Clinical Labs Posts Double Digit Revenue
Increase, Sharply Higher Operating Income
Outlook Buoyed by Successful Product
Developments, Especially Women’s Health Panel
Enzo Biochem Inc. (NYSE:ENZ) today reported improved operating
results for the first fiscal quarter ended October 31, 2017,
including year over year double digit revenue growth at Enzo
Clinical Labs.
First Quarter’s Highlights (Year Over
Year):
- Total revenue in the first fiscal
quarter increased to $27.7 million, or 5%, from $26.3 million in
the prior year period.
- Clinical Labs revenue totaled $20.3
million, or an increase of 10% from $18.6 million a year ago.
- Gross profit increased 1%, with
operating income improving $0.7 million, or 53%. Gross margin was
44%.
- The GAAP and non-GAAP net loss was $0.6
million or $(0.01) per fully diluted share, an improvement of $0.8
million, or 56% over the prior year’s net loss of $1.5 million or
$(0.03) per fully diluted share.
- Total cash and cash equivalents at
October 31, 2017 was $66.8 million, an increase of $2.7 million
from July 31, 2017. Tight cost controls and efficiencies resulted
in positive $2.6 million cash flow from operations in the
quarter.
- During the quarter, the New York State
Health Department issued conditional approval of the final three
women’s health related molecular diagnostic tests which completes a
13-analyte panel, placing Enzo in a leading position to benefit
from higher-margin proprietary women’s health diagnostics.
- Plant facilities in Farmingdale, NY,
undergoing expansion to accommodate anticipated growth in
manufacturing of growing roster of new molecular diagnostic assays
and to increase laboratory capacity and to support GMP
certification.
Barry Weiner, President,
Comments:
“The first quarter of fiscal 2018 saw additional progress in
moving aggressively towards our model as an integrated,
growth-oriented molecular diagnostics company, and a low-cost
medically related assay provider and reference service
organization. Revenues continued to grow, spurred by double digit
growth in the quarter at Clinical Labs, the result of expanded
product and service capabilities and geographical expansion, along
with increasing volume from our association with leading healthcare
insurance providers. Sales, general and administrative costs
(SG&A) are being held in check, even as product development and
research efforts continue. We are also completing preparations to
launch our marketing and sales program of our comprehensive
products and reference services menu, while also adding to our
Lab’s capability, particularly in the women’s health diagnostic
field.
“We are preparing to offer one of the industry’s most advanced
and well-rounded 13-analyte women’s health diagnostics panel, which
last month was presented at the annual meeting of the prestigious
Association for Molecular Pathology. The study our group reported
on demonstrated that Enzo’s AMPIPROBE® technology provides a
new proprietary approach to creating clinically sensitive and
specific multiplex real-time PCR assays, which, when run in tandem,
can serve as a comprehensive panel for the accurate detection and
identification of vaginitis-associated microorganisms. Enhanced by
our proprietary AMPIPROBE® technology, it offers faster, more
specific and more sensitive molecular vaginitis testing, which we
expect to improve diagnoses of vaginitis, a leading medical concern
among women. Increasingly, when measured against the performance of
similar assays, Enzo products continue to outperform, as reported
recently in a leading diagnostic pathology publication, which cited
our Polyview™ technology for viewing the clinical morphology of HPV
specimens as having no false positives. That compared favorably to
other leading competitive products that did have false positives in
their tests.
“Our focus is on gaining sustained profitability and advancing
healthcare in today’s challenging environment by providing
affordable and reliable diagnostic testing. With Medicare
reimbursement rates expected to decline materially over the next
three years based on a new formula being adopted in place of one
used over the past 30 years, the challenges are clear. Enzo’s
transformative blueprint may help to alleviate this new challenge
to the nation’s independent labs. This opportunity is reflected in
our expanding line of medically related, versatile, highly
efficient platforms and assays that are increasingly professionally
recognized for their sensitivity and economics.”
First Quarter Results
Total revenues increased to $27.7 million or 5% higher than the
prior year period driven by increased Clinical labs services
revenue from MDx tests. Gross profit was $12.2 million or 44% of
total revenue. Total operating expenses were $12.9 million, a
decline of $0.5 million or 4% over a year ago.
The GAAP and Non-GAAP net loss amounted to $(0.6) million, or
$(0.01) per fully diluted share, compared to the year ago net loss
of $(1.5) million or $(0.03) per fully diluted share, an
improvement of $0.8 million. EBITDA and Adjusted EBITDA were
essentially break even compared with a loss of $(0.6) million a
year ago, a $0.5 million improvement year over year.
As of October 31, 2017 working capital amounted to $71.4
million, cash and cash equivalents totaled $66.8 million, up $2.7
million from three months earlier. Apart from capital leases, there
was no debt.
Quarterly Segment
Results
Enzo Clinical Labs revenues increased to $20.3 million,
or 10%, from $18.6 million a year ago. As noted above, expansion of
its diagnostics services to additional nearby geographical
locations, the increased product mix of diagnostic tests,
particularly in the women’s health field, and greater volume, all
are contributing to its steady test and service growth. Gross
profit increased to $8.3 million, from $7.7 million, with gross
margin as a percentage of revenues at 41% for both the current and
year ago quarters. Total operating expenses increased by 3.6%, to
$6.9 million. Operating income amounted to $1.4 million, a nearly
40% increase.
Enzo Life Sciences revenues were $7.1 million compared to
$7.4 million a year ago, a decline of $0.3 million or 5%. Gross
profit approximated $4 million and gross margin as a percentage of
revenue was 54%, compared to $4.4 million and 57%, respectively, a
year ago. With the continued focus on reducing costs and improving
efficiency, SG&A declined by 11%, to $2.6 million, with total
operating expenses declining 12%, to $3.2 million.
Conference Call
The Company will conduct a conference call Friday, December 8,
2017 at 8:30 AM ET. The call can be accessed by dialing
1-888-459-5609. International callers can dial 1-973-321-1024.
Please reference PIN number 3678737.
Interested parties may also listen over the Internet at:
https://tinyurl.com/yd96bbmv
To listen to the live call on the Internet, please go to the web
site at least fifteen minutes early to register, download and
install any necessary audio software. For those who cannot listen
to the live broadcast, a replay will be available approximately two
hours after the end of the live call, through midnight (ET) on
December 22, 2017. The replay of the conference call can be
accessed by dialing 1-855-859-2056, and when prompted, use PIN
number 3678737. International callers can dial 1-404-537-3406,
using the same PIN number.
NON-GAAP Financial
Measures
To comply with Regulation G promulgated pursuant to the
Sarbanes-Oxley Act, Enzo Biochem attached to this news release and
will post to the Company's investor relations web site
(www.enzo.com) any reconciliation of differences between non-GAAP
financial information that may be required in connection with
issuing the Company's quarterly financial results.
The Company uses EBITDA as a measure of performance to
demonstrate earnings exclusive of interest, taxes, depreciation and
amortization. Adjustments to EBITDA are for items of a
non-recurring nature and are reconciled on the table provided. The
Company manages its business based on its operating cash flows. The
Company, in its daily management of its business affairs and
analysis of its monthly, quarterly and annual performance, makes
its decisions based on cash flows, not on the amortization of
assets obtained through historical activities. The Company, in
managing its current and future affairs, cannot affect the
amortization of the intangible assets to any material degree, and
therefore uses EBITDA as its primary management guide. Since an
outside investor may base its evaluation of the Company's
performance based on the Company's net loss not its cash flows,
there is a limitation to the EBITDA measurement. EBITDA is not, and
should not be considered, an alternative to net loss, loss from
operations, or any other measure for determining operating
performance of liquidity, as determined under accounting principles
generally accepted in the United States (GAAP). The most directly
comparable GAAP reference in the Company's case is the removal of
interest, taxes, depreciation and amortization.
We refer you to the tables attached to this press release which
includes reconciliation tables of GAAP to Non-GAAP net income
(loss) and EBITDA to Adjusted EBITDA.
About Enzo Biochem
Enzo Biochem is a pioneer in molecular diagnostics, leading the
convergence of clinical laboratories, life sciences and
intellectual property through the development of unique diagnostic
platform technologies that provide numerous advantages over
previous standards. A global company, Enzo Biochem utilizes
cross-functional teams to develop and deploy products, systems and
services that meet the ever-changing and rapidly growing needs of
health care today and into the future. Underpinning Enzo Biochem’s
products and technologies is a broad and deep intellectual property
portfolio, with patent coverage across a number of key enabling
technologies.
Except for historical information, the matters discussed in this
news release may be considered "forward-looking" statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended and Section 21E of the Securities Exchange Act of 1934, as
amended. Such statements include declarations regarding the intent,
belief or current expectations of the Company and its management,
including those related to cash flow, gross margins, revenues, and
expenses which are dependent on a number of factors outside of the
control of the Company including, inter alia, the markets for the
Company’s products and services, costs of goods and services, other
expenses, government regulations, litigation, and general business
conditions. See Risk Factors in the Company’s Form 10-K for the
fiscal year ended July 31, 2017. Investors are cautioned that any
such forward-looking statements are not guarantees of future
performance and involve a number of risks and uncertainties that
could materially affect actual results. The Company disclaims any
obligations to update any forward-looking statement as a result of
developments occurring after the date of this press release.
ENZO BIOCHEM, INC. (in
thousands, except per share data)
Three months
ended
Selected
operations data:
October 31 (unaudited)
2017
2016
Revenues: Clinical laboratory services $ 20,334 $ 18,558 Product
revenues 7,081 7,426 Royalty and license fee income 261
300 Total revenues $ 27,676 $
26,284 Gross profit $ 12,245 $ 12,079
Gross profit % 44 % 46 % Income (loss)
before income taxes (640 ) (1,474 ) Provision for income
taxes - - Net income (loss) $ (640 )
$ (1,474 ) Basic and diluted net income (loss) per share
($0.01 ) ($0.03 ) Weighted average shares
outstanding - basic and diluted 46,914 46,272
Selected balance
sheet data:
10/31/2017(unaudited)
7/31/2017(unaudited)
Cash and cash equivalents $ 66,849
$
64,167 Working capital $ 71,442 $ 71,274
Stockholders' equity $ 89,182 $ 88,872 Total assets $
109,256 $ 107,665
The following table presents a reconciliation of reported net
income (loss) and basic and diluted net income (loss) per share to
non-GAAP net income (loss) and basic and diluted net income (loss)
per share for the three months ended October 31, 2017 and 2016:
ENZO BIOCHEM, INC. Non-GAAP
Reconciliation Table (Unaudited, in thousands, except per share
data)
Three months ended October 31
2017
2016
Reported GAAP net income (loss) $ (640 ) $ (1,474 ) Adjusted
for: Legal settlements, net - - Legal fees associated with
settlements - - Separation payments - - Non-GAAP net
loss $ (640 ) $ (1,474 ) Weighted Shares Outstanding
Basic and diluted 46,914 46,272 Basic and diluted earnings
per share Basic and diluted net income (loss) per share GAAP ($0.01
) ($0.03 ) Basic and diluted net income (loss) per share
non-GAAP ($0.01 ) ($0.03 )
The following table presents a reconciliation of reported net
income (loss) for the three months ended October 31, 2017 and 2016,
respectively to EBITDA and Adjusted EBITDA:
ENZO BIOCHEM, INC. EBITDA &
Adjusted EBITDA Reconciliation Table (Unaudited, in thousands)
Three months ended October 31
2017
2016
GAAP net income (loss) $ (640 ) $ (1,474 ) Plus (minus):
Depreciation and amortization 749 927 Interest income (157 ) (46 )
Provision for income taxes - - EBITDA $
(48 ) $ (593 ) Adjusted for: Legal settlements, net - -
Legal fees associated with settlements - - Separation payments
- - Adjusted EBITDA $ (48 ) $ (593 )
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171207006211/en/
For: Enzo Biochem, Inc.Steve Anreder,
212-532-3232steven.anreder@anreder.comorCEOcast, Inc.Michael Wachs,
212-732-4300mwachs@ceocast.com
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