GenMark Diagnostics Reports Third Quarter 2019 Results

November 6, 2019
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CARLSBAD, Calif., Nov. 06, 2019 (GLOBE NEWSWIRE) -- GenMark Diagnostics, Inc. (Nasdaq: GNMK), a leading provider of automated, multiplex molecular diagnostic testing systems, today announced financial results for the quarter ended September 30, 2019.

Highlights

  • Recognized total revenue of $20.9 million and achieved total gross margin of 34%
    ◦  ePlex revenue of $13.4 million represented 64% of total revenue
    ◦  ePlex revenue grew 98% compared to the prior year period
  • Placed 51 net new ePlex analyzers, expanding the global installed base to 489 placements
    ◦  ePlex installed base grew 57% compared to the prior year period
  • Obtained a Proprietary Laboratory Analysis (PLA) reimbursement code for the ePlex Respiratory Pathogen Panel

“Our recently launched Blood Culture ID panels, which provide the broadest coverage of molecular targets for the detection of sepsis, are significantly bolstering our competitive position.  With a highly differentiated menu and superior testing efficiency, ePlex is increasingly being recognized in the syndromic testing market as the best-in-class system for delivering high quality, patient-centered care,” said Hany Massarany, President and Chief Executive Officer. “I’m very encouraged by the momentum that our company continues to gain and I’m confident that our strong commercial team and consistent operational execution will continue to drive our performance and growth in this very attractive and rapidly growing market.”

Third Quarter Financial Results
Revenue was $20.9 million in the third quarter of 2019, an increase of 32% versus $15.8 million in the third quarter of 2018.  Gross profit was $7.1 million, or 34% of revenue, compared with $5.6 million, or 36% of revenue in the same period of 2018.

Operating expenses for the third quarter of 2019 were $17.3 million compared to $16.2 million in the same period of 2018.  The increase was largely due to the investment in the launch of the BCID panels.

Loss per share was $0.20 for the third quarter of 2019, compared to a $0.20 loss per share in the third quarter of 2018.

Cash and investments were $33.2 million as of September 30, 2019.

Guidance for Full Year 2019
GenMark continues to expect total revenue for the full year 2019 to be in the range of $85 million to $90 million.

The Company expects global ePlex placements to range from 170 to 190 net new analyzers with an annuity per analyzer of $135,000 to $145,000. 

Gross margin is expected to be in the 31% to 33% range. Operating expenses are expected to be approximately $65 million to $70 million. Cash usage is projected to be in the range of $25 million to $30 million.

Webcast and Conference Call Information
GenMark will be hosting a conference call to discuss third quarter results in further detail on Wednesday, November 6, 2019 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 2190875 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 the Company’s future operating results and financial position. Such statements, including, but not limited to, those regarding its future financial performance, achievement of profitability targets, plans and objectives of management, and the timely and effective commercialization and clinical impact of the Company’s ePlex system, are all subject to risks and uncertainties that could cause actual results and financial position to differ materially. Some of these risks and uncertainties include, but are not limited to, GenMark’s 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, the Company’s ability to successfully expand sales of its product offerings outside the United States, and third-party payor reimbursement to its customers, as well as other risks and uncertainties described under the “Risk Factors” in GenMark’s public filings with the Securities and Exchange Commission. The Company assumes 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.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
       
  September 30,
 2019		   December 31,
 2018
ASSETS:
Current Assets:      
Cash and cash equivalents $ 24,308     $ 36,286  
Short-term marketable securities 8,879     8,882  
Accounts receivable, net of allowances of $131 and $75, respectively 10,448     11,534  
Inventories, net 12,570     10,244  
Prepaid expenses and other current assets 2,071     1,483  
Total current assets 58,276     68,429  
       
Property and equipment, net 18,863     21,070  
Intangible assets, net 1,580     2,023  
Restricted cash 758     758  
Noncurrent operating lease right-of-use assets 4,766     —  
Other long-term assets 809     701  
Total assets $ 85,052     $ 92,981  
       
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:      
Accounts payable $ 10,007     $ 9,886  
Accrued compensation 7,720     7,358  
Current operating lease liability 1,828     —  
Other current liabilities 2,089     3,043  
Total current liabilities 21,644     20,287  
       
Deferred rent —     2,996  
Long-term debt 48,720     36,042  
Noncurrent operating lease liability 6,071     —  
Other noncurrent liabilities 55     109  
Total liabilities 76,490     59,434  
       
Stockholders' equity:      
Preferred stock, $0.0001 par value; 5,000 authorized, none issued —     —  
Common stock, $0.0001 par value; 100,000 authorized; 58,044 and 56,240 shares issued and outstanding, respectively 6     6  
Additional paid-in capital 512,451     500,344  
Accumulated deficit (503,946 )   (466,883 )
Accumulated other comprehensive income 51     80  
Total stockholders’ equity 8,562     33,547  
Total liabilities and stockholders’ equity $ 85,052     $ 92,981  
               


 
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,
  2019   2018   2019   2018
Revenue:              
Product revenue $ 20,822     $ 15,713     $ 60,413     $ 51,156  
License and other revenue 96     82     412     225  
Total revenue 20,918     15,795     60,825     51,381  
Cost of revenue 13,868     10,165     41,339     37,172  
Gross profit 7,050     5,630     19,486     14,209  
Operating expenses:              
Sales and marketing 6,279     5,375     17,991     15,964  
General and administrative 4,765     4,718     14,217     13,398  
Research and development 6,294     6,105     20,386     22,007  
Total operating expenses 17,338     16,198     52,594     51,369  
Loss from operations (10,288 )   (10,568 )   (33,108 )   (37,160 )
Other income (expense):              
Interest income 126     188     438     577  
Interest expense (1,527 )   (661 )   (4,331 )   (2,246 )
Other income (expense) (19 )   53     (34 )   (49 )
Total other income (expense) (1,420 )   (420 )   (3,927 )   (1,718 )
Loss before provision for income taxes (11,708 )   (10,988 )   (37,035 )   (38,878 )
Income tax (benefit) expense (33 )   5     28     59  
Net loss $ (11,675 )   $ (10,993 )   $ (37,063 )   $ (38,937 )
Net loss per share, basic and diluted $ (0.20 )   $ (0.20 )   $ (0.65 )   $ (0.70 )
Weighted average number of shares outstanding, basic and diluted 57,718     55,847     57,161     55,535  
               
Other comprehensive loss:              
Net loss $ (11,675 )   $ (10,993 )   $ (37,063 )   $ (38,937 )
Other comprehensive income/(loss):              
Foreign currency translation adjustments, net of tax (46 )   (51 )   (37 )   (31 )
Net unrealized gains on marketable securities, net of tax —     4     8     27  
Total other comprehensive income (46 )   (47 )   (29 )   (4 )
Total comprehensive loss $ (11,721 )   $ (11,040 )   $ (37,092 )   $ (38,941 )
                               


 
GENMARK DIAGNOSTICS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
   
  Nine Months Ended
 September 30,
  2019   2018
Operating activities:      
Net loss $ (37,063 )   $ (38,937 )
Adjustments to reconcile net loss to net cash used in operating activities:      
Depreciation and amortization 5,393     5,281  
Net accretion of premiums/discounts on investments (134 )   (110 )
Amortization of deferred debt issuance costs 1,266     725  
Stock-based compensation 8,840     8,895  
Provision for bad debt 93     24  
Non-cash inventory adjustments 1,653     1,061  
Other non-cash adjustments 175     (62 )
Changes in operating assets and liabilities:      
Accounts receivable 993     797  
Inventories (5,471 )   (3,847 )
Prepaid expenses and other assets (857 )   384  
Accounts payable 345     (3,408 )
Accrued compensation (406 )   1,053  
Other current and non-current liabilities (398 )   (756 )
Net cash used in operating activities (25,571 )   (28,900 )
Investing activities:      
Purchases of property and equipment (1,193 )   (1,060 )
Purchases of marketable securities (26,735 )   (28,785 )
Maturities of marketable securities 26,880     56,500  
Net cash (used in) provided by investing activities (1,048 )   26,655  
Financing activities:      
Proceeds from issuance of common stock, net of offering costs 2,837     535  
Principal repayment of borrowings (35,070 )   (68 )
Proceeds from borrowings 50,000     —  
Payments associated with debt issuance (3,588 )   (20 )
Proceeds from stock option exercises 432     22  
Net cash provided by financing activities 14,611     469  
Effect of exchange rate changes on cash, cash equivalents, and restricted cash 30     27  
Net decrease in cash, cash equivalents, and restricted cash (11,978 )   (1,749 )
Cash, cash equivalents, and restricted cash at beginning of year 37,044     27,512  
Cash, cash equivalents, and restricted cash at end of period $ 25,066     $ 25,763  
Non-cash investing and financing activities:      
Transfer of systems to property and equipment from inventory $ 1,492     $ 2,477  
Property and equipment included in accounts payable $ 147     $ 746  
Supplemental cash flow information:      
Cash paid for income taxes, net $ 85     $ 133  
Cash paid for interest $ 2,890     $ 1,517  
               

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Source: GenMark Diagnostics, Inc.