Base Business Grows Year-Over-Year by 71%,
Gross Margin Increases to 51%
Installed Base Grows by 31 to 475 Analyzers,
Annuity per Analyzer Increases to $56,000
2014 Revenue Guidance Raised to
Approximately $28.0 Million
GenMark Diagnostics, Inc. (Nasdaq:GNMK), a leading
provider of automated, multiplex molecular diagnostic testing
systems, today reported financial results for the quarter ended
June 30, 2014.
As previously released on July 28th, revenues for the quarter
ended June 30, 2014 were $6.6 million compared with $5.2
million during the second quarter of 2013. Revenue during the
current quarter from the Company’s base business, which excludes
revenue attributable to former customer NMTC, increased by 71% over
the prior year period. Consumable revenue for the second quarter
2014 increased 35% to $6.2 million compared with $4.6 million in
the quarter ended June 30, 2013 and increased by 92% over the prior
year’s base business. As disclosed in its July release, the Company
placed 31 net new analyzers during the current quarter to bring its
total installed base to 475, all in end-user laboratories within
the U.S. market.
“Continued strong demand for our proprietary eSensor® detection
technology drove robust revenue growth in the quarter. We are
pleased with this clear market endorsement of our eSensor®
technology, which is also fundamental to our ePlex™ sample to
answer system. During the second quarter, we completed development
of the ePlex™ instrument, and also progressed the associated
consumable and several assay panels to the final stages of
development. As we stated previously, we expect to complete
development of our ePlex™ system by the end of this year,” stated
GenMark’s President & CEO, Hany Massarany.
Gross profit for the quarter ended June 30, 2014 was $3.4
million, or 51% of revenue, compared with a gross profit of $2.0
million, or 39% of revenue for the second quarter of 2013.
Operating expenses increased $4.5 million to $14.6 million
during the second quarter of 2014 compared with the second quarter
of 2013. Research and Development expenses increased $3.1 million
due to the Company’s ePlex™ instrument and assay development
activities. Sales and Marketing expenses increased $0.8 million
mainly due to continued expansion of the Company’s global
commercial sales force ahead of the launch of ePlex™. General and
Administrative expenses increased $0.6 million primarily due to
personnel costs.
Loss per share was $0.27 for the second quarter of 2014,
compared with a loss per share of $0.25 in the second quarter of
2013.
The Company ended the second quarter of 2014 with $89.4 million
in cash and investments. The Company intends to continue utilizing
its cash balances to invest in the development of its ePlex™ system
and for infrastructure improvements and general corporate
purposes.
The Company also increased its full year 2014 guidance. Total
year revenue and gross margin are expected to be approximately
$28.0 million and approximately 50%, respectively.
INVESTOR CONFERENCE CALL
GenMark will hold a conference call to discuss second quarter
2014 results at 4:30 PM EDT today. The conference call and webcast
can be accessed live through the Company’s website under the
Investor Relations section and will be archived for future
reference. To listen to the conference call, please dial
877-312-5847 (US/Canada) or 253-237-1154 (International) and use
the conference ID number 72247869 approximately five minutes prior
to the start time.
ABOUT GENMARK DIAGNOSTICS
GenMark Diagnostics is a leading provider of automated,
multiplex molecular diagnostic testing systems that detect and
measure DNA and RNA targets to diagnose disease and optimize
patient treatment. Utilizing GenMark’s proprietary eSensor®
detection technology, GenMark’s eSensor® XT-8 system is designed to
support a broad range of molecular diagnostic tests with a compact,
easy-to-use workstation and self-contained, disposable test
cartridges. GenMark currently markets four tests that are FDA
cleared for IVD use: Cystic Fibrosis Genotyping Test, Respiratory
Viral Panel, Thrombophilia Risk Test, and Warfarin Sensitivity
Test. A number of other tests, including HCV Genotyping, 2C19
Genotyping, and 3A4/3A5 Genotyping are available for research use
only. For more information, visit www.genmarkdx.com.
SAFE HARBOR STATEMENT
This press release includes forward-looking statements regarding
events, trends and business prospects, which may affect our future
operating results and financial position. Such statements,
including, but not limited to, those regarding the timely
completion of our ePlex™ system and related assay development
projects and our expected 2014 financial results, are all subject
to risks and uncertainties that could cause our actual results and
financial position to differ materially. Some of these risks and
uncertainties include, but are not limited to, our ability to
successfully develop and commercialize our ePlex™ system and its
related test menu, constraints or inefficiencies caused by
unanticipated acceleration and deceleration of customer demand, our
ability to successfully expand sales of our product offerings
outside the United States, and third-party payor reimbursement to
our customers, as well as other risks and uncertainties described
under the “Risk Factors” in our public filings with the Securities
and Exchange Commission. We assume no responsibility to update or
revise any forward-looking statements to reflect events, trends or
circumstances after the date they are made.
GENMARK DIAGNOSTICS, INC. UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS (In thousands, except par
value) June
30, December 31, 2014 2013 Current
assets Cash and cash equivalents $ 26,832 $ 35,723 Marketable
securities 62,570 69,866 Accounts receivable - net of allowances of
$2,736 and $2,736, respectively 2,128 2,859 Inventories 1,151 2,102
Prepaid expenses and other current assets 1,146
552
Total current assets 93,827 111,102
Property and equipment, net 9,947 8,591 Intangible assets, net
1,998 1,197 Restricted cash 758 $ 758 Other long-term assets
106 106
Total assets $ 106,636 $
121,754
Current liabilities Accounts payable $ 3,272
$ 3,863 Accrued compensation 4,750 3,375 Other current liabilities
3,673 2,999
Total current
liabilities 11,695 10,237
Long-term liabilities Deferred
rent 1,531 1,601 Other non-current liabilities 742
748
Total liabilities 13,968
12,586
Stockholders’ equity Preferred stock,
$0.0001 par value; 5,000 authorized, none issued — — Common stock,
$0.0001 par value; 100,000 authorized; 41,752 and 41,520 shares
issued and outstanding as of June 30, 2014 and December 31, 2013,
respectively 4 4 Additional paid-in capital 336,865 333,363
Accumulated deficit (244,202 ) (224,209 ) Accumulated other
comprehensive income 1 10 Total
stockholders’ equity 92,668 109,168
Total liabilities and stockholders’ equity $ 106,636 $
121,754
GENMARK DIAGNOSTICS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
LOSS (In thousands, except per share data)
Three Months Ended Six
Months Ended June 30, June 30, 2014
2013 2014
2013 Revenue Product revenue 6,494 5,138 14,360
16,106 License and other revenue 61 77
108 210
Total revenue 6,555
5,215 14,468 16,316 Cost of revenue 3,189
3,201 6,899 8,235
Gross
profit 3,366 2,014 7,569 8,081
Operating expenses Sales
and marketing 3,379 2,556 6,357 4,915 General and administrative
3,129 2,539 5,943 5,096 Research and development 8,123
5,006 15,393 10,388
Total operating expenses 14,631
10,101 27,693 20,399
Loss
from operations (11,265 ) (8,087 ) (20,124
) (12,318 )
Other income (expense) Interest income
271 136 555 211 Interest expense (2 ) (7 ) (4 ) (14 ) Other income
(expense) (195 ) (60 ) (394 )
(65 )
Total other income (expense) 74
69 157 132
Loss before income
taxes (11,191 ) (8,018 ) (19,967 ) (12,186 ) Provision for
income taxes 19 1 26
8
Net loss $ (11,210 ) $ (8,019 ) $ (19,993 )
$ (12,194 ) Net loss per share, basic and diluted $ (0.27 ) $ (0.25
) $ (0.49 ) $ (0.38 ) Weighted average number of shares
outstanding, basic and diluted 41,293 31,891
41,186 31,920
Other
comprehensive loss Net loss $ (11,210 ) $ (8,019 ) $ (19,993 )
$ (12,194 ) Net unrealized gains (losses) on marketable securities,
net of tax 26 (5 ) 9 (9 )
Comprehensive loss $ (11,184 ) $ (8,024 ) $ (19,984 ) $
(12,203 )
GENMARK DIAGNOSTICS, INC. UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In
thousands) Six Months Ended June
30, 2014 2013 Operating
activities Net loss $ (19,993 ) $ (12,194 ) Adjustments to
reconcile net loss to net cash used in operating activities:
Depreciation and amortization 1,167 1,036 Amortization of premiums
on marketable securities 394 63 Stock-based compensation 2,949
1,657 Provision for bad debt — 309 Non-cash inventory adjustments
457 546 Changes in operating assets and liabilities: Accounts
receivable 731 (1,545 ) Inventories 608 (1,752 ) Prepaid expenses
and other current assets (447 ) (485 ) Accounts payable (501 ) (310
) Accrued compensation 1,375 (155 ) Other liabilities (259 )
(498 ) Net cash used in operating activities (13,519 )
(13,328 )
Investing activities Change in restricted cash —
500 Payments for intellectual property licenses — (345 ) Purchases
of property and equipment (2,626 ) (2,168 ) Purchases of marketable
securities (28,200 ) (20,206 ) Proceeds from sales of marketable
securities 7,497 3,250 Maturities of marketable securities
27,450 — Net cash provided by (used in)
investing activities 4,121 (18,969 )
Financing activities
Proceeds from issuance of common stock 373 — Principal repayment of
borrowings (46 ) (561 ) Proceeds from borrowings — 166 Proceeds
from stock option exercises 180 278 Net
cash provided by (used in) financing activities 507
(117 )
Net decrease in cash and cash equivalents
(8,891 ) (32,414 ) Cash and cash equivalents at beginning of period
35,723 51,250 Cash and cash equivalents
at end of period $ 26,832 $ 18,836
Non-cash
investing and financing activities Transfer of XT-8 instruments
from property and equipment to inventory $ 113 $ 226 Property and
equipment costs included in accounts payable $ 513 $ 520
Intellectual property acquisitions included in other noncurrent
liabilities $ 900 $ 556
Supplemental cash flow disclosures
Cash paid for income taxes, net $ 26 $ 6 Cash received for interest
$ 555 $ 211 Cash paid for interest $ 4 $ 14
GenMark Diagnostics, Inc.Hany Massarany,
760-448-4358President/Chief Executive Officer
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