Interpace Biosciences, Inc. (“Interpace” or the “Company”) (Nasdaq:
IDXG) today announced financial results for the fiscal quarter
ended June 30, 2020 and provided a business and financial update.
Year to date Net Revenue was $14.6 million, a
19% increase as compared to the same period of 2019. Second quarter
Net Revenue was $5.4 million, a decrease of 13% from the prior year
second quarter as the second quarter 2020 was the hardest hit by
the impact of COVID-19. Our 2020 results include the results of our
pharma services acquired in the third quarter of 2019 which are not
included in 2019 results herein. We believe our Net Revenue growth
year to date as compared to 2019 further demonstrates the value of
that acquisition and the benefit to improving our overall risk
profile by diversifying customers and operations.
In July 2020, we announced that our peer
reviewed manuscript, describing results from a seminal clinical
validation study of the combination of ThyGeNEXTâ and ThyraMIRâ,
was accepted for publication in the highly respected journal
Diagnostic Cytopathology and also accepted as a podium presentation
for the American Society of Cytopathology (ASC) Annual Meeting.
Recently, this publication was published on line and available to
customers, clients and insurance companies. Our progress through
July 2020 in executing agreements or contracts with over a half
dozen Blue Cross Blue Shield plans focused on ThyGeNEXTÒ and
ThyraMIRÒ is expected to be beneficial to us as we are continuously
seeking to improve reimbursement.
Q2-2020 pharma services entered into
approximately $9 million of new agreements, our greatest bookings
quarter so far and established the opportunity for future
revenues.
Due to a violation of a financial covenant and
failure to file our form 10-q on a timely basis we currently do not
have availability to borrow funds under the SVB Loan Agreement (the
Agreement) and we repaid $3.4 million of borrowings previously
outstanding in September 2020. While the Company has received a
waiver of default from SVB and is in compliance with the terms of
the SVB Loan Agreement as of the date of this Report, we currently
do not have the ability to drawn down on the Revolving Line of
Credit at this time. The Company is exploring options to reinstate
availability in the near term.
“We are pleased with our results year to date
and for the quarter and our overall performance and progress toward
our goals in spite of the challenges of the COVID-19 pandemic,”
said Jack Stover, Interpace’s President & CEO. “I am proud
during this time that that we managed our costs effectively,
continued to service customers and physicians, improved
reimbursement, produced solid clinical results and grew our pharma
services backlog while protecting our employees and seeking to
operate as effectively and efficiently as possible. I am also
pleased to report that the findings of the Audit Committee
investigation, originally announced in August and which delayed
filing of our second quarter 10-Q, found all claims to be
unsubstantiated.”
Year to Date and Second Quarter 2020
Financial Performance
For the Six Months Ended June 30, 2020 as
Compared to the Six Months Ended June 30, 2019
|
● |
Net Revenue was $14.6 million, an increase of 19% from the prior
year to date period, which did not include pharma services
revenues. |
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● |
Gross Profit was 32% as compared to 54% for the first six months of
2019; this decrease was due principally to lower margins associated
with pharma services in 2020 prior to consolidation of facilities,
as well as the coronavirus pandemic. |
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|
● |
General & Administrative costs were up primarily attributable
to costs associated with the acquired pharma services
business. |
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|
● |
Loss from Continuing Operations was approximately $(11.6) million
in the current year period as compared to $(8.6) million in the
prior year to date period. |
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|
● |
Adjusted EBITDA was $(8.3) million as compared to $(5.2) million
for the prior year to date period. |
For the Second Quarter of 2020 as Compared to
the Second Quarter of 2019
|
● |
Net Revenue was $5.4 million, a decrease of 13% from the prior year
second quarter principally due to the impact of the pandemic. It
should be noted that the second quarter of 2019 did not include
pharma services revenues. |
|
|
|
|
● |
Gross Profit was 29% as compared to 52% in the second quarter of
2019; this decrease was due principally to lower margins associated
with pharma services in 2020, the impact of the coronavirus
pandemic which caused reduced demand for our clinical services, and
additional integration costs to support our lab move. |
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|
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|
● |
Loss from Continuing Operations was $(5.4) million as compared to
$(5.3) million for the prior year second quarter. |
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|
● |
Adjusted EBITDA was $(4.2) million as compared to $(3.4) million
for the prior year second quarter. |
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● |
June 30, 2020 cash balance was $15.1 million. |
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®.
Reimbursement expansion for our clinical
services through July 2020 is as follows:
|
● |
In April 2020, we executed an agreement with Avalon Healthcare
Solutions (Avalon), a laboratory benefit manager representing
numerous health plans. Our agreement with Avalon offers us
in-network status to approximately 5.8 million lives covered by the
following health plans: Blue Cross Blue Shield North Carolina,
South Carolina, Kansas City and Vermont, and Capital Blue Cross of
Central Pennsylvania. |
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|
● |
In April 2020, we executed a contract with Blue Cross of Idaho
making ThyGeNEXT® and ThyraMIR® tests covered in-network services
for their more than 576,000 members. |
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|
● |
In April 2020, we executed a contract with Blue Cross Blue Shield
of Kansas. |
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|
● |
In May 2020, we executed a contract with Blue Cross Blue Shield of
Wyoming. |
Nasdaq Update
We are working on a remediation plan to submit
to Nasdaq as a result of our failure to meet the Nasdaq minimum
stockholder’s equity requirement of $2.5 million as of June 30,
2020.
Third Quarter Net Revenue
Guidance
Net revenue for the third quarter is estimated
to between $7.5 million and $7.8 million
CONFERENCE CALL INFORMATION
Interpace will hold a conference call and Webcast on Wednesday
October 21, 2020, at 8:30 am ET. Details are as follow:
Date and Time: Wednesday October 21, 2020 at
8:30 am ETDial-in Number (Domestic): +1 (877)
407-9716Dial-in Number (International): +1 (201)
493-6779
Confirmation Number:
13712344Webcast Access:
http://public.viavid.com/index.php?id=142139
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 an emerging 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 versus metastatic origin. In addition, BarreGEN®, a
molecular based assay that helps resolve the risk of progression of
Barrett’s Esophagus to esophageal cancer, is currently in a CEP
whereby we gather information from physicians using BarreGEN® to
assist us in gathering clinical evidence relative to the safety and
performance of the test and also providing data that will
potentially support payer reimbursement.
Pharma services, through Interpace Pharma
Solutions, provides pharmacogenomics testing, genotyping,
biorepository and other customized services to the pharmaceutical
and biotech industries. Pharma services also 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,
while also 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,
but not limited to, the adverse impact of the COVID-19 pandemic on
the Company’s operations and revenues, the substantial doubt about
the Company’s ability to continue as a going concern, the Company’s
history of operating losses, the Company’s ability to adequately
finance its business, including maintaining its line of credit, the
Company’s ability to maintain its Nasdaq listing in light of its
failure to meet minimum stockholder equity requirements as of June
30, 2020, the Company’s dependence on sales and reimbursements from
its clinical services, the Company’s ability to retain or secure
reimbursement including its reliance on third parties to process
and transmit claims to payers and the adverse impact of any delay,
data loss, or other disruption in processing or transmitting such
claims, and the Company’s revenue recognition being based in part
on estimates for future collections which estimates may prove to be
incorrect. 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,
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 RelationsEdison GroupJoseph
Green/ Megan Paul(646)
653-7030/7034jgreen@edisongroup.com/mpaul@edisongroup.com
INTERPACE BIOSCIENCES,
INC.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED)(in thousands, except per
share data)
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue, net |
|
$ |
5,446 |
|
|
$ |
6,270 |
|
|
$ |
14,645 |
|
|
$ |
12,280 |
|
Cost of revenue |
|
|
3,850 |
|
|
|
3,031 |
|
|
|
9,963 |
|
|
|
5,654 |
|
Gross Profit |
|
|
1,596 |
|
|
|
3,239 |
|
|
|
4,682 |
|
|
|
6,626 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing |
|
|
1,596 |
|
|
|
2,959 |
|
|
|
4,077 |
|
|
|
5,369 |
|
Research and development |
|
|
550 |
|
|
|
647 |
|
|
|
1,360 |
|
|
|
1,175 |
|
General and
administrative |
|
|
4,107 |
|
|
|
2,788 |
|
|
|
8,993 |
|
|
|
5,299 |
|
Acquisition related
expense |
|
|
- |
|
|
|
1,295 |
|
|
|
- |
|
|
|
1,696 |
|
Acquisition amortization
expense |
|
|
1,031 |
|
|
|
813 |
|
|
|
2,062 |
|
|
|
1,626 |
|
Total operating expenses |
|
|
7,284 |
|
|
|
8,502 |
|
|
|
16,492 |
|
|
|
15,165 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
|
(5,688 |
) |
|
|
(5,263 |
) |
|
|
(11,810 |
) |
|
|
(8,539 |
) |
Interest accretion |
|
|
(167 |
) |
|
|
(91 |
) |
|
|
(276 |
) |
|
|
(220 |
) |
Other income, net |
|
|
438 |
|
|
|
74 |
|
|
|
485 |
|
|
|
123 |
|
Loss from continuing operations before tax |
|
|
(5,417 |
) |
|
|
(5,280 |
) |
|
|
(11,601 |
) |
|
|
(8,636 |
) |
Provision for income
taxes |
|
|
13 |
|
|
|
5 |
|
|
|
28 |
|
|
|
10 |
|
Loss from continuing operations |
|
|
(5,430 |
) |
|
|
(5,285 |
) |
|
|
(11,629 |
) |
|
|
(8,646 |
) |
Less adjustment for preferred
stock deemed dividend |
|
|
- |
|
|
|
- |
|
|
|
(3,033 |
) |
|
|
- |
|
Loss from continuing
operations attributable to common stockholders |
|
|
(5,430 |
) |
|
|
(5,285 |
) |
|
|
(14,662 |
) |
|
|
(8,646 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss (income) from discontinued operations, net of tax |
|
|
(66 |
) |
|
|
65 |
|
|
|
(130 |
) |
|
|
7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to
common stockholders |
|
$ |
(5,496 |
) |
|
$ |
(5,220 |
) |
|
$ |
(14,792 |
) |
|
$ |
(8,639 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted (loss)
income per share of common stock: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From continuing operations |
|
$ |
(1.35 |
) |
|
$ |
(1.39 |
) |
|
$ |
(3.65 |
) |
|
$ |
(2.36 |
) |
From discontinued operations |
|
|
(0.01 |
) |
|
|
0.02 |
|
|
|
(0.03 |
) |
|
|
- |
|
Net loss per basic share of common stock |
|
$ |
(1.36 |
) |
|
$ |
(1.37 |
) |
|
$ |
(3.68 |
) |
|
$ |
(2.36 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
common shares and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
common share equivalents
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
4,033 |
|
|
|
3,813 |
|
|
|
4,018 |
|
|
|
3,665 |
|
Diluted |
|
|
4,033 |
|
|
|
3,813 |
|
|
|
4,018 |
|
|
|
3,665 |
|
Selected Balance Sheet Data
(Unaudited)($ in thousands)
|
|
June 30, |
|
|
December 31, |
|
|
|
2020 |
|
|
2019 |
|
Cash and cash equivalents |
|
$ |
15,106 |
|
|
$ |
2,321 |
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
26,096 |
|
|
|
16,369 |
|
Total current liabilities |
|
|
16,098 |
|
|
|
17,298 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
78,431 |
|
|
|
69,051 |
|
Total liabilities |
|
|
30,202 |
|
|
|
29,853 |
|
Total stockholders’
equity |
|
|
1,693 |
|
|
|
13,026 |
|
Selected Cash Flow Data
(Unaudited)($ in thousands)
|
|
For the Six Months Ended |
|
|
|
June 30, |
|
|
|
2020 |
|
|
2019 |
|
Net loss |
|
$ |
(11,759 |
) |
|
$ |
(8,639 |
) |
|
|
|
|
|
|
|
|
|
Net cash used in
operations |
|
$ |
(6,673 |
) |
|
$ |
(7,785 |
) |
Net cash used in investing
activities |
|
|
(913 |
) |
|
|
(35 |
) |
Net cash provided by financing
activities |
|
|
20,371 |
|
|
|
5,962 |
|
Change in cash and cash
equivalents |
|
|
12,785 |
|
|
|
(1,858 |
) |
Cash and equivalents,
Beginning |
|
|
2,321 |
|
|
|
6,068 |
|
Cash and equivalents,
Ending |
|
$ |
15,106 |
|
|
$ |
4,210 |
|
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, receipt of stimulus grants, 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.
Reconciliation of Adjusted EBITDA
(Unaudited)($ in thousands)
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Loss from continuing
operations (GAAP Basis) |
|
$ |
(5,430 |
) |
|
$ |
(5,285 |
) |
|
$ |
(11,629 |
) |
|
$ |
(8,646 |
) |
Bad debt expense |
|
|
- |
|
|
|
499 |
|
|
|
250 |
|
|
|
499 |
|
Receipt of HHS stimulus
grant |
|
|
(650 |
) |
|
|
- |
|
|
|
(650 |
) |
|
|
- |
|
Transition expenses |
|
|
124 |
|
|
|
- |
|
|
|
180 |
|
|
|
- |
|
Depreciation and
amortization |
|
|
1,237 |
|
|
|
876 |
|
|
|
2,472 |
|
|
|
1,749 |
|
Stock-based compensation |
|
|
400 |
|
|
|
452 |
|
|
|
818 |
|
|
|
990 |
|
Taxes |
|
|
13 |
|
|
|
5 |
|
|
|
28 |
|
|
|
10 |
|
Accretion expense |
|
|
167 |
|
|
|
91 |
|
|
|
276 |
|
|
|
220 |
|
Mark to market on warrant
liability |
|
|
(23 |
) |
|
|
(42 |
) |
|
|
(49 |
) |
|
|
(45 |
) |
Adjusted EBITDA |
|
$ |
(4,162 |
) |
|
$ |
(3,404 |
) |
|
$ |
(8,304 |
) |
|
$ |
(5,223 |
) |
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