Integrated Diagnostic Company Reports Higher
Revenues
Enzo Biochem Inc. (NYSE:ENZ) today announced results for the
fiscal quarter and six months ended January 31, 2018.
Quarter Highlights (Year over
Year)
- Total revenues for the second fiscal
quarter increased to $27.0 million, or 3%, from $26.3 million in
the prior year period.
- Clinical Lab revenues for the quarter
totaled $19.5 million, an increase of 4% over the prior year
period, despite severe weather impacting operations. Enzo Life
Sciences revenue was $7.4 million, unchanged over the year
ago.
- Gross margins were 42% in the current
year quarter, lower than 44% in the prior year period due to
adverse weather noted above and lower genomic product sales.
- Heavier than usual increased legal
expenses of $1.7 million resulted in an operating loss of ($3.1)
million compared to ($1.0) million a year ago.
- GAAP net loss declined to ($0.9)
million or ($0.02) per share, compared to ($1.0) million or ($0.02)
per share a year ago, and for six months amounted to ($1.6) million
or ($0.03) per share, compared to ($2.5) million or ($0.05) per
share, a $0.9 million improvement.
- Total cash and cash equivalents at
January 31, 2018 was $64.5 million, an increase of $0.3 million
from July 31, 2017, and consolidated cash flow from operations was
$0.8 million for the six months ended January 31, 2018, an increase
of $3.7 million over the prior year period. Working capital stands
at nearly $70 million as of January 31, 2018.
- During the quarter, the Company fully
integrated and validated its AmpiProbe® platform for use in its
laboratory which is expected to result in significant savings in
the cost of laboratory services in future periods.
- Interest in Enzo’s now completed
13-analyte women’s diagnostics health panel continues to mount,
reinforcing build-up of physician servicing network in northeast
service territory.
- In addition to continued emphasis on
product development, the quarter’s activity was focused on
increased marketing, including additions to and training of our
sales staff, and appearances at major industry conferences and
meetings to promote the Company’s highly efficient, higher margin
molecular diagnostic test alternatives to profit-squeezed
independent labs.
Barry Weiner, President,
Comments
“The second fiscal quarter of 2018 has been an especially
productive period. While we continued to gain ground with our
AmpiProbe® products and other New York State Department of Health
approved diagnostics designed to allay cost pressures affecting the
nation’s independent clinical laboratories, severe winter weather
cut into our clinical laboratory operations revenues. In addition,
in anticipation of a trial in New York’s Federal Southern District
in litigation with Roche, following a favorable Markman
patent-related decision by the court for Enzo, stepped-up
depositions involving extensive expert testimony resulted in a
substantial increase in litigation expenses. This case involves
both patent and contract issues.
“Total revenues continue to grow, with Clinical Labs quarterly
results improving year over year despite the harsh weather that
affected operations of approximately two days resulting in lost
revenues. Product revenues at Life Sciences also advanced,
underscoring the benefits starting to derive from our strategic
program to increase both services and product revenues. Our
financial position and balance sheet remain strong providing the
necessary capital from positive cash flow to grow organically and
make long term capital investments.
“The expected new reduced PAMA Medicare reimbursements took
effect in January further enforcing our strategy in helping
laboratories to improve their margin utilizing our program of low
cost products and services. Our focus remains on serving
independent labs as an integrated, growth-oriented molecular
diagnostics company, and a low-cost medically related assay
provider and reference service organization. Put simply, with our
current approved platforms and assays and those in our pipeline, we
expect to be a lead supplier of affordable and reliable diagnostic
testing either by product or service. Towards that end, we are
diligently expanding and investing in our marketing program
directed at independent labs and hospitals. The superior
effectiveness and utility of our products that are compatible with
existing in-house diagnostic systems has been demonstrated in
various studies. We will adhere to those high standards of
sensitivity and economy as we build our comprehensive testing
line-up moving forward.”
Second Quarter Results
The quarter’s total revenues amounted to approximately $27
million, compared to $26.3 million a year ago, an increase of 3%.
Gross profit was $11.3 million or 42% of total revenue. Total
operating expenses were $14.4 million and included selling and
general and administrative expenses of $11.1 million, or 41% of
revenue.
As noted, a favorable Markman decision in our New York
litigation with Roche resulted in a significant increase in
litigation expenditures to $1.7 million, compared with $370,000 a
year ago. After slightly higher interest income, a foreign currency
gain, and a $1.1 million tax benefit attributable to the Tax Cuts
and Jobs Act of 2017, GAAP net loss amounted to $(0.9) million, or
$(0.02) per share, compared to the year ago GAAP net loss of $(1.1)
million or $(0.02) per share. Adjusted net loss amounted to $(2.0)
million or $(0.04) per share compared to Adjusted net loss of
$(1.1) million or $(0.02) per share a year ago. EBITDA (earnings
before interest, taxes, depreciation and amortization) and Adjusted
EBITDA were both a loss of ($1.4) million, compared to ($0.2)
million in the prior year period due largely to increased legal
expenses.
As of January 31, 2018, cash and cash equivalents were $64.5
million with working capital of nearly $70 million. Cash flow from
operations for the six months was $0.8 million, an increase of $3.7
million over the prior year period.
First Half Results
Total revenues were $54.6 million or 4% higher than prior year.
Gross profit totaled $23.6 million, compared to $23.8 million a
year ago, with gross margins of 43% and 45%, respectively. SG&A
of $22.0 million increased $0.7 million, but as a percentage of
sales declined to 40% from 43% a year ago. With legal expenses
increasing to $2.1 million, from $0.7 million a year ago, the
operating loss amounted to ($3.7) million, compared with ($2.2)
million. The six month GAAP net loss totaled ($1.5) million, or
($0.03) per share, down from ($2.5) million, or ($0.05) per share,
a 38% improvement.
Segment Results -
Quarter
Enzo Clinical Labs revenues were $19.5 million, an
increase of 4%, from $18.8 million in the prior year. The increase
in revenue was offset in part by adverse winter weather and a
severe Flu season in the Northeast that essentially curtailed
patient visits to physicians and clinics by approximately two days
during the quarter, consequently reducing the number of tests
submitted and processed. As a result, gross margins were 40%,
compared to 41% in the prior year period. SG&A increased
approximately $210,000 due to headcount and costs in client and
billing services, but as a percentage of revenues remained at 31%.
Operating income was $0.9 million, versus $1.2 million in the prior
year period. Enzo Life Sciences revenues were $7.4 million,
unchanged over the year ago.
Gross profit equaled 48% compared to 53% a year ago due to lower
genomic product sales and a decline in royalty income. SG&A
remained flat at approximately $2.9 million, though as a percentage
of revenues declined 10 basis points to 39%. Operating income
amounted to $51,000, versus $381,000 a year ago due to lower
margins on product sales.
Conference Call
The Company will conduct a conference call Tuesday, March 13,
2018 at 8:30 AM ET. The call can be accessed by dialing
1-888-459-5609. International callers can dial 1-973-321-1024.
Please reference PIN number 9386236.
Interested parties may also listen over the Internet at:
https://tinyurl.com/yb9wet9f
To listen to the live call on the Internet, please go to the web
site at least fifteen minutes early to register, download and
install any necessary audio software. For those who cannot listen
to the live broadcast, a replay will be available approximately two
hours after the end of the live call, through midnight (ET) on
March 27, 2018. The replay of the conference call can be accessed
by dialing 1-855-859-2056, and when prompted, use PIN number
9386236. International callers can dial 1-404-537-3406, using the
same PIN number.
ADJUSTED Financial
Measures
To comply with Regulation G promulgated pursuant to the
Sarbanes-Oxley Act, Enzo Biochem attached to this news release and
will post to the Company's investor relations web site
(www.enzo.com) any reconciliation of differences between GAAP and
Adjusted financial information that may be required in connection
with issuing the Company's quarterly financial results.
The Company uses EBITDA as a measure of performance to
demonstrate earnings exclusive of interest, taxes, depreciation and
amortization. Adjustments to EBITDA are for items of a
non-recurring nature and are reconciled on the table provided. The
Company manages its business based on its operating cash flows. The
Company, in its daily management of its business affairs and
analysis of its monthly, quarterly and annual performance, makes
its decisions based on cash flows, not on the amortization of
assets obtained through historical activities. The Company, in
managing its current and future affairs, cannot affect the
amortization of the intangible assets to any material degree, and
therefore uses EBITDA as its primary management guide. Since an
outside investor may base its evaluation of the Company's
performance based on the Company's net loss not its cash flows,
there is a limitation to the EBITDA measurement. EBITDA is not, and
should not be considered, an alternative to net loss, loss from
operations, or any other measure for determining operating
performance of liquidity, as determined under accounting principles
generally accepted in the United States (GAAP). The most directly
comparable GAAP reference in the Company's case is the removal of
interest, taxes, depreciation and amortization.
We refer you to the tables attached to this press release which
includes reconciliation tables of GAAP to Adjusted net income
(loss) and EBITDA to Adjusted EBITDA.
About Enzo Biochem
Enzo Biochem is a pioneer in molecular diagnostics, leading the
convergence of clinical laboratories, life sciences and
intellectual property through the development of unique diagnostic
platform technologies that provide numerous advantages over
previous standards. A global company, Enzo Biochem utilizes
cross-functional teams to develop and deploy products, systems and
services that meet the ever-changing and rapidly growing needs of
health care today and into the future. Underpinning Enzo Biochem’s
products and technologies is a broad and deep intellectual property
portfolio, with patent coverage across a number of key enabling
technologies.
Except for historical information, the matters discussed in this
news release may be considered "forward-looking" statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended and Section 21E of the Securities Exchange Act of 1934, as
amended. Such statements include declarations regarding the intent,
belief or current expectations of the Company and its management,
including those related to cash flow, gross margins, revenues, and
expenses which are dependent on a number of factors outside of the
control of the Company including, inter alia, the markets for the
Company’s products and services, costs of goods and services, other
expenses, government regulations, litigation, and general business
conditions. See Risk Factors in the Company’s Form 10-K for the
fiscal year ended July 31, 2017. Investors are cautioned that any
such forward-looking statements are not guarantees of future
performance and involve a number of risks and uncertainties that
could materially affect actual results. The Company disclaims any
obligations to update any forward-looking statement as a result of
developments occurring after the date of this press release.
ENZO BIOCHEM, INC. (in thousands, except per share
data)
Three months ended Six months
ended
Selected
operations data:
January 31 January 31, (unaudited)
(unaudited)
2018
2017
2018
2017
Revenues: Clinical laboratory services $ 19,530 $ 18,837 $ 39,864 $
37,395 Product revenues 7,122 6,983 14,203 14,409 Royalty and
license fee income 300 440 561
740 Total revenues $ 26,952 $
26,260 $ 54,628 $ 52,544 Gross profit $
11,345 $ 11,688 $ 23,590 $ 23,767
Gross profit % 42 % 45 % 43 % 45
% Income (loss) before income taxes (1,998 ) (1,053 ) (2,638
) (2,527 ) Benefit for income taxes (1) 1,097 - 1,097 -
Net income (loss) $ (901 )
$ (1,053 ) $ (1,541 ) $ (2,527 ) Basic and diluted net
income (loss) per share ($0.02 ) ($0.02 )
($0.03 ) ($0.05 ) Weighted average shares outstanding
- basic and diluted 46,941 46,292
46,806 46,282
(1) The statement of operations for the
2018 periods includes a one-time tax benefit related to the passing
of the Tax Cut and Jobs Act, which was signed into law in December
2017.
Selected balance
sheet data:
1/31/2018(unaudited)
7/31/2017(unaudited)
Cash and cash equivalents $ 64,468 $ 64,167 Working
capital $ 69,668 $ 71,274 Stockholders' equity $ 87,959 $
88,872 Total assets $ 108,325 $ 107,665
The following table presents a
reconciliation of reported net income (loss) and basic and diluted
net income (loss) per share to Adjusted net income (loss) and basic
and diluted net income (loss) per share for the three and six
months ended January 31, 2018 and 2017:
ENZO BIOCHEM, INC. Adjusted Reconciliation Table
(Unaudited, in thousands, except per share data)
Three months ended Six months ended
January 31 January 31,
2018
2017
2018
2017
Reported GAAP net income (loss) $ (901 ) $ (1,053 ) $ (1,541
) $ (2,527 ) Adjusted for: Benefit for income taxes (1,097 )
- (1,097 ) - Adjusted net income
(loss) $ (1,998 ) $ (1,053 ) $ (2,638 ) $ (2,527 )
Weighted Shares Outstanding: Basic and diluted 46,941 46,292 46,806
46,282 Basic and diluted earnings per share: Basic and
diluted net income (loss) per share - GAAP ($0.02 ) ($0.02 ) ($0.03
) ($0.05 ) Basic and diluted net income (loss) per share -
Adjusted ($0.04 ) ($0.02 ) ($0.06 ) ($0.05 )
(1) The statement of operations for the
2018 periods includes a one-time tax benefit related to the passing
of the Tax Cut and Jobs Act, which was signed into law in December
2017. The Company has excluded the one-time impact of this law in
the calculation of adjusted net income as it is non-recurring.
The following table presents a
reconciliation of reported net income (loss) for the three and six
months ended January 31, 2018 and 2017 to EBITDA and Adjusted
EBITDA:
ENZO BIOCHEM, INC. EBITDA & Adjusted EBITDA
Reconciliation Table (Unaudited, in thousands)
Three months ended Six months ended January
31 January 31,
2018
2017
2018
2017
GAAP net income (loss) $ (901 ) $ (1,053 ) $ (1,541 ) $
(2,527 ) Plus: Depreciation and amortization 786 915 1,535 1,842
Interest expense (income) (185 ) (79 ) (342 ) (125 ) (Benefit)
provision for income taxes (1,097 ) - (1,097 ) -
EBITDA and Adjusted EBITDA $ (1,397 ) $ (217 ) $
(1,445 ) $ (810 )
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180312006096/en/
For: Enzo Biochem, Inc.Steve Anreder,
212-532-3232steven.anreder@anreder.comorCEOcast, Inc.Michael Wachs,
212-732-4300mwachs@ceocast.com
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