GenMark Diagnostics Reports Fourth Quarter and Full Year 2017 Results

February 27, 2018

CARLSBAD, Calif., Feb. 27, 2018 (GLOBE NEWSWIRE) -- GenMark Diagnostics, Inc. (Nasdaq:GNMK), a leading provider of automated, multiplex molecular diagnostic testing systems, today announced financial results for the fourth quarter and full year ended December 31, 2017.

Highlights

  • Revenues for the fourth quarter of 2017 were $16.0 million, an increase of 8% over the prior year period
  • Revenues for the full year 2017 were $52.5 million, representing an increase of 7% over 2016
  • Placed 49 ePlex® analyzers in the fourth quarter of 2017
  • Exited the year with an installed base of 196 ePlex analyzers in U.S. and European labs
  • XT-8 installed base remained relatively stable at 620 analyzers in U.S. labs

“In 2017, we achieved several significant product launches that are fundamental to the continued growth and success of our business.  We launched our FDA cleared ePlex system and Respiratory Pathogen Panel in the U.S. ahead of the current severe flu season, and we introduced our ePlex family of CE Marked BCID sepsis panels in Europe.  We’re also very pleased with the recent launch of our ePlex NP system, which we designed to address lower test-volume sites and decentralized near patient settings,” said Hany Massarany, President and Chief Executive Officer.  “Looking ahead, we are excited about the opportunity we have in 2018 and beyond, to drive ePlex commercialization with an expanded menu of test panels and a rapidly growing number of customers utilizing ePlex for routine clinical testing,” concluded Massarany.

Fourth Quarter Financial Results
Revenue was $16.0 million in the fourth quarter of 2017, an increase of 8% versus $14.9 million in the fourth quarter of 2016.  Gross profit was $4.7 million, or 30% of revenue, compared with $8.6 million, or 58% of revenue in the same period of 2016, reflecting the increased proportion of ePlex revenues in the quarter.

Annuity per XT-8 analyzer was approximately $65,000 over the last 4 quarters. Annuity per ePlex analyzer was approximately $120,000 in the fourth quarter.

Operating expenses for the fourth quarter of 2017 were $18.7 million compared to $20.7 million in the same period for 2016.  The decrease was largely due to reduced ePlex development expenses.

Loss per share was $0.26 per share for the fourth quarter of 2017, compared to a $0.27 loss per share in the fourth quarter of 2016.

The Company ended the quarter with $72.0 million in cash and investments, reflecting the impact of increasing inventory levels in advance of the flu season.

Guidance for Full Year 2018
GenMark projects revenue for the full year 2018 to range from $68 to $72 million. Gross margin is expected to be in the mid 30% range and operating expenses in the mid-$60 million range. The Company expects ePlex placements of 140-170 analyzers, and an annuity per ePlex placement in the range of $100,000 to $120,000.

Webcast and Conference Call Information
The Company will be hosting a conference call to discuss fourth quarter results in further detail on Tuesday, February 27, 2018 starting at 4:30 p.m. ET. The conference call will be concurrently webcast. The link to the webcast will be available on the GenMark Diagnostics, Inc. website at www.genmarkdx.com 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 3489404 approximately five minutes prior to the start time.

About GenMark Diagnostics
GenMark Diagnostics (NASDAQ:GNMK) is a leading provider of multiplex molecular diagnostic solutions designed to enhance patient care, improve key quality metrics, and reduce the total cost-of-care. Utilizing GenMark's proprietary eSensor® detection technology, GenMark's eSensor XT-8® and ePlex® systems are designed to support a broad range of molecular diagnostic tests with compact, easy-to-use workstations and self-contained, disposable test cartridges. GenMark’s ePlex: The True Sample-to-Answer Solution™ is designed to optimize laboratory efficiency and address a broad range of infectious disease testing needs, including respiratory, bloodstream, and gastrointestinal infections.  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 future financial performance, regulatory submissions and approvals, and the timely and effective commercialization and clinical impact of our ePlex system, 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 commercialize our ePlex system and its related test menu in a timely manner, 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.

Investor Relations Contact                                                             
Lynn Pieper Lewis or Leigh Salvo                                  
(415) 937-5404   
ir@genmarkdx.com 

GENMARK DIAGNOSTICS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)

   
  As of December 31,
  2017   2016
ASSETS:
Current Assets:      
Cash and cash equivalents $ 26,754     $ 15,959  
Short-term marketable securities 45,236     25,607  
Accounts receivable, net of allowances of $2,754 and $2,740, respectively 10,676     9,048  
Inventories 10,949     6,633  
Prepaid expenses and other current assets 1,792     1,202  
Total current assets 95,407     58,449  
       
Property and equipment, net 22,581     18,268  
Intangible assets, net 2,624     2,670  
Restricted cash 758     758  
Other long-term assets 192     179  
Total assets $ 121,562     $ 80,324  
       
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:      
Accounts payable $ 11,171     $ 8,703  
Accrued compensation 5,419     5,650  
Current portion of long-term debt 7,927     7,935  
Other current liabilities 3,226     4,133  
Total current liabilities 27,743     26,421  
       
Deferred rent 3,059     3,652  
Long-term debt 20,099     11,880  
Other noncurrent liabilities 241     220  
Total liabilities 51,142     42,173  
       
Stockholders' equity      
Preferred stock, $0.0001 par value; 5,000 authorized, none issued      
Common stock, $0.0001 par value; 100,000 authorized; 55,066 and 46,554 shares issued and outstanding, respectively 6     4  
Additional paid-in capital 487,525     393,322  
Accumulated deficit (417,120 )   (355,270 )
Accumulated other comprehensive income 9     95  
Total stockholders’ equity 70,420     38,151  
Total liabilities and stockholders’ equity $ 121,562     $ 80,324  
               


GENMARK DIAGNOSTICS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands, except per share data)

       
  Three Months Ended December 31,   Twelve Months Ended December 31,
  2017   2016   2017   2016
  (unaudited)   (unaudited)        
Revenue              
Product revenue $ 15,947     $ 14,803     $ 52,260     $ 48,914  
License and other revenue 75     82     259     360  
Total revenue 16,022     14,885     52,519     49,274  
Cost of revenue 11,287     6,243     32,514     19,700  
Gross profit 4,735     8,642     20,005     29,574  
Operating expenses:              
Sales and marketing 5,584     4,501     20,557     14,734  
General and administrative 4,651     3,841     16,205     14,363  
Research and development 8,463     12,358     42,760     49,458  
Total operating expenses 18,698     20,700     79,522     78,555  
Loss from operations (13,963 )   (12,058 )   (59,517 )   (48,981 )
Other income (expense):              
Interest income 208     77     561     176  
Interest expense (771 )   (474 )   (3,042 )   (1,536 )
Other income (expense) 22     (168 )   249     (160 )
Total other income (expense) (541 )   (565 )   (2,232 )   (1,520 )
Loss before provision for income taxes (14,504 )   (12,623 )   (61,749 )   (50,501 )
Income tax expense 32     55     101     100  
Net loss $ (14,536 )   $ (12,678 )   $ (61,850 )   $ (50,601 )
Net loss per share, basic and diluted $ (0.26 )   $ (0.27 )   $ (1.21 )   $ (1.15 )
Weighted average number of shares outstanding basic and diluted 54,910     46,458     51,169     44,100  
               
Other comprehensive loss              
Net loss $ (14,536 )   $ (12,678 )   $ (61,850 )   $ (50,601 )
Other comprehensive income/(loss):              
Foreign currency translation adjustments, net of tax (229 )   86     (84 )   77  
Net unrealized losses on marketable securities, net of tax 22     (13 )   (2 )   (11 )
Total other comprehensive income/(loss) (207 )   73     (86 )   66  
Total comprehensive loss $ (14,743 )   $ (12,605 )   $ (61,936 )   $ (50,535 )
                               


GENMARK DIAGNOSTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

   
  Years ended December 31,
  2017   2016   2015
Operating activities:          
Net loss $ (61,850 )   $ (50,601 )   $ (42,197 )
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation and amortization 5,317     3,916     3,405  
Net amortization/(accretion) of premiums/discounts on investments (39 )   89     180  
Gain on sale of investment in preferred stock     (9 )   (223 )
Amortization of deferred debt issuance costs 1,132     388     285  
Stock-based compensation 12,170     9,236     9,995  
Provision for bad debt 14     13     25  
Non-cash inventory adjustments 1,323     134     594  
Other non-cash adjustments (224 )   145     186  
Changes in operating assets and liabilities:          
Accounts receivable (1,555 )   (2,250 )   (1,983 )
Inventories (10,512 )   (3,450 )   (1,286 )
Prepaid expenses and other assets (599 )   (613 )   (36 )
Accounts payable 2,557     4,105     (757 )
Accrued compensation (263 )   2,172     (458 )
Other current and non-current liabilities (893 )   1,088     355  
    Net cash used in operating activities (53,422 )   (35,637 )   (31,915 )
Investing activities:          
Payments for intellectual property licenses (500 )   (1,500 )   (550 )
Purchases of property and equipment (4,815 )   (7,000 )   (3,756 )
Purchases of marketable securities (70,989 )   (33,688 )   (22,646 )
Proceeds from sales of marketable securities 13,896     8,015     223  
Maturities of marketable securities 37,500     10,050     46,050  
   Net cash provided by (used in) investing activities (24,908 )   (24,123 )   19,321  
Financing activities:          
Proceeds from issuance of common stock 87,267     30,920     884  
Costs incurred in conjunction with public offering (5,469 )   (1,143 )    
Principal repayment of borrowings (7,848 )   (40 )   (22 )
Proceeds from borrowings 15,000     10,000     10,000  
Costs associated with debt issuance (187 )   (90 )   (718 )
Proceeds from stock option exercises 287     712     989  
   Net cash provided by financing activities 89,050     40,359     11,133  
Effect of exchange rate changes on cash 75     (25 )   (9 )
Net increase (decrease) in cash and cash equivalents 10,795     (19,426 )   (1,470 )
Cash and cash equivalents at beginning of year 15,959     35,385     36,855  
Cash and cash equivalents at end of year $ 26,754     $ 15,959     $ 35,385  
Non-cash investing and financing activities:          
Transfer of systems from property and equipment into inventory $ 4,885     $ 263     $ 225  
Property and equipment costs incurred but not paid included in accounts payable $ 227     $ 1,159     $ 146  
Intellectual property acquisition included in accrued expenses $     $     $ 800  
Supplemental cash flow information:          
Cash paid for interest $ 1,643     $ 1,130     $ 572  
Cash paid for income taxes, net $ 61     $ 65     $ 10  
                       

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Source: GenMark Diagnostics, Inc.