Long-term Strategy to Expand Laboratories
Services Nationally Underway
Enzo Biochem, Inc. (NYSE:ENZ) today reported continued strong
growth in operating results for the fiscal quarter and six months
ended January 31, 2017.
Second Quarter
Highlights
- Total revenues were $26.3 million, an
increase of 7% over the prior year period.
- Clinical Labs revenues grew to $18.8
million, an increase of nearly 8%, representing the 5th straight
quarter of growth. Reflecting the increased importance of higher
margin molecular diagnostic tests (MDx), particularly women’s
health, Clinical Labs increased gross margins 100 basis points and
posted a 53% increase in operating profit compared to a year ago,
excluding non-recurring items.
- Life Sciences’ product sales were $7.0
million, an increase of 6% over a year ago, as the business
continues to prepare for introducing several key product lines
later this year.
- Both operating units continued to be
profitable and generated positive cash flow that provides capital
for investment in the development of new products and
services.
- GAAP net loss was ($1.1) million or
($0.02) per share compared to a GAAP net income of $6.8 million or
$0.15 per share in the prior year period. Non-GAAP net loss was
($1.1) million or ($0.02) per share compared to a Non-GAAP net loss
of ($3.3) million or ($0.07) per share in the prior year
period.
- Cash and cash equivalents and working
capital at January 31, 2017 remain strong at $62.4 million and
$69.3 million, respectively.
Barry Weiner, President,
Commented
“Our quarterly results were very strong as we continue to build
on our mounting success and importance of our molecular diagnostic
related activities, both on the development side and in clinical
usage. We are progressing on schedule in the development area, with
new MDx tests expected to be introduced later this year. We are
gaining recognition as a disruptive provider of cost efficient
molecular diagnostic products. The pressure on operating margins of
clinical laboratories due to high fixed manufacturer product costs
and steadily shrinking reimbursements has become a mainstay with
few viable long-term solutions. Thus we believe Enzo’s strategy to
provide affordable, highly reliable and easy to use more effective
molecular diagnostic products and services to labs is well timed
and is being recognized in the market place as a needed
solution.
“We are focused on making available a full, extensive line of
medically relevant and cost efficient targeted products that
address this market challenge. We have successfully secured New
York State Department of Health approval for several of our
diagnostic platforms and products. Under development are a host of
additional assays and reagents aimed at this market, including a
full line of women’s health products, where Enzo has a specific
focus in both products and services.
“We are highly encouraged by the acceptance of our products and
their performance in the marketplace, and we anticipate even
greater penetration in the market as additional test development is
completed and approval is obtained. Meanwhile, we continue to build
a highly-skilled workforce and efficient operation, and are
investing capital to ensure solid sustainability. With enabling
technology and focused marketing efforts, revenues continue to
grow, gross margins are expanding and operating costs, including
SG&A, are contained while supporting our growth objectives. Not
least, our strong, highly liquid balance sheet provides us with the
financial flexibility to allocate capital effectively to maximize
return for our shareholders.”
Fiscal 2017 Second Quarter Operating
Results
During the quarter, revenues were $26.3 million compared to
$24.6 million a year ago, an increase of $1.7 million, or 7%. Gross
profit improved to $11.7 million, from $10.8 million a year ago
with consolidated gross margins of 45%, an increase of 100 basis
points principally due to the growth in the clinical labs.
Operating expenses were $12.7 million down from $15.0 million in
the prior year period, excluding licensing and legal settlements,
mainly due to lower legal expenses due to the timing of work
associated with the Company’s patent litigation.
The Company reported a net loss of ($1.0) million, compared to a
year ago net income of $6.8 million. Fully diluted per share loss
equaled ($0.02), compared to per share income of $0.15 in the prior
year period, which included $11.6 million of licensing and legal
settlements. On a Non-GAAP basis, which adjusts for one-time items,
the net loss per share was ($0.02) compared to ($0.07) in the prior
year period. Non-GAAP EBITDA was a loss of ($0.2) million compared
to a loss of ($2.1) million in the prior year period, demonstrating
significant operational improvement towards profitability.
As of January 31, 2017, cash and cash equivalents and working
capital were $62.4 million and $69.3 million, respectively.
Approximately $2 million in bank loans were retired in the quarter,
leaving the balance sheet, apart from lease obligations, debt
free.
Segment Quarterly
Results
As noted, Enzo Clinical Labs posted its 5th straight
quarterly revenue increase. At $18.8 million, revenues increased 8%
year over year. The increase is attributable to molecular
diagnostic testing volume from both new and existing accounts.
Gross profit was $7.8 million, with gross margins of 41%, up 100
basis points from the prior year. Total operating expenses were
$6.5 million compared to $6.2 million in the prior year period,
excluding licensing and legal settlements, due to higher selling
and related expenses to support increased revenues. Operating
income totaled $1.2 million, compared to $0.8 million last year,
excluding legal settlements that were reported in prior year
results.
Enzo Life Sciences’ product revenues were $7.0 million
compared to $6.6 million in the prior year period, an increase of
$0.4 million or 6%. The increase reflected a pickup in orders, both
domestically and internationally, after an extended period of
softness, due to reduced governmental and institutional R&D
spending. Gross profit increased to $3.9 million with gross margins
of 53%. Operating income was $0.4 million, unchanged from a year
ago, excluding $13.2 million in both licensing and legal
settlements.
Fiscal First Half
Results
Year to date revenues were $52.5 million compared to $49.7
million in the prior year period, an increase of $2.8 million, or
6%. Gross profit increased roughly 8% to $23.8 million and gross
margins increased 100 basis points to 45%. Operating expenses were
$26.0 million compared to $28.4 million, a decrease of $2.4
million, or 8%, principally due to lower legal fees offset in part
by higher SG&A costs.
Year to date net loss was ($2.5) million, compared to a year ago
net income of $11.3 million, which included $18.5 million in
licensing and legal settlements. Basic and fully diluted per share
loss equaled ($0.05), versus per share income of $0.24 last
year.
Conference Call
The Company will conduct a conference call March 13, 2017 at
4:30 PM ET. The call can be accessed by dialing 1-888-459-5609.
International callers can dial 1-973-321-1024. Please reference PIN
number 82073178. Interested parties may also listen over the
Internet at https://tinyurl.com/zn5vkrr To listen to the live call
on the Internet, please go to the web site at least fifteen minutes
early to register, download and install any necessary audio
software. For those who cannot listen to the live broadcast, a
replay will be available approximately two hours after the end of
the live call, through midnight (ET) on March 27, 2017. The replay
of the conference call can be accessed by dialing 1-800-585-8367,
and when prompted, use PIN number 82073178. International callers
can dial 1-404-537-3406, using the same PIN number.
NON-GAAP Financial
Measures
To comply with Regulation G promulgated pursuant to the
Sarbanes-Oxley Act, Enzo Biochem attached to this news release and
will post to the Company's investor relations web site
(www.enzo.com) any reconciliation of differences between non-GAAP
financial information that may be required in connection with
issuing the Company's quarterly financial results.
The Company uses EBITDA as a measure of performance to
demonstrate earnings exclusive of interest, taxes, depreciation and
amortization. Adjustments to EBITDA are for items of a
non-recurring nature and are reconciled on the table provided. The
Company manages its business based on its operating cash flows. The
Company, in its daily management of its business affairs and
analysis of its monthly, quarterly and annual performance, makes
its decisions based on cash flows, not on the amortization of
assets obtained through historical activities. The Company, in
managing its current and future affairs, cannot affect the
amortization of the intangible assets to any material degree, and
therefore uses EBITDA as its primary management guide. Since an
outside investor may base its evaluation of the Company's
performance based on the Company's net loss not its cash flows,
there is a limitation to the EBITDA measurement. EBITDA is not, and
should not be considered, an alternative to net loss, loss from
operations, or any other measure for determining operating
performance of liquidity, as determined under accounting principles
generally accepted in the United States (GAAP). The most directly
comparable GAAP reference in the Company's case is the removal of
interest, taxes, depreciation and amortization.
We refer you to the tables attached to this press release which
includes reconciliation tables of GAAP to Non-GAAP net income
(loss) and EBITDA to Adjusted EBITDA.
About Enzo Biochem
Enzo Biochem is a pioneer in molecular diagnostics, leading the
convergence of clinical laboratories, life sciences and
intellectual property through the development of unique diagnostic
platform technologies that provide numerous advantages over
previous standards. A global company, Enzo Biochem utilizes
cross-functional teams to develop and deploy products, systems and
services that meet the ever-changing and rapidly growing needs of
health care today and into the future. Underpinning Enzo Biochem’s
products and technologies is a broad and deep intellectual property
portfolio, with patent coverage across a number of key enabling
technologies.
Except for historical information, the matters discussed in this
news release may be considered "forward-looking" statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended and Section 21E of the Securities Exchange Act of 1934, as
amended. Such statements include declarations regarding the intent,
belief or current expectations of the Company and its management,
including those related to cash flow, gross margins, revenues, and
expenses which are dependent on a number of factors outside of the
control of the Company including, inter alia, the markets for the
Company’s products and services, costs of goods and services, other
expenses, government regulations, litigation, and general business
conditions. See Risk Factors in the Company’s Form 10-K for the
fiscal year ended July 31, 2016. Investors are cautioned that any
such forward-looking statements are not guarantees of future
performance and involve a number of risks and uncertainties that
could materially affect actual results. The Company disclaims any
obligations to update any forward-looking statement as a result of
developments occurring after the date of this press release.
ENZO BIOCHEM, INC.
(in thousands, except per share data)
Three months ended Six months ended
Selected
operations data:
January 31 January 31, (unaudited)
(unaudited)
2017
2016
2017
2016
Revenues: Clinical laboratory services $ 18,837 $ 17,523 $ 37,395 $
34,613 Product revenues 6,983 6,578 14,409 14,265 Royalty and
license fee income 440 459 740
859 Total revenues $ 26,260 $
24,560 $ 52,544 $ 49,737 Gross profit $
11,688 $ 10,819 $ 23,767 $ 22,053
Gross profit % 45 % 44 % 45 % 44
% Income (loss) before income taxes (1) (1,000 ) 7,039
(2,454 ) 11,560 Provision for income taxes (53 ) (207 ) (73
) (294 ) Net income (loss) $ (1,053 ) $
6,832 $ (2,527 ) $ 11,266 Basic net income
(loss) per share ($0.02 ) $ 0.15 ($0.05 ) $
0.24 Diluted net income (loss) per share ($0.02 ) $
0.15 ($0.05 ) $ 0.24 Weighted average
shares outstanding - basic 46,292 46,077
46,282 46,070 Weighted average
shares outstanding - diluted 46,292 46,518
46,282 46,353 (1) -
includes legal settlements of $11.7 million and $18.5 million for
the three and six months ended January 31, 2016, respectively.
Selected balance
sheet data:
1/31/2017 (unaudited)
7/31/2016 (unaudited)
Cash and cash equivalents $62,427 $67,777 Working
capital $69,314 $70,829 Stockholders' equity $87,728 $89,554
Total assets $106,391 $111,821 The following table
presents a reconciliation of reported net income (loss) and basic
and diluted net income (loss) per share to non-GAAP net income
(loss) and basic and diluted net income (loss) per share for the
three and six months ended January 31, 2017 and 2016:
ENZO BIOCHEM, INC. Non-GAAP
Reconciliation Table (Unaudited, in thousands, except per share
data)
Three months ended Six months ended
January 31 January 31,
2017
2016
2017
2016
Reported GAAP net income (loss) $ (1,053 ) $ 6,832 $ (2,527
) $ 11,266 Adjusted for: Legal settlements, net - (11,650 ) -
(18,450 ) Costs related to contested proxy - 1,483 - 1,483
Separation payments - 51 -
132 Non-GAAP net loss $ (1,053 ) $ (3,284 ) $
(2,527 ) $ (5,569 ) Weighted Shares Outstanding:
Basic 46,292 46,077 46,282 46,070 Diluted 46,292 46,518 46,282
46,353 Basic and diluted earnings per share: Basic net income
(loss) per share GAAP ($0.02 ) $ 0.15 ($0.05 ) $ 0.24 Diluted net
income (loss) per share GAAP ($0.02 ) $ 0.15 ($0.05 ) $ 0.24
Basic net income (loss) per share non-GAAP ($0.02 ) ($0.07 ) ($0.05
) ($0.12 ) Diluted net income (loss) per share non-GAAP ($0.02 )
($0.07 ) ($0.05 ) ($0.12 ) The following table presents a
reconciliation of reported net income (loss) for the three and six
months ended January 31, 2017 and 2016 to EBITDA and Adjusted
EBITDA:
ENZO BIOCHEM, INC. EBITDA & Adjusted
EBITDA Reconciliation Table (Unaudited, in thousands)
Three months ended Six months ended January 31
January 31,
2017
2016
2017
2016
GAAP net income (loss) $ (1,053 ) $ 6,832 $ (2,527 ) $
11,266 Plus: Depreciation and amortization 915 952 1,842 1,902
Interest expense (income) (79 ) 42 (125 ) 82 Provision for income
taxes 53 207 73
294 EBITDA $ (164 ) $ 8,033 $ (737 ) $ 13,544
Adjusted for:
Legal settlements, net - (11,650 ) - (18,450 ) Costs related to
contested proxy - 1,483 - 1,483 Separation payments -
51 - 132 Adjusted EBITDA
$ (164 ) $ (2,083 ) $ (737 ) $ (3,291 )
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version on businesswire.com: http://www.businesswire.com/news/home/20170313006316/en/
For Enzo Biochem, Inc.Steve Anreder,
212-532-3232steven.anreder@anreder.comorCEOcast, Inc.Michael Wachs,
212-732-4300mwachs@ceocast.com
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