Rapidly growing revenue, increasing test volume,
gross margin expansion, strong cash reimbursement and prudent
expense management provide clear path to profitability
CombiMatrix Corporation (NASDAQ:CBMX), a family health molecular
diagnostics company specializing in DNA-based reproductive health
and pediatric testing services, today reported financial results
for the three and nine months ended September 30, 2016, and
provided a business update.
“Excellent execution on our business initiatives
keeps us squarely on the path to profitability,” said Mark
McDonough, CombiMatrix President and CEO. “Among quarterly
financial highlights, we are reporting revenue growth of 29%, our
third consecutive quarter of gross margin above 50% and record cash
reimbursement of $3.1 million, or 95% of total revenues.
Combined with our ability to manage expenses, we reduced both our
operating loss and our cash burn by nearly half from one year
ago.
“We are pleased with our recent performance and
expect continued growth in revenue and test volume, along with
consistent cash reimbursement and prudent expense management in the
coming year with a focus on creating value for our shareholders,”
Mr. McDonough added. “Given our outlook, we are increasingly
confident we will reach our goal of positive cash flow from
operations by the fourth quarter of 2017.”
Third Quarter Financial and Operating
Highlights (all comparisons are with the third quarter of
2015)
- Total revenues of $3.2 million, up 29%
- Total test volume of 2,835, up 14%
- Reproductive health revenues of $2.3 million, up 39%
- Reproductive health test volume of 1,483, up 17%
- Gross margin of 54.0%, up from 43.6%
- Number of billable customers of 257, up 10%
- Cash collections at new record of $3.1 million, or 95% of total
revenue, up 29%
|
|
Volumes |
|
Revenues (in
000's) |
|
|
Q3
'16 |
|
Q3
'15 |
|
#
Δ |
|
% Δ |
|
Q3
'16 |
|
Q3
'15 |
|
$
Δ |
|
% Δ |
Prenatal |
|
294 |
|
272 |
|
|
22 |
|
|
|
8 |
% |
|
$ |
408 |
|
|
$ |
368 |
|
|
$ |
40 |
|
|
|
11 |
% |
Miscarriage analysis |
|
990 |
|
866 |
|
|
124 |
|
|
|
14 |
% |
|
|
1,622 |
|
|
|
1,145 |
|
|
|
477 |
|
|
|
42 |
% |
PGS |
|
199 |
|
127 |
|
|
72 |
|
|
|
57 |
% |
|
|
286 |
|
|
|
149 |
|
|
|
137 |
|
|
|
92 |
% |
Subtotal - reproductive health |
|
1,483 |
|
1,265 |
|
|
218 |
|
|
|
17 |
% |
|
|
2,316 |
|
|
|
1,662 |
|
|
|
654 |
|
|
|
39 |
% |
Pediatric |
|
505 |
|
509 |
|
|
(4 |
) |
|
|
(1 |
%) |
|
|
589 |
|
|
|
558 |
|
|
|
31 |
|
|
|
6 |
% |
Subtotal |
|
1,988 |
|
1,774 |
|
|
214 |
|
|
|
12 |
% |
|
|
2,905 |
|
|
|
2,220 |
|
|
|
685 |
|
|
|
31 |
% |
FISH and
karyotyping |
|
847 |
|
721 |
|
|
126 |
|
|
|
17 |
% |
|
|
306 |
|
|
|
261 |
|
|
|
45 |
|
|
|
17 |
% |
Total - all tests |
|
2,835 |
|
2,495 |
|
|
340 |
|
|
|
14 |
% |
|
|
3,211 |
|
|
|
2,481 |
|
|
|
730 |
|
|
|
29 |
% |
Royalties |
|
37 |
|
|
|
45 |
|
|
|
(8 |
) |
|
|
(18 |
%) |
Total revenues |
$ |
3,248 |
|
|
$ |
2,526 |
|
|
$ |
722 |
|
|
|
29 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volumes |
|
Revenues (in
000's) |
|
|
9 Mo's.
'16 |
|
9 Mo's.
'15 |
|
#
Δ |
|
% Δ |
|
9 Mo's.
'16 |
|
9 Mo's.
'15 |
|
$
Δ |
|
% Δ |
Prenatal |
|
860 |
|
936 |
|
|
(76 |
) |
|
|
(8 |
%) |
|
$ |
1,203 |
|
|
$ |
1,214 |
|
|
$ |
(11 |
) |
|
|
(1 |
%) |
Miscarriage analysis |
|
2,886 |
|
2,664 |
|
|
222 |
|
|
|
8 |
% |
|
|
4,701 |
|
|
|
3,467 |
|
|
|
1,234 |
|
|
|
36 |
% |
PGS |
|
566 |
|
157 |
|
|
409 |
|
|
|
261 |
% |
|
|
759 |
|
|
|
189 |
|
|
|
570 |
|
|
|
302 |
% |
Subtotal - reproductive health |
|
4,312 |
|
3,757 |
|
|
555 |
|
|
|
15 |
% |
|
|
6,663 |
|
|
|
4,870 |
|
|
|
1,793 |
|
|
|
37 |
% |
Pediatric |
|
1,454 |
|
1,557 |
|
|
(103 |
) |
|
|
(7 |
%) |
|
|
1,646 |
|
|
|
1,687 |
|
|
|
(41 |
) |
|
|
(2 |
%) |
Subtotal |
|
5,766 |
|
5,314 |
|
|
452 |
|
|
|
9 |
% |
|
|
8,309 |
|
|
|
6,557 |
|
|
|
1,752 |
|
|
|
27 |
% |
FISH and
karyotyping |
|
2,497 |
|
2,125 |
|
|
372 |
|
|
|
18 |
% |
|
|
881 |
|
|
|
735 |
|
|
|
146 |
|
|
|
20 |
% |
Total - all tests |
|
8,263 |
|
7,439 |
|
|
824 |
|
|
|
11 |
% |
|
|
9,190 |
|
|
|
7,292 |
|
|
|
1,898 |
|
|
|
26 |
% |
Royalties |
|
137 |
|
|
|
112 |
|
|
|
25 |
|
|
|
22 |
% |
Total revenues |
$ |
9,327 |
|
|
$ |
7,404 |
|
|
$ |
1,923 |
|
|
|
26 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Results
Three Months Ended September 30, 2016 and
2015
Total revenues for the third quarter of 2016
increased 29% to $3.2 million from $2.5 million for the third
quarter of 2015. Reproductive health diagnostic test revenue,
which includes prenatal microarrays, miscarriage analysis and
preimplantation genetic screening (PGS), increased 39% to $2.3
million and testing volume increased 17% to 1,483. The third
quarter 2016 revenue increase was driven primarily by higher test
volume for reproductive health diagnostics, higher average revenue
per test particularly for miscarriage analysis and PGS tests, and
from an increase in the number of billable customers, which reached
257 during the third quarter of 2016 compared to 234 in the
prior-year period.
Total operating expenses were $4.1 million for
the third quarter of 2016 compared with $4.2 for the prior-year
period. The decrease was due primarily to lower sales and marketing
and research and development expenses, partially offset by higher
general and administrative expenses due to higher personnel,
investor relations and consulting costs and higher cost of services
as a result of higher test volume. Gross margin for the third
quarter of 2016 improved to 54.0% from 43.6% for third quarter of
2015.
The net loss attributable to common stockholders
for the third quarter of 2016 was $856,000, or $0.38 per share,
compared with a net loss attributable to common stockholders for
the third quarter of 2015 of $1.7 million, or $2.00 per share, an
improvement of $831,000.
Nine Months Ended September 30, 2016 and
2015
Total revenues for the first nine months of 2016
increased 26% to $9.3 million from $7.4 million for the first nine
months of 2015. Revenues for the first nine months of 2016
included $9.2 million in diagnostic services revenue and $137,000
in royalty revenues.
Operating expenses for the first nine months of
2016 were $12.9 million compared with $12.4 million for the
prior-year period, with the increase mainly due to higher general
and administrative expenses and higher cost of services resulting
from increased testing volumes, partially offset by lower sales and
marketing expenses. Gross margin improved to 52.9% for the
first nine months of 2016 from 44.8% for the first nine months of
2015.
The net loss attributable to common stockholders
for the first nine months of 2016 was $5.2 million, or $3.48 per
share, compared to $6.0 million, or $7.21 per share in 2015.
The net loss attributable to common stockholders in 2016
reflected one-time, non-cash charges of $1.9 million related to
deemed dividends from the issuance of Series F convertible
preferred stock and warrants in the $8.0 million public offering
that closed on March 24, 2016. This increase was partially
offset by the reversal of the $890,000 Series E deemed dividend
recognized in 2015 from the repurchase of those securities upon
closing of our Series F public offering, partially reduced by the
$656,000 deemed dividend paid to the Series E investors in February
of 2016.
The Company reported $4.3 million in cash, cash
equivalents and short-term investments as of September 30, 2016,
compared with $3.9 million as of December 31, 2015. The
Company used $813,000 and $3.4 million in cash to fund operating
activities during the quarter and nine months ended September 30,
2016, respectively, compared with $1.5 million and $4.2 million
used to fund operating activities during the comparable 2015
periods, respectively. The significant decreases in net cash
used to fund operating activities for the 2016 periods resulted
primarily from improved cash reimbursement of $3.1 million and $8.5
million for the three and nine months ended September 30, 2016,
respectively, compared with $2.4 million and $7.0 million for the
three and nine months ended September 30, 2015, respectively.
Conference Call and Webcast
CombiMatrix will hold an investment-community
conference call and audio webcast today beginning at 4:30 p.m.
Eastern time (1:30 p.m. Pacific time) to discuss these results and
answer questions. The conference call dial-in numbers are (866)
634-2258 for domestic callers and (330) 863-3454 for international
callers. A live webcast of the call will be available at
http://investor.combimatrix.com/events.cfm.
A recording of the call will be available for
seven days beginning approximately two hours after the completion
of the call by dialing (855) 859-2056 for domestic callers or (404)
537-3406 for international callers, and entering passcode 93599356.
The webcast of the call will be archived for 30 days on the
Company’s website at
http://investor.combimatrix.com/events.cfm.
About CombiMatrix
Corporation
CombiMatrix Corporation provides best-in-class
molecular diagnostic solutions and comprehensive clinical support
to foster the highest quality in patient care. CombiMatrix
specializes in pre-implantation genetic diagnostics and screening,
prenatal diagnosis, miscarriage analysis and pediatric
developmental disorders, offering DNA-based testing for the
detection of genetic abnormalities beyond what can be identified
through traditional methodologies. Our testing focuses on advanced
technologies, including single nucleotide polymorphism (“SNP”)
chromosomal microarray analysis (“CMA”), next generation sequencing
(“NGS”), fluorescent in situ hybridization (“FISH”) and high
resolution karyotyping. Additional information about CombiMatrix is
available at www.combimatrix.com or by calling (800) 710-0624.
Safe Harbor Statement under the Private
Securities Litigation Reform Act of 1995
This press release contains forward-looking
statements within the meaning of the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995. These
statements are based upon our current expectations, speak only as
of the date hereof and are subject to change. All statements, other
than statements of historical fact included in this press release,
are forward-looking statements. Forward-looking statements can
often be identified by words such as "anticipates," "expects,"
"intends," "plans," "goal," "predicts," "believes," "seeks,"
"estimates," "may," "will," "should," "would," "could,"
"potential," "continue," "ongoing," similar expressions, and
variations or negatives of these words and include, but are not
limited to, statements regarding projected results of operations,
including projected cash flow-positive operating results,
management's future business, operational and strategic plans,
recruiting efforts and test menu expansion. These forward-looking
statements are not guarantees of future results and are subject to
risks, uncertainties and assumptions that could cause our actual
results to differ materially and adversely from those expressed in
any forward-looking statement. The risks and uncertainties referred
to above include, but are not limited to: our ability to grow
revenue and improve gross margin; delays in achieving cash
flow-positive operating results; the risk that test volumes and
reimbursements level off or decline; the risk that payors decide to
not cover our tests or to reduce the amounts they are willing to
pay for our tests; the risk that we will not be able to grow our
business as quickly as we need to; the inability to raise capital;
the loss of members of our sales force; our ability to successfully
expand the base of our customers, add to the menu of our diagnostic
tests, develop and introduce new tests and related reports, expand
and improve our current suite of services, optimize the
reimbursements received for our microarray testing services, and
increase operating margins by improving overall productivity and
expanding sales volumes; our ability to successfully accelerate
sales, steadily increase the size of our customer rosters in all of
our genetic testing markets; our ability to attract and retain
a qualified sales force in wider geographies; our ability to ramp
production from our sales; rapid technological change in our
markets; changes in demand for our future services; legislative,
regulatory and competitive developments; general economic
conditions; and various other factors. Further information on
potential factors that could affect our financial results is
included in our Annual Report on Form 10-K, Quarterly Reports of
Form 10-Q, and in other filings with the Securities and
Exchange Commission. We undertake no obligation to revise or update
publicly any forward-looking statements for any reason, except as
required by law.
Tables to Follow
COMBIMATRIX
CORPORATION |
CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In thousands, except share and per
share information) |
(Unaudited) |
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
Diagnostic services |
|
$ |
3,211 |
|
|
$ |
2,481 |
|
|
$ |
9,190 |
|
|
$ |
7,292 |
|
|
Royalties |
|
|
37 |
|
|
|
45 |
|
|
|
137 |
|
|
|
112 |
|
|
Total revenues |
|
|
3,248 |
|
|
|
2,526 |
|
|
|
9,327 |
|
|
|
7,404 |
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Cost of services |
|
|
1,476 |
|
|
|
1,400 |
|
|
|
4,327 |
|
|
|
4,028 |
|
|
Research and development |
|
|
88 |
|
|
|
133 |
|
|
|
380 |
|
|
|
352 |
|
|
Sales and marketing |
|
|
1,055 |
|
|
|
1,295 |
|
|
|
3,532 |
|
|
|
3,658 |
|
|
General and administrative |
|
|
1,450 |
|
|
|
1,249 |
|
|
|
4,562 |
|
|
|
4,212 |
|
|
Patent amortization and
royalties |
|
|
25 |
|
|
|
25 |
|
|
|
75 |
|
|
|
75 |
|
|
Impairment of cost-basis
investment |
|
|
- |
|
|
|
97 |
|
|
|
- |
|
|
|
97 |
|
|
Total operating expenses |
|
|
4,094 |
|
|
|
4,199 |
|
|
|
12,876 |
|
|
|
12,422 |
|
|
Operating loss |
|
|
(846 |
) |
|
|
(1,673 |
) |
|
|
(3,549 |
) |
|
|
(5,018 |
) |
|
Other income
(expense): |
|
|
|
|
|
|
|
|
Interest income |
|
|
7 |
|
|
|
5 |
|
|
|
19 |
|
|
|
13 |
|
|
Interest expense |
|
|
(17 |
) |
|
|
(19 |
) |
|
|
(52 |
) |
|
|
(59 |
) |
|
Total other income (expense) |
|
|
(10 |
) |
|
|
(14 |
) |
|
|
(33 |
) |
|
|
(46 |
) |
|
Net
loss |
|
$ |
(856 |
) |
|
$ |
(1,687 |
) |
|
$ |
(3,582 |
) |
|
$ |
(5,064 |
) |
|
|
|
|
|
|
|
|
|
|
Deemed dividend from
issuing Series F |
|
|
|
|
|
|
|
|
convertible preferred stock and
warrants |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
(1,877 |
) |
|
$ |
- |
|
|
Deemed dividend paid
for right to repurchase |
|
|
|
|
|
|
|
|
Series E convertible preferred
stock |
|
|
- |
|
|
|
- |
|
|
|
(656 |
) |
|
|
- |
|
|
Deemed dividend from
issuing Series E |
|
|
|
|
|
|
|
|
convertible preferred stock and
warrants |
|
|
- |
|
|
|
- |
|
|
|
890 |
|
|
|
(890 |
) |
|
Net loss
attributable to common stockholders |
|
$ |
(856 |
) |
|
$ |
(1,687 |
) |
|
$ |
(5,225 |
) |
|
$ |
(5,954 |
) |
|
|
|
|
|
|
|
|
|
|
Basic
and diluted net loss per share |
|
$ |
(0.38 |
) |
|
$ |
(2.00 |
) |
|
$ |
(2.38 |
) |
|
$ |
(6.13 |
) |
|
Deemed dividend paid
for right to repurchase |
|
|
|
|
|
|
|
|
Series E convertible preferred
stock |
|
|
- |
|
|
|
- |
|
|
|
(0.44 |
) |
|
|
- |
|
|
Deemed dividend from
issuing Series E |
|
|
|
|
|
|
|
|
convertible preferred stock |
|
|
- |
|
|
|
- |
|
|
|
0.59 |
|
|
|
(1.08 |
) |
|
Deemed dividend from
issuing Series F |
|
|
|
|
|
|
|
|
convertible preferred
stock |
|
|
- |
|
|
|
- |
|
|
|
(1.25 |
) |
|
|
- |
|
|
Basic and diluted net
loss per share attributable |
|
|
|
|
|
|
|
|
|
|
|
to common stockholders |
|
$ |
(0.38 |
) |
|
$ |
(2.00 |
) |
|
$ |
(3.48 |
) |
|
$ |
(7.21 |
) |
|
|
|
|
|
|
|
|
|
|
Basic and diluted
weighted average |
|
|
|
|
|
|
|
|
common shares outstanding |
|
|
2,253,834 |
|
|
|
845,395 |
|
|
|
1,502,680 |
|
|
|
825,956 |
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED BALANCE SHEET INFORMATION: |
|
September 30, |
|
December 31, |
|
|
|
2016 |
|
|
2015 |
|
|
Total cash, cash
equivalents and short-term investments |
$ |
4,345 |
|
$ |
3,901 |
|
|
Total assets |
|
8,889 |
|
|
7,922 |
|
|
Total liabilities |
|
1,954 |
|
|
2,066 |
|
|
Total stockholders’
equity |
|
6,935 |
|
|
5,856 |
|
|
Company Contact:
Mark McDonough
President & CEO, CombiMatrix Corporation
(949) 753-0624
Investor Contact:
LHA
Jody Cain
(310) 691-7100
jcain@lhai.com
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