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GenMark Diagnostics Reports Second Quarter 2018 Results

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CARLSBAD, Calif., July 30, 2018 (GLOBE NEWSWIRE) -- GenMark Diagnostics, Inc. (NASDAQ:GNMK), a leading provider of automated, multiplex molecular diagnostic testing systems, today announced financial results for the second quarter ended June 30, 2018.

Highlights

  • Recognized revenues of $14.9 million, an increase of 21% over the prior year period
  • Placed 39 net new ePlex analyzers, expanding the global installed base to 267 placements
  • Submitted the ePlex BCID Gram Positive panel to the FDA
  • Completed clinical testing for FDA submission of the ePlex BCID Gram Negative panel
  • Commenced clinical study for FDA submission of the ePlex Fungal Pathogen panel

"Our second quarter results reflect solid execution on our strategic priorities of growth through ePlex commercialization and menu expansion, as well as improving manufacturing efficiencies. Top line performance was largely driven by strong ePlex placements and demand for our respiratory pathogen test cartridges. We also submitted to the FDA the first of three blood culture identification panels being developed on our ePlex system, which was a significant milestone for the company. We expect FDA submission of the remaining two blood culture panels in the third and fourth quarters of this year, as previously communicated," said Hany Massarany, President and Chief Executive Officer. "Based on this momentum and our continued focus on commercial and operational execution, I am confident we will achieve our goals for 2018 and beyond."

Second Quarter Financial Results
Revenue was $14.9 million in the second quarter of 2018, an increase of 21% versus $12.4 million in the second quarter of 2017.  Gross profit was $4.4 million, or 30% of revenue, compared with $4.9 million, or 40% of revenue in the same period of 2017, reflecting the increased proportion of ePlex revenues in the quarter versus prior year.

Operating expenses for the second quarter of 2018 were $20.2 million compared to $22.2 million in the same period for 2017.  The decrease was largely due to reduced ePlex development expenses.

Loss per share was $0.30 per share for the second quarter of 2018, compared to a $0.37 loss per share in the second quarter of 2017.

The Company ended the quarter with $55.2 million in cash and investments, reflecting the impact of reductions in operating expenses and efforts to minimize working capital needs.

Guidance for Full Year 2018
GenMark is reconfirming 2018 revenue guidance of $68 to $72 million. Gross margin is expected to be in the 30% range. The Company continues to expect ePlex placements of 140-170 net new analyzers, and an annuity per ePlex placement in the $100,000 to $120,000 range.

Webcast and Conference Call Information
GenMark will be hosting a conference call to discuss second quarter results in further detail on Monday, July 30, 2018 starting at 4:30 p.m. ET. The conference call will be concurrently webcast. The link to the webcast will be available on the GenMark Diagnostics, Inc. website at www.genmarkdx.com under the investor relations section and will be archived for future reference. To listen to the conference call, please dial (877) 312-5847 (US/Canada) or (253) 237-1154 (International) and use the conference ID number 4473539 approximately five minutes prior to the start time.

About GenMark Diagnostics
GenMark Diagnostics (NASDAQ:GNMK) is a leading provider of multiplex molecular diagnostic solutions designed to enhance patient care, improve key quality metrics, and reduce the total cost-of-care. Utilizing GenMark's proprietary eSensor® detection technology, GenMark's eSensor XT-8® and ePlex® systems are designed to support a broad range of molecular diagnostic tests with compact, easy-to-use workstations and self-contained, disposable test cartridges. GenMark's ePlex: The True Sample-to-Answer Solution™ is designed to optimize laboratory efficiency and address a broad range of infectious disease testing needs, including respiratory, bloodstream, and gastrointestinal infections.  For more information, visit www.genmarkdx.com

Safe Harbor Statement
This press release includes forward-looking statements regarding events, trends and business prospects, which may affect our future operating results and financial position. Such statements, including, but not limited to, those regarding our future financial performance, regulatory submissions and approvals, and the timely and effective commercialization and clinical impact of our ePlex system, are all subject to risks and uncertainties that could cause our actual results and financial position to differ materially. Some of these risks and uncertainties include, but are not limited to, our ability to successfully commercialize our ePlex system and its related test menu in a timely manner, constraints or inefficiencies caused by unanticipated acceleration and deceleration of customer demand, our ability to successfully expand sales of our product offerings outside the United States, and third-party payor reimbursement to our customers, as well as other risks and uncertainties described under the "Risk Factors" in our public filings with the Securities and Exchange Commission. We assume no responsibility to update or revise any forward-looking statements to reflect events, trends or circumstances after the date they are made.

Investor Relations Contact                                                             
Lynn Pieper Lewis or Leigh Salvo                                  
(415) 937-5404   
ir@genmarkdx.com 


GENMARK DIAGNOSTICS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)

  June 30,
 2018
  December 31,
 2017
ASSETS:
Current Assets:      
Cash and cash equivalents $ 28,891     $ 26,754  
Short-term marketable securities 26,358     45,236  
Accounts receivable, net of allowances of $86 and $2,754, respectively 7,144     10,676  
Inventories 8,828     10,949  
Prepaid expenses and other current assets 1,912     2,216  
Total current assets 73,133     95,831  
       
Property and equipment, net 21,159     22,581  
Intangible assets, net 2,327     2,624  
Restricted cash 758     758  
Other long-term assets 522     505  
Total assets $ 97,899     $ 122,299  
       
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:      
Accounts payable $ 9,219     $ 11,171  
Accrued compensation 4,872     5,419  
Current portion of long-term debt 19,009     7,927  
Other current liabilities 2,710     3,226  
Total current liabilities 35,810     27,743  
       
Deferred rent 2,715     3,059  
Long-term debt 9,579     20,099  
Other noncurrent liabilities 146     241  
Total liabilities 48,250     51,142  
       
Stockholders' equity:      
Preferred stock, $0.0001 par value; 5,000 authorized, none issued      
Common stock, $0.0001 par value; 100,000 authorized; 55,753 and 55,066 shares issued and outstanding, respectively 6     6  
Additional paid-in capital 493,921     487,525  
Accumulated deficit (444,329 )   (416,383 )
Accumulated other comprehensive income 51     9  
Total stockholders' equity 49,649     71,157  
Total liabilities and stockholders' equity $ 97,899     $ 122,299  
               


GENMARK DIAGNOSTICS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands, except per share data)

  Three Months Ended   Six Months Ended
  June 30,   June 30,
  2018   2017   2018   2017
Revenue:              
Product revenue $ 14,867     $ 12,291     $ 35,443     $ 24,761  
License and other revenue 74     68     143     133  
Total revenue 14,941     12,359     35,586     24,894  
Cost of revenue 10,527     7,475     27,007     13,827  
Gross profit 4,414     4,884     8,579     11,067  
Operating expenses:              
Sales and marketing 5,187     5,159     10,589     9,853  
General and administrative 4,547     3,978     8,680     7,988  
Research and development 10,482     13,014     15,902     24,049  
Total operating expenses 20,216     22,151     35,171     41,890  
Loss from operations (15,802 )   (17,267 )   (26,592 )   (30,823 )
Other income (expense):              
Interest income 202     54     389     106  
Interest expense (797 )   (755 )   (1,585 )   (1,261 )
Other income (expense) (90 )   56     (102 )   151  
Total other income (expense) (685 )   (645 )   (1,298 )   (1,004 )
Loss before provision for income taxes (16,487 )   (17,912 )   (27,890 )   (31,827 )
Income tax expense 34     77     54     78  
Net loss $ (16,521 )   $ (17,989 )   $ (27,944 )   $ (31,905 )
Net loss per share, basic and diluted $ (0.30 )   $ (0.37 )   $ (0.50 )   $ (0.67 )
Weighted average number of shares outstanding, basic and diluted 55,547     48,067     55,377     47,460  
               
Other comprehensive loss:              
Net loss $ (16,521 )   $ (17,989 )   $ (27,944 )   $ (31,905 )
Other comprehensive income/(loss):              
Foreign currency translation adjustments, net of tax 14     3     (20 )   94  
Net unrealized gains (losses) on marketable securities, net of tax 14     1     22     (15 )
Total other comprehensive income/(loss) 28     4     2     79  
Total comprehensive loss $ (16,493 )   $ (17,985 )   $ (27,942 )   $ (31,826 )
                               


GENMARK DIAGNOSTICS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

  Six Months Ended
 June 30,
  2018   2017
Operating activities:      
Net loss $ (27,944 )   $ (31,905 )
Adjustments to reconcile net loss to net cash used in operating activities:      
Depreciation and amortization 3,507     2,454  
Net amortization/(accretion) of premiums/discounts on investments (78 )   30  
Amortization of deferred debt issuance costs 583     493  
Stock-based compensation 5,799     5,602  
Provision for bad debt 34     32  
Non-cash inventory adjustments 809     565  
Other non-cash adjustments (13 )   (123 )
Changes in operating assets and liabilities:      
Accounts receivable 3,501     1,795  
Inventories 353     (2,563 )
Prepaid expenses and other assets 340     (119 )
Accounts payable (1,853 )   (3,134 )
Accrued compensation (853 )   (1,170 )
Other current and non-current liabilities (622 )   (124 )
Net cash used in operating activities (16,437 )   (28,167 )
Investing activities:      
Purchases of property and equipment, net (924 )   (2,535 )
Purchases of marketable securities (23,622 )   (10,496 )
Proceeds from sales of marketable securities     13,896  
Maturities of marketable securities 42,600     4,100  
Net cash provided by investing activities 18,054     4,965  
Financing activities:      
Proceeds from issuance of common stock 535     86,835  
Costs incurred in conjunction with public offering     (5,171 )
Principal repayment of borrowings (45 )   (964 )
Proceeds from borrowings     15,000  
Payments associated with debt issuance (20 )   (187 )
Proceeds from stock option exercises 22     170  
Net cash provided by financing activities 492     95,683  
Effect of exchange rate changes on cash, cash equivalents, and restricted cash 28     (13 )
Net increase in cash, cash equivalents, and restricted cash 2,137     72,468  
Cash, cash equivalents, and restricted cash at beginning of year 27,512     16,717  
Cash, cash equivalents, and restricted cash at end of period $ 29,649     $ 89,185  
Non-cash investing and financing activities:      
Transfer of systems (from) to property and equipment into (from) inventory $ 956     $ (1,534 )
Property and equipment included in accounts payable $ 168     $ 713  
Intellectual property acquisitions included in other current liabilities $     $ 500  
Supplemental cash flow information:      
Cash paid for income taxes, net $ 113     $ 54  
Cash paid for interest $ 1,003     $ 574  
               


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