GenMark Diagnostics, Inc. - FORM 8-K - EX-99.1 - EXHIBIT - August 11, 2014

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Exhibit 99.1
August 11, 2014
GenMark Diagnostics Reports Second Quarter 2014 Results
Base Business Grows Year-Over-Year by 71%, Gross Margin Increases to 51%
Installed Base Grows by 31 to 475 Analyzers, Annuity per Analyzer Increases to $56,000
2014 Revenue Guidance Raised to Approximately $28.0 Million
CARLSBAD, Calif.-(BUSINESS WIRE)- GenMark Diagnostics, Inc. (Nasdaq:GNMK), a leading provider of automated, multiplex molecular diagnostic testing systems, today reported financial results for the quarter ended June 30, 2014.
As previously released on July 28th, revenues for the quarter ended June 30, 2014 were $6.6 million compared with $5.2 million during the second quarter of 2013. Revenue during the current quarter from the Company's base business, which excludes revenue attributable to former customer NMTC, increased by 71% over the prior year period. Consumable revenue for the second quarter 2014 increased 35% to $6.2 million compared with $4.6 million in the quarter ended June 30, 2013 and increased by 92% over the prior year's base business. As disclosed in its July release, the Company placed 31 net new analyzers during the current quarter to bring its total installed base to 475, all in end-user laboratories within the U.S. market.
“Continued strong demand for our proprietary eSensor® detection technology drove robust revenue growth in the quarter. We are pleased with this clear market endorsement of our eSensor® technology, which is also fundamental to our ePlex™ sample to answer system. During the second quarter, we completed development of the ePlex™ instrument, and also progressed the associated consumable and several assay panels to the final stages of development. As we stated previously, we expect to complete development of our ePlex™ system by the end of this year ," stated GenMark’s President & CEO Hany Massarany.
Gross profit for the quarter ended June 30, 2014 was $3.4 million, or 51% of revenue, compared with a gross profit of $2.0 million, or 39% of revenue for the second quarter of 2013.
Operating expenses increased $4.5 million to $14.6 million during the second quarter of 2014 compared with the second quarter of 2013. Research and Development expenses increased $3.1 million due to the Company's ePlex™ instrument and assay development activities. Sales and Marketing expenses increased $0.8 million mainly due to continued expansion of the Company's global commercial sales force ahead of the launch of ePlex™. General and Administrative expenses increased $0.6 million primarily due to personnel costs.
Loss per share was $0.27 for the second quarter of 2014, compared with a loss per share of $0.25 in the second quarter of 2013.

The Company ended the second quarter of 2014 with $89.4 million in cash and investments. The Company intends to continue utilizing its cash balances to invest in the development of its ePlex™ system and for infrastructure improvements and general corporate purposes.

The Company also increased its full year 2014 guidance. Total year revenue and gross margin are expected to be approximately $28.0 million and approximately 50%, respectively.




INVESTOR CONFERENCE CALL
GenMark will hold a conference call to discuss second quarter 2014 results at 4:30PM EDT today. The conference call and webcast can be accessed live through the Company’s website 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 72247869 approximately five minutes prior to the start time.
ABOUT GENMARK DIAGNOSTICS
GenMark Diagnostics is a leading provider of automated, multiplex molecular diagnostic testing systems that detect and measure DNA and RNA targets to diagnose disease and optimize patient treatment. Utilizing GenMark’s proprietary eSensor® detection technology, GenMark’s eSensor® XT-8 system is designed to support a broad range of molecular diagnostic tests with a compact, easy-to-use workstation and self-contained, disposable test cartridges. GenMark currently markets four tests that are FDA cleared for IVD use: Cystic Fibrosis Genotyping Test, Respiratory Viral Panel, Thrombophilia Risk Test, and Warfarin Sensitivity Test. A number of other tests, including HCV Genotyping, 2C19 Genotyping, and 3A4/3A5 Genotyping are available for research use only. 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 the timely completion of our ePlex™ system and related assay development projects and our expected 2014 financial results, 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 develop and commercialize our ePlex™ system and its related test menu, 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.







GENMARK DIAGNOSTICS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)

 
 
 
 
 
June 30,
2014
 
December 31,
2013
Current assets
 
 
 
Cash and cash equivalents
$
26,832

 
$
35,723

Marketable securities
62,570

 
69,866

Accounts receivable - net of allowances of $2,736 and $2,736, respectively
2,128

 
2,859

Inventories
1,151

 
2,102

Prepaid expenses and other current assets
1,146

 
552

Total current assets
93,827

 
111,102

Property and equipment, net
9,947

 
8,591

Intangible assets, net
1,998

 
1,197

Restricted cash
758

 
$
758

Other long-term assets
106

 
106

Total assets
$
106,636

 
$
121,754

Current liabilities
 
 
 
Accounts payable
$
3,272

 
$
3,863

Accrued compensation
4,750

 
3,375

Other current liabilities
3,673

 
2,999

Total current liabilities
11,695

 
10,237

Long-term liabilities
 
 
 
Deferred rent
1,531

 
1,601

Other non-current liabilities
742

 
748

Total liabilities
13,968

 
12,586

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

 
—

Common stock, $0.0001 par value; 100,000 authorized; 41,752 and 41,520 shares issued and outstanding as of June 30, 2014 and December 31, 2013, respectively
4

 
4

Additional paid-in capital
336,865

 
333,363

Accumulated deficit
(244,202
)
 
(224,209
)
Accumulated other comprehensive income
1

 
10

Total stockholders’ equity
92,668

 
109,168

Total liabilities and stockholders’ equity
$
106,636

 
$
121,754






GENMARK DIAGNOSTICS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands, except per share data)

 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2014
 
2013
 
2014
 
2013
Revenue
 
 
 
 
 
 
 
Product revenue
6,494

 
5,138

 
14,360

 
16,106

License and other revenue
61

 
77

 
108

 
210

Total revenue
6,555

 
5,215

 
14,468

 
16,316

Cost of revenue
3,189

 
3,201

 
6,899

 
8,235

Gross profit
3,366

 
2,014

 
7,569

 
8,081

Operating expenses
 
 
 
 
 
 
 
Sales and marketing
3,379

 
2,556

 
6,357

 
4,915

General and administrative
3,129

 
2,539

 
5,943

 
5,096

Research and development
8,123

 
5,006

 
15,393

 
10,388

Total operating expenses
14,631

 
10,101

 
27,693

 
20,399

Loss from operations
(11,265
)
 
(8,087
)
 
(20,124
)
 
(12,318
)
Other income (expense)
 
 
 
 
 
 
 
Interest income
271

 
136

 
555

 
211

Interest expense
(2
)
 
(7
)
 
(4
)
 
(14
)
Other income (expense)
(195
)
 
(60
)
 
(394
)
 
(65
)
Total other income (expense)
74

 
69

 
157

 
132

Loss before income taxes
(11,191
)
 
(8,018
)
 
(19,967
)
 
(12,186
)
Provision for income taxes
19

 
1

 
26

 
8

Net loss
$
(11,210
)
 
$
(8,019
)
 
$
(19,993
)
 
$
(12,194
)
Net loss per share, basic and diluted
$
(0.27
)
 
$
(0.25
)
 
$
(0.49
)
 
$
(0.38
)
Weighted average number of shares outstanding, basic and diluted
41,293

 
31,891

 
41,186

 
31,920

Other comprehensive loss
 
 
 
 
 
 
 
Net loss
$
(11,210
)
 
$
(8,019
)
 
$
(19,993
)
 
$
(12,194
)
Net unrealized gains (losses) on marketable securities, net of tax
26

 
(5
)
 
9

 
(9
)
Comprehensive loss
$
(11,184
)
 
$
(8,024
)
 
$
(19,984
)
 
$
(12,203
)





GENMARK DIAGNOSTICS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
Six Months Ended June 30,
 
2014
 
2013
Operating activities
 
 
 
Net loss
$
(19,993
)
 
$
(12,194
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
Depreciation and amortization
1,167

 
1,036

Amortization of premiums on marketable securities
394

 
63

Stock-based compensation
2,949

 
1,657

Provision for bad debt
—

 
309

Non-cash inventory adjustments
457

 
546

Changes in operating assets and liabilities:
 
 
 
Accounts receivable
731

 
(1,545
)
Inventories
608

 
(1,752
)
Prepaid expenses and other current assets
(447
)
 
(485
)
Accounts payable
(501
)
 
(310
)
Accrued compensation
1,375

 
(155
)
Other liabilities
(259
)
 
(498
)
Net cash used in operating activities
(13,519
)
 
(13,328
)
Investing activities
 
 
 
Change in restricted cash
—

 
500

Payments for intellectual property licenses
—

 
(345
)
Purchases of property and equipment
(2,626
)
 
(2,168
)
Purchases of marketable securities
(28,200
)
 
(20,206
)
Proceeds from sales of marketable securities
7,497

 
3,250

Maturities of marketable securities
27,450

 
—

Net cash provided by (used in) investing activities
4,121

 
(18,969
)
Financing activities
 
 
 
Proceeds from issuance of common stock
373

 
—

Principal repayment of borrowings
(46
)
 
(561
)
Proceeds from borrowings
—

 
166

Proceeds from stock option exercises
180

 
278

Net cash provided by (used in) financing activities
507

 
(117
)
Net decrease in cash and cash equivalents
(8,891
)
 
(32,414
)
Cash and cash equivalents at beginning of period
35,723

 
51,250

Cash and cash equivalents at end of period
$
26,832

 
$
18,836

Non-cash investing and financing activities
 
 
 
Transfer of XT-8 instruments from property and equipment to inventory
$
113

 
$
226

Property and equipment costs included in accounts payable
$
513

 
$
520

Intellectual property acquisitions included in other noncurrent liabilities
$
900

 
$
556

Supplemental cash flow disclosures
 
 
 
Cash paid for income taxes, net
$
26

 
$
6

Cash received for interest
$
555

 
$
211

Cash paid for interest
$
4

 
$
14









GenMark Diagnostics, Inc.
Hany Massarany
President/Chief Executive Officer
760-448-4358

Source: GenMark Diagnostics, Inc.

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GenMark Diagnostics, Inc. Reports