GenMark Diagnostics, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - October 29, 2018

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October 29, 2018


GenMark Diagnostics Reports Third Quarter 2018 Results

CARLSBAD, Calif - GenMark Diagnostics, Inc. (Nasdaq: GNMK), a leading provider of automated, multiplex molecular diagnostic testing systems, today announced financial results for the third quarter ended September 30, 2018.

Highlights
Recognized revenues of $15.8 million, an increase of 36% over the prior year period
•
Placed 45 net new ePlex analyzers, expanding the global installed base to 312 placements
•
Submitted two additional ePlex Blood Culture Identification (BCID) Panels to the U.S. Food and Drug Administration (FDA): Gram-Negative (BCID-GN) Panel and Fungal Pathogen (BCID-FP) Panel

“Q3 was another quarter of solid performance across several important areas of our business.  Our sales force delivered strong revenues and expanded our installed base of ePlex analyzers, while our operations team continued to enhance manufacturing and cost efficiencies,” said Hany Massarany, President and Chief Executive Officer. “We are especially pleased to have now completed all three submissions of our blood culture identification panels to the FDA.  We are confident in the significant opportunity for these panels and currently preparing the market, as well as our organization, for a successful launch in the US.”

Third Quarter Financial Results
Revenue was $15.8 million in the third quarter of 2018, an increase of 36% versus $11.6 million in the third quarter of 2017. Gross profit was $5.6 million, or 36% of revenue, compared with $4.2 million, or 36% of revenue in the same period of 2017.

Operating expenses for the third quarter of 2018 were $16.2 million compared to $18.9 million in the same period of 2017. The decrease was largely due to reduced ePlex development expenses.

Loss per share was $0.20 for the third quarter of 2018, compared to a $0.28 loss per share in the third quarter of 2017.

The Company ended the quarter with $42.7 million in cash and investments.

Guidance for Full Year 2018
GenMark is reconfirming 2018 revenue guidance of $68 to $72 million. Gross margin is now expected to be in the 28-30% range. The range of expected ePlex placements has been narrowed to 150-160 net new analyzers, and the annuity per ePlex placement remains the same in the $100,000 to $120,000 range.

Webcast and Conference Call Information
GenMark will be hosting a conference call to discuss third quarter results in further detail on Monday, October 29, 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 3389197 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

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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



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GENMARK DIAGNOSTICS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
 
September 30,
2018
 
December 31,
2017
ASSETS:
Current Assets:
 
 
 
Cash and cash equivalents
$
25,005

 
$
26,754

Short-term marketable securities
17,657

 
45,236

Accounts receivable, net of allowances of $75 and $2,754, respectively
9,858

 
10,676

Inventories
11,254

 
10,949

Prepaid expenses and other current assets
1,894

 
2,216

Total current assets
65,668

 
95,831

 
 
 
 
Property and equipment, net
21,873

 
22,581

Intangible assets, net
2,170

 
2,624

Restricted cash
758

 
758

Other long-term assets
562

 
505

Total assets
$
91,031

 
$
122,299

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
 
 
 
Accounts payable
$
8,242

 
$
11,171

Accrued compensation
6,987

 
5,419

Current portion of long-term debt
—

 
7,927

Other current liabilities
2,302

 
3,226

Total current liabilities
17,531

 
27,743

 
 
 
 
Deferred rent
2,952

 
3,059

Long-term debt
28,730

 
20,099

Other noncurrent liabilities
112

 
241

Total liabilities
49,325

 
51,142

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

 
—

Common stock, $0.0001 par value; 100,000 authorized; 55,955 and 55,066 shares issued and outstanding, respectively
6

 
6

Additional paid-in capital
497,018

 
487,525

Accumulated deficit
(455,322
)
 
(416,383
)
Accumulated other comprehensive income
4

 
9

Total stockholders’ equity
41,706

 
71,157

Total liabilities and stockholders’ equity
$
91,031

 
$
122,299













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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,
 
2018
 
2017
 
2018
 
2017
Revenue:
 
 
 
 
 
 
 
Product revenue
$
15,713

 
$
11,552

 
$
51,156

 
$
36,313

License and other revenue
82

 
51

 
225

 
184

Total revenue
15,795

 
11,603

 
51,381

 
36,497

Cost of revenue
10,165

 
7,400

 
37,172

 
21,227

Gross profit
5,630

 
4,203

 
14,209

 
15,270

Operating expenses:
 
 
 
 
 
 
 
Sales and marketing
5,375

 
5,121

 
15,964

 
14,974

General and administrative
4,718

 
3,565

 
13,398

 
11,553

Research and development
6,105

 
10,248

 
22,007

 
34,297

Total operating expenses
16,198

 
18,934

 
51,369

 
60,824

Loss from operations
(10,568
)
 
(14,731
)
 
(37,160
)
 
(45,554
)
Other income (expense):
 
 
 
 
 
 
 
Interest income
188

 
247

 
577

 
353

Interest expense
(661
)
 
(1,009
)
 
(2,246
)
 
(2,270
)
Other income (expense)
53

 
76

 
(49
)
 
227

Total other income (expense)
(420
)
 
(686
)
 
(1,718
)
 
(1,690
)
Loss before provision for income taxes
(10,988
)
 
(15,417
)
 
(38,878
)
 
(47,244
)
Income tax expense (benefit)
5

 
(9
)
 
59

 
68

Net loss
$
(10,993
)
 
$
(15,408
)
 
$
(38,937
)
 
$
(47,312
)
Net loss per share, basic and diluted
$
(0.20
)
 
$
(0.28
)
 
$
(0.70
)
 
$
(0.95
)
Weighted average number of shares outstanding, basic and diluted
55,847

 
54,726

 
55,535

 
49,908

 
 
 
 
 
 
 
 
Other comprehensive loss:
 
 
 
 
 
 
 
Net loss
$
(10,993
)
 
$
(15,408
)
 
$
(38,937
)
 
$
(47,312
)
Other comprehensive income/(loss):
 
 
 
 
 
 
 
Foreign currency translation adjustments, net of tax
49

 
51

 
29

 
145

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

 
(9
)
 
26

 
(24
)
Total other comprehensive income/(loss)
53

 
42

 
55

 
121

Total comprehensive loss
$
(10,940
)
 
$
(15,366
)
 
$
(38,882
)
 
$
(47,191
)













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GENMARK DIAGNOSTICS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
Nine Months Ended 
 September 30,
 
2018
 
2017
Operating activities:
 
 
 
Net loss
$
(38,937
)
 
$
(47,312
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
Depreciation and amortization
5,281

 
3,811

Net amortization/(accretion) of premiums/discounts on investments
(110
)
 
4

Amortization of deferred debt issuance costs
725

 
891

Stock-based compensation
8,895

 
8,386

Provision for bad debt
24

 
51

Non-cash inventory adjustments
1,061

 
911

Other non-cash adjustments
(62
)
 
(190
)
Changes in operating assets and liabilities:
 
 
 
Accounts receivable
797

 
1,272

Inventories
(3,847
)
 
(4,813
)
Prepaid expenses and other assets
384

 
(767
)
Other long-term assets
—

 
(16
)
Accounts payable
(3,408
)
 
(1,468
)
Accrued compensation
1,053

 
(452
)
Other current and non-current liabilities
(756
)
 
(913
)
Net cash used in operating activities
(28,900
)
 
(40,605
)
Investing activities:
 
 
 
Payments for intellectual property licenses
—

 
(500
)
Purchases of property and equipment, net
(1,060
)
 
(3,816
)
Purchases of marketable securities
(28,785
)
 
(56,525
)
Proceeds from sales of marketable securities
—

 
13,896

Maturities of marketable securities
56,500

 
8,500

Net cash provided by (used in) investing activities
26,655

 
(38,445
)
Financing activities:
 
 
 
Proceeds from issuance of common stock
535

 
86,835

Costs incurred in conjunction with public offering
—

 
(5,469
)
Principal repayment of borrowings
(68
)
 
(6,123
)
Proceeds from borrowings
—

 
15,000

Payments associated with debt issuance
(20
)
 
(187
)
Proceeds from stock option exercises
22

 
213

Net cash provided by financing activities
469

 
90,269

Effect of exchange rate changes on cash, cash equivalents, and restricted cash
27

 
(17
)
Net increase (decrease) in cash, cash equivalents, and restricted cash
(1,749
)
 
11,202

Cash, cash equivalents, and restricted cash at beginning of year
27,512

 
16,717

Cash, cash equivalents, and restricted cash at end of period
$
25,763

 
$
27,919

Non-cash investing and financing activities:
 
 
 
Transfer of systems (from) to property and equipment into (from) inventory
$
2,477

 
$
(3,438
)
Property and equipment included in accounts payable
$
746

 
$
330

Intellectual property acquisitions included in other current liabilities
$
—

 
$
—

Supplemental cash flow information:
 
 
 
Cash paid for income taxes, net
$
133

 
$
58

Cash paid for interest
$
1,517

 
$
1,143




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GenMark Diagnostics, Inc. Reports