Revenue for the Quarter Grew 40% over the
Comparable Prior Year Quarter and 21% for the Full
Year, Raising $30 Million in Equity and Significantly
Improving Balance Sheet and Cash Position, Reimbursement Continued
to Grow Especially for ThyGenX® and
ThyraMIR®
Conference Call Thursday March 15, 2018 at 4:30 p.m. ET
Interpace Diagnostics Group, Inc. (Nasdaq:IDXG) (“Interpace” or the
“Company”), a fully integrated commercial and bioinformatics
company that provides clinically useful molecular diagnostic tests
and pathology services, today announced financial results and
business progress for the quarter and full year ended December 31,
2017 as well as recent accomplishments.
“2017 definitively positioned IDXG as a force in the growing
molecular diagnostics and bioinformatics sector as we delivered
strong, sequential revenue growth, improved margins, and greatly
improved liquidity during a period characterized by enhanced
reimbursement and volume growth in our endocrine or (thyroid)
franchise as well as growth in our gastrointestinal or (pancreas)
franchise,” said Jack Stover, Interpace’s President and CEO.
“During the year we raised approximately $30 million in capital and
eliminated over $9 million of secured debt and royalties to further
strengthen our balance sheet, providing the capital needed to keep
us on a sustainable path during 2017 and 2018,” said Stover.
Q4 and 2017 Year End Financial Results and
Performance
- Revenue for the three and twelve-month periods ended December
31, 2017 was $4.4 million and $15.9 million, respectively, an
increase of 40% and 21% over the prior year periods principally as
a result of our endocrine (thyroid) franchise but also due to
growth in our gastroenterology (pancreas) franchise as well.
Revenue for the three-month period ended December 31, 2017 also
grew 4.0% over the preceding quarter.
- Gross profit percentage improved from 49.2% to 53.7% year over
year, while improving for the fourth quarter from 43.2% in 2016 to
62.5% in 2017, as we began to recognize the benefits of scale as
well as reduce certain royalty obligations.
- General & Administrative costs decreased for the three and
twelve-month periods ended December 31, 2017 over the prior year
periods by 4% and 13%, respectively.
- Sales & Marketing costs increased for the three and
twelve-month periods ended December 31, 2017 over the prior year
periods by 61% and 20%, respectively, supporting our revenue growth
and reflecting the rational rebuilding of our commercial operations
to take advantage of market opportunities.
- Research & Development costs decreased for the three and
twelve-month periods ended December 31, 2017 over the prior year
periods by 16% and 11%, respectively.
- Loss from Continuing Operations for the three and twelve-month
periods ended December 31, 2017 was ($5.0) million and ($12.7)
million, respectively, while Income (Loss) from Continuing
Operations for the three and twelve-month periods of the prior year
was $6.3 million and ($8.4) million, respectively.
- Net Income (Loss) for the three and twelve-month periods ended
December 31, 2017 was ($5.0) million and ($12.2) million,
respectively, and $6.3 million and ($8.3) million for the
comparable periods of the prior year.
- 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,
adjusts Income or Loss from Continuing Operations for non-cash
charges such as depreciation & amortization, stock-based
compensation, asset impairment, loss on extinguishment, the change
in fair value of both our contingent consideration and certain
warrant liabilities. Accordingly, our Adjusted EBITDA for the
three-and twelve-month periods ended December 31, 2017 was ($1.6)
and ($7.1) million, respectively, an improvement of 45% and 32%,
respectively, over the ($2.9) and ($10.5) million for the
comparable periods of the prior year.
- Our cash balance at the end of the year was $15.2 million, up
from $0.6 million at the end of 2016 and our stockholders’ equity
balance is approximately $40 million as of December 31, 2017, up
from $6.5 million at the end of 2016.
2017 and Recent Business Highlights
Reimbursement:
- UnitedHealthcare, the largest health plan in the United States,
agreed to cover our ThyraMIR® test, our microRNA-based molecular
test used in assessing indeterminate thyroid nodules.
- We signed a new national contract with Aetna for our ThyGenX ®
and ThyraMIR® tests covering many of Aetna’s products. The
agreement is our first national provider contract with a national
health plan and means that Interpace will now be part of Aetna’s
laboratory network for these services.
- Cigna, one of the largest national health plans in the United
States, agreed to cover Interpace’s ThyGenX test for Cigna’s 15
million members nationwide.
- Oxford Health Plans began to cover Interpace’s ThyraMIR test.
Oxford offers health care benefits to employers primarily in New
York, New Jersey, and Connecticut making it one of the largest
health plans in the heavily populated tristate Region.
- The American Medical Association (AMA) assigned a new, discreet
CPT code to facilitate reimbursement of ThyraMIR simplifying and
expediting the process for Interpace in submitting claims and
securing reimbursement.
- Medicare reimbursement for ThyGenX increased by 40% effective
January 1, 2018. Medicare represents approximately 40% of the
Company’s volume for the ThyGenX test.
- In 2018 we announced that five Blue Cross Blue Shield plans
agreed to cover both ThyGenX and ThyraMIR. These five plans
combined represent over 8 million members who now have coverage for
the Company’s molecular thyroid tests.
Commercial Expansion:
- We announced the renewal and expansion of our agreement with
Lab Corp, a NYSE listed company which provides leading-edge medical
laboratory tests and services through a national network of primary
clinical laboratories and specialty testing laboratories, to now
co-market ThyraMIR along with ThyGenX.
- We announced that the New York State Department of Health has
reviewed and approved our TERT marker of aggressiveness which can
now be ordered in conjunction with the ThyGenX molecular panel or
on a stand-alone basis.
- We also announced that the Company has entered into a
Laboratory Services Agreement with ARUP Laboratories, Inc., whereby
ARUP is utilizing Interpace as a laboratory services provider
for its menu of molecular testing services.
Clinical Evidence
- We commenced a multi-site study to provide further evidence of
the Clinical Utility of our ThyGenX/ThyraMiR tests in accurately
identifying malignancy or benign status in indeterminate thyroid
nodules.
- We announced the data presented in six posters at the Digestive
Disease Week (DDW) meeting including:
Three posters supporting the clinical utility of PancraGEN® in
assessing long-term risk of malignancy in pancreatic cystic lesions
and three posters supporting the clinical utility of PancraGEN as
an ancillary test for solid lesions of the pancreas and bile
duct.
- We also announced the presentation of new data based on actual
clinical results for 3,471 patients tested with ThyGenX/ThyraMIR at
the annual meeting of The American Thyroid Association
(ATA).
- We reported two publications presented at the WCOG American
College of Gastroenterology (ACG) 2017 Conference.
- We also announced that G2 Intelligence selected Interpace as
the “Company of the Month for September 2017”.
- In January 2018 we announced that CIO Applications magazine
designated Interpace as one of the top 20 Companies in 2017 for
providing bioinformatics solutions to their customers through the
Company’s extensive data base, and,
- In February 2018 we announced the acceptance of five abstracts
of the Company being presented at the US and Canadian Academy of
Pathology (USCAP).
“Based on our accomplishments in 2017 and progress to date in
scaling operations, gaining additional reimbursement and expanding
our commercial activities, we are pleased with our performance in
2017 and we are looking forward to 2018,” concluded Stover.
About Thyroid Nodules, ThyGenX and ThyraMIR
testing
According to the American Thyroid Association, approximately
15% to 30% of the 525,000 thyroid fine needle aspirations (FNAs)
performed on an annual basis in the U.S. are indeterminate for
malignancy based on standard cytological evaluation, and thus are
candidates for ThyGenX and ThyraMIR.
ThyGenX and ThyraMIR reflex testing yields high predictive value
in determining the presence and absence of cancer in thyroid
nodules. The combination of both tests can improve risk
stratification and surgical decision-making when standard
cytopathology does not provide a clear diagnosis for the presence
of cancer.
ThyGenX utilizes state-of-the-art next-generation sequencing
(NGS) to identify more than 100 genetic alterations associated with
papillary and follicular thyroid carcinomas, the two most common
forms of thyroid cancer. ThyraMIR is the first microRNA gene
expression classifier. MicroRNAs are small, non-coding RNAs
that bind to messenger RNA and regulate expression of genes
involved in human cancers, including every subtype of thyroid
cancer. ThyraMIR measures the expression of 10 microRNAs.
Both ThyGenX and ThyraMIR are covered by both Medicare and
Commercial insurers.
About PancraGEN
PancraGEN® is a molecular test that stratifies the risk of
progression to pancreatic cancer from pancreatic cysts and solid
masses by incorporating endoscopic ultrasound images, cytology,
first-line chemistry testing like CEA and Amylase, and molecular
markers into one of four risk categories ranging from Benign to
Aggressive. PancraGEN® is 90% accurate according to clinical
studies, enabling effective risk stratification of patients.
Pancreatic cancer is often difficult to diagnose in early stages
and typically spreads rapidly with signs and symptoms appearing
when the cancer is significantly advanced. Because of this, and
that complete surgical removal of the pancreas is not possible,
pancreatic cancer is considered a leading cause of cancer
deaths.
About RespriDx
RespriDx™ is a molecular test that differentiates between new
primary lung tumors and metastasis by identifying the unique
molecular fingerprint of a tumor using a series of tumor markers
and loss of heterozygosity (LOH). Discerning whether a lung
neoplasm is the result of a newly formed tumor or metastasis is
useful in determining what course of action physicians should take,
e.g. surgery, chemotherapy, etc.
About Interpace Diagnostics Group,
Inc.
Interpace is a fully integrated commercial and
bioinformatics company that provides clinically useful molecular
diagnostic tests and pathology services for evaluating risk of
cancer by leveraging the latest technology in personalized medicine
for improved patient diagnosis and management. The Company
currently 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; ThyGenX® 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. BarreGEN® for Barrett's
Esophagus, is currently being “soft launched” with key opinion
leaders as we continue to gather data on this assay that will
assist us in seeking favorable reimbursement as well as important
clinical information. [Barrett's Esophagus is a rapidly growing
diagnosis that affects over three million people in the US and over
time can progress to esophageal cancer.] The Company’s data base
includes data from over 45,000 patients who have been tested using
the Company’s current products, including over 15,000 molecular
tests for thyroid nodules. Interpace has been designated as one of
the top 20 companies for providing bioinformatics solutions.
Interpace’s mission is to provide personalized medicine
through molecular diagnostics, innovation and data to advance
patient care based on rigorous science. For more information,
please visit Interpace’s 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, 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. Known and
unknown risks, uncertainties and other factors include, but are not
limited to, the Company’s history of losses, the Company's ability
to adequately finance the business, the market's acceptance of its
molecular diagnostic tests, its ability to retain or secure
reimbursement, its ability to secure additional business and
generate higher profit margins through sales of its molecular
diagnostic tests, in-licensing or other means, projections of
future revenues, growth, gross profit and anticipated internal rate
of return on investments and its ability to maintain its NASDAQ
listing. Additionally, all forward-looking statements are subject
to the “Risk Factors” detailed from time to time in the Company's
SEC filings, including its Annual Report on Form 10-K for the
fiscal year ended December 31, 2017 to be filed, Quarterly Reports
on Form 10-Q and other SEC filings. 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:
Interpace Diagnostics Group, Inc.Investor Relations:Paul Kuntz –
Redchippaul@redchip.com
|
|
|
|
|
|
|
|
|
|
INTERPACE DIAGNOSTICS GROUP,
INC. |
|
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED) |
|
(in thousands, except per share
data) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Years Ended |
|
|
December 31, |
|
December 31, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
Revenue, net |
$ |
4,370 |
|
|
$ |
3,122 |
|
|
$ |
15,897 |
|
|
$ |
13,085 |
|
|
Cost of
revenue |
|
1,639 |
|
|
|
1,774 |
|
|
|
7,358 |
|
|
|
6,641 |
|
|
Gross
Profit |
|
2,731 |
|
|
|
1,348 |
|
|
|
8,539 |
|
|
|
6,444 |
|
|
|
|
|
|
|
|
|
|
|
Sales and
marketing |
|
2,060 |
|
|
|
1,276 |
|
|
|
6,567 |
|
|
|
5,462 |
|
|
Research and
development |
|
259 |
|
|
|
308 |
|
|
|
1,461 |
|
|
|
1,647 |
|
|
General and
administrative |
|
2,723 |
|
|
|
2,848 |
|
|
|
9,153 |
|
|
|
10,504 |
|
|
Acquisition related
amortization expense |
|
813 |
|
|
|
862 |
|
|
|
3,253 |
|
|
|
3,770 |
|
|
Asset impairment |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3,363 |
|
|
Change in fair value of
contingent consideration |
|
174 |
|
|
|
(10,686 |
) |
|
|
(5,602 |
) |
|
|
(11,860 |
) |
|
Total
operating expenses |
|
6,029 |
|
|
|
(5,392 |
) |
|
|
14,832 |
|
|
|
12,886 |
|
|
|
|
|
|
|
|
|
|
|
Operating
(loss) income |
|
(3,298 |
) |
|
|
6,740 |
|
|
|
(6,293 |
) |
|
|
(6,442 |
) |
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
- |
|
|
|
(544 |
) |
|
|
(433 |
) |
|
|
(2,144 |
) |
|
Loss on extinguishment
of debt |
|
- |
|
|
|
- |
|
|
|
(4,278 |
) |
|
|
- |
|
|
Other (expense) income,
net |
|
(1,713 |
) |
|
|
- |
|
|
|
(2,128 |
) |
|
|
14 |
|
|
Loss from
continuing operations before tax |
|
(5,011 |
) |
|
|
6,196 |
|
|
|
(13,132 |
) |
|
|
(8,572 |
) |
|
Income tax benefit |
|
(55 |
) |
|
|
(108 |
) |
|
|
(395 |
) |
|
|
(162 |
) |
|
(Loss)
income from continuing operations |
|
(4,956 |
) |
|
|
6,304 |
|
|
|
(12,737 |
) |
|
|
(8,410 |
) |
|
|
|
|
|
|
|
|
|
|
Discontinued
Operations |
|
|
|
|
|
|
|
|
Income
(loss) from discontinued operations |
|
43 |
|
|
|
120 |
|
|
|
1,124 |
|
|
|
(886 |
) |
|
Gain on
sale of assets |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,326 |
|
|
Income
from discontinued operations |
|
43 |
|
|
|
120 |
|
|
|
1,124 |
|
|
|
440 |
|
|
Provision for income tax on discontinued operations |
|
94 |
|
|
|
143 |
|
|
|
603 |
|
|
|
362 |
|
|
Income
from discontinued operations, net of tax |
$ |
(51 |
) |
|
$ |
(23 |
) |
|
$ |
521 |
|
|
$ |
78 |
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) income |
$ |
(5,007 |
) |
|
$ |
6,281 |
|
|
$ |
(12,216 |
) |
|
$ |
(8,332 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) income per
share of common stock: |
|
|
|
|
|
|
|
|
From
continuing operations |
$ |
(0.18 |
) |
|
$ |
3.40 |
|
|
$ |
(0.81 |
) |
|
$ |
(4.63 |
) |
|
From
discontinued operations |
|
(0.00 |
) |
|
|
(0.01 |
) |
|
|
0.03 |
|
|
|
0.04 |
|
|
Net
(loss) income per basic share of common stock |
$ |
(0.19 |
) |
|
$ |
3.39 |
|
|
$ |
(0.77 |
) |
|
$ |
(4.59 |
) |
|
|
|
|
|
|
|
|
|
|
Diluted (loss) income
per share of common stock: |
|
|
|
|
|
|
|
|
From
continuing operations |
$ |
(0.18 |
) |
|
$ |
3.25 |
|
|
$ |
(0.81 |
) |
|
$ |
(4.63 |
) |
|
From
discontinued operations |
|
(0.00 |
) |
|
|
(0.01 |
) |
|
|
0.03 |
|
|
|
0.04 |
|
|
Net
(loss) income per diluted share of common stock |
$ |
(0.19 |
) |
|
$ |
3.24 |
|
|
$ |
(0.77 |
) |
|
$ |
(4.59 |
) |
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares and |
|
|
|
|
|
|
|
|
common
share equivalents outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
26,874 |
|
|
|
1,855 |
|
|
|
15,766 |
|
|
|
1,816 |
|
|
Diluted |
|
26,874 |
|
|
|
1,941 |
|
|
|
15,766 |
|
|
|
1,816 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Balance Sheet Data
(Unaudited) |
|
|
|
|
|
($ in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, |
|
December
31, |
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
Cash and cash
equivalents |
$ |
15,199 |
|
|
$ |
602 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current
assets |
|
19,808 |
|
|
|
4,240 |
|
|
|
|
|
|
Total current
liabilities |
|
7,991 |
|
|
|
16,241 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
53,598 |
|
|
|
41,778 |
|
|
|
|
|
|
Total liabilities |
|
13,629 |
|
|
|
35,247 |
|
|
|
|
|
|
|
|
Total stockholders
equity |
|
39,969 |
|
|
|
6,531 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Cash Flow Data
(Unaudited) |
|
|
|
|
|
($ in thousands) |
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended |
|
|
|
|
|
|
December 31, |
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
Net loss |
$ |
(12,216 |
) |
|
$ |
(8,332 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in
operations |
$ |
(15,263 |
) |
|
$ |
(7,607 |
) |
|
|
|
|
|
Net cash used in
investing activities |
|
(29 |
) |
|
|
- |
|
|
|
|
|
|
Net cash provided by
(used in) financing activities |
|
29,889 |
|
|
|
(101 |
) |
|
|
|
|
|
Change in cash and cash
equivalents |
|
14,597 |
|
|
|
(7,708 |
) |
|
|
|
|
|
Cash and equivalents,
Beginning |
|
602 |
|
|
|
8,310 |
|
|
|
|
|
|
Cash and equivalents,
Ending |
$ |
15,199 |
|
|
$ |
602 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures
In addition to the United States generally
accepted accounting principles, or GAAP, results provided
throughout this document, Interpace 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, non cash stock based
compensation, interest and taxes, and other non-cash expenses
including asset impairment costs, loss on extinguishment of debt,
goodwill impairment and change in fair value of both our contingent
consideration and certain warrant liabilities. 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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended |
|
Years Ended |
|
|
|
December 31, |
|
December 31, |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
(Loss) income from
continuing operations |
|
|
$ |
(4,956 |
) |
|
$ |
6,304 |
|
|
$ |
(12,737 |
) |
|
$ |
(8,410 |
) |
Depreciation and
amortization- continuing operations |
|
|
|
876 |
|
|
|
992 |
|
|
|
3,690 |
|
|
|
4,292 |
|
Stock-based
compensation - continuing operations |
|
|
|
583 |
|
|
|
23 |
|
|
|
1,060 |
|
|
|
131 |
|
Taxes |
|
|
|
(55 |
) |
|
|
(108 |
) |
|
|
(395 |
) |
|
|
(162 |
) |
Interest expense |
|
|
|
- |
|
|
|
544 |
|
|
|
433 |
|
|
|
2,144 |
|
Mark to market on
warrant liability |
|
|
|
(260 |
) |
|
|
- |
|
|
|
141 |
|
|
|
- |
|
Warrant expense |
|
|
|
2,016 |
|
|
|
- |
|
|
|
2,016 |
|
|
|
- |
|
Asset impairment |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3,363 |
|
Loss on extinguishment
of debt |
|
|
|
- |
|
|
|
- |
|
|
|
4,278 |
|
|
|
- |
|
Change in fair value of
contingent consideration |
|
|
|
174 |
|
|
|
(10,686 |
) |
|
|
(5,602 |
) |
|
|
(11,860 |
) |
Adjusted EBITDA |
|
|
$ |
(1,622 |
) |
|
$ |
(2,931 |
) |
|
$ |
(7,116 |
) |
|
$ |
(10,502 |
) |
|
|
|
|
|
|
|
|
|
|
Conference Call
As previously announced, Interpace will hold a
conference call today Thursday, March 15, 2018 at 4:30 PM (ET) to
discuss financial and operational results for the fourth quarter
and the year ended December 31, 2017. Details as follows:
Time: 4:30 PM (ET)Dial-in numbers: toll free:
1-888-394-8218 (US) toll/international 1-323-701-0225
Conference ID#: 5146319
The live webcast and subsequent replay may be
accessed by visiting Interpace’s website:
www.interpacediagnostics.com. The webcast replay will be available
on the company’s website within 24 hours following completion of
the call and archived on the company’s website for 90 days.
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