Enzo Biochem, Inc. (NYSE:ENZ), a leading biosciences and
diagnostics company, today reported results for the third
quarter ended April 30, 2020.
Elazar Rabbani, PhD., Chairman and Chief Executive Officer,
said: “The COVID-19 pandemic has brought unique challenges as well
as opportunities for Enzo. The company has applied several years of
investment in technology and product development and rapidly
launched a COVID-19 test on its proprietary GenFlex™ molecular
diagnostics platform and serological tests for antibodies on its
ELISA platform.
“The value proposition for Enzo is clear with its distinct
advantage as a vertically integrated company. By leveraging control
of our own supply chain in conjunction with our proprietary
platforms, we are able to address the unprecedented needs
underlying this health crisis. The result is the launch of an
extensive COVID-19 program that goes beyond testing alone and spans
virus detection, immunity, inflammation and therapy. This is
further testament to our ability to deliver high performance, open,
flexible, adaptable and cost-effective products, devices and
services. It demonstrates how we are uniquely positioned to gain
momentum within the broader molecular diagnostics market.”
Third Quarter Highlights
- Enzo Life Sciences launched COVID-19 related molecular
diagnostics products as well as serological related products under
the FDA’s Emergency Use Authorization.
- Enzo Clinical Labs launched comprehensive molecular COVID-19
testing services, rolled out a drive-through facility for COVID-19
testing on Long Island, New York and introduced serological IgG
antibody detection testing.
- Enzo Therapeutics had two significant patents issued, including
one regarding Enzo’s proprietary compound SK1-I (a potential option
as a therapeutic treatment for COVID-19) and another for methods of
producing monoclonal antibodies against the osteoporosis drug
target Sclerostin.
Third Quarter Results
- Total third quarter revenue was $16.9 million, a decrease of
14% from $19.7 million in the third quarter last year. Clinical
Services revenue decreased 11% to $10.5 million from $11.8 million
in the third quarter last year. This was driven by a 28% reduction
in accession volume due to factors related to the COVID-19
pandemic. Product revenue of $6.4 million decreased 19% from $7.9
million in the third quarter last year also due to the impact of
COVID-19, partially offset by a 19% increase in average product
order value.
- Consolidated gross margin was 26.2% compared to 27.0% a year
ago. Clinical services gross margin increased to 12.9% from 6.7% in
the third quarter last year, primarily due to cost efficiencies and
supplemental grant income, partially offset by accession volume
declines due to the COVID-19 pandemic. Product gross margin
declined to 47.9% from 57.1% in the third quarter last year due to
the impact of the COVID-19 pandemic.
- Net loss was ($9.9) million, or ($0.21) per share, compared to
net income of $22.3 million, or $0.47 per share a year ago.
Adjusted EBITDA loss was ($7.4) million, or ($0.16) per share,
compared to Adjusted EBITDA loss of ($6.1) million, or ($0.13) per
share, in the third quarter of 2019. Last year’s third quarter
results benefitted from legal settlements and licensing payments,
net of $28.9 million related to a patent infringement and contract
case in New York and a patent infringement case in Delaware.
- Adjusted EBITDA is described below under “Adjusted Financial
Measures” and is reconciled to the most directly comparable GAAP
financial measure, GAAP income (loss), in the accompanying
tables.
- At quarter-end, cash, cash equivalents and restricted cash
totaled $55 million. The company added $10.6 million of capital in
the third quarter to strengthen its balance sheet through various
grants, loans and advanced payments.
Barry Weiner, President, said: “Our third quarter results
reflect the substantial challenges affecting our core business
operations during this unprecedented time. The dedication of our
staff ensured our ability to maintain operations and launch new
processes and systems in a difficult environment. Our operating
performance was impacted by revenue loss related to the coronavirus
pandemic, partially offset by supplemental grant income and
improvements in cost of goods sold and other spending. Despite
these dynamics, we saw favorable trends in average product order
value and year-over-year expansion in clinical services gross
margins. We continue to make positive progress across the cost
efficiency measures we have implemented and have recognized more
than $8 million towards our $10 million target.
“Our strategic goal remains investing in key focus areas
including our proprietary lab developed tests. This investment
should have a significant positive impact on gross margins in a
post-COVID environment. While accession volume increased slightly
subsequent to the quarter-end, along with the rest of the industry
we remain affected by lower volume in the clinical lab segment, in
addition to COVID-19 impacted revenue in the life sciences segment.
We expect these issues to be partially counterbalanced by new
opportunities related to the COVID-19 pandemic. These opportunities
include prospects ranging from academic and research institutions
to commercial, laboratory, and government entities. In Enzo Life
Sciences, we are offering a full range of COVID-19 products
including sample collection, molecular, and IgG antibody kits on a
global basis as well as instrumentation. On the Enzo Clinical Lab
side, we expect to ramp up substantially throughout the year from
our initial weekly capacity of approximately 10,000 COVID-19
molecular tests and 10,000 ELISA serological antibody tests.”
Conference CallThe third quarter 2020 earnings
conference call and webcast will be held today, Monday, June
8, 2020, at 5:00 p.m. Eastern Time. Enzo Biochem management
will host the call, followed by a question and answer session. All
interested parties may dial +1 323-794-2590 and reference
confirmation code “9751599” to listen to the quarterly conference
call or participants may join the audio webcast. A replay of the
call will be available via webcast for on-demand listening shortly
after completion of the call on the Investor Relations section of
the company’s website, https://www.enzo.com, and will remain
available for approximately 90 days.
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 investor relations section of the company’s
website (https://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, Inc.
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 478 issued patents worldwide and 63 pending patent
applications, along with extensive enabling technologies and
platforms.
Forward-Looking StatementsExcept 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, revenue, 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, 2019 and Form 10-Q for the period ended
April 30, 2020. 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.
Contacts:
For Enzo Biochem, Inc.
David Bench, CFO 212-583-0100 dbench@enzo.com
Investors/Media:
Melanie SolomonThe Blueshirt
Group415-217-4964melanie@blueshirtgroup.com
Steve AnrederAnreder &
Company212-532-3232Steven.anreder@anreder.com
ENZO
BIOCHEM, INC. |
|
|
|
(in thousands,
except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended |
|
Nine months
ended |
Selected operations data: |
April
30, |
|
April
30, |
|
(unaudited) |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
Total
revenues |
$ |
16,903 |
|
|
$ |
19,662 |
|
|
$ |
56,494 |
|
|
$ |
60,249 |
|
|
|
|
|
|
|
|
|
Gross
profit |
$ |
4,425 |
|
|
$ |
5,302 |
|
|
$ |
15,920 |
|
|
$ |
16,902 |
|
|
|
|
|
|
|
|
|
Gross profit
% |
|
26 |
% |
|
|
27 |
% |
|
|
28 |
% |
|
|
28 |
% |
|
|
|
|
|
|
|
|
(Loss)
income before income taxes |
$ |
(9,860 |
) |
|
$ |
22,265 |
|
|
$ |
(25,195 |
) |
|
$ |
7,876 |
|
|
|
|
|
|
|
|
|
Net (loss)
income |
$ |
(9,860 |
) |
|
$ |
22,265 |
|
|
$ |
(25,195 |
) |
|
$ |
7,876 |
|
|
|
|
|
|
|
|
|
Basic net
(loss) income per share |
($ |
0.21 |
) |
|
$ |
0.47 |
|
|
($ |
0.53 |
) |
|
$ |
0.17 |
|
Diluted net
(loss) income per share |
($ |
0.21 |
) |
|
$ |
0.47 |
|
|
($ |
0.53 |
) |
|
$ |
0.17 |
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding - basic |
|
47,780 |
|
|
|
47,452 |
|
|
|
47,668 |
|
|
|
47,259 |
|
Weighted
average shares outstanding - diluted |
|
47,780 |
|
|
|
47,555 |
|
|
|
47,668 |
|
|
|
47,364 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected balance sheet data: |
4/30/2020 (unaudited) |
|
7/31/2019 (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents including restricted cash of $750 |
$ |
55,157 |
|
|
$ |
60,896 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Working
capital |
$ |
40,430 |
|
(a) |
$ |
65,444 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity |
$ |
62,330 |
|
|
$ |
86,028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets |
$ |
116,348 |
|
|
$ |
106,640 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Includes impact of
adoption of ASC 842 leases, the current portion of operating lease
liabilities recorded is $4,257 |
|
|
|
|
|
|
|
|
|
|
The following table
presents a reconciliation of reported net (loss) income and basic
and diluted net (loss) income per share to non-GAAP net (loss)
income and basic and diluted net (loss) income per share for the
three and nine months ended April 30, 2020 and 2019: |
|
|
|
|
|
|
|
|
|
|
|
ENZO
BIOCHEM, INC. |
|
|
|
Non-GAAP
Reconciliation Table |
|
|
|
(Unaudited, in
thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended |
|
Nine
months ended |
|
April 30, |
|
April 30, |
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
Reported
GAAP net (loss) income |
$ |
(9,860 |
) |
|
$ |
22,265 |
|
|
$ |
(25,195 |
) |
|
$ |
7,876 |
|
Adjusted
for: |
|
|
|
|
|
|
|
Legal
settlements, net |
$ |
- |
|
|
$ |
(28,925 |
) |
|
$ |
- |
|
|
$ |
(28,925 |
) |
Contested proxy expenses |
$ |
1,547 |
|
|
$ |
- |
|
|
$ |
4,042 |
|
|
$ |
- |
|
Separation expenses |
$ |
235 |
|
|
$ |
- |
|
|
$ |
235 |
|
|
$ |
- |
|
Non-GAAP net
loss |
$ |
(8,078 |
) |
|
$ |
(6,660 |
) |
|
$ |
(20,918 |
) |
|
$ |
(21,049 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
Shares Outstanding |
|
|
|
|
|
|
|
Basic |
|
47,780 |
|
|
|
47,452 |
|
|
|
47,668 |
|
|
|
47,259 |
|
Diluted |
|
47,780 |
|
|
|
47,555 |
|
|
|
47,668 |
|
|
|
47,364 |
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per share - GAAP and non-GAAP |
|
|
|
|
|
|
Basic net
(loss) income per share GAAP |
($0.21 |
) |
|
$0.47 |
|
|
($0.53 |
) |
|
$0.17 |
|
Diluted net
(loss) income per share GAAP |
($0.21 |
) |
|
$0.47 |
|
|
($0.53 |
) |
|
$0.17 |
|
Basic and
diluted net loss per share non-GAAP |
($0.17 |
) |
|
($0.14 |
) |
|
($0.44 |
) |
|
($0.45 |
) |
|
|
|
|
|
|
|
|
The following table
presents a reconciliation of reported net (loss) income for the
three and nine months ended April 30, 2020 and 2019, respectively
to EBITDA and Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
ENZO
BIOCHEM, INC. |
|
|
|
EBITDA &
Adjusted EBITDA Reconciliation Table |
|
|
|
(Unaudited, in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended |
|
Nine
months ended |
|
April 30, |
|
April 30, |
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
GAAP net
(loss) income |
$ |
(9,860 |
) |
|
$ |
22,265 |
|
|
$ |
(25,195 |
) |
|
$ |
7,876 |
|
Plus
(minus): |
|
|
|
|
|
|
|
Depreciation and amortization |
$ |
723 |
|
|
$ |
838 |
|
|
$ |
2,166 |
|
|
$ |
2,372 |
|
Interest, net |
$ |
(88 |
) |
|
$ |
(258 |
) |
|
$ |
(495 |
) |
|
$ |
(759 |
) |
EBITDA |
$ |
(9,225 |
) |
|
$ |
22,845 |
|
|
$ |
(23,524 |
) |
|
$ |
9,489 |
|
|
|
|
|
|
|
|
|
Adjusted
for: |
|
|
|
|
|
|
|
Contested proxy expenses |
$ |
1,547 |
|
|
$ |
- |
|
|
$ |
4,042 |
|
|
$ |
- |
|
Legal
settlements, net |
$ |
- |
|
|
$ |
(28,925 |
) |
|
$ |
- |
|
|
$ |
(28,925 |
) |
Separation
expenses |
$ |
235 |
|
|
$ |
- |
|
|
$ |
235 |
|
|
$ |
- |
|
Adjusted
EBITDA |
$ |
(7,443 |
) |
|
$ |
(6,080 |
) |
|
$ |
(19,247 |
) |
|
$ |
(19,436 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
Shares Outstanding |
|
|
|
|
|
|
|
Basic |
|
47,780 |
|
|
|
47,452 |
|
|
|
47,668 |
|
|
|
47,259 |
|
Diluted |
|
47,780 |
|
|
|
47,555 |
|
|
|
47,668 |
|
|
|
47,364 |
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per share - GAAP and Adjusted
EBITDA |
|
|
|
|
|
|
Basic net
(loss) income per share GAAP |
($0.21 |
) |
|
$0.47 |
|
|
($0.53 |
) |
|
$0.17 |
|
Diluted net
(loss) income per share GAAP |
($0.21 |
) |
|
$0.47 |
|
|
($0.53 |
) |
|
$0.17 |
|
Basic and
diluted net loss per share Adjusted EBITDA |
($0.16 |
) |
|
($0.13 |
) |
|
($0.40 |
) |
|
($0.41 |
) |
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