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| 8-K - 8-K - AFFYMETRIX INC | affx-20151231xpr.htm |
EXHIBIT 99.1
Contact:
Doug Farrell
Vice President of Investor Relations
408-731-5285
AFFYMETRIX REPORTS FOURTH QUARTER 2015 OPERATING RESULTS
Santa Clara, Calif.—February 17, 2016—Affymetrix, Inc., (NASDAQ: AFFX) today reported its operating results for the fourth quarter of 2015.
Results for the year ended December 31, 2015:
• | Total revenue was $359.8 million, compared to $349.0 million in 2014. |
• | Reported revenue increased 3.1%, or 6.8% on a constant currency basis. |
• | GAAP net income was $10.1 million, or $0.13 per diluted share, as compared to a GAAP net loss of $3.8 million, or $0.05 per diluted share, in 2014, an increase of $13.9 million or $0.18 per diluted share. |
• | Non-GAAP net income was $33.7 million, or $0.42 per diluted share, compared to a non-GAAP net income of $22.3 million, or $0.30 per diluted share, for 2014. Please refer to "Itemized Reconciliation Between GAAP and Non-GAAP Net Income (Loss)" for a reconciliation of these GAAP and non-GAAP financial measures. |
• | Total balance in cash and cash equivalents was $88.8 million, short term investments were $50.0 million and senior debt was $19.1 million as of December 31, 2015. |
• | On October 9, 2015, we entered into a settlement agreement with Enzo Life Sciences, Inc. ("Enzo") and agreed to pay $10.0 million with respect to the lawsuit filed by Enzo in April 2012. |
• | On October 28, 2015, we entered into a five-year Senior Credit Facility Agreement with Bank of America in an aggregate amount of $100.0 million of revolving commitment. We borrowed $20.1 million under this Senior Credit Facility and used the proceeds to pay off all of our outstanding senior debt under our credit agreement entered into in 2012. |
Product revenue for the year ended December 31, 2015 was $327.0 million and service and other revenue was $32.8 million. This compares to product revenue of $310.5 million and service and other revenue of $38.6 million in 2014. Product revenue for 2015 included consumable revenue of $311.7 million and instrument revenue of $15.3 million. Product revenue for 2014 included consumable revenue of $294.2 million and instrument revenue of $16.2 million.
Total GAAP gross margin was 64%, as compared to 59% in the same period of 2014. Excluding non-GAAP adjustments such as the amortization of acquired intangible assets, non-GAAP gross margin for 2015 was 65% compared to 62% in 2014. This improvement was driven by higher sales as well as favorable manufacturing variances in the year and continued focus on cost control. Please refer to the "Itemized Reconciliation Between GAAP and Non-GAAP Gross Margin" for a reconciliation of these GAAP and non-GAAP financial measures.
For the year ended December 31, 2015, operating expenses were $212.5 million on a GAAP basis as compared to $203.7 million in 2014. Excluding non-GAAP adjustments, such as litigation costs and the amortization of acquired intangible assets, non-GAAP operating expenses for 2015 were $193.9 million, compared to an adjusted total of $187.7 million in 2014. The increase was primarily caused by higher headcount and associated compensation. Please refer to the "Itemized Reconciliation Between GAAP and Non-GAAP Operating Expenses" for a reconciliation of these GAAP and non-GAAP financial measures.
Results for the three months ended December 31, 2015:
• | Total revenue was $95.6 million, compared to $93.5 million in fourth quarter of 2014. |
• | Reported revenue increased 2.2%, or 6.7% on a constant currency basis. |
• | GAAP net income was $4.1 million, or $0.05 per diluted share, as compared to a GAAP net income of $5.2 million, or $0.05 per diluted share, in the fourth quarter of 2014, a decrease of $1.1 million. |
• | Non-GAAP net income was $7.4 million, or $0.09 per diluted share, compared to a non-GAAP net income of $8.9 million, or $0.09 per diluted share, for the fourth quarter of 2014. Please refer to "Itemized Reconciliation Between GAAP and Non-GAAP Net Income (Loss)" for a reconciliation of these GAAP and non-GAAP financial measures. |
Product revenue for the fourth quarter of 2015 was $87.7 million and service and other revenue was $7.9 million. This compares to product revenue of $82.8 million and service and other revenue of $10.7 million in the fourth quarter of 2014. Product revenue for the fourth quarter of 2015 included consumable revenue of $83.5 million and instrument revenue of $4.2 million. Product revenue for the fourth quarter of 2014 included consumable revenue of $78.0 million and instrument revenue of $4.8 million.
Total GAAP gross margin was 65%, as compared to 63% in the same period of 2014. Excluding non-GAAP adjustments such as the amortization of acquired intangible assets, non-GAAP gross margin for the fourth quarter of 2015 was 66% compared to 64% in the same period of 2014. This improvement was driven by higher sales as well as favorable manufacturing variances in the quarter. Please refer to the "Itemized Reconciliation Between GAAP and Non-GAAP Gross Margin" for a reconciliation of these GAAP and non-GAAP financial measures.
For the fourth quarter of 2015, operating expenses were $56.9 million on a GAAP basis as compared to $52.7 million in the same period of 2014. Excluding non-GAAP adjustments, such as the amortization of acquired intangible assets, non-GAAP operating expenses for the fourth quarter of 2015 were $54.8 million, compared to an adjusted total of $50.2 million in the same period of 2014. The increase was primarily caused by higher bonus attainment and commissions. Please refer to the "Itemized Reconciliation Between GAAP and Non-GAAP Operating Expenses" for a reconciliation of these GAAP and non-GAAP financial measures.
Recent developments:
• | On January 8, 2016, the Company entered into an Agreement and Plan of Merger with Thermo Fisher, and White Birch Merger Co, a Delaware corporation and a wholly owned subsidiary of Thermo Fisher, providing for, subject to the satisfaction or waiver of specified conditions, the acquisition of the Company by Thermo Fisher at a price of $14.00 per share in cash. Subject to the terms and conditions of the Merger Agreement, the closing of the merger is expected to occur during the second quarter of 2016. |
• | The Company entered a partnership with United Kingdom-based Bio-Genesys Diagnostics to offer commercial genotyping services. Under the terms of the agreement, the genetic testing services offered by Bio-Genesys Diagnostics for cattle, pigs, goats and sheep will be run exclusively on Affymetrix’s technology. The partnership leverages the broad range of reproductive and diagnostic solutions offered by Bio-Genesys Diagnostics to professional farming operations and veterinarians and the strong technical and customization expertise from Affymetrix in developing custom genotyping arrays and panels in agrigenomics. |
• | The introduction of several new agrigenomic genotyping solutions at the annual Plant and Animal Genome Conference (PAG XXIV). Following the Company’s acquisition of Eureka Genomics in mid-2015, Affymetrix is introducing Eureka™ Genotyping Solution for low-cost, low-plex genotyping by sequencing (GBS). The company also introduced two new array configurations for the Axiom® genotyping platform, providing customers with a complete range of options for varying sample numbers and throughput goals. |
• | The Company entered into a partnership with Reveal Biosciences LLC, an advanced tissue technologies company, under which Reveal will use Affymetrix ViewRNA® ISH for tissue samples to provide RNA in situ hybridization (ISH) staining, imaging, and quantification services using the company’s proprietary image analysis software, ImageDx™. |
• | The introduction of the Axiom®Turkey Genotyping array, developed in collaboration with the United States Department of Agriculture - Agricultural Research Service (USDA-ARS) along with Aviagen and Hendrix Genetics. The array will help breeders better understand the genetics of turkeys in order to improve meat characteristics and health. It will enable scientists and breeders to quickly evaluate genetic markers that can be associated with improved traits such as health outcome and fertility. |
• | The Company entered into a collaboration with XRGenomics LTD, a UK-based biotechnology company, to research and develop a new generation of diagnostic tests for age-related diseases. Over 50% of healthcare costs are spent on those aged 65 and older and according to the G8 Summit 2013, age-related diseases could bankrupt Western medicine by 2050. New solutions are required to deliver efficient and effective care. XRGenomics is using Affymetrix technology to develop novel gene expression-based signatures that enable translational research and biomarker test development activities in areas such as dementia, Alzheimer’s, and other age-related diseases. |
About Affymetrix
Affymetrix technology is used by the world's top pharmaceutical, diagnostic and biotechnology companies, as well as leading academic, government and nonprofit research institutes. More than 2,300 systems have been shipped around the world and more than 110,000 peer-reviewed papers have been published using the technology. Affymetrix is headquartered in Santa Clara, California, and has manufacturing facilities in Cleveland, Ohio, San Diego, California, Singapore and Vienna, Austria. The Company has about 1,150 employees worldwide and maintains sales and distribution operations across Europe, Asia and Latin America.
All statements in this press release that are not historical in nature, are predicative in nature or that depend upon or refer to future events or conditions are "forward-looking statements" within the meaning of Section 21 of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These include statements regarding our strategic initiatives, market expectations, the consummation and timing of the proposed acquisition of us by Thermo Fisher Scientific, Inc., anticipated product and revenue growth, financial strength and regulatory environment, as well as all other "expectations," "beliefs," "hopes," "intentions," "strategies" and words of similar import and the negatives thereof. Such statements are based on our current expectations and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. We cannot assure you that actual results or business conditions will not differ materially from those projected or suggested in such forward-looking statements as a result of various factors, including, but not limited to, those discussed in “Risk Factors” contained in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2014. These forward-looking statements speak only as of the date of the press release. Unless required by law, we do not undertake to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.
In addition to providing financial measures based on generally accepted accounting principles in the United States (GAAP), Affymetrix has disclosed in this press release its net income (loss) and net income (loss) per share as well as its total gross margin and operating expenses for the fourth quarter of 2015 and 2014 excluding specified items. Reconciliation of GAAP to Non-GAAP measures can be found in the tables included in this press release. Affymetrix has determined to disclose this financial information to investors because it believes it will be useful, as a supplement to GAAP measures, in comparing Affymetrix's operating performance in the fourth quarter of 2015 as compared to the prior-year period. These Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Our management uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods.
PLEASE NOTE:
Affymetrix, the Affymetrix logo, GeneChip, and all other trademarks are the property of Affymetrix, Inc.
- Financial Charts to Follow -
AFFYMETRIX, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
December 31, 2015 | December 31, 2014 | ||||||
ASSETS: | (Note 1) | ||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 88,767 | $ | 79,923 | |||
Short-term investments | 50,000 | — | |||||
Accounts receivable, net | 58,970 | 46,896 | |||||
Inventories—short-term portion | 54,131 | 50,676 | |||||
Deferred tax assets—short-term portion | — | 3,778 | |||||
Prepaid expenses and other current assets | 7,655 | 9,197 | |||||
Total current assets | 259,523 | 190,470 | |||||
Property and equipment, net | 21,000 | 18,087 | |||||
Inventories—long-term portion | 2,207 | 5,956 | |||||
Goodwill | 154,539 | 156,178 | |||||
Intangible assets, net | 102,398 | 106,183 | |||||
Deferred tax assets—long-term portion | 567 | 303 | |||||
Other long-term assets | 6,657 | 9,371 | |||||
Total assets | $ | 546,891 | $ | 486,548 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY: | |||||||
Current liabilities: | |||||||
Accounts payable and accrued liabilities | $ | 56,037 | $ | 53,063 | |||
Term loan—short-term portion | 4,000 | 4,000 | |||||
Deferred revenue—short-term portion | 8,605 | 9,210 | |||||
Total current liabilities | 68,642 | 66,273 | |||||
Deferred revenue—long-term portion | 2,161 | 2,372 | |||||
Convertible notes | 105,000 | 105,000 | |||||
Term loan—long-term portion | 15,088 | 18,950 | |||||
Other long-term liabilities | 16,747 | 21,626 | |||||
Total liabilities | 207,638 | 214,221 | |||||
Stockholders’ equity: | |||||||
Common stock | 805 | 743 | |||||
Additional paid-in capital | 847,266 | 781,747 | |||||
Accumulated other comprehensive income | (9,380 | ) | (612 | ) | |||
Accumulated deficit | (499,438 | ) | (509,551 | ) | |||
Total stockholders’ equity | 339,253 | 272,327 | |||||
Total liabilities and stockholders’ equity | $ | 546,891 | $ | 486,548 | |||
Note 1: | The condensed consolidated balance sheet at December 31, 2014 has been derived from the audited consolidated financial statements at that date included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014. |
AFFYMETRIX, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
REVENUE: | |||||||||||||||
Product sales | $ | 87,707 | $ | 82,814 | $ | 327,011 | $ | 310,458 | |||||||
Services and other | 7,865 | 10,716 | 32,775 | 38,561 | |||||||||||
Total revenue | 95,572 | 93,530 | 359,786 | 349,019 | |||||||||||
COSTS AND EXPENSES: | |||||||||||||||
Cost of product sales | 29,270 | 28,288 | 110,770 | 117,499 | |||||||||||
Cost of services and other | 4,491 | 6,300 | 19,775 | 25,659 | |||||||||||
Research and development | 14,865 | 12,784 | 52,900 | 50,227 | |||||||||||
Selling, general and administrative | 42,038 | 39,866 | 149,638 | 148,411 | |||||||||||
Litigation settlement | — | — | 10,000 | 5,100 | |||||||||||
Total costs and expenses | 90,664 | 87,238 | 343,083 | 346,896 | |||||||||||
Income from operations | 4,908 | 6,292 | 16,703 | 2,123 | |||||||||||
Other income (expense), net | 1,076 | (50 | ) | 752 | 652 | ||||||||||
Interest expense | 2,188 | 1,401 | 6,609 | 6,373 | |||||||||||
Income (loss) before income taxes | 3,796 | 4,841 | 10,846 | (3,598 | ) | ||||||||||
Income tax expense (benefit) | (261 | ) | (326 | ) | 733 | 236 | |||||||||
Net income (loss) | $ | 4,057 | $ | 5,167 | $ | 10,113 | $ | (3,834 | ) | ||||||
Basic net income (loss) per common share | $ | 0.05 | $ | 0.07 | $ | 0.13 | $ | (0.05 | ) | ||||||
Diluted net income (loss) per common share | $ | 0.05 | $ | 0.05 | $ | 0.13 | $ | (0.05 | ) | ||||||
Shares used in computing basic net income (loss) per common share | 80,236 | 73,933 | 77,842 | 73,202 | |||||||||||
Shares used in computing diluted net income (loss) per common share | 82,490 | 94,585 | 80,707 | 73,202 | |||||||||||
AFFYMETRIX, INC.
RESULTS OF OPERATIONS – NON-GAAP
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP NET INCOME (LOSS)
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
GAAP net income (loss) - basic and diluted | $ | 4,057 | $ | 5,167 | $ | 10,113 | $ | (3,834 | ) | ||||||
Amortization of inventory fair value adjustment | — | — | — | 4,666 | |||||||||||
Amortization of acquired intangible assets | 3,323 | 3,759 | 13,627 | 16,352 | |||||||||||
Litigation settlement | — | — | 10,000 | 5,100 | |||||||||||
Non-GAAP net income - basic and diluted | $ | 7,380 | $ | 8,926 | $ | 33,740 | $ | 22,284 | |||||||
Non-GAAP basic net income per common share | $ | 0.09 | $ | 0.12 | $ | 0.43 | $ | 0.30 | |||||||
Non-GAAP diluted net income per common share | $ | 0.09 | $ | 0.09 | $ | 0.42 | $ | 0.30 | |||||||
Shares used in computing Non-GAAP basic net income per common share | 80,236 | 73,933 | 77,842 | 73,202 | |||||||||||
Shares used in computing Non-GAAP diluted net income per common share (Note 1) | 82,490 | 94,585 | 80,707 | 73,202 | |||||||||||
Note 1: | Weighted average shares outstanding includes the dilutive effect, if any, of employee stock options, employee stock purchase plan, and restricted stock awards. |
ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP GROSS MARGIN
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||||||||||||||
GAAP total gross margin | $ | 61,811 | 65 | % | $ | 58,942 | 63 | % | $ | 229,241 | 64 | % | $ | 205,861 | 59 | % | |||||||||||
Amortization of inventory fair value adjustment | — | — | % | — | — | % | — | — | % | 4,666 | 1 | % | |||||||||||||||
Amortization of acquired intangible assets | 1,226 | 1 | % | 1,316 | 1 | % | 4,994 | 1 | % | 5,389 | 2 | % | |||||||||||||||
Non-GAAP total gross margin | $ | 63,037 | 66 | % | $ | 60,258 | 64 | % | $ | 234,235 | 65 | % | $ | 215,916 | 62 | % | |||||||||||
ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP OPERATING EXPENSES
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Total GAAP operating expenses | $ | 56,903 | $ | 52,650 | $ | 212,538 | $ | 203,738 | |||||||
Amortization of acquired intangible assets | (2,097 | ) | (2,443 | ) | (8,633 | ) | (10,963 | ) | |||||||
Litigation settlement | — | — | (10,000 | ) | (5,100 | ) | |||||||||
Total Non-GAAP operating expenses | $ | 54,806 | $ | 50,207 | $ | 193,905 | $ | 187,675 | |||||||
ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP ADJUSTED EBITDA AS PERCENTAGE OF REVENUE
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
GAAP net income (loss) | $ | 4,057 | $ | 5,167 | $ | 10,113 | $ | (3,834 | ) | ||||||
Depreciation and amortization | 5,768 | 6,932 | 21,971 | 30,776 | |||||||||||
Amortization of inventory fair value adjustment | — | — | — | 4,666 | |||||||||||
Interest expense, net | 2,197 | 1,397 | 6,596 | 6,315 | |||||||||||
Income tax provision | (261 | ) | (327 | ) | 733 | 236 | |||||||||
EBITDA | 11,761 | 13,169 | 39,413 | 38,159 | |||||||||||
Adjustments to EBITDA: | |||||||||||||||
Share-based compensation | 4,042 | 2,975 | 14,985 | 12,411 | |||||||||||
Loss on foreign currency | 135 | 651 | 1,047 | 2,458 | |||||||||||
Litigation charges | 246 | 757 | 11,525 | 9,917 | |||||||||||
Gain on sales of securities | (1,330 | ) | (742 | ) | (1,383 | ) | (2,426 | ) | |||||||
Other adjustments | 111 | 146 | (403 | ) | (624 | ) | |||||||||
Adjusted EBITDA | $ | 14,965 | $ | 16,956 | $ | 65,184 | $ | 59,895 | |||||||
Revenue | $ | 95,572 | $ | 93,530 | $ | 359,786 | $ | 349,019 | |||||||
Adjusted EBITDA as percentage of revenue | 16 | % | 18 | % | 18 | % | 17 | % | |||||||