Chembio Diagnostics, Inc. (Nasdaq:CEMI), a leader in point-of-care
("POC") diagnostic tests for infectious diseases, today reported
financial results for the quarter ended March 31, 2017.
John J. Sperzel III, Chief Executive Officer,
stated, "We are pleased with the early results of the strategy to
expand our commercial channels, focusing on the United States
(U.S.), Latin America, Asia Pacific, Europe, and Africa. During the
fourth quarter of 2016, we made key appointments to strengthen our
commercial leadership team, and during the first quarter of 2017 we
added experienced diagnostic sales executives in Latin America,
Africa and Asia Pacific. With this enhanced organization, we
achieved a geographic mix of product sales for the first quarter of
2017, consisting of 39% of sales in Latin America, 26% in Asia
Pacific, 20% in the U.S., 8% in Europe, and 7% in Africa.
"During the quarter, the Company continued to
expand its product portfolio by leveraging our patented DPP®
technology platform, which we believe will result in near-term and
long-term growth opportunities. The Company's product development
strategy includes two primary objectives: 1) to strengthen our core
business in the sexually transmitted disease market, and 2) to
build a strong position in the fever and tropical disease
market.
"To strengthen our core business in the sexually
transmitted disease market, the Company continues to focus on
our DPP® HIV-Syphilis Assay in response to the global concerns
related to co-infection and mother-to-child transmission of both
HIV and Syphilis. During the first quarter of 2017, we received a
CE mark for our DPP® HIV-Syphilis Assay, which allows us to market
and sell the product within the member states of the European Union
and in the Caribbean, except for Puerto Rico. The U.S. clinical
trial to support our FDA application for the DPP® HIV-Syphilis
Assay, which was initiated during the first quarter of 2016, has
been completed. In March 2017, the FDA requested further clinical
studies in addition to those recently completed. As a result,
Chembio is in discussion with the FDA regarding the timing of
filing the Premarket Approval Application. Another important
development subsequent to the end of the first quarter of 2017 is
that Chembio received a $5.8 million order from
Bio-Manguinhos/Fiocruz to supply test components and intermediate
product for the production of DPP® HIV 1/2 Assays in Brazil and
subsequent supply to Brazil’s Ministry of Health. We believe
that substantially all of this order will be shipped prior to
year-end 2017.
To build a strong position in the fever and
tropical disease market, we continue to make significant progress
toward the goal of commercializing multiple products during 2017.
During the first quarter of 2017, we initiated sales of our DPP®
Zika Assay and our DPP® Zika/Dengue/Chikungunya Assay to the
Centers for Disease Control and Prevention for use in a pilot
surveillance program in Peru, India, Guatemala and Haiti. Also
during the 2017 first quarter, we initiated sales of our DPP®
Dengue Assay in Asia Pacific, and we continue to pursue important
regulatory approvals for our DPP® Zika System with the U.S. FDA
Emergency Use Authorization (EUA), World Health Organization
Emergency Use Assessment And Listing (EUAL), and
Brazil Agência Nacional de Vigilância Sanitária (ANVISA)."
Addressing the Company's financial results, Mr.
Sperzel commented, "During the first quarter of 2017, we achieved
total revenue of $6.3 million which included product revenue of
$5.4 million. While total revenue represented a 4.2% decrease
from the first quarter of 2016, it is important to note that the
first quarter of 2016 included approximately $1.8 million in
product purchases by our previous U.S. distributor, while the first
quarter of 2017, included approximately $1.4 million in sales from
our recently acquired Malaysia subsidiary. During the first
quarter of 2017, we continue to see important quarter-on-quarter
sales growth.
"Within a number of geographic regions, we had
several notable sales successes during the first quarter of 2017.
In Asia Pacific, we achieved $1.4 million in product
sales, driven by key tender wins in Malaysia,
representing the first time the Company has achieved
meaningful sales in Asia. In the U.S., we achieved $1.1 million in
product sales, driven by a number of HIV tenders, which were won
during the last two quarters, and much of which we expect
to realize over the next 18 months. In Latin America, we
achieved product sales of $2.1 million driven by sales to Brazil
and, as mentioned above, we received a $5.8 million order from
Bio-Manguinhos/Fiocruz and we believe that substantially all of
this order will be shipped prior to year-end 2017. In Europe and
Africa, we achieved $0.8 million in combined product sales,
largely driven by HIV sales in the HIV self-testing and
professional HIV testing business.
“In closing, we believe the advances made during
the first quarter of 2017 demonstrate our commitment to continue
building global commercial channels, thereby strengthening our core
business in the sexually transmitted disease market, and building a
strong position in the high-growth fever and tropical disease
market.”
Selected Summary Financial Information
comparing the 2017 first quarter with the 2016 first
quarter:
- Total revenues of $6.3 million, compared with $6.6
million.
- Product sales of $5.4 million, compared with $5.9 million.
- Operating loss of $1.6 million, compared with operating loss of
$0.47 million.
- Net loss of $1.6 million, or $0.13 per diluted share, compared
with net loss of $.30 million, or $0.03 per diluted share.
Additional Financial
Information
First Quarter:
Total revenues for the first quarter of 2017 of
$6.3 million decreased 4.2% compared with $6.6 million in the
prior-year period. Product sales for the first quarter of 2017 of
$5.4 million decreased 8.3% compared with $5.9 million in the
prior-year period, again largely due to the $1.8 million of product
purchases in the 2016 period by our former U.S. SURE CHECK®
distributor, which did not make any material purchases after March
31, 2016. R&D milestone, and grant and royalty revenues
for the first quarter of 2017 of $0.9 million increased 31.2%
compared with $0.7 million in the prior-year period.
Gross margin dollars for the first quarter of
2017 of $3.1 million decreased 1.9% compared with $3.2 million in
the prior-year period, due primarily to the decrease in product
sales. The amount of product gross margin for the first quarter of
2017 of $2.2 million decreased 11.0% compared with $2.5 million in
the prior-year period.
R&D expenses for the first quarter of 2017
of $2.2 million increased 37.5%, compared with $1.6 million in the
prior-year period. This increase is due primarily to increased
clinical trial expenses as well as R&D activities for projects
and grants.
Selling, general and administrative expenses for
the first quarter of 2017 of $2.5 million increased 24.5%, compared
with $2.0 million in the prior-year period, largely due to
increased wages and related costs, marketing materials, stock-based
compensation, and travel, entertainment and trade shows, which were
partially offset by decreased commissions on sales, decreased
consulting, and decreases in investor relations expenses and
professional fees.
Operating loss for the first quarter of 2017 was
$1.6 million, compared with an operating loss of $0.47 million in
the prior-year period.
Net loss for the first quarter of 2017 was $1.6
million, or $0.13 per diluted share, compared with net loss of $0.3
million, or $0.03 per diluted share, in the prior-year period.
Balance Sheet Highlights:
The Company had cash and cash equivalents of
$5.6 million as of March 31, 2017, compared with $10.6 million as
of December 31, 2016. The decrease was primarily due to cash used
in operating activities for the first quarter of 2017, as well as
cash used in investing activities. The Company’s working capital
decreased by $2.3 million from $14.7 million as of December 31,
2016 to $12.4 million as of March 31, 2017.
The Company had Accounts Receivable net of
allowance for doubtful accounts of $5.7 million as of March 31,
2017, compared with $3.4 million as of December 31, 2016.
Cash and Accounts Receivable combined as of March 31, 2017 was
$11.3 million as compared to $13.9 million at December 31,
2016. During the months of April and May 2017 we collected
$2.8 million of the March 31, 2017 accounts receivable balance.
About Chembio Diagnostics
Chembio Diagnostics, Inc. develops,
manufactures, licenses and markets proprietary rapid diagnostic
tests in the growing $8.0 billion point-of-care testing
market. Chembio markets each of its DPP® HIV 1/2 Assay, HIV
1/2 STAT-PAK® Assay, and SURE CHECK® HIV 1/2 Assay, with these
Chembio brand names, in the U.S. and internationally, both directly
and through third-party distributors.
Chembio has developed a patented point-of-care
test platform technology, the Dual Path Platform (DPP®) technology,
which has significant advantages over lateral-flow technologies.
This technology is providing Chembio with a significant pipeline of
business opportunities for the development and manufacture of new
products.
Headquartered in Medford, NY, Chembio is
licensed by the U.S. Food and Drug Administration (FDA) as well as
the U.S. Department of Agriculture (USDA), and is certified for the
global market under the International Standards Organization (ISO)
directive 13485. Each of Chembio Diagnostic Systems, Inc. and RVR
Diagnostics Sdn Bhd is a wholly-owned subsidiary of Chembio
Diagnostics, Inc. For more information, please visit:
www.chembio.com.
Forward-Looking Statements
Statements contained herein that are not
historical facts may be forward-looking statements within the
meaning of the Securities Act of 1933, as amended.
Forward-looking statements include statements regarding the intent,
belief or current expectations of the Company and its
management. Such statements, which are estimates only,
reflect management's current views, are based on certain
assumptions, and involve risks and uncertainties. Actual
results, events, or performance may differ materially from the
above forward-looking statements due to a number of important
factors, and will be dependent upon a variety of factors,
including, but not limited to Chembio's ability to obtain
additional financing and to obtain regulatory approvals in a timely
manner, as well as the demand for Chembio's products. Chembio
undertakes no obligation to publicly update these forward-looking
statements to reflect events or circumstances that occur after the
date hereof or to reflect any change in Chembio's expectations with
regard to these forward-looking statements or the occurrence of
unanticipated events. Factors that may impact Chembio's
success are more fully disclosed in Chembio's most recent public
filings with the U.S. Securities and Exchange Commission.
(TABLES TO FOLLOW)
Chembio Diagnostics, Inc. &
Subsidiaries |
Summary of Consolidated Results of
Operations |
(UNAUDITED) |
|
|
|
|
|
|
|
For the three months
ended |
|
|
|
March 31, 2017 |
March 31, 2016 |
|
Net product
sales |
|
$ |
5,427,427 |
|
|
|
$ |
5,917,019 |
|
|
|
|
|
|
|
License and royalty
revenue |
|
|
100,000 |
|
|
|
|
22,201 |
|
|
|
|
|
|
|
R&D, milestone and grant
revenue |
|
|
797,740 |
|
|
|
|
661,879 |
|
|
|
|
|
|
|
TOTAL
REVENUES |
|
$ |
6,325,167 |
|
|
|
$ |
6,601,099 |
|
|
|
|
|
|
|
GROSS
MARGIN |
|
$ |
3,105,952 |
|
|
|
$ |
3,165,548 |
|
|
|
|
|
|
|
Research and development
expenses |
|
$ |
2,246,572 |
|
|
|
$ |
1,634,298 |
|
|
|
|
|
|
|
Selling, general and administrative
expenses |
|
$ |
2,488,337 |
|
|
|
$ |
1,999,404 |
|
|
|
|
|
|
|
LOSS FROM
OPERATIONS |
|
$ |
(1,628,957 |
) |
|
|
$ |
(468,154 |
) |
|
|
|
|
|
|
OTHER
INCOME: |
|
$ |
13,382 |
|
|
|
$ |
2,564 |
|
|
|
|
|
|
|
Income tax provision
(benefit) |
|
$ |
-
|
|
|
|
$ |
(162,000 |
) |
|
|
|
|
|
|
NET
LOSS |
|
$ |
(1,615,575 |
) |
|
|
$ |
(303,590 |
) |
|
|
|
|
|
|
Basic loss per
share |
|
$ |
(0.13 |
) |
|
|
$ |
(0.03 |
) |
|
|
|
|
|
|
Diluted loss per
share |
|
$ |
(0.13 |
) |
|
|
$ |
(0.03 |
) |
|
|
|
|
|
|
Weighted average number of shares
outstanding, basic |
|
|
12,270,679 |
|
|
|
|
9,631,686 |
|
|
|
|
|
|
|
Weighted average number of shares
outstanding, diluted |
|
|
12,270,679 |
|
|
|
|
9,631,686 |
|
|
Chembio Diagnostics, Inc. &
Subsidiaries |
Summary of Consolidated Balance
Sheets |
(UNAUDITED) |
|
|
|
|
|
|
|
March 31, 2017 |
|
December 31, 2016 |
|
|
|
|
|
CURRENT
ASSETS: |
|
|
|
|
Cash and cash
equivalents |
|
$ |
5,582,482 |
|
|
$ |
10,554,464 |
|
Accounts receivable,
net of allowance for doubtful accounts of $52,000 at March 31, 2017
and December 31, 2016, respectively |
|
|
5,681,524 |
|
|
|
3,383,729 |
|
Inventories |
|
|
3,754,481 |
|
|
|
3,335,188 |
|
Prepaid expenses and
other current assets |
|
|
910,413 |
|
|
|
840,145 |
|
TOTAL CURRENT
ASSETS |
|
|
15,928,900 |
|
|
|
18,113,526 |
|
|
|
|
|
|
FIXED ASSETS, net of accumulated
depreciation |
|
|
1,901,557 |
|
|
|
1,709,321 |
|
|
|
|
|
|
OTHER
ASSETS |
|
|
3,057,049 |
|
|
|
752,389 |
|
|
|
|
|
|
TOTAL ASSETS |
|
$ |
20,887,506 |
|
|
$ |
20,575,236 |
|
|
|
|
|
|
- LIABILITIES
AND STOCKHOLDERS’ EQUITY - |
|
|
|
|
|
|
|
|
|
TOTAL CURRENT
LIABILITIES |
|
$ |
3,514,825.00 |
|
|
$ |
3,405,650.00 |
|
|
|
|
|
|
TOTAL
LIABILITIES |
|
|
3,514,825 |
|
|
|
3,405,650 |
|
|
|
|
|
|
STOCKHOLDERS’
EQUITY: |
|
|
|
|
Common stock - $.01 par
value; 100,000,000 shares authorized; 12,229,122 and 12,026,847
shares issued and outstanding at March 31, 2017 and December 31,
2016, respectively |
|
|
122,991 |
|
|
|
120,268 |
|
Additional paid-in
capital |
|
|
62,537,730 |
|
|
|
60,721,783 |
|
Accumulated
deficit |
|
|
(45,288,040 |
) |
|
|
(43,672,465 |
) |
TOTAL
STOCKHOLDERS’ EQUITY |
|
|
17,372,681 |
|
|
|
17,169,586 |
|
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
$ |
20,887,506 |
|
|
$ |
20,575,236 |
|
Chembio Diagnostics, Inc. &
Subsidiaries |
Summary of Consolidated Cash
Flows |
For the three Months
ended |
(UNAUDITED) |
|
|
March 31, 2017 |
|
|
March 31, 2016 |
|
|
|
|
|
Net cash used
in operating activities |
|
$ |
(3,871,811 |
) |
|
$ |
(2,690,610 |
) |
Net cash used
in investing activities |
|
|
(1,100,171 |
) |
|
|
(28,407 |
) |
Net cash
provided by financing activities |
|
|
- |
|
|
|
- |
|
DECREASE IN
CASH AND CASH EQUIVALENTS |
|
$ |
(4,971,982 |
) |
|
$ |
(2,719,017 |
) |
Contacts:
Company
Susan Norcott
(631) 924-1135 Ext. 125
snorcott@chembio.com
Investor Relations
Vida Strategic Partners (investors)
Stephanie C. Diaz
(415) 675-7401
sdiaz@vidasp.com
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