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Enzo Biochem Reports Third Quarter Results

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Operations to Launch High Quality Products and Services to Hospital
and Independent Laboratories Headline Quarterly Activities

Enzo Biochem Inc. (NYSE:ENZ), an integrated diagnostic company, today
reported results for the third fiscal quarter and nine months ended
April 30, 2018, in addition to noting significant progression of its
strategic plan aimed at providing cost-effective, high performing and
easily adaptable products and services to hospital and independent
laboratories.

Recent Developments

Implementation of Enzo's disruptive strategy to alleviate cost pressures
for clinical laboratories by developing cost efficient high performing
technologies and products for use in commonly available automated
systems accelerated in a number of critical areas during the quarter,
capitalizing on Enzo's integrated businesses:

  • Overall testing volume gains in services revenue grew nearly 2%
    despite weather and specific items impacting services revenue,
    demonstrating resiliency in the turbulent marketplace for clinical
    laboratories. Services revenue of Enzo's newly launched women's health
    panel on the AmpiProbe® platform was strong in the quarter.
  • Recruitment of incremental sales force to drive revenue growth is well
    underway with addition of new professional team members, including new
    sales leadership.
  • Enzo recently named an in-network laboratory provider to a large New
    England commercial payor covering more than 3 million lives.
    Applications for in-network status continue to be filed with several
    payors that will expand Enzo's reach of testing services to millions
    of covered lives across the U.S.
  • Acceleration of product and services marketing efforts with additional
    staff hires and work around branding of technology platforms, new
    print and digital articles and marketing materials, and attendance at
    targeted trade shows and conferences.
  • Enzo validated three clinically relevant cost-effective cancer
    biomarker detection tests as part of its expanded anatomical Pathology
    platform. In addition, Enzo added assays for detecting chromosomal
    abnormalities for cancer stagings to Enzo's development pipeline for
    introduction later this year and a UMM marker (Ureaplasma species,
    Mycoplasma hominis and Mycoplasma genitalium) is being validated that
    will expand the Company's 13-analyte women's health panel on the
    AmpiProbe® platform.
  • Growing number of important business development meetings and
    activities around potential partnerships and collaborations with
    hospital networks, diagnostic manufactures and other laboratories in
    process, with specific emphasis on use of Enzo diagnostic reagents in
    existing automated systems that are commonly available.
  • During fiscal 2018, Enzo has been granted 14 new patents, including
    key patents covering potential cancer therapeutic.
  • Expect near term announcement on Enzo's facility expansion program to
    support growth.

Third Quarter Financial Highlights

  • Total revenues in the quarter amounted to $25.6 million or 5% lower
    than prior year due to a decrease in service revenue.
  • Services revenue was affected in the third quarter by the loss of a
    medical practice that internalized genetic testing ordering of
    approximately $1.9 million, storm related weather in the Northeast
    which impacted operations approximately $1.0 million (5 days), and an
    accounts receivable reserve adjustment of $0.5 million due to a
    commercial payor payment practice. Despite these items, core service
    testing volume increased nearly 2% or $2.0 million with growth in
    genetic and esoteric testing. Included in this amount was strong
    revenue related to the recently launched AmpiProbe® platform in the
    quarter. As a result, services revenue totaled $18.1 million compared
    to $19.6 million in the prior year.
  • Product revenue was slightly ahead of prior year at $7.4 million as
    reported sales increased in Europe and stabilized in the U.S.
  • Gross margins in the quarter were 43% compared with 45% in the prior
    year period.
  • Total operating expenses were $13.9 million compared to $12.4 million,
    an increase of $1.5 million or 12%. Legal expense accounted for $1.1
    million of the increase along with marketing and sales related
    expenses of $0.3 million in advance of launching new sales initiatives.
  • The GAAP and Non-GAAP net loss was $3.0 million or $0.06 per share
    compared to breakeven results or $0.00 per share in the prior year
    period.
  • Total cash and cash equivalents at April 30, 2018 were $62.6 million
    compared to $64.2 million at July 31, 2017. Operating segments
    continue to be cash flow positive. Cash used in operations for the
    nine months ended April 30, 2018 was $0.5 million compared to a use of
    $1.9 million for the nine months ended April 30, 2017.

Barry Weiner, Enzo Biochem President, comments:

"Healthcare overall is in a transformative state, a situation Enzo has
long recognized with innovative platforms and assays designed to bring
hospitals and independent labs meaningful cost savings, improved service
to physician customers, assure the comfort and needs of patients, and
overall help to importantly build value.

"Our quarterly services revenue and gross margin was adversely impacted
by a customer shift to internalizing genetic ordering, adverse weather,
and payment practices at a commercial insurance payor. Nevertheless,
Enzo showed its business model can replace this service revenue by
expanding our coverage area, increasing services to hospital networks
and successfully launching tests such as AmpiProbe® at lower cost,
thereby improving gross margins.

"Enzo is making significant progress preparing to roll out our
disruptive diagnostic technology to hospital and independent
laboratories. Our operating and commercial activities have accelerated
and we expect the pace to continue throughout calendar 2018. The
insurance reimbursement market is shifting rapidly, making Enzo's
strategic plan to develop and market cost-efficient proprietary products
and services that are high performing, critical to the laboratory
industry. The Company saw increased service revenue from its AmpiProbe®
line with attractive gross margins in just the first quarter since
launch.

"Our focus is clear: expanding Enzo's proprietary technology platforms
in high-valued molecular diagnostics, immunoassays and genomics segments
that will provide laboratories margin relief as insurance reimbursement
and cost challenges become more prevalent. This ongoing effort involves
training an expanded sales team, investing in related marketing and
promotion programs, in addition to continuing our pipeline development.

"We have a highly liquid and strong balance sheet with which to
implement our strategic plan and bring it to fruition."

Business Strategy

As an integrated diagnostic company, Enzo is driving the development of
cost efficient, high performing and easily adaptable disruptive
diagnostic technologies to the hospital and independent clinical
laboratory industry. Enzo's current market position is the culmination
of extensive strategic planning and years of work developing reagents
and assays in clinical markets. Key to our strategy is Enzo's unique
operating structure and integration of Enzo Life Sciences products and
Enzo Clinical Laboratories services that provide us with a unique
advantage. Enzo Life Sciences has broad capabilities for developing
critical assays that have demonstrated unusually high sensitivity. In
our facilities in New York and Michigan we also have the capability to
manufacture them as they are approved.

In turn, Enzo Clinical Labs with its state-of-the-art diagnostic
capabilities is working seamlessly with Life Sciences to assure the
quality and effectiveness of our products through testing services on
commonly available automated systems.

The result of this unique integration is that we are able to bring to
market platforms and technologies that are fully vetted in a real world
diagnostic facility. Moreover, these solutions cover multiple diagnostic
segments including molecular diagnostics, anatomical pathology,
immunoassays, and genetics. Affordable price structure is related to our
ability to access installed automated systems. At a time when
reimbursement pressures and cost challenges persist, Enzo's solutions
provide much needed margin relief for clinical laboratories.

Third Quarter Results

Total revenues in the quarter amounted to $25.6 million or 5% lower than
prior year due to a decrease in services revenue. As noted above,
services revenue was impacted in the third quarter by the loss of a
large medical practice that internalized genetic testing ordering of
approximately $1.9 million, storm related weather in the Northeast that
impacted operations approximately $1.0 million, and an accounts
receivable reserve adjustment of $0.5 million due to a commercial payor
payment practice. Despite these items, core service testing volume
increased nearly 2%, or $2.0 million, with growth in genetic and
esoteric testing. Product revenue was slightly ahead of prior year at
$7.4 million as reported sales increased in Europe and stabilized in the
U.S. The current quarter's products revenue was impacted favorably by
foreign currency movements of approximately $0.2 million.

Gross margins in the quarter were 43% compared with 45% in the prior
year period. Total operating expenses were $13.9 million compared to
$12.4 million, an increase of $1.5 million or 12%. Legal expenses were
$1.7 million and accounted for $1.1 million of the increase in operating
expenses along with marketing and sales related expenses of $0.3 million
in advance of launching new sales initiatives. The increase in legal
expenses was principally related to the New York litigation with Roche,
where Enzo is the plaintiff.

The GAAP and Non-GAAP net loss was $3.0 million or $0.06 per share
compared to breakeven results or $0.00 per share in the prior year
period.

EBITDA (earnings before interest, taxes, depreciation and amortization)
and Adjusted EBITDA was a loss of $2.4 million, compared to EBITDA of
$0.7 million in the prior year period.

Segment Results

Services revenues were $18.1 million versus $19.6 million in the prior
year period as a result of the aforementioned specific items offset by
growth in testing volume. Gross margins declined to 39.4%, from 42.1% a
year ago. Operating income amounted to $0.5 million, compared to $1.5
million, a year ago. Noteworthy was steady growth in tests using the
newly installed AmpiProbe™ platform with significantly above average
profit margins compared to historical laboratory testing.

Products revenue increased to $7.4 million from $7.3 million a year ago.
With costs well maintained, and sales of higher margin products,
resulting from the unit's recent product mix realignment, Life Science
product profit margins advanced to 52%, from 51% a year earlier.
Operating income approximated $0.4 million for the April 2018 quarter
and $0.6 million in the year ago period.

Nine Month Results

Total products and services revenues year to date amounted to $80.3
million, up 1% from $79.6 million a year ago. Gross margins were 43.2%,
vs. 44.9% a year ago, and SG&A as a percentage of revenue was 41% vs.
42%. Legal expenses amounted to $3.8 million, up from $1.3 million a
year ago principally due to litigation expenses in New York with Roche,
where Enzo is the plaintiff. The GAAP and Non-GAAP net loss was $4.6
million or $0.10 per share and $5.7 million or $0.12 per share,
respectively, compared to GAAP and Non-GAAP net loss of $2.6 million or
$0.06 in the prior year period. EBITDA and Adjusted EBITDA was a loss of
$3.9 million compared to a loss of $0.2 million in the prior year period.

Conference Call

The Company will conduct a conference call Tuesday, June 12, 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 8178498.

Interested parties may also listen over the Internet at: https://tinyurl.com/ybasc9sh

To listen to the live call, individuals should go to the website at
least 15 minutes early to register, download and install any necessary
audio software. Any pop up blocker installed on your PC should be
disabled while accessing the webcast. A rebroadcast of the call will be
available starting approximately two hours after the conference call
ends, through 12 AM (E.T.) Tuesday June 26, 2018. The replay of the
conference call can be accessed by dialing 1-855-859-2056 (International
callers can dial 1-404-537-3406) and, when prompted, use the same PIN
number 8178498.

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 Nine months ended

Selected operations data:

April 30, April 30,
(unaudited) (unaudited)
  2018     2017     2018     2017  
Revenues:
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