Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 30, 2018
 
GENMARK DIAGNOSTICS, INC.
(Exact name of registrant as specified in its charter)

Commission File Number: 001-34753
 
Delaware
 
27-2053069
(State or other jurisdiction
of incorporation)
 
(I.R.S. Employer
Identification No.)
 
5964 La Place Court
Carlsbad, California 92008
(Address of principal executive offices, including zip code)
 
760-448-4300
(Registrant’s telephone number, including area code)
 
(Former Name or Former Address, if Changed Since Last Report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).
Emerging Growth Company o
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Selection 13(a) of the Exchange Act. o
 





Item 2.02. Results of Operations and Financial Condition.

On July 30 2018, GenMark Diagnostics, Inc. (the "Company") issued a press release announcing its financial results for the fiscal quarter ended June 30, 2018. A copy of the press release is attached hereto as Exhibit 99.1.

The information contained under this Item 2.02, including Exhibit 99.1 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, regardless of any general incorporation language in any such filing, unless the Company expressly sets forth in such filing that such information is to be considered “filed” or incorporated by reference therein.
Item 9.01. Financial Statements and Exhibits.
 
(d)
The following exhibit is furnished with this Current Report:
 
 
99.1
Press release dated July 30, 2018.
 





SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
GENMARK DIAGNOSTICS, INC.
 
 
 
 
 
 
Date:
July 30, 2018
/s/ Scott Mendel
 
 
Scott Mendel
 
 
Chief Financial Officer
 
 
 
 
 
 
 
 
 





EXHIBITS
 
 
 
 
Exhibit
Number
 
Description
 



Exhibit


    

July 30, 2018


GenMark Diagnostics Reports Second Quarter 2018 Results

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

Highlights
Recognized revenues of $14.9 million, an increase of 21% over the prior year period
Placed 39 net new ePlex analyzers, expanding the global installed base to 267 placements
Submitted the ePlex BCID Gram Positive panel to the FDA
Completed clinical testing for FDA submission of the ePlex BCID Gram Negative panel
Commenced clinical study for FDA submission of the ePlex Fungal Pathogen panel

“Our second quarter results reflect solid execution on our strategic priorities of growth through ePlex commercialization and menu expansion, as well as improving manufacturing efficiencies. Top line performance was largely driven by strong ePlex placements and demand for our respiratory pathogen test cartridges. We also submitted to the FDA the first of three blood culture identification panels being developed on our ePlex system, which was a significant milestone for the company. We expect FDA submission of the remaining two blood culture panels in the third and fourth quarters of this year, as previously communicated,” said Hany Massarany, President and Chief Executive Officer. “Based on this momentum and our continued focus on commercial and operational execution, I am confident we will achieve our goals for 2018 and beyond.”

Second Quarter Financial Results
Revenue was $14.9 million in the second quarter of 2018, an increase of 21% versus $12.4 million in the second quarter of 2017. Gross profit was $4.4 million, or 30% of revenue, compared with $4.9 million, or 40% of revenue in the same period of 2017, reflecting the increased proportion of ePlex revenues in the quarter versus prior year.

Operating expenses for the second quarter of 2018 were $20.2 million compared to $22.2 million in the same period for 2017. The decrease was largely due to reduced ePlex development expenses.

Loss per share was $0.30 per share for the second quarter of 2018, compared to a $0.37 loss per share in the second quarter of 2017.

The Company ended the quarter with $55.2 million in cash and investments, reflecting the impact of reductions in operating expenses and efforts to minimize working capital needs.

Guidance for Full Year 2018
GenMark is reconfirming 2018 revenue guidance of $68 to $72 million. Gross margin is expected to be in the 30% range. The Company continues to expect ePlex placements of 140-170 net new analyzers, and an annuity per ePlex placement in the $100,000 to $120,000 range.

Webcast and Conference Call Information
GenMark will be hosting a conference call to discuss second quarter results in further detail on Monday, July 30, 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 4473539 approximately five minutes prior to the start time.

About GenMark Diagnostics

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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



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GENMARK DIAGNOSTICS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
 
June 30,
2018
 
December 31,
2017
ASSETS:
Current Assets:
 
 
 
Cash and cash equivalents
$
28,891

 
$
26,754

Short-term marketable securities
26,358

 
45,236

Accounts receivable, net of allowances of $86 and $2,754, respectively
7,144

 
10,676

Inventories
8,828

 
10,949

Prepaid expenses and other current assets
1,912

 
2,216

Total current assets
73,133

 
95,831

 
 
 
 
Property and equipment, net
21,159

 
22,581

Intangible assets, net
2,327

 
2,624

Restricted cash
758

 
758

Other long-term assets
522

 
505

Total assets
$
97,899

 
$
122,299

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
 
 
 
Accounts payable
$
9,219

 
$
11,171

Accrued compensation
4,872

 
5,419

Current portion of long-term debt
19,009

 
7,927

Other current liabilities
2,710

 
3,226

Total current liabilities
35,810

 
27,743

 
 
 
 
Deferred rent
2,715

 
3,059

Long-term debt
9,579

 
20,099

Other noncurrent liabilities
146

 
241

Total liabilities
48,250

 
51,142

 
 
 
 
Stockholders' equity:
 
 
 
Preferred stock, $0.0001 par value; 5,000 authorized, none issued

 

Common stock, $0.0001 par value; 100,000 authorized; 55,753 and 55,066 shares issued and outstanding, respectively
6

 
6

Additional paid-in capital
493,921

 
487,525

Accumulated deficit
(444,329
)
 
(416,383
)
Accumulated other comprehensive income
51

 
9

Total stockholders’ equity
49,649

 
71,157

Total liabilities and stockholders’ equity
$
97,899

 
$
122,299













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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,
 
2018
 
2017
 
2018
 
2017
Revenue:
 
 
 
 
 
 
 
Product revenue
$
14,867

 
$
12,291

 
$
35,443

 
$
24,761

License and other revenue
74

 
68

 
143

 
133

Total revenue
14,941

 
12,359

 
35,586

 
24,894

Cost of revenue
10,527

 
7,475

 
27,007

 
13,827

Gross profit
4,414

 
4,884

 
8,579

 
11,067

Operating expenses:
 
 
 
 
 
 
 
Sales and marketing
5,187

 
5,159

 
10,589

 
9,853

General and administrative
4,547

 
3,978

 
8,680

 
7,988

Research and development
10,482

 
13,014

 
15,902

 
24,049

Total operating expenses
20,216

 
22,151

 
35,171

 
41,890

Loss from operations
(15,802
)
 
(17,267
)
 
(26,592
)
 
(30,823
)
Other income (expense):
 
 
 
 
 
 
 
Interest income
202

 
54

 
389

 
106

Interest expense
(797
)
 
(755
)
 
(1,585
)
 
(1,261
)
Other income (expense)
(90
)
 
56

 
(102
)
 
151

Total other income (expense)
(685
)
 
(645
)
 
(1,298
)
 
(1,004
)
Loss before provision for income taxes
(16,487
)
 
(17,912
)
 
(27,890
)
 
(31,827
)
Income tax expense
34

 
77

 
54

 
78

Net loss
$
(16,521
)
 
$
(17,989
)
 
$
(27,944
)
 
$
(31,905
)
Net loss per share, basic and diluted
$
(0.30
)
 
$
(0.37
)
 
$
(0.50
)
 
$
(0.67
)
Weighted average number of shares outstanding, basic and diluted
55,547

 
48,067

 
55,377

 
47,460

 
 
 
 
 
 
 
 
Other comprehensive loss:
 
 
 
 
 
 
 
Net loss
$
(16,521
)
 
$
(17,989
)
 
$
(27,944
)
 
$
(31,905
)
Other comprehensive income/(loss):
 
 
 
 
 
 
 
Foreign currency translation adjustments, net of tax
14

 
3

 
(20
)
 
94

Net unrealized gains (losses) on marketable securities, net of tax
14

 
1

 
22

 
(15
)
Total other comprehensive income/(loss)
28

 
4

 
2

 
79

Total comprehensive loss
$
(16,493
)
 
$
(17,985
)
 
$
(27,942
)
 
$
(31,826
)













4




    

GENMARK DIAGNOSTICS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
Six Months Ended 
 June 30,
 
2018
 
2017
Operating activities:
 
 
 
Net loss
$
(27,944
)
 
$
(31,905
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
Depreciation and amortization
3,507

 
2,454

Net amortization/(accretion) of premiums/discounts on investments
(78
)
 
30

Amortization of deferred debt issuance costs
583

 
493

Stock-based compensation
5,799

 
5,602

Provision for bad debt
34

 
32

Non-cash inventory adjustments
809

 
565

Other non-cash adjustments
(13
)
 
(123
)
Changes in operating assets and liabilities:
 
 
 
Accounts receivable
3,501

 
1,795

Inventories
353

 
(2,563
)
Prepaid expenses and other assets
340

 
(119
)
Accounts payable
(1,853
)
 
(3,134
)
Accrued compensation
(853
)
 
(1,170
)
Other current and non-current liabilities
(622
)
 
(124
)
Net cash used in operating activities
(16,437
)
 
(28,167
)
Investing activities:
 
 
 
Purchases of property and equipment, net
(924
)
 
(2,535
)
Purchases of marketable securities
(23,622
)
 
(10,496
)
Proceeds from sales of marketable securities

 
13,896

Maturities of marketable securities
42,600

 
4,100

Net cash provided by investing activities
18,054

 
4,965

Financing activities:
 
 
 
Proceeds from issuance of common stock
535

 
86,835

Costs incurred in conjunction with public offering

 
(5,171
)
Principal repayment of borrowings
(45
)
 
(964
)
Proceeds from borrowings

 
15,000

Payments associated with debt issuance
(20
)
 
(187
)
Proceeds from stock option exercises
22

 
170

Net cash provided by financing activities
492

 
95,683

Effect of exchange rate changes on cash, cash equivalents, and restricted cash
28

 
(13
)
Net increase in cash, cash equivalents, and restricted cash
2,137

 
72,468

Cash, cash equivalents, and restricted cash at beginning of year
27,512

 
16,717

Cash, cash equivalents, and restricted cash at end of period
$
29,649

 
$
89,185

Non-cash investing and financing activities:
 
 
 
Transfer of systems (from) to property and equipment into (from) inventory
$
956

 
$
(1,534
)
Property and equipment included in accounts payable
$
168

 
$
713

Intellectual property acquisitions included in other current liabilities
$

 
$
500

Supplemental cash flow information:
 
 
 
Cash paid for income taxes, net
$
113

 
$
54

Cash paid for interest
$
1,003

 
$
574




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