 90,664 87,238 343,083 346,896
Income from operations 4,908 6,292 16,703 2,123 Other income
(expense), net 1,076 (50 ) 752 652 Interest expense 2,188
1,401 6,609 6,373 Income (loss) before income
taxes 3,796 4,841 10,846 (3,598 ) Income tax expense (benefit) (261
) (326 ) 733 236 Net income (loss) $ 4,057 $
5,167 $ 10,113 $ (3,834 ) Basic net income
(loss) per common share $ 0.05 $ 0.07 $ 0.13 $
(0.05 ) Diluted net income (loss) per common share $ 0.05 $
0.05 $ 0.13 $ (0.05 ) Shares used in computing
basic net income (loss) per common share 80,236 73,933
77,842 73,202 Shares used in computing diluted
net income (loss) per common share 82,490 94,585
80,707 73,202
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 Ended Twelve Months Ended
December 31, December 31, 2015
2014 2015 2014 GAAP net income (loss) -
basic and diluted $ 4,057 $ 5,167 $ 10,113 $ (3,834 ) Amortization
of inventory fair value adjustment — — — 4,666 Amortization of
acquired intangible assets 3,323 3,759 13,627 16,352 Litigation
settlement — — 10,000 5,100 Non-GAAP
net income - basic and diluted $ 7,380 $ 8,926 $
33,740 $ 22,284 Non-GAAP basic net income per
common share $ 0.09 $ 0.12 $ 0.43 $ 0.30
Non-GAAP diluted net income per common share $ 0.09 $
0.09 $ 0.42 $ 0.30 Shares used in
computing Non-GAAP basic net income per common share 80,236
73,933 77,842 73,202 Shares used in computing
Non-GAAP diluted net income per common share (Note 1) 82,490
94,585 80,707 73,202 Note 1:
Weighted average shares outstanding includes the dilutive effect,
if any, of employee stock options, employee stock purchase plan,
and restricted stock awards.
ITEMIZED RECONCILIATION BETWEEN GAAP
AND NON-GAAP GROSS MARGIN
Three Months Ended December 31, Twelve Months
Ended December 31, 2015 2014 2015
2014 GAAP total gross margin $ 61,811
65 % $ 58,942 63 % $ 229,241 64 % $
205,861 59 % Amortization of inventory fair value
adjustment — — % — — % — — % 4,666 1 % Amortization of acquired
intangible assets 1,226 1 % 1,316 1 % 4,994 1
% 5,389 2 % Non-GAAP total gross margin $ 63,037 66 %
$ 60,258 64 % $ 234,235 65 % $ 215,916 62 %
ITEMIZED RECONCILIATION BETWEEN GAAP
AND NON-GAAP OPERATING EXPENSES
Three Months Ended Twelve Months Ended
December 31, December 31, 2015
2014 2015 2014 Total GAAP operating
expenses $ 56,903 $ 52,650 $ 212,538 $ 203,738 Amortization of
acquired intangible assets (2,097 ) (2,443 ) (8,633 ) (10,963 )
Litigation settlement — — (10,000 ) (5,100 ) Total
Non-GAAP operating expenses $ 54,806 $ 50,207 $
193,905 $ 187,675
ITEMIZED RECONCILIATION BETWEEN GAAP
AND NON-GAAP ADJUSTED EBITDA AS
PERCENTAGE OF REVENUE
Three Months Ended Twelve Months Ended
December 31, December 31, 2015
2014 2015 2014 GAAP net income (loss) $
4,057 $ 5,167 $ 10,113 $ (3,834 ) Depreciation and amortization
5,768 6,932 21,971 30,776 Amortization of inventory fair value
adjustment — — — 4,666 Interest expense, net 2,197 1,397 6,596
6,315 Income tax provision (261 ) (327 ) 733 236
EBITDA 11,761 13,169 39,413 38,159 Adjustments to EBITDA:
Share-based compensation 4,042 2,975 14,985 12,411 Loss on foreign
currency 135 651 1,047 2,458 Litigation charges 246 757 11,525
9,917 Gain on sales of securities (1,330 ) (742 ) (1,383 ) (2,426 )
Other adjustments 111 146 (403 ) (624 ) Adjusted
EBITDA $ 14,965 $ 16,956 $ 65,184 $ 59,895
Revenue $ 95,572 $ 93,530
$ 359,786 $ 349,019 Adjusted EBITDA as
percentage of revenue 16 % 18 % 18 % 17 %
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version on businesswire.com: http://www.businesswire.com/news/home/20160217006300/en/
Affymetrix, Inc.Doug Farrell, 408-731-5285Vice President of
Investor Relations
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