GenMark Diagnostics Reports Fourth Quarter and Full Year 2020 Results

February 25, 2021

CARLSBAD, Calif., Feb. 25, 2021 (GLOBE NEWSWIRE) -- GenMark Diagnostics, Inc. (Nasdaq: GNMK), a leading provider of automated, multiplex molecular diagnostic testing systems, today announced financial results for the fiscal year and quarter ended December 31, 2020.

Full Year 2020 Financial Highlights

  • Total revenue of $171.6 million, an increase of 95% over 2019
    • ePlex® revenue of $152.6 million, an increase of 155% over 2019
  • Gross margin of 40%, compared to 32% in 2019
  • Cash and investments were $128.2 million as of December 31, 2020
    • Delivered $6.1 million in positive cash flows from operating activities

Fourth Quarter 2020 Financial Highlights

  • Total revenue of $50.1 million, an increase of 84% over the fourth quarter of 2019
    • ePlex® revenue of $45.4 million, an increase of 138% over the fourth quarter of 2019
  • Gross margin of 39%, compared to 34% in the fourth quarter of 2019

Operational Highlights

  • Placed 70 net new ePlex analyzers in the fourth quarter of 2020, finishing the year with an installed base of 792 ePlex analyzers worldwide
    • ePlex installed base grew 50% year over year
  • Average annuity per analyzer of $220,000, compared to $148,000 in the fourth quarter of 2019
  • Increased manufacturing capacity by more than 75% versus prior year with the completion of the first of two new production lines during the quarter

“2020 was truly a transformational year for GenMark both financially and operationally. Our growth would not have been possible without the tremendous efforts of our team coming together to respond to a rapidly spreading disease - delivering innovative R&D and strong commercial execution. Our global ePlex installed base grew 50% year-over-year and builds on a strong foundation of enduring and predictable revenue,” said Scott Mendel, President and Chief Executive Officer.

“Our priorities in 2021 include increased adoption of our BCID and RP panels, as well as driving further market penetration for our differentiated ePlex platform. We are also focused on delivering financial execution, specifically driving revenue growth and improving margins that further accelerate cash flow positivity. Lastly, we plan to increase investment in innovation, including enhancing current panels, completing new panels and investing in longer term advanced technology development.”

Guidance for Full Year 2021
GenMark expects revenue for the full year 2021 in the range of $188 million to $198 million, which represents growth of 10% to 15% over 2020.

Global ePlex placements are expected to range from 200 to 220 net new analyzers with annuity per analyzer between $175,000 and $190,000.

Gross margin is expected to be in the range of 44% to 46% and operating expenses are expected to be approximately $85 million to $90 million.

Excluding financing activities, cash usage is projected in the range of $10 million to $15 million.

Webcast and Conference Call Information
GenMark will be hosting a conference call to discuss fourth quarter results in further detail today starting at 4:30 p.m. ET. The conference call will be concurrently webcast. The link to the webcast is available on the Company 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 6957136 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 2021 financial and operational performance, ability to secure enduring revenue streams extending beyond the COVID-19 pandemic, regulatory submissions and approvals, and plans and objectives of management, 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, disruptions to our manufacturing operations and/or supply chain, our ability to achieve our updated financial and operational performance guidance, our ability to successfully obtain regulatory clearance and 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 retain customers beyond the COVID-19 pandemic, 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                                
Leigh Salvo                         
(415) 937-5404         
ir@genmarkdx.com 

 
 
GENMARK DIAGNOSTICS, INC. 
CONSOLIDATED BALANCE SHEETS
(amounts in thousands except par value)
 
  As of December 31,
  2020   2019
ASSETS
Current assets      
Cash and cash equivalents $ 40,572     $ 44,360  
Short-term marketable securities 87,582     9,100  
Accounts receivable, net of allowances of $372 and $376, respectively 20,790     16,759  
Inventories, net 21,323     11,301  
Prepaid expenses and other current assets 2,695     1,877  
Total current assets 172,962     83,397  
       
Property and equipment, net 38,362     20,419  
Intangible assets, net 841     1,432  
Restricted cash 1,646     758  
Operating lease right-of-use assets 8,676     4,642  
Other long-term assets 1,047     825  
Total assets $ 223,534     $ 111,473  
               
LIABILITIES AND STOCKHOLDERS’ EQUITY              
Current liabilities              
Accounts payable $ 23,071     $ 12,249  
Accrued compensation 12,716     7,493  
Current operating lease liability 3,093     1,842  
Other current liabilities 5,250     2,732  
Total current liabilities 44,130     24,316  
       
Long-term debt 71,297     69,145  
Noncurrent operating lease liability 12,749     5,796  
Other noncurrent liabilities 1,160     53  
Total liabilities 129,336     99,310  
       
Stockholders’ equity      
Preferred stock, $0.0001 par value; 5,000 authorized, none issued      
Common stock, $0.0001 par value; 100,000 authorized; 71,960 and 60,255          
 shares issued and outstanding at December 31, 2020 and 2019, respectively 7     6  
Additional paid-in capital 626,816     526,294  
Accumulated deficit (532,877 )   (514,233 )
Accumulated other comprehensive income 252     96  
Total stockholders’ equity 94,198     12,163  
Total liabilities and stockholders’ equity $ 223,534     $ 111,473  
               


GENMARK DIAGNOSTICS, INC. 
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(amounts in thousands except per share data)
       
  Three Months Ended   Twelve Months Ended
  December 31,   December 31,
  2020   2019   2020   2019
Revenue              
Product revenue $ 49,350     $ 26,880     $ 169,148     $ 86,821  
Other revenue 730     316     2,406     1,200  
Total revenue 50,080     27,196     171,554     88,021  
Cost of revenue 30,682     18,079     103,610     59,418  
Gross profit 19,398     9,117     67,944     28,603  
Operating expenses              
Sales and marketing 5,760     6,127     23,164     24,118  
General and administrative 6,645     4,942     25,572     19,159  
Research and development 9,080     6,754     30,259     27,140  
Total operating expenses 21,485     17,823     78,995     70,417  
Operating loss (2,087 )   (8,706 )   (11,051 )   (41,814 )
Other income (expense)              
Interest income 64     74     386     512  
Interest expense (1,706 )   (1,630 )   (7,907 )   (5,961 )
Other income (expense) 25     11     9     (23 )
Total other expense (1,617 )   (1,545 )   (7,512 )   (5,472 )
Loss before income taxes (3,704 )   (10,251 )   (18,563 )   (47,286 )
Income tax expense 20     36     81     64  
Net loss $ (3,724 )   $ (10,287 )   $ (18,644 )   $ (47,350 )
Net loss per share—basic and diluted $ (0.05 )   $ (0.17 )   $ (0.28 )   $ (0.82 )
Weighted average number of shares outstanding—basic and diluted 71,781     58,915     67,541     57,603  
               
Other comprehensive income              
Net loss $ (3,724 )   $ (10,287 )   $ (18,644 )   $ (47,350 )
Foreign currency translation adjustments, net of tax 120     48     147     11  
Net unrealized gain (loss) on marketable securities, net of tax (20 )   (3 )   9     5  
Total other comprehensive income 100     45     156     16  
Total comprehensive loss $ (3,624 )   $ (10,242 )   $ (18,488 )   $ (47,334 )
                               


GENMARK DIAGNOSTICS, INC. 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
 
  For the years ended December 31,
  2020   2019   2018
Operating activities          
Net loss $ (18,644 )   $ (47,350 )   $ (50,500 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities          
Depreciation and amortization 7,066     7,268     7,088  
Net amortization (accretion) of premiums/discounts on investments 261     (133 )   (142 )
Amortization of deferred debt issuance costs 2,253     1,740     938  
Stock-based compensation 12,796     12,046     11,697  
Provision for bad debt, net of recoveries 17     338     23  
Non-cash inventory adjustments 2,319     2,631     1,426  
Other non-cash adjustments 360     537     15  
Changes in operating assets and liabilities          
Accounts receivable (4,105 )   (5,584 )   (878 )
Inventories (12,478 )   (6,534 )   (2,414 )
Prepaid expenses and other assets (858 )   (750 )   854  
Accounts payable 5,224     1,501     (1,389 )
Accrued compensation 4,945     (885 )   1,059  
Operating lease right-of-use assets and lease liabilities 4,170          
Other current and non-current liabilities 2,808     249     (289 )
   Net cash provided by (used in) operating activities 6,134     (34,926 )   (32,512 )
Investing activities          
Purchases of property and equipment (17,776 )   (2,092 )   (2,575 )
Purchases of marketable securities (114,186 )   (32,135 )   (29,778 )
Proceeds from sales of marketable securities 1,193          
Maturities of marketable securities 34,260     32,055     66,300  
   Net cash provided by (used in) investing activities (96,509 )   (2,172 )   33,947  
Financing activities          
Proceeds from issuance of common stock, net of offering costs 78,659     13,447     1,061  
Principal repayment of borrowings (57 )   (35,093 )   (92 )
Proceeds from borrowings     70,000     7,098  
Payments associated with debt issuance (100 )   (3,638 )   (20 )
Proceeds from stock option exercises 9,068     457     22  
   Net cash provided by financing activities 87,570     45,173     8,069  
 Effect of exchange rate changes on cash, cash equivalents, and restricted cash (95 )   (1 )   28  
Net increase (decrease) in cash, cash equivalents, and restricted cash (2,900 )   8,074     9,532  
Cash, cash equivalents, and restricted cash at beginning of year 45,118     37,044     27,512  
Cash, cash equivalents, and restricted cash at end of year $ 42,218     $ 45,118     $ 37,044  
Non-cash investing and financing activities          
Transfer of systems to property and equipment from inventory $ 137     $ 2,846     $ 1,689  
Property and equipment included in accounts payable $ 6,832     $ 1,234     $ 372  
Right-of-use assets obtained in exchange for new operating lease liabilities $ 4,689     $     $  
Supplemental cash flow information          
Cash paid for interest, net $ 5,684     $ 3,946     $ 2,028  
Cash paid for income taxes, net $ 91     $ 155     $ 165  
                       


GENMARK DIAGNOSTICS, INC. 
UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(amounts in thousands)
 
  Three Months Ended
December 31,
  Twelve Months Ended
December 31,
  2020   2019   2020   2019
GAAP net loss $ (3,724 )   $ (10,287 )   $ (18,644 )   $ (47,350 )
Nonrecurring charges              
Severance payments and stock-based compensation resulting from                       
reorganization1         566      
Severance payments and stock-based compensation due to our                       
former President and CEO upon his departure from the
Company2
        4,047      
Total nonrecurring charges         4,613      
Adjusted non-GAAP net loss $ (3,724 )   $ (10,287 )   $ (14,031 )   $ (47,350 )
               
GAAP and non-GAAP weighted average shares outstanding—basic and diluted 71,781     58,915     67,541     57,603  
               
GAAP net loss per share—basic and diluted $ (0.05 )   $ (0.17 )   $ (0.28 )   $ (0.82 )
Nonrecurring charges              
Severance payments and stock-based compensation resulting from                      
reorganization         0.01      
Severance payments and stock-based compensation due to our                      
former President and CEO upon his departure from the
Company
        0.06      
Total nonrecurring charges         0.07      
Adjusted non-GAAP net loss per share—basic and diluted $ (0.05 )   $ (0.17 )   $ (0.21 )   $ (0.82 )

1 Severance payments and stock-based compensation expense resulting from the elimination of certain positions within the Company. Stock-based compensation expense resulted from the acceleration of the vesting of restricted stock units awarded to certain individuals.

2 Severance payments and stock-based compensation expense resulting from the departure of the Company’s former President and CEO. The Company made a $1 million severance payment to the Company’s former President and CEO on October 1, 2020 and will be providing reimbursement for group health insurance premium payments pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) for 1 year following the separation date. The Company recognized $3 million in stock-based compensation expense resulting from the acceleration of the vesting of the outstanding unvested portion of restricted stock units and market-based stock units.

Use of Non-GAAP Financial Information
In addition to results reported under GAAP, we provide certain non-GAAP financial measures consisting of adjusted non-GAAP net loss and adjusted non-GAAP basic and diluted net loss per share. Non-GAAP net loss consists of the net loss reported in our Unaudited Condensed Consolidated Statement of Comprehensive Loss adjusted for nonrecurring severance payments and stock-based compensation expense from the elimination of certain positions and the departure of our former President and CEO. Adjusted non-GAAP basic and diluted net loss per share reflects the net loss per share reported in our Unaudited Condensed Consolidated Statement of Comprehensive Loss adjusted for the loss per share resulting from nonrecurring severance payments and stock-based compensation expense from the elimination of certain positions and the departure of our former President and CEO.

We believe that use of these non-GAAP financial measures can assist investors in understanding the results from our core operations by providing additional insight into the impact of nonrecurring activities on our GAAP financial measures. We believe that the use of these non-GAAP financial measures enhances the comparability of our current period results to our historical Unaudited Condensed Consolidated Financial Statements, as well as to the results of other public companies.

The use of these non-GAAP financial measures are not measurements of financial performance under GAAP and have been included solely for informational and comparative purposes. Other companies may define these non-GAAP financial measures differently and, as a result, our non-GAAP financial measures may not be directly comparable to the non-GAAP measures of other companies. We reconciled non-GAAP net loss and adjusted non-GAAP basic and diluted net loss per share to GAAP net loss and GAAP net loss per share, respectively, which we believe to be the most directly comparable GAAP financial measures. Reconciliations of non-GAAP and GAAP financial measures should be considered together with our Unaudited Condensed Consolidated Financial Statements.


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Source: GenMark Diagnostics, Inc.