GenMark Diagnostics, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - October 27, 2015

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8-K - 8-K - GenMark Diagnostics, Inc.form8-kearningsreleaseq320.htm


Exhibit 99.1
October 27, 2015
GenMark Diagnostics Reports Q3 Financial Results
Third Quarter Revenue of $8.5 Million, Up 34% Versus Prior Year
XT-8 Installed Base Expanded by 25 to 616
European ePlex™ Launch Now Expected in the First Quarter of 2016
External ePlex Studies Recently Commenced at the First Customer Site

CARLSBAD, Calif.-(BUSINESS WIRE)- GenMark Diagnostics, Inc. (Nasdaq:GNMK), a leading provider of automated, multiplex molecular diagnostic testing systems, today reported third quarter 2015 financial results.

Revenue for the third quarter of 2015 was $8.5 million, an increase of 34% over the prior year period. During the quarter, 25 additional XT-8 analyzers were placed in end-user laboratories, resulting in a total installed base of 616 analyzers within the U.S. market.

Gross profit for the third quarter was $5.1 million, or 60% of revenue, compared with $3.7 million, or 59% of revenue in the same period of 2014.

“We are pleased with the continued strong performance of our XT-8 business and the progress we are making towards the European launch of our ePlex sample-to-answer system in the first quarter of 2016,” said Hany Massarany, President and Chief Executive Officer of GenMark. “We recently commenced external ePlex Alpha studies at the first customer site. We also tested numerous clinical samples on the ePlex system at GenMark and will be presenting results from these studies at The Association of Molecular Pathology Conference in Texas next week,” added Massarany.
Operating expenses for the third quarter of 2015 were $16.2 million compared to $14.0 million in the same period of 2014. The 16% increase was mainly driven by personnel related expenses across the organization as the Company prepares for the upcoming launch of the ePlex system.
Loss per share was $0.27 per share for the third quarter of 2015 compared to a loss of $0.23 per share in the same period of 2014.
The Company ended the quarter with $54.2 million in cash and cash equivalents and intends to continue utilizing its cash balances to invest in the global commercialization of the ePlex system.
Business Outlook
For full year 2015, the Company continues to expect revenue in the range of $38 to $40 million and gross margin of 57% to 59%. The Company now expects to place more than 90 XT-8 analyzers for the full year.
The Company will be hosting a conference call to discuss third quarter 2015 results in further detail on Tuesday, October 27, 2015 starting at 4:30 p.m. Eastern Time. 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 62237999 approximately five minutes prior to the start time.
ABOUT GENMARK DIAGNOSTICS

GenMark Diagnostics (NASDAQ: GNMK) is a leading provider of automated, multiplex molecular diagnostic testing systems that detect and measure DNA and RNA targets to diagnose disease and optimize patient treatment. Utilizing GenMark’s proprietary eSensor® detection technology, GenMark’s eSensor XT-8TM system is designed to support a broad range of molecular diagnostic tests with a compact, easy-to-use workstation and self-contained, disposable test cartridges. The eSensor detection technology is also incorporated into GenMark’s sample-to-answer system, ePlexTM. 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 the timely commercialization of our ePlex system and our future financial performance, 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.








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

 
 
 
 
 
September 30,
2015
 
December 31,
2014
Current assets
 
 
 
Cash and cash equivalents
$
34,212

 
$
36,855

Marketable securities
19,966

 
33,651

Accounts receivable, net of allowances of $2,702 and $2,702, respectively
4,332

 
4,889

Inventories
2,714

 
2,137

Prepaid expenses and other current assets
874

 
575

Total current assets
62,098

 
78,107

Property and equipment, net
11,557

 
11,052

Intangible assets, net
2,470

 
1,870

Restricted cash
758

 
758

Other long-term assets
184

 
183

Total assets
$
77,067

 
$
91,970

Current liabilities
 
 
 
Accounts payable
$
4,893

 
$
5,126

Accrued compensation
4,885

 
5,172

Other current liabilities
1,695

 
1,995

Total current liabilities
11,473

 
12,293

Long-term liabilities
 
 
 
Deferred rent
1,308

 
1,445

Long-term debt
9,794

 
—

Other non-current liabilities
249

 
208

Total liabilities
22,824

 
13,946

Stockholders’ equity
 
 
 
Preferred stock, $0.0001 par value; 5,000 authorized, none issued
—

 
—

Common stock, $0.0001 par value; 100,000 authorized; 42,445 and 41,859 shares issued and outstanding as of September 30, 2015 and December 31, 2014, respectively
4

 
4

Additional paid-in capital
350,124

 
340,502

Accumulated deficit
(295,887)

 
(262,472)

Accumulated other comprehensive income
2

 
(10)

Total stockholders’ equity
54,243

 
78,024

Total liabilities and stockholders’ equity
$
77,067

 
$
91,970






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

 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2015
 
2014
 
2015
 
2014
Revenue
 
 
 
 
 
 
 
Product revenue
$
8,382

 
$
6,233

 
$
25,944

 
$
20,593

License and other revenue
90

 
67

 
281

 
175

Total revenue
8,472

 
6,300

 
26,225

 
20,768

Cost of revenue
3,352

 
2,609

 
10,630

 
9,300

Gross profit
5,120

 
3,691

 
15,595

 
11,468

Operating expenses
 
 
 
 
 
 
 
Sales and marketing
3,587

 
3,159

 
10,984

 
9,516

General and administrative
3,061

 
2,900

 
10,393

 
9,051

Research and development
9,589

 
7,904

 
27,292

 
23,297

Total operating expenses
16,237

 
13,963

 
48,669

 
41,864

Loss from operations
(11,117)

 
(10,272)

 
(33,074)

 
(30,396)

Other income (expense)
 
 
 
 
 
 
 
Interest income
30

 
45

 
99

 
206

Interest expense
(289
)
 
(14
)
 
(607
)
 
(18
)
Other income (expense)
(14)

 
(33
)
 
193

 
(34
)
Total other income (expense)
(273)

 
(2)

 
(315)

 
154

Loss before provision for income taxes
(11,390)

 
(10,274)

 
(33,389)

 
(30,242)

Income tax expense (benefit)
4

 
(616
)
 
26

 
(591
)
Net loss
$
(11,394
)
 
$
(9,658
)
 
$
(33,415
)
 
$
(29,651
)
Net loss per share, basic and diluted
$
(0.27
)
 
$
(0.23
)
 
$
(0.79
)
 
$
(0.72
)
Weighted average number of shares outstanding, basic and diluted
42,312

 
41,446

 
42,061

 
41,273

Other comprehensive loss
 
 
 
 
 
 
 
Net loss
$
(11,394
)
 
$
(9,658
)
 
$
(33,415
)
 
$
(29,651
)
Foreign currency translation adjustments
(1
)
 
—

 
8

 
—

Net unrealized gains (losses) on marketable securities, net of tax
(4
)
 
(3
)
 
(20
)
 
6

Comprehensive loss
$
(11,399
)
 
$
(9,661
)
 
$
(33,427
)
 
$
(29,645
)





GENMARK DIAGNOSTICS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
Nine Months Ended September 30,
 
2015
 
2014
Operating activities
 
 
 
Net loss
$
(33,415
)
 
$
(29,651
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
Depreciation and amortization
2,500

 
1,870

Amortization of premiums on investments
157

 
577

Amortization of deferred debt issuance costs
199

 
—

Gain on sale of investment in preferred stock
(223
)
 
—

Stock-based compensation
7,347

 
4,478

Non-cash inventory adjustments
567

 
517

Other non-cash adjustments
9

 
—

Changes in operating assets and liabilities:
 
 
 
Accounts receivable
557

 
151

Inventories
(980
)
 
209

Prepaid expenses and other assets
(320
)
 
(691
)
Accounts payable
(358
)
 
(318
)
Accrued compensation
575

 
1,757

Other liabilities
(295
)
 
(1,131
)
Net cash used in operating activities
(23,680
)
 
(22,232
)
Investing activities
 
 
 
Payments for intellectual property licenses
(550
)
 
(350
)
Purchases of property and equipment
(2,868
)
 
(3,699
)
Purchases of marketable securities
(14,797
)
 
(28,054
)
Proceeds from sales of marketable securities
223

 
7,497

Maturities of marketable securities
28,350

 
36,250

Net cash provided by investing activities
10,358

 
11,644

Financing activities
 
 
 
Proceeds from issuance of common stock
427

 
373

Principal repayment of borrowings
(15
)
 
(51
)
Proceeds from borrowings
10,000

 
—

Costs associated with debt issuance
(718
)
 
—

Proceeds from stock option exercises
986

 
201

Net cash provided by financing activities
10,680

 
523

Effect of exchange rate changes on cash
(1
)
 
—

Net decrease in cash and cash equivalents
(2,643
)
 
(10,065
)
Cash and cash equivalents at beginning of period
36,855

 
35,723

Cash and cash equivalents at end of period
$
34,212

 
$
25,658

Non-cash investing and financing activities
 
 
 
Transfer of instruments from property and equipment to inventory
$
165

 
$
156

Property and equipment costs included in accounts payable
$
248

 
$
364

Intellectual property acquisitions included in other current liabilities
$
800

 
$
550

Supplemental cash flow disclosures
 
 
 
Cash paid for income taxes, net
$
9

 
$
27

Cash received for interest
$
256

 
$
783

Cash paid for interest
$
607

 
$
18









GenMark Diagnostics, Inc.
Hany Massarany
President/Chief Executive Officer
760-448-4325

Source: GenMark Diagnostics, Inc.

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GenMark Diagnostics, Inc. Reports