GenMark Diagnostics Reports Second Quarter 2013 Results

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GenMark Diagnostics Reports Second Quarter 2013 Results

Revenue grows by 44%, Installed Base increases by 45 analyzers, Gross Margin of 39%

CARLSBAD, Calif.--(BUSINESS WIRE)-- GenMark Diagnostics, Inc. (Nasdaq: GNMK), a leading provider of automated, multiplex molecular diagnostic testing systems, today reported financial results for the second quarter ended June 30, 2013.


Revenues for the quarter ended June 30, 2013 were $5.2 million compared with $3.6 million during the second quarter of 2012. The 44% year-over-year increase in total revenue reflects an increase in the number of systems placed at customer sites, growth in test menus and an increase in the number of tests sold. Reagent revenues for the second quarter grew 33% year-over-year to $4.6 million from $3.5 million. Instrument and other revenues increased by 313% year-over-year to $583,000 from $141,000 due mainly to sales of instruments.

The Company placed a net 45 analyzers during the quarter, bringing the total installed base to 384, all in end-user laboratories within the U.S. market.

Gross profit for the quarter ended June 30, 2013 was $2.0 million, or 39% of revenue, compared with a gross profit of $1.4 million, or 40% of revenue for the same period in 2012.

Operating expenses increased $3.1 million to $10.1 million during the second quarter of 2013 compared with the second quarter of 2012. Selling, General and Administrative expenses increased $1.1 million year-over-year mainly due to increases in sales headcount and certain marketing commitments. Research and Development expenses increased $2.0 million due to an expansion of our R&D team and our continued commitment to develop our NexGen platform and its assay menu.

Loss per share was $0.25 for the second quarter of 2013, compared with a loss per share of $0.26 in the second quarter of 2012.

"Excluding our largest pharmacogenetics customer, we grew our reagents business by 128% and increased our annuity per analyzer by 41% compared with the second quarter of 2012. In addition, strong performance by our sales team saw our installed base of analyzers increase by 45 in the quarter," stated GenMark's President & CEO Hany Massarany. "Furthermore, our NexGen development efforts remain on schedule with assay integration expected to be completed in the third quarter of this year. Our initial menu will target infectious disease testing and includes RVP, Sepsis, Gastrointestinal Infection panel and HCV genotyping. These multiplex assays are being designed to deliver broad pathogen coverage with higher sensitivity, specificity, and overall clinical performance compared to culture and competitive molecular systems. We remain confident that we will bring to market the most competitively differentiated sample-to-answer system and we're on track to complete its development in the second quarter of 2014," added Massarany.

The Company ended the second quarter of 2013 with $36.5 million in cash and investments. The Company intends to continue utilizing its cash balances to invest in new product and menu development, mainly the development of its NexGen platform and related test menu, and for infrastructure improvements and general corporate purposes.

YEAR-TO-DATE 2013

Revenue for the first six months of 2013 was $16.3 million, compared to $5.8 million for the prior year period, an increase of 183%. Reagent revenue for the first six months of 2013 was $15.4 million, compared to $5.4 million for the prior year period, and instrument and other revenue for the first six months of 2013 was $878,000 compared to $381,000 for the prior year period.

Net loss for the first six months of 2013 was $12.2 million, or $0.38 loss per share, compared to net loss of $11.2 million, or $0.54 loss per share, for the prior year period.

INVESTOR CONFERENCE CALL

GenMark will hold a conference call to discuss second quarter 2013 results and the outlook for 2013 at 4:30PM 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 26104659 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 our expected 2013 financial performance and the timely completion of our research and development projects, 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, third-party payor reimbursement to our customers, the loss of a significant customer, risks related to our history of operating losses, the need for further financing and our ability to access the necessary additional capital for our business, 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)
  
As ofAs of
June 30, 2013December 31, 2012
Current assets
Cash and cash equivalents$18,836$51,250
Investments16,826-
Restricted cash8431,343
Accounts receivable - net of allowance of $318 and $304,4263,190
Inventories3,4251,993
Other current assets 772  226 
 
Total current assets45,12858,002
Property and equipment, net8,0517,074
Intangible assets, net2,5901,832
Other long-term assets 1,104  1,108 
 
Total assets$56,873 $68,016 
 
Current liabilities
Accounts payable$2,063$2,445
Accrued compensation2,2683,076
Current portion of loan payable251638
Other current liabilities 3,120  3,015 
 
Total current liabilities7,7029,174
Long-term liabilities
Loan payable, net of current portion5463
Other noncurrent liabilities 2,281  2,329 
 
Total liabilities 10,037  11,566 
 
Stockholders' equity
Common stock, $0.0001 par value; 100,000 authorized; 32,722 and 32,753 shares issued33
and outstanding as of June 30, 2013 and December 31, 2012, respectively
Preferred stock, $0.0001 par value; 5,000 authorized, none issued--
Additional paid-in capital250,039247,449
Accumulated deficit(202,761)(190,566)
Accumulated other comprehensive loss (445) (436)
 
Total stockholders' equity 46,836  56,450 
 
Total liabilities and stockholders' equity$56,873 $68,016 
 
 
GENMARK DIAGNOSTICS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands, except per share data)
    
Three Months EndedSix Months Ended
June 30,June 30,
 2013  2012  2013  2012 
Revenue
Product revenue$5,138$3,562$16,106$5,682
License and other revenue 77  50  210  89 
Total revenue5,2153,61216,3165,771
Cost of sales 3,201  2,165  8,235  3,853 
Gross profit2,0141,4478,0811,918
Operating expenses
Sales and marketing2,5561,3604,9152,779
General and administrative2,5392,6485,0965,233
Research and development 5,006  3,020  10,388  4,969 
Total operating expenses 10,101  7,028  20,399  12,981 
Loss from operations (8,087) (5,581) (12,318) (11,063)
Other income (expense)
Interest income136621143
Interest expense(7)(25)(14)(82)
Other income (expense) (60) 10  (65) (14)
Total other income (expense) 69  (9) 132  (53)
Loss before income taxes(8,018)(5,590)(12,186)(11,116)
Provision for income taxes (1) (10) (8) (41)
Net loss$(8,019)$(5,600)$(12,194)$(11,157)
Net loss per share, basic and diluted$(0.25)$(0.26)$(0.38)$(0.54)
Weighted average number of shares outstanding 31,891  21,163  31,920  20,623 
Other comprehensive loss
Net loss$(8,019)$(5,600)$(12,194)$(11,157)
Net unrealized loss on available-for-sale investments (5)   (9)  
Comprehensive loss$(8,024)$(5,600)$(12,203)$(11,157)
 
 
GenMark Diagnostics, Inc.
Unaudited Condensed Consolidated Statements of Cash flows
(In thousands)
 
 Six Months Ended June 30,
 2013   2012 
Operating activities:
Net loss$(12,194)$(11,157)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization1,036576
Amortization of premiums on investments63-
Share-based compensation1,6571,033
Provision for bad debt309(18)
Non-cash inventory adjustments546(740)
Changes in operating assets and liabilities:
Accounts receivable(1,545)(170)
Inventories(1,752)1,139
Other current assets(485)108
Accounts payable(310)369
Accrued compensation(155)277
Other liabilities (498) (162)
Net cash used in operating activities (13,328) (8,745)
Investing activities
Restricted cash500-
Purchase of available-for-sale securities(20,206)-
Payments for intellectual property licenses(345)(739)
Purchases of property and equipment(2,168)(1,529)
Proceeds from sales of marketable securities3,250-
Maturity of short-term investment -  5,000 
Net cash (used in) provided by investing activities (18,969) 2,732 
Financing activities
Proceeds from iss
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