GenMark Diagnostics, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - March 2, 2020

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8-K - 8-K - GenMark Diagnostics, Inc.form8-k20190302.htm
March 2, 2020


GenMark Diagnostics Reports Fourth Quarter and Full Year 2019 Results

CARLSBAD, Calif - GenMark Diagnostics, Inc. (Nasdaq: GNMK), a leading provider of automated, multiplex molecular diagnostic testing systems, today announced financial results for the fourth quarter and year ended December 31, 2019.

Full Year 2019 Financial Highlights
•
Total revenue of $88.0 million, an increase of 24% over 2018
◦
ePlex revenue of $60.3 million, an increase of more than 59% over 2018
•
Gross margin of 32.5%, a 500-bps improvement over 2018
•
Ended the year with $53.5 million in cash and investments

Fourth Quarter 2019 Financial Highlights
•
Total revenue of $27.2 million, an increase of 40% over the fourth quarter of 2018
◦
ePlex revenue of $19.2 million, an increase of approximately 58% over the fourth quarter of 2018
•
Gross margin of 33.5%, a 630-bps improvement over the fourth quarter of 2018

Operational Highlights
•
Placed 38 net new ePlex analyzers in the fourth quarter of 2019, expanding the global installed base to 527 at year end
•
Approximate average annuity per ePlex analyzer of $148,000, compared to $139,000 in the comparable period of 2018
•
Over 70% of the placements in the fourth quarter were within labs that previously had a competitive analyzer
•
Shipped initial Research Use Only (RUO) test kits designed to detect the SARS-CoV-2 virus to several key sites in the U.S. with access to clinical samples and to the company's Hong Kong distributor

“2019 was a turning point for our company. From the FDA clearance and launch of our suite of blood culture identification panels to our significant improvement in gross margin, our team delivered meaningful results through teamwork and clearly defined goals,” said Scott Mendel, Interim President and Chief Executive Officer. "I am confident that we will build on these achievements and drive strong revenue growth and improving margins in 2020.”

“As revenue crosses over the $100 million mark in 2020, we are increasingly focused on driving towards cash flow positivity. We expect continued strong U.S. ePlex revenue growth, which is the vast majority of our business. Internationally, we plan to take a more measured approach that balances additional placements with stronger leverage of 2019’s geographic expansion,” concluded Mendel.

Fourth Quarter Financial Results
Revenue was $27.2 million in the fourth quarter of 2019, an increase of 40% versus $19.4 million in the fourth quarter of 2018.

Gross profit was $9.1 million, or approximately 33.5% of revenue, compared with $5.3 million, or 27.2% of revenue in the same period of 2018.

Operating expenses for the fourth quarter of 2019 were $17.8 million compared to $15.9 million in the same period of 2018. The increase was largely due to higher BCID launch and ePlex development expenses.

Loss per share was $0.17 for the fourth quarter of 2019, compared to a $0.21 loss per share in the fourth quarter of 2018.

Full Year 2019 Financial Results
Revenue was $88.0 million in 2019, an increase of 24% versus $70.8 million in 2018. Gross profit was $28.6 million, or 32.5% of revenue, compared with $19.5 million, or 27.5% of revenue in the prior year.

Operating expenses for 2019 were $70.4 million compared to $67.3 million in 2018. The increase was largely due to higher BCID launch and ePlex development expenses.





Loss per share was $0.82 for 2019, compared to a $0.91 loss per share in 2018.

Cash and investments were $53.5 million as of December 31, 2019.

Guidance for Full Year 2020
The company expects revenue for the full year 2020 in the range of $100 million to $110 million, which represents growth of 14% to 25%, updated from the 20-25% previously communicated. ePlex revenues are expected to increase by more than 30% in 2020 and represent approximately 70% to 80% of total 2020 revenue.

Global ePlex placements are expected to range from 130 to 160 net new analyzers with an annuity per analyzer between $130,000 and $135,000.

Gross margin is expected to be in the 36% to 39% range and operating expenses are expected to be approximately $65 million to $70 million.

Cash used in operations is projected to decline year over year to $16 million to $20 million.

Webcast and Conference Call Information
GenMark will host a conference call to discuss fourth quarter results in further detail on Monday, March 2, 2020 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 8163576 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, plans and objectives of management, 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                
Leigh Salvo             
(415) 937-5404     







GENMARK DIAGNOSTICS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
 
As of December 31,
 
2019
 
2018
ASSETS:
Current Assets:
 
 
 
Cash and cash equivalents
$
44,360

 
$
36,286

Short-term marketable securities
9,100

 
8,882

Accounts receivable, net of allowances of $376 and $75, respectively
16,759

 
11,534

Inventories
11,301

 
10,244

Prepaid expenses and other current assets
1,877

 
1,483

Total current assets
83,397

 
68,429

 
 
 
 
Property and equipment, net
20,419

 
21,070

Intangible assets, net
1,432

 
2,023

Restricted cash
758

 
758

Noncurrent operating lease right-of-use assets
4,642

 
—

Other long-term assets
825

 
701

Total assets
$
111,473

 
$
92,981

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
 
 
 
Accounts payable
$
12,249

 
$
9,886

Accrued compensation
7,493

 
7,358

Current operating lease liability
1,842

 
—

Other current liabilities
2,732

 
3,043

Total current liabilities
24,316

 
20,287

 
 
 
 
Deferred rent
—

 
2,996

Long-term debt
69,145

 
36,042

Noncurrent operating lease liability
5,796

 
—

Other noncurrent liabilities
53

 
109

Total liabilities
99,310

 
59,434

 
 
 
 
Commitments and contingencies - See Note 7
 
 
 
 
 
 
 
Stockholders' equity
 
 
 
Preferred stock, $0.0001 par value; 5,000 authorized, none issued
—

 
—

Common stock, $0.0001 par value; 100,000 authorized; 60,255 and 56,240 shares issued and outstanding as of December 31, 2019 and 2018, respectively
6

 
6

Additional paid-in capital
526,294

 
500,344

Accumulated deficit
(514,233
)
 
(466,883
)
Accumulated other comprehensive income
96

 
80

Total stockholders’ equity
12,163

 
33,547

Total liabilities and stockholders’ equity
$
111,473

 
$
92,981








GENMARK DIAGNOSTICS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands, except per share data)
 
Three Months Ended
 
Twelve Months Ended
 
December 31,
 
December 31,
 
2019
 
2018
 
2019
 
2018
Revenue:
 
 
 
 
 
 
 
Product revenue
$
27,078

 
$
19,325

 
$
87,491

 
$
70,481

License and other revenue
118

 
53

 
530

 
278

Total revenue
27,196

 
19,378

 
88,021

 
70,759

Cost of revenue
18,079

 
14,106

 
59,418

 
51,278

Gross profit
9,117

 
5,272

 
28,603

 
19,481

Operating expenses:
 
 
 
 
 
 
 
Sales and marketing
6,127

 
5,813

 
24,118

 
21,777

General and administrative
4,942

 
4,147

 
19,159

 
17,545

Research and development
6,754

 
5,924

 
27,140

 
27,931

Total operating expenses
17,823

 
15,884

 
70,417

 
67,253

Loss from operations
(8,706
)
 
(10,612
)
 
(41,814
)
 
(47,772
)
Other income (expense):
 
 
 
 
 
 
 
Interest income
74

 
134

 
512

 
711

Interest expense
(1,630
)
 
(862
)
 
(5,961
)
 
(3,108
)
Other (expense) income
11

 
(143
)
 
(23
)
 
(192
)
Total other expense
(1,545
)
 
(871
)
 
(5,472
)
 
(2,589
)
Loss before provision for income taxes
(10,251
)
 
(11,483
)
 
(47,286
)
 
(50,361
)
Income tax expense
36

 
80

 
64

 
139

Net loss
$
(10,287
)
 
$
(11,563
)
 
$
(47,350
)
 
$
(50,500
)
Net loss per share, basic and diluted
$
(0.17
)
 
$
(0.21
)
 
$
(0.82
)
 
$
(0.91
)
Weighted average number of shares outstanding, basic and diluted
58,915

 
56,065

 
57,603

 
55,669

 
 
 
 
 
 
 
 
Other comprehensive loss:
 
 
 
 
 
 
 
Net loss
$
(10,287
)
 
$
(11,563
)
 
$
(47,350
)
 
$
(50,500
)
Other comprehensive income (loss):
 
 
 
 
 
 
 
Foreign currency translation adjustments, net of tax
48

 
15

 
11

 
44

Net unrealized gains (losses) on marketable securities, net of tax
(3
)
 
1

 
5

 
27

Total other comprehensive income (loss)
45

 
16

 
16

 
71

Total comprehensive loss
$
(10,242
)
 
$
(11,547
)
 
$
(47,334
)
 
$
(50,429
)






GENMARK DIAGNOSTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
Years ended December 31,
 
2019
 
2018
 
2017
Operating activities:
 
 
 
 
 
Net loss
$
(47,350
)
 
$
(50,500
)
 
$
(61,850
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
 
Depreciation and amortization
7,268

 
7,088

 
5,317

Net accretion of premiums/discounts on investments
(133
)
 
(142
)
 
(39
)
Amortization of deferred debt issuance costs
1,740

 
938

 
1,132

Stock-based compensation
12,046

 
11,697

 
12,170

Provision for bad debt
338

 
23

 
14

Non-cash inventory adjustments
2,631

 
1,426

 
1,323

Other non-cash adjustments
537

 
15

 
(224
)
Changes in operating assets and liabilities:
 
 
 
 
 
Accounts receivable
(5,584
)
 
(878
)
 
(1,555
)
Inventories
(6,534
)
 
(2,414
)
 
(10,512
)
Prepaid expenses and other assets
(750
)
 
854

 
(599
)
Accounts payable
1,501

 
(1,389
)
 
2,557

Accrued compensation
(885
)
 
1,059

 
(263
)
Other current and non-current liabilities
249

 
(289
)
 
(893
)
Net cash used in operating activities
(34,926
)
 
(32,512
)
 
(53,422
)
Investing activities:
 
 
 
 
 
Payments for intellectual property licenses
—

 
—

 
(500
)
Purchases of property and equipment
(2,092
)
 
(2,575
)
 
(4,815
)
Purchases of marketable securities
(32,135
)
 
(29,778
)
 
(70,989
)
Proceeds from sales of marketable securities
—

 
—

 
13,896

Maturities of marketable securities
32,055

 
66,300

 
37,500

Net cash (used in) provided by investing activities
(2,172
)
 
33,947

 
(24,908
)
Financing activities:
 
 
 
 
 
Proceeds from issuance of common stock
14,021

 
1,061

 
87,267

Costs incurred in conjunction with public offering
(574
)
 
—

 
(5,469
)
Principal repayment of borrowings
(35,093
)
 
(92
)
 
(7,848
)
Proceeds from borrowings
70,000

 
7,098

 
15,000

Costs associated with debt issuance
(3,638
)
 
(20
)
 
(187
)
Proceeds from stock option exercises
457

 
22

 
287

Net cash provided by financing activities
45,173

 
8,069

 
89,050

Effect of exchange rate changes on cash
(1
)
 
28

 
75

Net increase in cash and cash equivalents
8,074

 
9,532

 
10,795

Cash and cash equivalents at beginning of year
37,044

 
27,512

 
16,717

Cash and cash equivalents at end of year
$
45,118

 
$
37,044

 
$
27,512

Non-cash investing and financing activities:
 
 
 
 
 
Transfer of systems from inventory to property and equipment
$
2,846

 
$
1,689

 
$
4,885

Property and equipment costs incurred but not paid included in accounts payable
$
1,234

 
$
372

 
$
227

Supplemental cash flow information:
 
 
 
 
 
Cash paid for interest
$
3,946

 
$
2,028

 
$
1,643

Cash paid for income taxes, net
$
155

 
$
165

 
$
61

 



GenMark Diagnostics, Inc. Reports