GNMK GenMark Diagnostics Inc

Second Quarter Revenue of $12.4 millionEnded the Quarter with Over 80 ePlex® Instruments Installed at Customer Sites

GenMark Diagnostics, Inc. (Nasdaq:GNMK), a leading provider of automated, multiplex molecular diagnostic testing systems, today announced financial results for the second quarter ended June 30, 2017.

Revenue for the second quarter of 2017 was $12.4 million, a decrease of 1% over the prior year period. Annuity per XT-8 analyzer was $69 thousand in the second quarter and in the mid-$70 thousand range over the last 4 quarters.

Gross profit for the second quarter was $4.9 million, or 40% of revenue, compared with $7.8 million, or 62% of revenue in the same period of 2016.

“We are delighted to have accomplished several important goals in the second quarter. Our team achieved FDA 510(k) clearance of the ePlex instrument and Respiratory Pathogen Panel as well as CE Mark for all three of our Blood Culture ID Panels,” said Hany Massarany, President and Chief Executive Officer of GenMark. “In addition, we significantly strengthened our balance sheet, which will enable us to bring even more focus to the global commercialization of our ePlex System and its menu expansion,” added Massarany.

Operating expenses for the second quarter of 2017 were $22.2 million compared to $20.4 million in the same period for 2016. The increase was mainly driven by Marketing and Sales expenses as the Company continues to expand its commercial organization in support of the global ePlex product launch.

Loss per share was $0.37 per share for the second quarter of 2017, compared to a $0.30 loss per share in the second quarter of 2016.

The Company ended the quarter with $106.5 million in cash and cash equivalents.

The Company will be hosting a conference call to discuss second quarter results in further detail on Tuesday, August 1, 2017 starting at 8:30 a.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 48903152 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 future financial performance and the timely and effective commercialization and clinical impact of our ePlex system, 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, our 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, 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.

 

GENMARK DIAGNOSTICS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

      June 30, 2017   December 31, 2016 Current assets Cash and cash equivalents $ 88,427 $ 15,959 Marketable securities 18,091 25,607 Accounts receivable, net of allowances of $2,773 and $2,740, respectively 7,268 9,048 Inventories 7,105 6,633 Prepaid expenses and other current assets 1,324   1,202   Total current assets 122,215 58,449 Property and equipment, net 19,778 18,268 Intangible assets, net 2,923 2,670 Restricted cash 758 758 Other long-term assets 179   179   Total assets $ 145,853   $ 80,324   Current liabilities Accounts payable $ 6,665 $ 8,703 Accrued compensation 4,502 5,650 Loan payable 19,275 7,935 Other current liabilities 3,557   4,133   Total current liabilities 33,999 26,421 Long-term liabilities Deferred rent 3,378 3,652 Long-term debt 14,901 11,880 Other non-current liabilities 222   220   Total liabilities 52,500   42,173   Stockholders’ equity Preferred stock, $0.0001 par value; 5,000 authorized, none issued — — Common stock, $0.0001 par value; 100,000 authorized; 54,665 and 46,554 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively 6 4 Additional paid-in capital 480,507 393,322 Accumulated deficit (387,176 ) (355,270 ) Accumulated other comprehensive income 16   95   Total stockholders’ equity 93,353   38,151   Total liabilities and stockholders’ equity $ 145,853   $ 80,324      

GENMARK DIAGNOSTICS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands, except per share data)

 

    Three Months Ended   Six Months Ended June 30, June 30, 2017   2016 2017   2016 Revenue Product revenue $ 12,291 $ 12,425 $ 24,761 $ 23,384 License and other revenue 68   87   133   192   Total revenue 12,359 12,512 24,894 23,576 Cost of revenue 7,475   4,720   13,827   9,095   Gross profit 4,884 7,792 11,067 14,481 Operating expenses Sales and marketing 5,159 3,300 9,853 7,009 General and administrative 3,978 3,876 7,988 7,296 Research and development 13,014   13,204   24,049   25,472   Total operating expenses 22,151   20,380   41,890   39,777   Loss from operations (17,267 ) (12,588 ) (30,823 ) (25,296 ) Other income (expense) Interest income 54 26 106 55 Interest expense (755 ) (308 ) (1,261 ) (585 ) Other income 56   (42 ) 151   (9 ) Total other expense (645 ) (324 ) (1,004 ) (539 ) Loss before provision for income taxes (17,912 ) (12,912 ) (31,827 ) (25,835 ) Income tax expense 77   (5 ) 78   31   Net loss $ (17,989 ) $ (12,907 ) $ (31,905 ) $ (25,866 ) Net loss per share, basic and diluted $ (0.37 ) $ (0.30 ) $ (0.67 ) $ (0.60 ) Weighted average number of shares outstanding, basic and diluted 48,067   42,864   47,460   42,768   Other comprehensive loss Net loss $ (17,989 ) $ (12,907 ) $ (31,905 ) $ (25,866 ) Foreign currency translation adjustments 3 (34 ) 94 13 Net unrealized losses on marketable securities, net of tax 1   (5 ) (15 ) (21 ) Comprehensive loss $ (17,985 ) $ (12,946 ) $ (31,826 ) $ (25,874 )    

GENMARK DIAGNOSTICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

      Six Months Ended June 30, 2017   2016 Operating activities Net loss $ (31,905 ) $ (25,866 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 2,454 1,791 Amortization of premiums on investments 30 35 Amortization of deferred debt issuance costs 493 169 Stock-based compensation 5,602 4,540 Provision for bad debt 32 23 Non-cash inventory adjustments 565 92 Other non-cash adjustments (123 ) 19 Changes in operating assets and liabilities: Accounts receivable 1,795 1,406 Inventories (2,563 ) 306 Prepaid expenses and other assets (119 ) (721 ) Accounts payable (3,134 ) 1,289 Accrued compensation (1,170 ) 1,119 Other liabilities (124 ) 303   Net cash used in operating activities (28,167 ) (15,495 ) Investing activities Payments for intellectual property licenses — (800 ) Purchases of property and equipment (2,535 ) (2,404 ) Purchases of marketable securities (10,496 ) (2,532 ) Proceeds from sales of marketable securities 13,896 — Maturities of marketable securities 4,100   4,650   Net cash provided by (used in) investing activities 4,965 (1,086 ) Financing activities Proceeds from issuance of common stock 86,835 449 Costs incurred in conjunction with stock issuance (5,171 ) — Principal repayment of borrowings (964 ) (17 ) Proceeds from borrowings 15,000 10,000 Costs associated with debt issuance (187 ) (30 ) Proceeds from stock option exercises 170   352  

Net cash provided by financing activities

95,683 10,754 Effect of exchange rate changes on cash (13 ) 3   Net increase (decrease) in cash and cash equivalents 72,468 (5,824 ) Cash and cash equivalents at beginning of period 15,959   35,385   Cash and cash equivalents at end of period $ 88,427   $ 29,561   Non-cash investing and financing activities Transfer of instruments from (to) property and equipment into (from) inventory $ (1,534 ) $ 42 Property and equipment costs included in accounts payable 713 588 Intellectual property acquisitions included in other current liabilities 500 — Supplemental cash flow disclosures Cash paid for income taxes, net 54 13,000 Cash received for interest 187 51,000 Cash paid for interest 574 408,000  

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GenMark Diagnostics, Inc.Hany Massarany, 760-448-4325President/Chief Executive Officer