GenMark Diagnostics, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - February 24, 2015

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Exhibit 99.1
February 24, 2015
GenMark Reports Fourth Quarter and Full Year 2014 Results
Fourth Quarter Revenue $9.8 million, Up 52% Versus Prior Year
Gross Margin Increases to 61% in the Fourth Quarter
ePlex™ European Launch on Track for Mid-Year

CARLSBAD, Calif.-(BUSINESS WIRE)- 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, 2014.

Revenue for the fourth quarter of 2014 was $9.8 million, an increase of 52% over the prior year period. Full year 2014 revenue grew to $30.6 million, an increase of 59% versus 2013 base business revenue, which excludes revenues from former customer NMTC. During the quarter, 38 additional XT-8 analyzers were placed in end-user laboratories, resulting in a total installed base of 540 analyzers within the U.S. market at year end.
Gross profit for the fourth quarter was $6.0 million, or 61% of revenue, compared with $3.0 million, or 47% of revenue in same period of 2013. Full year 2014 gross profit was $17.5 million, or 57% of revenue.
“We are very pleased with our results in 2014, both in terms of revenue growth and gross margin improvement,” said Hany Massarany, President and Chief Executive Officer of GenMark. “In 2015, we will continue to grow and support our XT-8 business in the US market, while remaining very focused on launching ePlex in Europe in the middle of the year,” added Massarany.
Operating expenses for the fourth quarter of 2014 were $14.7 million compared to $13.3 million in the same period for 2013. The increase was mainly driven by Research and Development expenses as the Company completed the development phase of the ePlex system. For the full year, 2014 operating expenses were $56.5 million, an increase of $9.8 million over 2013 primarily driven by Research and Development investment in ePlex.
Loss per share was $0.21 per share for the fourth quarter of 2014 compared to a loss of $0.26 per share in the same period of 2013. For the full year 2014, loss per share was $0.93.
The Company ended the year with $70.5 million in cash and cash equivalents and intends to continue utilizing its cash balances to invest in the global commercialization of the ePlex platform. As previously announced, the Company also established a debt facility for up to $40 million to provide additional capital to launch ePlex internationally as well as domestically.
Business Outlook
For full year 2015, the Company expects revenue in the range of $38 to $40 million and Gross Margin in the range of 53-55%. The Company expects to place approximately 50 XT-8 analyzers in the first half of 2015.
The Company will be hosting a conference call to discuss fourth quarter results in further detail and release 2015 guidance on Tuesday, February 24, 2015 starting at 4:30 p.m. Eastern Time. 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 61540488 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. The eSensor® detection technology is also incorporated into GenMark’s sample-to-answer system, ePlex™. 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, the timely commercialization of our ePlex system, and the availability of future financing, 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.





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

 
As of December 31,
 
2014
 
2013
Current assets
(Unaudited)
 
 
Cash and cash equivalents
$
36,855

 
$
35,723

Marketable securities
33,651

 
69,866

Accounts receivable - net of allowances of $2,702 and $2,736, respectively
4,889

 
2,859

Inventories
2,137

 
2,102

Prepaid expenses and other current assets
575

 
552

Total current assets
78,107

 
111,102

Property and equipment, net
11,052

 
8,591

Intangible assets, net
1,870

 
1,197

Restricted cash
758

 
758

Other long-term assets
183

 
106

Total assets
$
91,970

 
$
121,754

Current liabilities
 
 
 
Accounts payable
$
3,468

 
$
3,863

Accrued compensation
5,172

 
3,375

Loan payable
—

 
37

Other current liabilities
3,653

 
2,962

Total current liabilities
12,293

 
10,237

Long-term liabilities
 
 
 
Deferred rent
1,445

 
1,601

Other noncurrent liabilities
208

 
748

Total liabilities
13,946

 
12,586

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

 
—

Common stock, $0.0001 par value; 100,000 authorized; 41,859 and 41,520 shares issued and outstanding as of December 31, 2014 and December 31, 2013, respectively
4

 
4

Additional paid-in capital
340,502

 
333,363

Accumulated deficit
(262,472
)
 
(224,209
)
Accumulated other comprehensive income (loss)
(10
)
 
10

Total stockholders’ equity
78,024

 
109,168

Total liabilities and stockholders’ equity
$
91,970

 
$
121,754






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

 
Three Months Ended December 31
 
Twelve Month Ended December 31,
 
2014
 
2013
 
2014
 
2013
Revenue
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
 
Product revenue
$
9,735

 
$
6,577

 
$
30,328

 
$
27,204

License and other revenue
91

 
(125
)
 
266

 
200

Total revenue
9,826

 
6,452

 
30,594

 
27,404

Cost of revenues
3,827

 
3,420

 
13,127

 
15,570

Gross profit
5,999

 
3,032

 
17,467

 
11,834

Operating expenses

 

 
 
 
 
Sales and marketing
3,112

 
2,988

 
12,629

 
12,818

General and administrative
3,018

 
4,041

 
12,069

 
11,836

Research and development
8,526

 
6,274

 
31,823

 
22,060

Total operating expenses
14,656

 
13,303

 
56,521

 
46,714

Loss from operations
(8,657
)
 
(10,271
)
 
(39,054
)
 
(34,880
)
Other income (expense)
 
 
 
 
 
 
 
Interest income
37

 
124

 
244

 
403

Interest expense
(1
)
 
(2
)
 
(20
)
 
(19
)
Other income (expense)
27

 
(469
)
 
(6
)
 
897

Total other income (expense)
63

 
(347
)
 
218

 
1,281

Loss before income taxes
(8,594
)
 
(10,618
)
 
(38,836
)
 
(33,599
)
Income tax expense (benefit)
18

 
14

 
(573
)
 
44

Net loss
$
(8,612
)
 
$
(10,632
)
 
$
(38,263
)
 
$
(33,643
)
Net loss per share, basic and diluted
$
(0.21
)
 
$
(0.26
)
 
$
(0.93
)
 
$
(0.95
)
Weighted average number of shares outstanding, basic and diluted
41,569

 
40,957

 
41,346

 
35,253

Other comprehensive loss
 
 
 
 
 
 
 
Net loss
$
(8,612
)
 
$
(10,632
)
 
$
(38,263
)
 
$
(33,643
)
Net unrealized losses on marketable securities, net of tax
(14
)
 
(16
)
 
(20
)
 
(4
)
Comprehensive loss
$
(8,626
)
 
$
(10,648
)
 
$
(38,283
)
 
$
(33,647
)





GENMARK DIAGNOSTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
Year ended December 31,
 
2014
 
2013
 
2012
Operating activities:
(Unaudited)
 
 
 
 
Net loss
$
(38,263
)
 
$
(33,643
)
 
$
(22,103
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
 
Depreciation and amortization
2,656

 
2,530

 
1,198

Amortization of premiums on marketable securities
702

 
314

 
—

Stock-based compensation
5,796

 
3,893

 
2,352

Provision for bad debt
—

 
2,721

 
(24
)
Non-cash inventory adjustments
450

 
1,779

 
(482
)
Gain on sales of investment in preferred stock
—

 
(1,392
)
 
—

Elimination of cumulative foreign currency translation adjustments upon liquidation of foreign subsidiary
—

 
450

 
—

Impairment of intangible asset
—

 
1,624

 
—

Other non-cash adjustments
185

 
—

 
—

Changes in operating assets and liabilities:
 
 
 
 
 
Accounts receivable
(2,030
)
 
(2,390
)
 
(2,068
)
Inventories
(229
)
 
(1,313
)
 
880

Prepaid expenses and other assets
(184
)
 
(119
)
 
68

Accounts payable
85

 
1,343

 
728

Accrued compensation
1,797

 
951

 
1,811

Other liabilities
(537
)
 
(544
)
 
1,397

Net cash used in operating activities
(29,572
)
 
(23,796
)
 
(16,243
)
Investing activities
 
 
 
 
 
Change in restricted cash
—

 
585

 
(1,343
)
Purchase of marketable securities
(28,054
)
 
(76,190
)
 
(1,000
)
Payments for intellectual property licenses
(350
)
 
(882
)
 
(1,327
)
Purchases of property and equipment
(5,726
)
 
(4,270
)
 
(3,476
)
Proceeds from sales of marketable securities
7,497

 
6,643

 
—

Maturities of marketable securities
56,050

 
1,550

 
5,000

Net cash provided by (used in) investing activities
29,417

 
(72,564
)
 
(2,146
)
Financing activities
 
 
 
 
 
Proceeds from issuance of common stock
812

 
86,547

 
48,300

Cost incurred in conjunction with public offering
—

 
(5,510
)
 
(3,211
)
Proceeds from borrowings
—

 
166

 
991

Principal repayment of borrowings
(56
)
 
(766
)
 
(1,984
)
Proceeds from stock option exercises
531

 
396

 
223

Net cash provided by financing activities
1,287

 
80,833

 
44,319

Net (decrease) increase in cash and cash equivalents
1,132

 
(15,527
)
 
25,930

Cash and cash equivalents at beginning of period
35,723

 
51,250

 
25,320

Cash and cash equivalents at end of period
$
36,855

 
$
35,723

 
$
51,250

Non-cash investing and financing activities:
 
 
 
 
 
Property and equipment purchased with capital lease
$
—

 
$
—

 
$
109

Transfer of systems from property and equipment into inventory
$
256

 
$
575

 
$
223

Property and equipment costs incurred but not paid included in accounts payable
$
124

 
$
603

 
$
592

Leasehold improvements related to lease incentives
$
—

 
$
—

 
$
1,359

Intellectual property acquisition included in other noncurrent liabilities
$
550

 
$
450

 
$
—





Offering costs incurred but not paid included in other liabilities
—

 
65

 
—

Supplemental cash flow disclosures:
 
 
 
 
 
Cash paid for interest
$
20

 
$
19

 
$
90

Cash received for interest
$
244

 
$
403

 
$
42

Cash paid for income taxes, net
$
24

 
$
21

 
$
91


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



GenMark Diagnostics, Inc. Reports