Affymetrix, Inc., (NASDAQ: AFFX) today reported its operating
results for the third quarter of 2012. Total revenue for the
quarter was $79.6 million, including approximately $17.6 million in
revenue from eBioscience during the third quarter of 2012. This
compares to total revenue of $64.0 million for the same period of
2011.
The Company reported a net loss of approximately $17.9 million,
or $0.25 per diluted share, in the third quarter of 2012, which
included the following one-time items: (1) acquisition-related and
integration costs of $1.9 million and (2) impairment of the West
Sacramento facility of $4.0 million. Excluding these one-time items
and recurring amortization of acquired intangible assets of $5.0
million and release of step-up in inventory fair value of $4.5
million, the Company would have reported a net loss of $2.4
million, or $0.03 per diluted share. This compares to a net loss of
$9.8 million, or $0.14 per diluted share, in the same period of
2011, which included one-time impairment charges on investments
totaling $0.7 million and a reserve on a note receivable from a
private biotechnology company of $2.2 million, and recurring
amortization of acquired intangible assets of $1.5 million.
Excluding these charges, net loss was $5.3 million, or $0.08 per
diluted share, for the third quarter of 2011.
Revenue for the third quarter of 2012 was comprised of product
revenue of $72.7 million and service and other revenue of $6.9
million. Product revenue included consumable revenue of $50.5
million excluding eBioscience, instrument revenue of $4.6 million
and revenue from eBioscience of $17.6 million. This compares to
total revenue of $64.0 million in the third quarter of 2011,
comprised of product revenue of $57.0 million and service and other
revenue of $7.0 million. Product revenue included consumable
revenue of $52.9 million and instrument revenue of $4.1 million in
the third quarter of 2011.
For the third quarter of 2012, cost of product sales, including
eBioscience, was $34.0 million, as compared to $24.6 million in the
same period of 2011. Product gross margin was 53%, as compared to
57% in the same period of 2011, the decrease is due primarily to
the amortization of the step-up in inventory fair value of $4.5
million. Excluding the inventory step-up amortization, product
gross margin for the third quarter of 2012 was 57%. Cost of
services and other was $4.0 million compared to $3.0 million in the
same period of 2011.
For the third quarter of 2012, operating expenses were $52.8
million, including acquisition- and integration-related
non-recurring costs of $1.9 million, and recurring amortization of
acquired intangible assets of $3.4 million and eBioscience
operating expense of approximately $7.5 million. This compared to
operating expenses of $42.2 million in the same period of 2011.
“For the third quarter of 2012 we’ve continued to make steady
progress in stabilizing our business. On a constant currency basis,
our revenue excluding eBioscience for the third quarter of 2012 was
down by about 2% as compared to the same period in the previous
year,” said Frank Witney, president and CEO. “In the third quarter
of 2012, we generated revenue growth of more than 16% as compared
to the third quarter of 2011 in our Genetic Analysis business,
which was offset by continued headwinds in our Gene Expression
unit. With the addition of eBioscience, we have further diversified
our revenues and added important capabilities to provide customers
in translational medicine and clinical diagnostics with a
comprehensive set of tools to improve healthcare outcomes.”
Third quarter
highlights:
- The Company signed a Powered by
Affymetrix (PbA) agreement with PathGEN Dx Pte. Ltd., a spin-off
molecular diagnostics company founded by researchers from the
Genome Institute of Singapore. Under this PbA agreement, PathGEN Dx
will develop an in-vitro diagnostic kit for comprehensive pathogen
detection using their PathGEN® PathChip and is based on a patented,
efficient, and accurate microarray-based protocol and analysis
method. The kit will be comprised of PathGEN Dx’s proprietary
reagents, an automated software package, and a contract
manufactured GeneChip® microarray from Affymetrix. It will detect
the presence of more than 70,000 viral and bacterial genomes from a
wide variety of human samples, annotate the genomic information,
and identify co-infecting pathogens.
- The Company announced the availability
of SensationPlus™ FFPE Amplification and 3’ IVT Labeling Kit
(SensationPlus™ FFPE Reagent Kit), consisting of RNA amplification
and labeling modules, to enable gene expression profiling of
formalin-fixed, paraffin-embedded (FFPE) samples on GeneChip 3’ IVT
arrays and Almac Xcel™ Array for disease clinical research and
retrospective studies. SensationPlusTM FFPE Reagent Kit is an
advanced version of the Genisphere® technology Affymetrix licensed
last year.
- The Company announced the expansion of
its license agreement with Siemens Healthcare Diagnostics for the
company’s branched DNA (bDNA) technology whereby Affymetrix is the
exclusive licensee for in situ products, including in vitro
diagnostics. This expanded license grants Affymetrix rights to
develop and sell in situ QuantiGene® ViewRNA products, currently
for research use only, in the in vitro diagnostic market.
Additionally, this license includes exclusive rights to alkaline
phosphatase conjugated oligonucleotides and their use in bDNA
methods for in situ detection utilizing Fast Red substrates.
Affymetrix will host a conference call on November 5, 2012 at
2:00 p.m. PT to review its operating results for the third quarter
of 2012. A live webcast can be accessed by visiting the Investor
Relations section of the Company’s website at www.affymetrix.com.
In addition, investors and other interested parties can listen by
dialing domestic: (877) 407-8291, international: (201)
689-8345.
A replay of this call will be available from 5:00 p.m. PT on
November 5, 2012 until 8:00 p.m. PT on November 12, 2012 at the
following numbers: domestic: (877) 660-6853, international: (201)
612-7415. The conference call passcode to access the replay is
401334. An archived webcast of the conference call will be
available under the Investor Relations section of the Company's
website.
About Affymetrix
Affymetrix technology is used by the world's top pharmaceutical,
diagnostic, and biotechnology companies, as well as leading
academic, government, and nonprofit research institutes. More than
2,200 systems have been shipped around the world and almost 26,000
peer-reviewed papers have been published using the technology.
Affymetrix is headquartered in Santa Clara, California, and has
manufacturing facilities in Cleveland, Ohio, and Singapore.
eBioscience is headquartered in San Diego, California and has
manufacturing facilities in San Diego and Vienna, Austria.
Including eBioscience, the Company has about 1,200 employees
worldwide and maintains sales and distribution operations across
Europe, Asia and Latin America.
All statements in this press release that are not historical are
"forward-looking statements" within the meaning of Section 21E of
the Securities Exchange Act as amended, including statements
regarding Affymetrix's "expectations," "beliefs," "hopes,"
"intentions," "strategies" or the like. Such statements are subject
to risks and uncertainties that could cause actual results to
differ materially for Affymetrix from those projected, including,
but not limited to: Affymetrix's ability to timely and successfully
integrate and realize the anticipated strategic benefits and costs
savings or other synergies of the acquisition of eBioscience in a
cost-effective manner while minimizing the disruption to its
business; risks that eBioscience’s future performance may not be
consistent with its historical performance; risks relating to
Affymetrix's ability to make scheduled payments of the principal
of, to pay interest on or to refinance its indebtedness; risks
relating to Affymetrix's ability to successfully develop and
commercialize new products, including its ability to successfully
develop and commercialize novel molecular solutions based on
eBioscience’s portfolio of reagents; risks relating to past and
future acquisitions, including the ability of Affymetrix to
successfully integrate such acquisitions into its existing
business; risks of Affymetrix's ability to achieve and sustain
higher levels of revenue, higher gross margins and reduced
operating expenses; risks relating to Affymetrix’s ability to
generate cash in the second half of 2012 after interest and
principal payments; uncertainties relating to technological
approaches; risks associated with manufacturing and product
development; personnel retention; uncertainties relating to cost
and pricing of Affymetrix products; dependence on collaborative
partners; uncertainties relating to sole-source suppliers;
uncertainties relating to FDA and other regulatory approvals;
competition; risks relating to intellectual property of others and
the uncertainties of patent protection and litigation. These and
other risk factors are discussed in Affymetrix's Annual Report on
Form 10-K for the year ended December 31, 2011, and other SEC
reports. Affymetrix expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change
in Affymetrix's expectations with regard thereto or any change in
events, conditions or circumstances on which any such statements
are based.
In addition to providing financial measures based on generally
accepted accounting principles in the United States (GAAP),
Affymetrix has disclosed in this press release its net loss and net
loss per share as well as its gross margins for the third quarter
of 2012 excluding specified one-time items. Reconciliation of
non-GAAP net loss to GAAP net loss can be found in the tables
included in this press release. Affymetrix has determined to
disclose this financial information to investors because it
believes it will be useful, as a supplement to GAAP measures, in
comparing Affymetrix’s operating performance in the third quarter
of 2012 to the prior-year period. These non-GAAP financial measures
should not be considered in isolation from, or as a substitute for,
financial information prepared in accordance with GAAP.
PLEASE NOTE:
Affymetrix, the Affymetrix logo, GeneChip, and all other trademarks
are the property of Affymetrix, Inc.
AFFYMETRIX, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(IN THOUSANDS)
September 30, December 31, 2012
2011 (Unaudited) (See Note 1)
ASSETS:
Current assets: Cash and cash equivalents $ 29,026 $ 201,937
Restricted cash 691 692 Available-for-sale securities—short-term
portion 2,575 7,937 Accounts receivable, net 52,534 44,021
Inventories—short-term portion 74,891 42,851 Deferred tax
assets—short-term portion 379 364 Property and equipment, net—held
for sale 5,000 9,000 Prepaid expenses and other current assets
15,078 7,785 Total current assets
180,174 314,587 Available-for-sale securities—long-term portion
7,337 54,501 Property and equipment, net 30,988 30,583
Inventories—long-term portion 14,668 - Goodwill 159,420 -
Intangible assets, net 157,930 29,525 Deferred tax assets—long-term
portion 3,445 450 Other long-term assets 16,224
8,369 Total assets $ 570,186 $ 438,015
LIABILITIES AND STOCKHOLDERS’ EQUITY: Current
liabilities: Accounts payable and accrued liabilities $ 56,852 $
44,774 Convertible notes—short-term portion 3,855 - Term
loan—short-term portion 6,375 - Deferred revenue—short-term portion
10,749 9,852 Total current liabilities
77,831 54,626 Deferred revenue—long-term portion 3,453 3,959
Convertible notes—long-term portion 105,000 95,469 Term
loan—long-term portion 76,500 - Other long-term liabilities 22,345
9,127 Stockholders’ equity: Common stock 707 704 Additional paid-in
capital 757,051 750,332 Accumulated other comprehensive income
4,420 2,492 Accumulated deficit (477,121 ) (478,694 )
Total stockholders’ equity 285,057 274,834
Total liabilities and stockholders’ equity $ 570,186
$ 438,015
Note 1: The condensed consolidated balance
sheet at December 31, 2011 has been derived from the audited
consolidatedfinancial statements at that date included in the
Company’s Annual Report on Form 10-K for the fiscal year
endedDecember 31, 2011.
AFFYMETRIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30, 2012
2011 2012
2011 REVENUE: Product sales $ 72,685 $
57,001 $ 189,681 $ 182,608 Services and other 6,939
6,986 21,593 19,762 Total
revenue 79,624 63,987 211,274
202,370
COSTS AND EXPENSES: Cost of
product sales 33,979 24,647 81,907 70,913 Cost of services and
other 3,959 3,001 11,057 9,627 Research and development 16,498
15,328 43,417 46,894 Selling, general and administrative
36,302 26,915 104,752
80,802 Total costs and expenses 90,738
69,891 241,133 208,236 Loss from
operations (11,114 ) (5,904 ) (29,859 ) (5,866 ) Interest income
and other, net (3,933 ) (2,154 ) (1,631 ) (3,549 ) Interest expense
2,993 991 4,191
2,866 Loss before income taxes (18,040 ) (9,049 ) (35,681 )
(12,281 ) Income tax (benefit) provision (181 ) 740
(37,254 ) 1,141 Net (loss) income $
(17,859 ) $ (9,789 ) $ 1,573 $ (13,422 ) Basic net
(loss) income per common share $ (0.25 ) $ (0.14 ) $ 0.02 $
(0.19 ) Diluted net (loss) income per common share $ (0.25 ) $
(0.14 ) $ 0.02 $ (0.19 ) Shares used in computing
basic net (loss) income per common share 70,403
69,719 70,181 70,790
Shares used in computing diluted net (loss) income per common share
70,403 69,719 70,610
70,790
AFFYMETRIX, INC.
ITEMIZED RECONCILIATION BETWEEN GAAP
AND NON-GAAP NET (LOSS) INCOME
(IN THOUSANDS)
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30, 2012
2011 2012
2011 GAAP net (loss) income -
diluted $ (17,859 ) $ (9,789 ) $ 1,573 $ (13,422 )
Amortization of inventory fair value adjustment 4,536 - 4,855 -
Amortization of acquired intangible assets 5,016 1,544 7,919 4,632
Acquisition-related transaction costs 326 - 6,093 -
Acquisition-related integration costs 1,541 - 1,541 - Share-based
compensation charge related to acquisition - - 8,265 - Provision
(recovery) of notes receivable - 2,215 (2,215 ) 2,215 Impairment of
non-marketable investments - 743 - 1,900 Impairment of
held-for-sale property 4,000 - 4,000 - Income tax benefit related
to acquisition - -
(37,462 ) - Non-GAAP net loss - diluted $
(2,440 ) $ (5,287 ) $ (5,431 ) $ (4,675 )
Basic net loss per common share $ (0.03 ) $ (0.08 )
$ (0.08 ) $ (0.07 ) Diluted net loss per common share
$ (0.03 ) $ (0.08 ) $ (0.08 ) $ (0.07 )
Shares used in computing basic net loss per common share
70,403 69,719 70,181
70,790 Shares used in computing diluted
net loss per common share 70,403 69,719
70,610 70,790
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