Interpace Biosciences, Inc. (Nasdaq: IDXG) today announced
financial results for the fiscal year ended December 31, 2019 and
provided a business and financial update.
“Fiscal 2019 was a transformational year for us
as we acquired the Biopharma business of Cancer Genetics in July
and raised over $47 million from sophisticated laboratory private
equity investors in 2019 and early 2020. We believe that the
combination of our clinical services and acquired pharma services
uniquely positions us for growth and expansion in the fast-growing
biopharma sector where we can provide our unique diagnostic
capabilities to a broad customer base.” said CEO Jack Stover. “We
believe that our accomplishments this year have supported our
aggressive growth plans and also de-risked our business during
these uncertain times,” added Mr. Stover.
2019 Business and Financial
Highlights
- Acquired the BioPharma business of Cancer
Genetics (CGI) in July 2019, which contributed $6.7 million in net
revenue in 2019.
- Net Revenue was $24.1 million for fiscal
2019, a 10% increase over fiscal 2018 Net Revenue of $21.9 million.
Net Revenue included approximately $8.7 million reserve in accounts
receivable, $3.5 million related to 2018 billings and $5.2 million
related to 2019 billings.
- The $5.2 million reserve related to 2019
billings was recorded as a reduction of Net Revenue to reflect
collectability concerns of the 2019 year-end receivables.
Collections of these, reserved for 2019 billings in 2020, if any,
will be recorded in Net Revenue at that time.
- Gross profit for fiscal 2019 year was 34% as
compared to 53% in fiscal 2018. Fiscal 2019 margins were negatively
impacted by the carve out and transition of the pharma solutions
business from CGI and the $5.2 million reserve.
- Raised over $47 million of long-term capital
from sophisticated laboratory private equity investors through
January 2020 which will be included in total stockholders’ equity
beginning in the first quarter of 2020.
Fourth Quarter 2019 Financial
Highlights
- Net Revenue for the fourth quarter of 2019
was $4.1 million, a reduction of 30% from the prior year fourth
quarter. 2019 fourth quarter revenue included a $5.2 million
reserve against prior quarters’ outstanding receivables which
reduced Net Revenue for the quarter accordingly.
- Year-end December 31, 2019 cash position of
approximately $2.3 million and a total of $3.1 million of cash and
availability.
First Quarter 2020 Preliminary Financial
Highlights
- Expect first quarter Net Revenue in the
range of $8.8 million to $9.3 million.
- Quarter-end March 31, 2020 cash position of
approximately $14.5 million and a total of $16.8 million of cash
and availability.
- As of April 21, 2020, total cash and
availability of approximately $18.4 million.
Cancer is relentless and we are committed to
delivering critical answers to patients, even in the face of
unprecedented challenges such as COVID-19. We believe we have taken
all necessary precautions to safeguard our employees from the
COVID-19 pandemic. Our labs are operational and all non-essential
employees are on a work-from-home arrangement. However, there can
be no assurance that key employees will not become ill or that we
will be able to continue to operate our labs. We will continue to
take all necessary actions to support our customers’ requirements
and preserve the financial health of Interpace.
“The leadership team acted quickly to minimize
business disruption and reduced spending in areas not critical to
patient care to ensure we have the financial flexibility to meet
patient needs. Further, we took immediate action to reduce lab and
overhead support costs to match our physical needs. Actions include
elimination of non-essential discretionary spending, temporary
furlough of employees where activities were reduced, a hiring
freeze, deferral of incentive bonuses anticipated to be paid in
2020 and a 10 to 15 percent reduction in base pay of all salaried
employees including all members of our leadership team,” stated
Jack Stover.
In response to customer interest we have
acquired and installed processing equipment to perform serology
antibody ELISA testing for COVID-19 at our CLIA lab in Pittsburgh,
PA. We are in the process of validating processes while acquiring
acceptable kits and reference samples and expect to be able to
offer this testing to customers in the next several weeks.
“First quarter 2020 Net Revenue is expected to
be in the range of $8.8 million to $9.3 million as compared to $6.0
million reported in the first quarter of 2019. In spite of our test
volumes dropping throughout March 2020 due to the coronavirus
pandemic, diagnostic average daily test volume increased
approximately 25% and pharma services average daily testing volume
increased approximately 64% when compared to the first quarter of
2019. However, March 2020 diagnostic average daily test volume
declined approximately 27% from February 2020 and declined a
further 56% for the period of April 1 through April 20, 2020.
Alternatively, Pharma services revenue improved throughout the
quarter and leading indicators, bookings and backlog point to a
strong back half of 2020. However, we have seen a softening of
demand in the near term as a result of our global footprint and
testing activity through April 20, 2020 was down 19% relative to
March.,” stated Fred Knechtel CFO Interpace.
Jack Stover added, “As we look at the remainder
of 2020, in this uncertain time, I am very excited about our
prospects:
- We are an essential medical services business and therefore
expect to remain open and able to serve our customers who handle
critical cancer-related patient care and develop life-saving
treatments;
- We recently recognized a significant retroactive price increase
in 2020 from Medicare for ThyraMIR® and we have been notified of a
prospective price increase for ThyGeNEXT®;
- We anticipate publishing a seminal paper on the clinical
validity of the combination of ThyGeNEXT®/ThyraMIR®, our largest
commercial products;
- We have demonstrated our ability to reduce operating costs
consistent with volume changes while continuing to integrate the
Biopharma business we recently acquired;
- Through March our pharma services sales pipeline reached record
levels providing us confidence in our ability to ramp up this
business as our customers reengage or expand clinical trials;
- We have and will continue to add more contracted reimbursement
coverage with private insurers, helping to support more timely and
accurate payment of our tests;
- We have made significant progress in streamlining and improving
our billing processes to allow us to collect cash on a more timely
and consistent basis.
Recent Clinical and Reimbursement
Highlights
We continue to generate and publish clinical
evidence related to our key products, including ThyGeNEXT® and
ThyraMIR® and PancraGEN® as well as our pipeline product,
BarreGEN®. Below is a summary of the most important publications
and presentations announced since the beginning of 2019:
Clinical Performance and Evidence
- Acceptance of first paper demonstrating clinical performance of
ThyGeNEXT® and ThyraMIR® ;
- Publication of new data on Thyroid test utility, peer reviewed
journal article and one textbook on clinical utility of
ThyGeNEXT®;
- Presentation of data on Thyroid performance at ATA in 3
separate posters;
- Presentation at ACOG on PancraGEN®;
- Announced data from our thyroid registry published in
Diagnostic Cytology; and First independent publication of clinical
utility of BarreGEN®.
Clinical Reimbursement Expansion
Reimbursement for our clinical diagnostics tests
are the lifeblood of our business and critical to our ability to
serve our diverse customer base. Below are our most important
reimbursement accomplishments since the beginning of 2019:
- Contract with Blue Cross/Blue Shield of
Massachusetts for more than 2 million of their members;
- Improvement for ThyraMIR’s® Medicare
reimbursement from $1800 to $3000, retroactive to January 1,
2020;
- New draft Medicare LCD for ThyGeNEXT®
indicating a reimbursement increase of approximately $2400;
- Contract with Blue Cross/Blue Shield of
Michigan for ThyGeNEXT® and ThyraMIR® for their 6 million
members;
- Contract with Blue Cross/Blue Shield of
California for ThyGeNEXT® and ThyraMIR® for their 4 million
members;
- Contract with 3 independent Blue Cross and
Blue Shield plans for ThyGeNEXT® and ThyraMIR® in Alabama, Arkansas
and Arizona that combine to serve 5 million members;
- New agreement with Select Health for
coverage of their 850,000 members;
- New agreement with Independence Blue Cross
for coverage of their 2.5 million members;
- New coverage of our thyroid assays by Medica
serving their 1.3 million members; and
- Agreement with the University of Maryland
Medical System serving its approximately 25,000 employees.
Other Business Announcements
- Expanded our collaboration agreement with
LabCorp® (NYSE: LH) to co-market our thyroid tests for an
additional two years, through January 2022;
- Announced strategic partnership with
Genecast Biotechnology Co, Ltd. to support our global
pharmaceutical and biotechnology clients with their testing needs
in the Chinese market;
- Entered into a research agreement with
Predictive Oncology to evaluate enhancing diagnosis of thyroid
cancer via AI driven analyses;
- Our PA and CT labs received College of
American Pathology (CAP) accreditation; and
- Finalized validation of FFPE samples of
ThyraMIR® and subsequently announced approval to launch ThyraMIR®
on FFPE fixation in New York State.
Addition of Chairman of the Board,
Robert Gorman
We are pleased to welcome Bob Gorman as our new
Chairman of the Board. Bob has a tremendous amount of experience in
helping to build successful laboratories and companies in our
industry, having served in leadership roles with companies such as
Quest Diagnostics and Eurofins Scientific Group. We look forward to
Bob’s active involvement.
2020 Net Revenue Guidance
As a result of the uncertainty and potential
impact of the coronavirus pandemic, we believe it is prudent to
withdraw our previously announced annual revenue guidance for
2020.
CONFERENCE CALL INFORMATION
Interpace will hold a conference call and
Webcast on Wednesday April 22, 2020, at 5:00 pm ET. Details are as
follow:
Date and Time: Wednesday April 22, 2020
at 5:00 pm ET |
Dial-in Number (Domestic): +1 (877)
407-9716 |
Dial-in Number (International): +1 (201)
493-6779 |
Confirmation Number: 13702580
Webcast Access:
http://public.viavid.com/index.php?id=139379 |
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.
Clinical services, through Interpace
Diagnostics, 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 has four
commercialized molecular tests and one test in a clinical
evaluation process (CEP): PancraGEN® for the diagnosis and
prognosis of pancreatic cancer from pancreatic cysts; ThyGeNEXT®
for the diagnosis of thyroid cancer from thyroid nodules utilizing
a next generation sequencing assay; ThyraMIR® for the diagnosis of
thyroid cancer from thyroid nodules utilizing a proprietary gene
expression assay; and RespriDX® that differentiates lung cancer of
primary vs. metastatic origin. In addition, BarreGEN® for Barrett’s
Esophagus, is currently in a clinical evaluation program whereby we
gather information from physicians using BarreGEN® to assist us in
positioning the product for full launch, partnering and potentially
supporting reimbursement with payers.
Pharma services, through Interpace Pharma
Solutions, provides pharmacogenomics testing, genotyping,
biorepository and other customized services to the pharmaceutical
and biotech industries. Pharma services also advance 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
Biosciences’ website at www.interpace.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
the adverse impact of the Coronavirus (COVID-19) pandemic, our
history of operating losses and the limited revenue generated by
our clinical and pharma solutions customers, our dependence on
sales and reimbursements from our clinical services, our reliance
on third parties to process and transmit claims to payers for our
clinical services, and any delay, data loss, or other disruption in
processing or transmitting such claims could have an adverse effect
on our revenue and financial condition, our revenue recognition
being based in part on our estimates for future collections which
estimates may prove to be incorrect, that we will be able to meet
our revenue projections and that there is no guarantee that we will
be successful in completing development or realize any revenue or
benefit from our efforts to launch a new product line of antibody
testing of the COVID-19 virus. The preliminary financial results
for the first quarter of 2020 are subject to the completion of
management’s final review and our other financial closing
procedures and therefore are subject to change; 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 filed on April 22, 2020. 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
INTERPACE BIOSCIENCES,
INC.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(in thousands, except per share
data)
|
|
Three Months Ended |
|
|
|
|
|
|
December 31, |
|
|
Years Ended |
|
|
|
(unaudited) |
|
|
December 31, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue, net |
|
$ |
4,073 |
|
|
$ |
5,834 |
|
|
$ |
24,079 |
|
|
$ |
21,896 |
|
Cost of revenue |
|
|
5,399 |
|
|
|
2,607 |
|
|
|
15,888 |
|
|
|
10,197 |
|
Gross (loss) profit |
|
|
(1,326 |
) |
|
|
3,227 |
|
|
|
8,191 |
|
|
|
11,699 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing |
|
|
2,990 |
|
|
|
2,286 |
|
|
|
11,116 |
|
|
|
8,421 |
|
Research and development |
|
|
778 |
|
|
|
596 |
|
|
|
2,810 |
|
|
|
2,124 |
|
General and administrative |
|
|
4,753 |
|
|
|
2,518 |
|
|
|
14,546 |
|
|
|
8,499 |
|
Acquisition related expense |
|
|
- |
|
|
|
- |
|
|
|
2,534 |
|
|
|
- |
|
Acquisition related amortization expense |
|
|
1,031 |
|
|
|
813 |
|
|
|
3,652 |
|
|
|
3,252 |
|
Change in fair value of contingent consideration |
|
|
(44 |
) |
|
|
1,522 |
|
|
|
(44 |
) |
|
|
1,522 |
|
Total operating expenses |
|
|
9,508 |
|
|
|
7,735 |
|
|
|
34,614 |
|
|
|
23,818 |
|
Operating loss |
|
|
(10,834 |
) |
|
|
(4,508 |
) |
|
|
(26,423 |
) |
|
|
(12,119 |
) |
Accretion expense |
|
|
(109 |
) |
|
|
(83 |
) |
|
|
(440 |
) |
|
|
(331 |
) |
Other income, net |
|
|
209 |
|
|
|
405 |
|
|
|
196 |
|
|
|
263 |
|
Loss from continuing operations before tax |
|
|
(10,734 |
) |
|
|
(4,186 |
) |
|
|
(26,667 |
) |
|
|
(12,187 |
) |
(Benefit) provision for
income taxes |
|
|
(47 |
) |
|
|
(3 |
) |
|
|
(28 |
) |
|
|
18 |
|
Loss from continuing operations, net of tax |
|
|
(10,687 |
) |
|
|
(4,183 |
) |
|
|
(26,639 |
) |
|
|
(12,205 |
) |
Less Preferred stock dividends |
|
|
(354 |
) |
|
|
- |
|
|
|
(429 |
) |
|
|
- |
|
Loss from continuing
operations attributable to common stockholders |
|
|
(11,041 |
) |
|
|
(4,183 |
) |
|
|
(27,068 |
) |
|
|
(12,205 |
) |
(Loss) income from
discontinued operations, net of tax |
|
|
(38 |
) |
|
|
146 |
|
|
|
(88 |
) |
|
|
16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to common stockholders |
|
$ |
(11,079 |
) |
|
$ |
(4,037 |
) |
|
$ |
(27,156 |
) |
|
$ |
(12,189 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted (loss)
income per share of common stock: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From continuing operations |
|
$ |
(2.88 |
) |
|
$ |
(1.46 |
) |
|
$ |
(7.23 |
) |
|
$ |
(4.33 |
) |
From discontinued operations |
|
|
(0.01 |
) |
|
|
0.05 |
|
|
|
(0.02 |
) |
|
|
- |
|
Net loss per basic and diluted share of common stock |
|
$ |
(2.89 |
) |
|
$ |
(1.41 |
) |
|
$ |
(7.25 |
) |
|
$ |
(4.33 |
) |
Weighted average number of
common shares and common share equivalents outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
3,834 |
|
|
|
2,861 |
|
|
|
3,746 |
|
|
|
2,816 |
|
Diluted |
|
|
3,834 |
|
|
|
2,861 |
|
|
|
3,746 |
|
|
|
2,816 |
|
Selected Balance Sheet Data
($ in thousands)
|
|
December 31, |
|
|
December 31, |
|
|
|
2019 |
|
|
2018 |
|
Cash and cash equivalents |
|
$ |
2,321 |
|
|
$ |
6,068 |
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
16,369 |
|
|
|
17,721 |
|
Total current liabilities |
|
|
17,298 |
|
|
|
8,492 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
69,051 |
|
|
|
48,442 |
|
Total liabilities |
|
|
29,853 |
|
|
|
15,504 |
|
Total stockholders equity |
|
|
13,026 |
|
|
|
32,938 |
|
Selected Cash Flow
Data($ in thousands)
|
|
For the Years Ended |
|
|
|
December 31, |
|
|
|
2019 |
|
|
2018 |
|
Net loss |
|
$ |
(26,727 |
) |
|
$ |
(12,189 |
) |
|
|
|
|
|
|
|
|
|
Net cash used in
operations |
|
$ |
(18,957 |
) |
|
$ |
(8,673 |
) |
Net cash used in investing
activities |
|
|
(13,947 |
) |
|
|
(449 |
) |
Net cash provided by (used in)
financing activities |
|
|
29,157 |
|
|
|
(9 |
) |
Change in cash and cash
equivalents |
|
|
(3,747 |
) |
|
|
(9,131 |
) |
Cash and equivalents,
Beginning |
|
|
6,068 |
|
|
|
15,199 |
|
Cash and equivalents,
Ending |
|
$ |
2,321 |
|
|
$ |
6,068 |
|
Non-GAAP Financial Measures
In addition to the United States generally
accepted accounting principles, or GAAP, results provided
throughout this document, we have provided certain non-GAAP
financial measures to help evaluate the results of our 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 our 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 our 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.
GAAP to Non-GAAP Reconciliation
(Unaudited)($ in thousands)
|
|
Quarters Ended |
|
|
Years Ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing
operations (GAAP Basis) |
|
$ |
(10,687 |
) |
|
$ |
(4,183 |
) |
|
$ |
(26,639 |
) |
|
$ |
(12,205 |
) |
Acquisition related expense |
|
|
- |
|
|
|
- |
|
|
|
2,534 |
|
|
|
- |
|
Transition expenses |
|
|
- |
|
|
|
- |
|
|
|
836 |
|
|
|
- |
|
Depreciation and amortization |
|
|
1,276 |
|
|
|
884 |
|
|
|
4,187 |
|
|
|
3,464 |
|
Stock-based compensation |
|
|
289 |
|
|
|
706 |
|
|
|
1,535 |
|
|
|
2,270 |
|
Bad debt expense |
|
|
- |
|
|
|
- |
|
|
|
499 |
|
|
|
- |
|
Taxes |
|
|
(47 |
) |
|
|
(3 |
) |
|
|
(28 |
) |
|
|
18 |
|
Accretion expense |
|
|
109 |
|
|
|
83 |
|
|
|
440 |
|
|
|
331 |
|
Mark to market on warrant liability |
|
|
(244 |
) |
|
|
(372 |
) |
|
|
(279 |
) |
|
|
(112 |
) |
Change in fair value of contingent consideration |
|
|
(44 |
) |
|
|
1,522 |
|
|
|
(44 |
) |
|
|
1,522 |
|
Non-GAAP Adjusted EBITDA |
|
$ |
(9,348 |
) |
|
$ |
(1,363 |
) |
|
$ |
(16,959 |
) |
|
$ |
(4,712 |
) |
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