Interpace Biosciences, Inc. (formerly Interpace Diagnostics Group,
Inc.) (Nasdaq: IDXG), a leader in enabling personalized medicine,
offering specialized services along the therapeutic value chain
from early diagnosis and prognostic planning to targeted
therapeutic applications, announced today that it has changed its
name to
Interpace Biosciences, Inc. to better
reflect its new business model that combines its traditional
esoteric molecular diagnostic business with its recent acquisition
of the BioPharma business of Cancer Genetics (CGIX), now known as
Interpace Pharma Solutions, that uses its
proprietary test systems and platforms to support drug discovery
and development valued by pharmaceutical and biotechnology
companies. Interpace Biosciences will continue to trade on NASDAQ
as IDXG.
Interpace Biosciences recognized $7.7 million in
Net Revenue for the quarter and $20.0 million year to date. Our
Diagnostics business had volume growth of 16% for the quarter and
22% year to date. Medicare and contracted reimbursement remained
strong and continued to grow across both products.
On July 15, 2019 Interpace closed on the
acquisition of the BioPharma business of Cancer Genetics and
accordingly from that date forward the BioPharma business is being
reported in the results of operations of Interpace Biosciences.
Further, on October 16, 2019 Interpace Biosciences closed on the
$13 million second tranche round of financing with Ampersand
Capital Partners (Ampersand) and on October 24th we completed
settlement with Cancer Genetics under the Net Working Capital
Adjustment as planned. We are now moving forward together as one
company!
Certainly part of our rationale in acquiring the
BioPharma business was risk diversification of our customer base
and revenue stream but more importantly it was to take advantage of
the synergies between these two businesses as cancer therapeutics
move toward earlier stage treatment, require customized services
and obligate many therapeutic companies to match their targeted
therapies with companion diagnostics. Today, Interpace Pharma
Solutions is involved in over 225 clinical trials including
approximately 47 immuno-oncology trials. Focusing on the Pharma
Solutions business, contracts are growing and bookings have been
recorded through September 30, 2019 worth over $18 million that are
expected to be recognized over the next year or more. Our near-term
growth plans are to add additional business development personnel
in key unserved markets, expand our immuno-oncology franchise and
accelerate global expansion as recently indicated by our
partnership with Genecast in Bejing, China.
We think that the combination of the Interpace
Diagnostics and Interpace Pharma Solutions businesses, now under
the Interpace Biosciences’ umbrella, is a great platform to
leverage our broad based and synergistic capabilities, and deliver
consistent growth. The addition of Ampersand as a significant
financial and strategic partner and investor in Interpace
Biosciences we believe provides validation of our model and plans
as well as the basis for supporting future synergistic growth.
Interpace Biosciences has demonstrated its ability to not only
acquire meaningful assets but to also cost effectively integrate
assets while continuing to grow.
“During the third quarter we continued to drive
volume growth across our products and completed the acquisition of
the BioPharma business of Cancer Genetics (CGIX). We are especially
pleased to be partnering with Ampersand Capital Partners, one of
the best known and most successful funds in the laboratory services
space,” said Jack Stover, President & CEO Of Interpace. “The
transition process is happening on schedule and our goal, as
previously stated, is to reach adjusted EBITDA breakeven before the
end of next year,” Stover said.
THIRD QUARTER 2019 FINANCIAL PERFORMANCE
For the Third Quarter of 2019 as Compared to the Third Quarter
of 2018
- Net Revenue was $7.7 million which included revenues of both
our Diagnostics and Pharma Solutions business for part of the
quarter, an increase of 34%;
- Gross Profit was 37%, a decrease compared to 52% primarily due
to the acquisition of the BioPharma business and the reduction in
the estimate of amounts to be collected resulting from our
transition to a new billing and collections contractor.
- Sales & marketing expenses increased $0.7 million to $2.8
million;
- G&A Expenses were $4.5 million as compared to $2.1 million
again related principally to our BioPharma acquisition and certain
non-cash charges;
- Acquisition-related costs were $0.8 million in the current
quarter with no such costs in the prior year;
- Loss from Continuing Operations was $(7.3) million as compared
to $(3.0) million;
- Net Loss per basic and diluted share was $(0.19) versus
$(0.11);
- Adjusted EBITDA was $(4.2) million as compared to $(1.0)
million; and
- Net cash used in operations for the quarter was $(4.8) million
as compared to $(1.8) million.
For the Nine Months Ended September 30, 2019 as Compared to the
Nine Months Ended September 30,
2018
- Net Revenue increased to $20.0 million, a 25% improvement;
- Gross Profit decreased to 48% from 53%;
- Sales & Marketing expenses increased $2.0 million or
33%;
- G&A expenses were $9.8 million as compared to $6.0 million
due principally to costs associated with the BioPharma
acquisition;
- Acquisition-related costs were $2.4 million with no such costs
in the comparable period for the prior year;
- Loss from Continuing Operations was $(16.0) million as
compared to $(8.0) million;
- Net Loss per Share was $(0.43) as compared to $(0.29);
- Adjusted EBITDA was $(7.7) million as compared to $(3.4)
million; and
- Net cash used in operations was $(12.6) million as compared to
$(6.8) million.
Cash and cash equivalents were $2.4 million as
of September 30, 2019 before the closing of the second tranche
financing with Ampersand on October 16th, 2019. From the proceeds
received from the second closing with Ampersand, approximately
$3.75 million was used to repay the balance in the revolving credit
line, $6.02 million was used to repay the note to Cancer Genetics
and the balance was used for general corporate purposes including
the integration of the BioPharma business. Further, on September
20, 2019, the Company entered into an Equity Distribution Agreement
with Oppenheimer & Co. Inc., as sales agent, pursuant to which
the Company may, from time to time, issue and sell shares of its
common stock with an aggregate offering price of up to $4.8
million.. To date, no shares have been sold under this
Agreement.
Adjusted EBITDA (in the attached schedule),
which we believe is a meaningful supplemental disclosure that may
be indicative of how management and our Board of Directors evaluate
Company performance, is defined as income or loss from continuing
operations, plus depreciation and amortization, non-cash stock
based compensation, interest and taxes, and other non-cash expenses
including asset impairment costs, non-recurring acquisition and
transition expenses, loss on extinguishment of debt, goodwill
impairment, change in fair value of contingent consideration and
warrant liability.
RECENT BUSINESS HIGHLIGHTS
Secured Additional Financing via Ampersand Capital
Partners and Acquisition of BioPharma Business
Closed on a $13 million Convertible Preferred Stock investment
by Ampersand constituting the second tranche of the overall $27
million Convertible Preferred Stock financing provided by Ampersand
to Interpace in connection with Interpace’s July 15, 2019
acquisition of the BioPharma Business of Cancer Genetics, Inc.
(CGIX).
Reimbursement Expansion Announced
|
● |
In September we announced that we contracted with 3 independent
Blue Cross Blue Shield (BCBS) plans in the South and Southwest
totaling nearly 5 million covered lives;
- Announced diagnostic contract agreement with BCBS plans of
Michigan and California;
- Announced agreement with SelectHealth to provide ThyGeNEXT® and
ThyraMIR® in Utah and Idaho to more than 850,000 members; and;
- Announced that THyGeNEXT® and ThyraMIR® are now covered by
Independence Blue Cross for its nearly 2.5 million members in
Philadelphia and Southeastern PA.
|
|
|
|
Clinical Validation Announcements
- Announced the publication of two peer-reviewed journal articles
and one textbook chapter supporting the clinical utility of
ThyGeNEXT® when used alone and in combination with ThyraMIR®;
- Presented new data on the performance of ThyGeNEXT® and
ThyraMIR® at the American Thyroid Assn Annual Meeting in
October;
- Presented new data on the performance of PancraGEN® at the
American College of Gastroenterology in October; and
- Presented at the World Congress on Thyroid Cancer in Rome on
detail outcomes of a study using our thyroid assays in combination
with microRNA testing.
Other
- Entered into a strategic partnership with Genecast to partner
biopharma solutions in China;
- Interpace named one of the 50 “Most Admired Companies of the
Year” by Silicon Review; and
- Entered into agreement with Predictive Oncology to evaluate
diagnosis of thyroid cancer via AI-driven analyses.
UPDATED NET REVENUE GUIDANCE
Interpace is adjusting its 2019 annual Net Revenue
guidance to between $28 and $32 million as we continue to
transition the BioPharma business and prepare for our first full
year together. Interpace Biosciences is also confirming top-line
revenue guidance of $50 million for 2020.
CONFERENCE CALL INFORMATION Interpace will hold
a conference call and Webcast on Wednesday, November 13, 2019, at
4:30 pm ET to discuss financial and operational results for the
third quarter ended September 30, 2019. Details are as follow:
Date and Time: Wednesday, November 13,
2019 at 4:30 pm ET |
Dial-in Number (Domestic): (877)
407-0312 |
Dial-in Number (International): +1 (201)
389-0899 |
Confirmation
Number: 13690534Webcast Access:
https://webcasts.eqs.com/interpacedia20190513/en |
The webcast replay will be available on the Company’s website
approximately two hours following completion of the call and
archived on the Company’s website for 90 days.
About Interpace Biosciences
Interpace Biosciences is a leader in enabling
personalized medicine, offering specialized services along the
therapeutic value chain from early diagnosis and prognostic
planning to targeted therapeutic applications.
Interpace Diagnostics is a fully integrated commercial and
bioinformatics business unit that provides clinically useful
molecular diagnostic tests, bioinformatics and pathology services
for evaluating risk of cancer by leveraging the latest technology
in personalized medicine for improved patient diagnosis and
management.
Interpace Pharma Solutions provides
pharmacogenomics testing, genotyping, biorepository and other
customized services to the pharmaceutical and biotech industries
and advances personalized medicine by partnering with
pharmaceutical, academic, and technology leaders to effectively
integrate pharmacogenomics into their drug development and clinical
trial programs with the goals of delivering safer, more effective
drugs to market more quickly, and improving patient care.For more
information, please visit Interpace’s current website
at www.interpacediagnostics.com.
Forward-looking Statements
This press release contains forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, Section 21E of the Securities Exchange Act of 1934 and the
Private Securities Litigation Reform Act of 1995, relating to the
Company's future financial and operating performance. The Company
has attempted to identify forward looking statements by terminology
including "believes," "estimates," "anticipates," "expects,"
"plans," "projects," "intends," "potential," "may," "could,"
"might," "will," "should," "approximately" or other words that
convey uncertainty of future events or outcomes to identify these
forward-looking statements. These statements are based on current
expectations, assumptions and uncertainties involving judgments
about, among other things, future economic, competitive and market
conditions and future business decisions, all of which are
difficult or impossible to predict accurately and many of which are
beyond the Company's control. These statements also involve known
and unknown risks, uncertainties and other factors that may cause
the Company's actual results to be materially different from those
expressed or implied by any forward-looking statement, including
that there is no assurance that the acquisition of the BioPharma
business will be successfully integrated with the Company, that the
potential benefits of the acquisition, including future revenues,
will be successfully realized, that other potential acquisitions
will be successfully consummated, that the Company will be able to
maintain its Nasdaq listing and that the Company will be able to
meet its revenue projections. Additionally, all forward-looking
statements are subject to the “Risk Factors” detailed from time to
time in the Company's most recent Annual Report on Form 10-K,
Current Reports on Form 8-K and Quarterly Reports on Form 10-Q.
Because of these and other risks, uncertainties and assumptions,
undue reliance should not be placed on these forward-looking
statements. In addition, these statements speak only as of the date
of this press release and, except as may be required by law, the
Company undertakes no obligation to revise or update publicly any
forward-looking statements for any reason.
Contacts: Investor Relations Edison Group
Joseph Green (646) 653-7030 jgreen@edisongroup.com
Non-GAAP Financial Measures
In addition to the United States generally
accepted accounting principles, or GAAP, results provided
throughout this document, Interpace Biosciences has provided
certain non-GAAP financial measures to help evaluate the results of
its performance. We believe that these non-GAAP financial measures,
when presented in conjunction with comparable GAAP financial
measures, are useful to both management and investors in analyzing
the Company’s ongoing business and operating performance. We
believe that providing the non-GAAP information to investors, in
addition to the GAAP presentation, allows investors to view the
Company’s financial results in the way that management views
financial results.
In this document, we discuss Adjusted EBITDA, a
non-GAAP financial measure. Adjusted EBITDA is a metric used by
management to measure cash flow of the ongoing business. Adjusted
EBITDA is defined as income or loss from continuing operations,
plus depreciation and amortization, acquisition related expenses,
transition expenses, non-cash stock based compensation, interest
and taxes, and other non-cash expenses including asset impairment
costs, bad debt expense, loss on extinguishment of debt, goodwill
impairment and change in fair value of contingent consideration,
and warrant liability. The table below includes a reconciliation of
this non-GAAP financial measure to the most directly comparable
GAAP financial measure.
INTERPACE BIOSCIENCES, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED) |
(in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue, net |
|
$ |
7,725 |
|
|
$ |
5,753 |
|
|
$ |
20,005 |
|
|
$ |
16,062 |
|
Cost of revenue |
|
|
4,835 |
|
|
|
2,763 |
|
|
|
10,489 |
|
|
|
7,590 |
|
Gross Profit |
|
|
2,890 |
|
|
|
2,990 |
|
|
|
9,516 |
|
|
|
8,472 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing |
|
|
2,757 |
|
|
|
2,048 |
|
|
|
8,127 |
|
|
|
6,135 |
|
Research and development |
|
|
857 |
|
|
|
510 |
|
|
|
2,032 |
|
|
|
1,528 |
|
General and
administrative |
|
|
4,492 |
|
|
|
2,084 |
|
|
|
9,790 |
|
|
|
5,981 |
|
Acquisition related
expense |
|
|
838 |
|
|
|
- |
|
|
|
2,534 |
|
|
|
- |
|
Acquisition related
amortization expense |
|
|
995 |
|
|
|
813 |
|
|
|
2,621 |
|
|
|
2,439 |
|
Total operating expenses |
|
|
9,939 |
|
|
|
5,455 |
|
|
|
25,104 |
|
|
|
16,083 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
|
(7,049 |
) |
|
|
(2,465 |
) |
|
|
(15,588 |
) |
|
|
(7,611 |
) |
Accretion expense |
|
|
(111 |
) |
|
|
(248 |
) |
|
|
(331 |
) |
|
|
(248 |
) |
Other income (expense),
net |
|
|
(135 |
) |
|
|
(288 |
) |
|
|
(12 |
) |
|
|
(143 |
) |
Loss from continuing operations before tax |
|
|
(7,295 |
) |
|
|
(3,001 |
) |
|
|
(15,931 |
) |
|
|
(8,002 |
) |
Provision for income
taxes |
|
|
9 |
|
|
|
7 |
|
|
|
19 |
|
|
|
21 |
|
Loss from continuing operations |
|
|
(7,304 |
) |
|
|
(3,008 |
) |
|
|
(15,950 |
) |
|
|
(8,023 |
) |
Loss from discontinued operations, net of tax |
|
|
(58 |
) |
|
|
(34 |
) |
|
|
(51 |
) |
|
|
(129 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(7,362 |
) |
|
$ |
(3,042 |
) |
|
$ |
(16,001 |
) |
|
$ |
(8,152 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted (loss)
income per share of common stock: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From continuing operations |
|
$ |
(0.19 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.43 |
) |
|
$ |
(0.29 |
) |
From discontinued operations |
|
|
(0.00 |
) |
|
|
(0.00 |
) |
|
|
(0.00 |
) |
|
|
(0.00 |
) |
Net (loss) income per diluted share of common stock |
|
$ |
(0.19 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.43 |
) |
|
$ |
(0.29 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
common shares and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
common share equivalents outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
38,196 |
|
|
|
28,215 |
|
|
|
37,169 |
|
|
|
28,002 |
|
Diluted |
|
|
38,196 |
|
|
|
28,215 |
|
|
|
37,169 |
|
|
|
28,002 |
|
Selected Balance Sheet Data (Unaudited) |
($ in thousands) |
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
|
|
2019 |
|
|
2018 |
|
Cash and cash equivalents |
|
$ |
2,358 |
|
|
$ |
6,068 |
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
20,581 |
|
|
|
17,721 |
|
Total current liabilities |
|
|
17,296 |
|
|
|
8,492 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
74,673 |
|
|
|
48,442 |
|
Total liabilities |
|
|
37,915 |
|
|
|
15,504 |
|
Total preferred stock |
|
|
13,161 |
|
|
|
- |
|
Total stockholders equity |
|
|
23,597 |
|
|
|
32,938 |
|
Selected Cash Flow Data (Unaudited) |
($ in thousands) |
|
|
For the Nine Months Ended |
|
|
|
September 30, |
|
|
|
2019 |
|
|
2018 |
|
Net loss |
|
$ |
(16,001 |
) |
|
$ |
(8,152 |
) |
|
|
|
|
|
|
|
|
|
Net cash used in
operations |
|
$ |
(12,556 |
) |
|
$ |
(6,800 |
) |
Net cash used in investing
activities |
|
|
(13,921 |
) |
|
|
(388 |
) |
Net cash provided by (used in)
financing activities |
|
|
22,767 |
|
|
|
(9 |
) |
Change in cash and cash
equivalents |
|
|
(3,710 |
) |
|
|
(7,197 |
) |
Cash and equivalents,
Beginning |
|
|
6,068 |
|
|
|
15,199 |
|
Cash and equivalents,
Ending |
|
$ |
2,358 |
|
|
$ |
8,002 |
|
GAAP to
Non-GAAP Reconciliation (Unaudited) |
($ in
thousands) |
|
|
|
|
|
|
|
|
|
Quarters
Ended |
|
Nine Months
Ended |
|
September 30, |
|
September 30, |
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
Loss from continuing operations (GAAP Basis) |
($ |
7,304 |
) |
|
($ |
3,008 |
) |
|
($ |
15,950 |
) |
|
($ |
8,023 |
) |
Acquisition related expense |
|
838 |
|
|
|
- |
|
|
|
2,534 |
|
|
|
- |
|
Transition expenses |
|
836 |
|
|
|
- |
|
|
|
836 |
|
|
|
- |
|
Depreciation and amortization |
|
1,074 |
|
|
|
870 |
|
|
|
2,823 |
|
|
|
2,580 |
|
Stock-based compensation |
|
211 |
|
|
|
525 |
|
|
|
1,247 |
|
|
|
1,564 |
|
Bad debt expense |
|
- |
|
|
|
- |
|
|
|
499 |
|
|
|
- |
|
Taxes |
|
- |
|
|
|
7 |
|
|
|
- |
|
|
|
21 |
|
Accretion expense |
|
111 |
|
|
|
248 |
|
|
|
331 |
|
|
|
248 |
|
Mark to market on warrant liability |
|
10 |
|
|
|
325 |
|
|
|
-35 |
|
|
|
259 |
|
Adjusted EBITDA (Non-GAAP Basis) |
($ |
4,224 |
) |
|
($ |
1,033 |
) |
|
($ |
7,715 |
) |
|
($ |
3,351 |
) |
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