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Press release content from Globe Newswire. The AP news staff was not involved in its creation.

GenMark Diagnostics Reports Fourth Quarter and Full Year 2019 Results

March 2, 2020 GMT

CARLSBAD, Calif., March 02, 2020 (GLOBE NEWSWIRE) -- 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

Recent 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 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 ResultsRevenue 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 ResultsRevenue 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 2020The 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 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 between $16 million and $20 million.

Webcast and Conference Call InformationGenMark 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 DiagnosticsGenMark 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 StatementThis 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 6 6 and outstanding as of December 31, 2019 and 2018, respectively 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 58,915 56,065 57,603 55,669 diluted --------- - --------- - --------- - --------- - 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 (3 ) 1 5 27 of tax --------- - --------- - --------- - --------- - 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 $ 1,234 $ 372 $ 227 payable Supplemental cash flow information: Cash paid for interest $ 3,946 $ 2,028 $ 1,643 Cash paid for income taxes, net $ 155 $ 165 $ 61