GenMark Diagnostics Reports Third Quarter 2018 Results

October 29, 2018

CARLSBAD, Calif., Oct. 29, 2018 (GLOBE NEWSWIRE) -- GenMark Diagnostics, Inc. (Nasdaq: GNMK), a leading provider of automated, multiplex molecular diagnostic testing systems, today announced financial results for the third quarter ended September 30, 2018.

Highlights

  • Recognized revenues of $15.8 million, an increase of 36% over the prior year period
  • Placed 45 net new ePlex analyzers, expanding the global installed base to 312 placements
  • Submitted two additional ePlex Blood Culture Identification (BCID) Panels to the U.S. Food and Drug Administration (FDA): Gram-Negative (BCID-GN) Panel and Fungal Pathogen (BCID-FP) Panel

“Q3 was another quarter of solid performance across several important areas of our business.  Our sales force delivered strong revenues and expanded our installed base of ePlex analyzers, while our operations team continued to enhance manufacturing and cost efficiencies,” said Hany Massarany, President and Chief Executive Officer. “We are especially pleased to have now completed all three submissions of our blood culture identification panels to the FDA.  We are confident in the significant opportunity for these panels and currently preparing the market, as well as our organization, for a successful launch in the US.”

Third Quarter Financial Results
Revenue was $15.8 million in the third quarter of 2018, an increase of 36% versus $11.6 million in the third quarter of 2017.  Gross profit was $5.6 million, or 36% of revenue, compared with $4.2 million, or 36% of revenue in the same period of 2017.

Operating expenses for the third quarter of 2018 were $16.2 million compared to $18.9 million in the same period of 2017.  The decrease was largely due to reduced ePlex development expenses.

Loss per share was $0.20 for the third quarter of 2018, compared to a $0.28 loss per share in the third quarter of 2017.

The Company ended the quarter with $42.7 million in cash and investments.

Guidance for Full Year 2018
GenMark is reconfirming 2018 revenue guidance of $68 to $72 million. Gross margin is now expected to be in the 28-30% range.  The range of expected ePlex placements has been narrowed to 150-160 net new analyzers, and the annuity per ePlex placement remains the same in the $100,000 to $120,000 range.

Webcast and Conference Call Information
GenMark will be hosting a conference call to discuss third quarter results in further detail on Monday, October 29, 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 3389197 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.
 
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
 
(In thousands, except par value)
 
  September 30,
 2018
  December 31,
 2017
ASSETS:
Current Assets:      
Cash and cash equivalents $ 25,005     $ 26,754  
Short-term marketable securities 17,657     45,236  
Accounts receivable, net of allowances of $75 and $2,754, respectively 9,858     10,676  
Inventories 11,254     10,949  
Prepaid expenses and other current assets 1,894     2,216  
Total current assets 65,668     95,831  
       
Property and equipment, net 21,873     22,581  
Intangible assets, net 2,170     2,624  
Restricted cash 758     758  
Other long-term assets 562     505  
Total assets $ 91,031     $ 122,299  
       
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:      
Accounts payable $ 8,242     $ 11,171  
Accrued compensation 6,987     5,419  
Current portion of long-term debt     7,927  
Other current liabilities 2,302     3,226  
Total current liabilities 17,531     27,743  
       
Deferred rent 2,952     3,059  
Long-term debt 28,730     20,099  
Other noncurrent liabilities 112     241  
Total liabilities 49,325     51,142  
       
Stockholders' equity:      
Preferred stock, $0.0001 par value; 5,000 authorized, none issued      
Common stock, $0.0001 par value; 100,000 authorized; 55,955 and 55,066 shares issued and outstanding, respectively 6     6  
Additional paid-in capital 497,018     487,525  
Accumulated deficit (455,322 )   (416,383 )
Accumulated other comprehensive income 4     9  
Total stockholders’ equity 41,706     71,157  
Total liabilities and stockholders’ equity $ 91,031     $ 122,299  
               



 
GENMARK DIAGNOSTICS, INC.
 
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
 
(In thousands, except per share data)
 
  Three Months Ended   Nine Months Ended
  September 30,   September 30,
  2018   2017   2018   2017
Revenue:              
Product revenue $ 15,713     $ 11,552     $ 51,156     $ 36,313  
License and other revenue 82     51     225     184  
Total revenue 15,795     11,603     51,381     36,497  
Cost of revenue 10,165     7,400     37,172     21,227  
Gross profit 5,630     4,203     14,209     15,270  
Operating expenses:              
Sales and marketing 5,375     5,121     15,964     14,974  
General and administrative 4,718     3,565     13,398     11,553  
Research and development 6,105     10,248     22,007     34,297  
Total operating expenses 16,198     18,934     51,369     60,824  
Loss from operations (10,568 )   (14,731 )   (37,160 )   (45,554 )
Other income (expense):              
Interest income 188     247     577     353  
Interest expense (661 )   (1,009 )   (2,246 )   (2,270 )
Other income (expense) 53     76     (49 )   227  
Total other income (expense) (420 )   (686 )   (1,718 )   (1,690 )
Loss before provision for income taxes (10,988 )   (15,417 )   (38,878 )   (47,244 )
Income tax expense (benefit) 5     (9 )   59     68  
Net loss $ (10,993 )   $ (15,408 )   $ (38,937 )   $ (47,312 )
Net loss per share, basic and diluted $ (0.20 )   $ (0.28 )   $ (0.70 )   $ (0.95 )
Weighted average number of shares outstanding, basic and diluted 55,847     54,726     55,535     49,908  
               
Other comprehensive loss:              
Net loss $ (10,993 )   $ (15,408 )   $ (38,937 )   $ (47,312 )
Other comprehensive income/(loss):              
Foreign currency translation adjustments, net of tax 49     51     29     145  
Net unrealized gains (losses) on marketable securities, net of tax 4     (9 )   26     (24 )
Total other comprehensive income/(loss) 53     42     55     121  
Total comprehensive loss $ (10,940 )   $ (15,366 )   $ (38,882 )   $ (47,191 )
                               



 
GENMARK DIAGNOSTICS, INC.
 
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(In thousands)
 
  Nine Months Ended
 September 30,
  2018   2017
Operating activities:      
Net loss $ (38,937 )   $ (47,312 )
Adjustments to reconcile net loss to net cash used in operating activities:      
Depreciation and amortization 5,281     3,811  
Net amortization/(accretion) of premiums/discounts on investments (110 )   4  
Amortization of deferred debt issuance costs 725     891  
Stock-based compensation 8,895     8,386  
Provision for bad debt 24     51  
Non-cash inventory adjustments 1,061     911  
Other non-cash adjustments (62 )   (190 )
Changes in operating assets and liabilities:      
Accounts receivable 797     1,272  
Inventories (3,847 )   (4,813 )
Prepaid expenses and other assets 384     (767 )
Other long-term assets     (16 )
Accounts payable (3,408 )   (1,468 )
Accrued compensation 1,053     (452 )
Other current and non-current liabilities (756 )   (913 )
Net cash used in operating activities (28,900 )   (40,605 )
Investing activities:      
Payments for intellectual property licenses     (500 )
Purchases of property and equipment, net (1,060 )   (3,816 )
Purchases of marketable securities (28,785 )   (56,525 )
Proceeds from sales of marketable securities     13,896  
Maturities of marketable securities 56,500     8,500  
Net cash provided by (used in) investing activities 26,655     (38,445 )
Financing activities:      
Proceeds from issuance of common stock 535     86,835  
Costs incurred in conjunction with public offering     (5,469 )
Principal repayment of borrowings (68 )   (6,123 )
Proceeds from borrowings     15,000  
Payments associated with debt issuance (20 )   (187 )
Proceeds from stock option exercises 22     213  
Net cash provided by financing activities 469     90,269  
Effect of exchange rate changes on cash, cash equivalents, and restricted cash 27     (17 )
Net increase (decrease) in cash, cash equivalents, and restricted cash (1,749 )   11,202  
Cash, cash equivalents, and restricted cash at beginning of year 27,512     16,717  
Cash, cash equivalents, and restricted cash at end of period $ 25,763     $ 27,919  
Non-cash investing and financing activities:      
Transfer of systems (from) to property and equipment into (from) inventory $ 2,477     $ (3,438 )
Property and equipment included in accounts payable $ 746     $ 330  
Intellectual property acquisitions included in other current liabilities $     $  
Supplemental cash flow information:      
Cash paid for income taxes, net $ 133     $ 58  
Cash paid for interest $ 1,517     $ 1,143  

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Source: GenMark Diagnostics, Inc.