Clinical Labs Records Sixth Straight
Quarterly Revenue Gain on Growing Molecular Diagnostics
Volume
New York State Approvals of New Molecular
Diagnostic Assays Highlight R&D Activity
Enzo Biochem Inc. (NYSE:ENZ) today announced growth in operating
results for the third fiscal quarter and nine months ended April
30, 2017.
Third Quarter Highlights
- Total revenues increased to $27.1
million, a 2% increase from $26.4 million in the prior year
period.
- Clinical Labs revenues totaled $19.6
million, an 8% increase over the prior year period and the sixth
straight quarterly increase, reflecting continued growth in volume
of high margin molecular diagnostic tests (MDx). Gross margins
advanced 300 basis points, to 42%.
- Consolidated gross margin was 45%, a
200 basis points improvement over the prior year period.
- With operating expenses lower,
including legal costs, Enzo recorded a GAAP loss of $71,000, or
$0.00 per share. EBITDA, a non-GAAP measure, was $0.7 million, a
$1.8 million improvement over the prior year period.
- Enzo Life Sciences’ revenue was $7.5
million, an 9% decline from $8.3 million in the prior year period.
This was due to timing of product shipments, continued reduction in
the product mix to emphasize higher margins, and industrywide
weakness in the academic and governmental markets. Despite reduced
revenues, the segment remained profitable and cash flow
positive.
- Consolidated cash flows from operations
in the quarter were $0.9 million. After investing $0.7 million in
capital expenditures related to expansion in the Clinical Labs,
total cash and cash equivalents increased $0.2 million over the
second fiscal quarter 2017. Working capital at April 30, 2017 was
in excess of $70.5 million.
- As previously announced, New York State
Department of Health’s recent conditional approval of three new
diagnostics for the company’s cost efficient AmpiProbe® PCR
platform paves the way for their additions to Enzo’s expected
specialized 14-analyte panel, anticipated to be available by fall,
that will further establish Enzo’s strong MDx position in women’s
health.
Barry Weiner, President,
Comments:
“This was another excellent quarter of operational performance,
one of sustained growth, technological advances and market inroads.
Our transformative strategy to a fully integrated molecular
diagnostic company is being recognized in the marketplace. The
quarter was notable for the steadily increasing performance of our
clinical services. It reflected the addition of new clients,
growing interest in our molecular diagnostic development
capabilities, and expanding national reference services giving
recognition of our leading position as a provider of comprehensive
women’s health diagnostics. Enzo Life Sciences was affected by
timing of certain U.S. shipments, and tightening of academic and
government spending, while the segment focuses on product
development and approvals. In a relatively short time, we have
streamlined its product mix to concentrate on higher margin
products and have reduced products by over one-third to free
capacity for molecular diagnostics manufacturing and distribution.
At the same time, Enzo Life Science’s research capabilities,
uniquely integrated with our Clinical Labs, continues to turn out
advanced genomic diagnostic products built around our proprietary
technology platforms. This has enabled gross margin expansion at
Enzo and broadens our MDx test menu that offers greater efficiency
and reduced costs to independent laboratory customers.
“The integration of our operations is proving an important
aspect of our activities. We have been able to build a formidable
business model employing our significant patent estate and years of
accumulated know-how to benefit today’s independent lab market.
Specifically, we now provide a growing menu of highly efficient,
versatile and cost effective MDx products and platforms, compatible
with current open systems, which could result in significant
savings -- in many cases between 30% to 50%. We also have gone a
step further by making our state-of-the-art lab capabilities
available on a reference basis, enabling many independent labs to
utilize our services to continue to respond to their
client-physician needs and maintain margins as one effective way
for dealing with high product costs and shrinking
reimbursements.
“Also, Enzo was recently designated as an in-network health care
provider in the U.S. by one of the nation’s leading health services
organizations. Expanding Enzo’s in-network insurance coverage
nationwide is a key component of our growth strategy.
“Lastly, our patent infringement related lawsuits are moving
through the court system in Delaware and we expect some trials may
get underway before the end of the year.”
Fiscal 2017 Third Quarter Consolidated
Operating Results
During the quarter, revenues were $27.1 million compared to
$26.4 million a year ago, an increase of $0.7 million or 2%. Gross
profit improved to $12.2 million, from $11.4 million a year ago,
with consolidated gross margin of 45%, an increase of 200 basis
points, principally due to growth in the clinical services.
Operating expenses were $12.4 million, down from $14.0 million in
the prior year period, mainly due to lower legal and SG&A
expenses. Operating loss improved $2.3 million, to ($0.2) million,
compared to an operating loss a year ago of ($2.5) million.
The Company reported a net loss of less than ($0.1) million,
compared to a year ago net loss of ($2.1) million. Basic and fully
diluted per share results were ($0.00) compared to ($0.05) a year
ago. Earnings before interest, depreciation and amortization
(EBITDA), a non-GAAP measure, was $0.7 million, compared to
negative EBITDA a year ago of ($1.1) million.
As of April 30, 2017, cash and cash equivalents and working
capital were $62.6 million and $70.5 million, respectively.
Segment Quarterly
Results
Enzo Clinical Labs reported revenues of $19.6 million
compared to $18.2 million a year ago, an increase of $1.4 million
or 8%. Molecular testing continues to grow, as well as new accounts
added beyond existing regional areas, especially in the women’s
health segment where Enzo has increased its market share in the New
York metropolitan area. Gross profit was $8.3 million, with gross
margin of 42%, up 300 basis points from the prior year. Total
operating expenses were $6.8 million compared to $6.7 million in
the prior year. Operating income amounted to $1.5 million, compared
to $0.3 million a year ago, a five-fold increase.
Enzo Life Sciences revenues were $7.5 million compared to
$8.3 million in the prior year period, a decrease of $0.8 million
or 9%, due to lower product sales resulting from timing of certain
U.S. shipments that are expected to be picked up in subsequent
quarters, as well as continued weakness in the academic and
industrial markets due to reduced funding, amid industry pricing
pressures. Gross profit was $3.9 million with gross margin of 52%.
Operating income was $0.6 million, a decrease from $0.9 million a
year ago.
Fiscal 2017 Nine Months Consolidated
Operating Results
Year to date revenues increased to $79.6 million compared to
$76.2 million from a year ago, an increase of $3.5 million or 5%.
Gross profit increased 7% to $35.9 million and gross margin
increased 100 basis points to 45%. Operating expenses were $38.4
million compared to $42.4 million before licensing and legal
settlements, a decrease of $3.9 million or 9%, principally due to
lower legal fees offset in part by higher SG&A costs.
Year to date net loss was ($2.6) million compared to a year ago
net income of $9.1 million, which included $18.5 million in
licensing and legal settlements. Basic and fully diluted per share
loss equaled ($0.06), versus per share income of $0.20 last
year.
Conference Call
The Company will conduct a conference call Friday, June 9, 2017
at 8:30 AM ET. The call can be accessed by dialing 1-888-459-5609.
International callers can dial 1-973-321-1024. Please reference PIN
number 34280145. Interested parties may also listen over the
Internet at http://tinyurl.com/h5vvpm4 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 Friday, June 30, 2017. The
replay of the conference call can be accessed by dialing
1-800-585-8367, and when prompted, use PIN number 34280145.
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 Nine months ended
Selected
operations data:
April 30, April 30, (unaudited)
(unaudited)
2017
2016
2017
2016
Revenues: Clinical laboratory services $ 19,584 $ 18,162 $ 56,979 $
52,775 Product revenues 7,312 8,001 21,721 22,266 Royalty and
license fee income 193 270 933
1,129 Total revenues $ 27,089 $
26,433 $ 79,633 $ 76,170 Gross profit $
12,173 $ 11,445 $ 35,940 $ 33,498
Gross profit % 45 % 43 % 45 % 44
% Income (loss) before income taxes (1) (39 ) (2,113 )
(2,493 ) 9,447 Provision for income taxes (32 ) (2 ) (105 )
(296 ) Net income (loss) $ (71 ) $
(2,115 ) $ (2,598 ) $ 9,151 Basic net income (loss)
per share ($0.00 ) ($0.05 ) ($0.06 ) $ 0.20
Diluted net income (loss) per share ($0.00 )
($0.05 ) ($0.06 ) $ 0.20 Weighted average
shares outstanding - basic 46,367 46,201
46,310 46,115 Weighted average
shares outstanding - diluted 46,367 46,201
46,310 46,450 (1) -
includes legal settlements, net of $18.5 million for the nine
months ended April 30, 2016.
Selected balance
sheet data:
4/30/2017 (unaudited)
7/31/2016 (unaudited)
Cash and cash equivalents $ 62,627 $ 67,777 Working
capital $ 70,504 $ 70,829 Stockholders' equity $ 88,562 $
89,554 Total assets $ 106,577 $ 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 nine months
ended April 30, 2017 and 2016:
ENZO BIOCHEM, INC. Non-GAAP
Reconciliation Table (Unaudited, in thousands, except per share
data)
Three months ended Nine months ended
April 30, April 30,
2017
2016
2017
2016
Reported GAAP net income (loss) $ (71 ) $ (2,115 ) $ (2,598
) $ 9,151 Adjusted for: Legal settlements, net - - - (18,450 )
Costs related to contested proxy - - - 1,483 Separation payments
- 75 - 207
Non-GAAP net loss $ (71 ) $ (2,040 ) $ (2,598 ) $ (7,609 )
Weighted Shares Outstanding: Basic 46,367 46,201 46,310
46,115 Diluted 46,367 46,201 46,310 46,450 Basic and diluted
earnings per share: Basic net income (loss) per share GAAP ($0.00 )
($0.05 ) ($0.06 ) $ 0.20 Diluted net income (loss) per share GAAP
($0.00 ) ($0.05 ) ($0.06 ) $ 0.20 Basic net income (loss)
per share non-GAAP ($0.00 ) ($0.04 ) ($0.06 ) ($0.17 ) Diluted net
income (loss) per share non-GAAP ($0.00 ) ($0.04 ) ($0.06 ) ($0.17
)
The following table presents a reconciliation
of reported net income (loss) for the three and nine months ended
April 30, 2017 and 2016 to EBITDA and Adjusted EBITDA:
ENZO BIOCHEM, INC. EBITDA &
Adjusted EBITDA Reconciliation Table (Unaudited, in thousands)
Three months ended Nine months ended
April 30, April 30,
2017
2016
2017
2016
GAAP net income (loss) $ (71 ) $ (2,115 ) $ (2,598 ) $ 9,151
Plus: Depreciation and amortization 849 960 2,692 2,862 Interest
expense (income) (115 ) 40 (240 ) 122 Provision for income taxes
32 2 105 296
EBITDA $ 695 $ (1,113 ) $ (41 ) $ 12,431 Adjusted
for: Legal settlements, net - - - (18,450 ) Costs related to
contested proxy - - - 1,483 Separation payments -
75 - 207 Adjusted EBITDA
$ 695 $ (1,038 ) $ (41 ) $ (4,329 )
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170608006293/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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