GNMK GenMark Diagnostics Inc

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

Third Quarter Highlights

• Placed 65 ePlex® analyzers in the third quarter, mostly driven by first full quarter of U.S. launch
• Finished the quarter with an installed base of 147 ePlex analyzers in U.S. and European labs
• Achieved revenues of $11.6 million in the quarter, an increase of 7.3% over the prior year period

“We are pleased with our first full quarter of ePlex launch in the U.S., which drove the majority of placements in the third quarter,” said Hany Massarany, President and Chief Executive Officer. “With strong sales funnels and continued positive customer feedback regarding the overall performance of ePlex, we remain optimistic about our opportunity to accelerate our revenue growth rate and capture market share in the global multiplex molecular diagnostics market.”

Third Quarter Financial Results

Revenue was $11.6 million in the third quarter of 2017, an increase of 7.3% versus $10.7 million in the third quarter of 2016. Gross profit was $4.2 million, or 36% of revenue, compared with $6.5 million, or 60% of revenue in the same period of 2016.

Operating expenses for the third quarter of 2017 were $18.9 million compared to $18.1 million in the same period for 2016. The increase was mainly driven by sales and marketing expenses as the Company continues to expand its commercial organization in support of the global ePlex product launch.

Loss per share was $0.28 per share for the third quarter of 2017, compared to a $0.27 loss per share in the third quarter of 2016.

The Company ended the quarter with $86.9 million in cash and investments.

Business Outlook

For full year 2017, GenMark expects revenue to range from $51 - $53 million and gross margin to range from 38% to 40%. The Company expects to exit 2017 with 185-200 ePlex placements.

Webcast and Conference Call Information

The Company will be hosting a conference call to discuss third quarter results in further detail on Thursday, November 2, 2017 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 89238764 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, regulatory submissions and approvals, 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.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

    September 30,   December 31, 2017 2016 Current assets Cash and cash equivalents $ 27,161 $ 15,959 Marketable securities 59,756 25,607 Accounts receivable, net of allowances of $2,792 and $2,740, respectively 7,800 9,048 Inventories 7,109 6,633 Prepaid expenses and other current assets   1,971     1,202   Total current assets 103,797 58,449 Property and equipment, net 21,586 18,268 Intangible assets, net 2,772 2,670 Restricted cash 758 758 Other long-term assets   194     179   Total assets $ 129,107   $ 80,324   Current liabilities Accounts payable $ 7,242 $ 8,703 Accrued compensation 5,227 5,650 Loan payable 19,548 7,935 Other current liabilities   2,923     4,133   Total current liabilities 34,940 26,421 Long-term liabilities Deferred rent 3,225 3,652 Long-term debt 9,918 11,880 Other non-current liabilities   387     220   Total liabilities   48,470     42,173   Stockholders’ equity Preferred stock, $0.0001 par value; 5,000 authorized, none issued — — Common stock, $0.0001 par value; 100,000 authorized; 54,792 and 46,554 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively 5 4 Additional paid-in capital 483,242 393,322 Accumulated deficit (402,584 ) (355,270 ) Accumulated other comprehensive income   (26 )   95   Total stockholders’ equity   80,637     38,151   Total liabilities and stockholders’ equity $ 129,107   $ 80,324       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, 2017   2016 2017   2016 Revenue Product revenue $ 11,552 $ 10,727 $ 36,313 $ 34,111 License and other revenue   51     86     184     278   Total revenue 11,603 10,813 36,497 34,389 Cost of revenue   7,400     4,362     21,227     13,457   Gross profit 4,203 6,451 15,270 20,932 Operating expenses Sales and marketing 5,121 3,223 14,974 10,232 General and administrative 3,565 3,227 11,553 10,522 Research and development   10,248     11,628     34,297     37,100   Total operating expenses   18,934     18,078     60,824     57,854   Loss from operations   (14,731 )   (11,627 )   (45,554 )   (36,922 ) Other income (expense) Interest income 247 43 353 98 Interest expense (1,009 ) (476 ) (2,270 ) (1,061 ) Other income   76     16     227     7   Total other income (expense)   (686 )   (417 )   (1,690 )   (956 ) Loss before provision for income taxes (15,417 ) (12,044 ) (47,244 ) (37,878 ) Income tax expense (benefit)   (9 )   14     68     45   Net loss $ (15,408 ) $ (12,058 ) $ (47,312 ) $ (37,923 ) Net loss per share, basic and diluted $ (0.28 ) $ (0.27 ) $ (0.95 ) $ (0.88 ) Weighted average number of shares outstanding, basic and diluted   54,726     44,377     49,908     43,308   Other comprehensive loss Net loss $ (15,408 ) $ (12,058 ) $ (47,312 ) $ (37,923 ) Foreign currency translation adjustments 51 (4 ) 145 9 Net unrealized gains (losses) on marketable securities, net of tax   (9 )   20     (24 )   (2 ) Comprehensive loss $ (15,366 ) $ (12,042 ) $ (47,191 ) $ (37,916 )     GENMARK DIAGNOSTICS, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)     Nine Months Ended September 30, 2017   2016 Operating activities Net loss $ (47,312 ) $ (37,923 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 3,811 2,739 Amortization of premiums on investments 4 61 Amortization of deferred debt issuance costs 891 277 Gain on sale of investment in preferred stock — (9 ) Stock-based compensation 8,386 6,788 Provision for bad debt 51 13 Non-cash inventory adjustments 911 120 Other non-cash adjustments (190 ) 20 Changes in operating assets and liabilities: Accounts receivable 1,272 1,719 Inventories (4,813 ) (1,048 ) Prepaid expenses and other assets (767 ) (596 ) Other long-term assets (16 ) — Accounts payable (1,468 ) 916 Accrued compensation (452 ) 1,731 Other liabilities   (913 )   33   Net cash used in operating activities (40,605 ) (25,159 ) Investing activities Payments for intellectual property licenses (500 ) (800 ) Purchases of property and equipment (3,816 ) (5,105 ) Purchases of marketable securities (56,525 ) (32,895 ) Proceeds from sales of marketable securities 13,896 9 Maturities of marketable securities   8,500     8,050   Net cash used in investing activities (38,445 ) (30,741 ) Financing activities Proceeds from issuance of common stock 86,835 30,448 Costs incurred in conjunction with stock issuance (5,469 ) (1,091 ) Principal repayment of borrowings (6,123 ) (28 ) Proceeds from borrowings 15,000 10,000 Costs associated with debt issuance (187 ) (30 ) Proceeds from stock option exercises   213     507   Net cash provided by financing activities 90,269 39,806 Effect of exchange rate changes on cash   (17 )   2   Net increase (decrease) in cash and cash equivalents 11,202 (16,092 ) Cash and cash equivalents at beginning of period   15,959     35,385   Cash and cash equivalents at end of period $ 27,161   $ 19,293   Non-cash investing and financing activities Transfer of instruments from (to) property and equipment to (from) inventory $ (3,438 ) $ 234 Property and equipment costs included in accounts payable $ 330 $ 1,040 Intellectual property acquisitions included in other current liabilities $ — $ 700 Supplemental cash flow disclosures Cash paid for income taxes, net $ 58 $ 38 Cash received for interest $ 367 $ 58 Cash paid for interest $ 1,143 $ 761  

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Investor Relations ContactGenMark Diagnostics, Inc.Lynn Pieper Lewis or Leigh Salvo(415) 937-5404ir@genmarkdx.com