GenMark Diagnostics, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - February 27, 2018

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Exhibit 99.1
February 27, 2018


GenMark Diagnostics Reports Fourth Quarter and Full Year 2017 Results

CARLSBAD, Calif - GenMark Diagnostics, Inc. (Nasdaq: GNMK), a leading provider of automated, multiplex molecular diagnostic testing systems, today announced financial results for the fourth quarter and full year ended December 31, 2017.

Highlights
•
Revenues for the fourth quarter of 2017 were $16.0 million, an increase of 8% over the prior year period
•
Revenues for the full year 2017 were $52.5 million, representing an increase of 7% over 2016
•
Placed 49 ePlex® analyzers in the fourth quarter of 2017
•
Exited the year with an installed base of 196 ePlex analyzers in U.S. and European labs
•
XT-8 installed base remained relatively stable at 620 analyzers in U.S. labs

“In 2017, we achieved several significant product launches that are fundamental to the continued growth and success of our business. We launched our FDA cleared ePlex system and Respiratory Pathogen Panel in the U.S. ahead of the current severe flu season, and we introduced our ePlex family of CE Marked BCID sepsis panels in Europe. We’re also very pleased with the recent launch of our ePlex NP system, which we designed to address lower test-volume sites and decentralized near patient settings,” said Hany Massarany, President and Chief Executive Officer. “Looking ahead, we are excited about the opportunity we have in 2018 and beyond, to drive ePlex commercialization with an expanded menu of test panels and a rapidly growing number of customers utilizing ePlex for routine clinical testing,” concluded Massarany.

Fourth Quarter Financial Results
Revenue was $16.0 million in the fourth quarter of 2017, an increase of 8% versus $14.9 million in the fourth quarter of 2016. Gross profit was $4.7 million, or 30% of revenue, compared with $8.6 million, or 58% of revenue in the same period of 2016, reflecting the increased proportion of ePlex revenues in the quarter.

Annuity per XT-8 analyzer was approximately $65,000 over the last 4 quarters. Annuity per ePlex analyzer was approximately $120,000 in the fourth quarter.

Operating expenses for the fourth quarter of 2017 were $18.7 million compared to $20.7 million in the same period for 2016. The decrease was largely due to reduced ePlex development expenses.

Loss per share was $0.26 per share for the fourth quarter of 2017, compared to a $0.27 loss per share in the fourth quarter of 2016.

The Company ended the quarter with $72.0 million in cash and investments, reflecting the impact of increasing inventory levels in advance of the flu season.

Guidance for Full Year 2018
GenMark projects revenue for the full year 2018 to range from $68 to $72 million. Gross margin is expected to be in the mid 30% range and operating expenses in the mid-$60 million range. The Company expects ePlex placements of 140-170 analyzers, and an annuity per ePlex placement in the range of $100,000 to $120,000.

Webcast and Conference Call Information
The Company will be hosting a conference call to discuss fourth quarter results in further detail on Tuesday, February 27, 2018 starting at 4:30 p.m. ET. 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 3489404 approximately five minutes prior to the start time.









About GenMark Diagnostics
GenMark Diagnostics (NASDAQ: GNMK) is a leading provider of multiplex molecular diagnostic solutions designed to enhance patient care, improve key quality metrics, and reduce the total cost-of-care. Utilizing GenMark's proprietary eSensor® detection technology, GenMark's eSensor XT-8® and ePlex® systems are designed to support a broad range of molecular diagnostic tests with compact, easy-to-use workstations and self-contained, disposable test cartridges. GenMark’s ePlex: The True Sample-to-Answer Solution™ is designed to optimize laboratory efficiency and address a broad range of infectious disease testing needs, including respiratory, bloodstream, and gastrointestinal infections.  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, regulatory submissions and approvals, and the timely and effective commercialization and clinical impact of our ePlex system, 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.



Investor Relations Contact                
Lynn Pieper Lewis or Leigh Salvo             
(415) 937-5404     
ir@genmarkdx.com






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

 
As of December 31,
 
2017
 
2016
ASSETS:
Current Assets:
 
 
 
Cash and cash equivalents
$
26,754

 
$
15,959

Short-term marketable securities
45,236

 
25,607

Accounts receivable, net of allowances of $2,754 and $2,740, respectively
10,676

 
9,048

Inventories
10,949

 
6,633

Prepaid expenses and other current assets
1,792

 
1,202

Total current assets
95,407

 
58,449

 
 
 
 
Property and equipment, net
22,581

 
18,268

Intangible assets, net
2,624

 
2,670

Restricted cash
758

 
758

Other long-term assets
192

 
179

Total assets
$
121,562

 
$
80,324

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
 
 
 
Accounts payable
$
11,171

 
$
8,703

Accrued compensation
5,419

 
5,650

Current portion of long-term debt
7,927

 
7,935

Other current liabilities
3,226

 
4,133

Total current liabilities
27,743

 
26,421

 
 
 
 
Deferred rent
3,059

 
3,652

Long-term debt
20,099

 
11,880

Other noncurrent liabilities
241

 
220

Total liabilities
51,142

 
42,173

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

 
—

Common stock, $0.0001 par value; 100,000 authorized; 55,066 and 46,554 shares issued and outstanding, respectively
6

 
4

Additional paid-in capital
487,525

 
393,322

Accumulated deficit
(417,120
)
 
(355,270
)
Accumulated other comprehensive income
9

 
95

Total stockholders’ equity
70,420

 
38,151

Total liabilities and stockholders’ equity
$
121,562

 
$
80,324






GENMARK DIAGNOSTICS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands, except per share data)
 
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
2017
 
2016
 
2017
 
2016
 
(unaudited)
 
(unaudited)
 
 
 
 
Revenue
 
 
 
 
 
 
 
Product revenue
$
15,947

 
$
14,803

 
$
52,260

 
$
48,914

License and other revenue
75

 
82

 
259

 
360

Total revenue
16,022

 
14,885

 
52,519

 
49,274

Cost of revenue
11,287

 
6,243

 
32,514

 
19,700

Gross profit
4,735

 
8,642

 
20,005

 
29,574

Operating expenses:
 
 
 
 
 
 
 
Sales and marketing
5,584

 
4,501

 
20,557

 
14,734

General and administrative
4,651

 
3,841

 
16,205

 
14,363

Research and development
8,463

 
12,358

 
42,760

 
49,458

Total operating expenses
18,698

 
20,700

 
79,522

 
78,555

Loss from operations
(13,963
)
 
(12,058
)
 
(59,517
)
 
(48,981
)
Other income (expense):
 
 
 
 
 
 
 
Interest income
208

 
77

 
561

 
176

Interest expense
(771
)
 
(474
)
 
(3,042
)
 
(1,536
)
Other income (expense)
22

 
(168
)
 
249

 
(160
)
Total other income (expense)
(541
)
 
(565
)
 
(2,232
)
 
(1,520
)
Loss before provision for income taxes
(14,504
)
 
(12,623
)
 
(61,749
)
 
(50,501
)
Income tax expense
32

 
55

 
101

 
100

Net loss
$
(14,536
)
 
$
(12,678
)
 
$
(61,850
)
 
$
(50,601
)
Net loss per share, basic and diluted
$
(0.26
)
 
$
(0.27
)
 
$
(1.21
)
 
$
(1.15
)
Weighted average number of shares outstanding basic and diluted
54,910

 
46,458

 
51,169

 
44,100

 
 
 
 
 
 
 
 
Other comprehensive loss
 
 
 
 
 
 
 
Net loss
$
(14,536
)
 
$
(12,678
)
 
$
(61,850
)
 
$
(50,601
)
Other comprehensive income/(loss):
 
 
 
 
 
 
 
Foreign currency translation adjustments, net of tax
(229
)
 
86

 
(84
)
 
77

Net unrealized losses on marketable securities, net of tax
22

 
(13
)
 
(2
)
 
(11
)
Total other comprehensive income/(loss)
(207
)
 
73

 
(86
)
 
66

Total comprehensive loss
$
(14,743
)
 
$
(12,605
)
 
$
(61,936
)
 
$
(50,535
)





GENMARK DIAGNOSTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
Years ended December 31,
 
2017
 
2016
 
2015
Operating activities:
 
 
 
 
 
Net loss
$
(61,850
)
 
$
(50,601
)
 
$
(42,197
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
 
Depreciation and amortization
5,317

 
3,916

 
3,405

Net amortization/(accretion) of premiums/discounts on investments
(39
)
 
89

 
180

Gain on sale of investment in preferred stock
—

 
(9
)
 
(223
)
Amortization of deferred debt issuance costs
1,132

 
388

 
285

Stock-based compensation
12,170

 
9,236

 
9,995

Provision for bad debt
14

 
13

 
25

Non-cash inventory adjustments
1,323

 
134

 
594

Other non-cash adjustments
(224
)
 
145

 
186

Changes in operating assets and liabilities:
 
 
 
 
 
Accounts receivable
(1,555
)
 
(2,250
)
 
(1,983
)
Inventories
(10,512
)
 
(3,450
)
 
(1,286
)
Prepaid expenses and other assets
(599
)
 
(613
)
 
(36
)
Accounts payable
2,557

 
4,105

 
(757
)
Accrued compensation
(263
)
 
2,172

 
(458
)
Other current and non-current liabilities
(893
)
 
1,088

 
355

Net cash used in operating activities
(53,422
)
 
(35,637
)
 
(31,915
)
Investing activities:
 
 
 
 
 
Payments for intellectual property licenses
(500
)
 
(1,500
)
 
(550
)
Purchases of property and equipment
(4,815
)
 
(7,000
)
 
(3,756
)
Purchases of marketable securities
(70,989
)
 
(33,688
)
 
(22,646
)
Proceeds from sales of marketable securities
13,896

 
8,015

 
223

Maturities of marketable securities
37,500

 
10,050

 
46,050

Net cash provided by (used in) investing activities
(24,908
)
 
(24,123
)
 
19,321

Financing activities:
 
 
 
 
 
Proceeds from issuance of common stock
87,267

 
30,920

 
884

Costs incurred in conjunction with public offering
(5,469
)
 
(1,143
)
 
—

Principal repayment of borrowings
(7,848
)
 
(40
)
 
(22
)
Proceeds from borrowings
15,000

 
10,000

 
10,000

Costs associated with debt issuance
(187
)
 
(90
)
 
(718
)
Proceeds from stock option exercises
287

 
712

 
989

Net cash provided by financing activities
89,050

 
40,359

 
11,133

Effect of exchange rate changes on cash
75

 
(25
)
 
(9
)
Net increase (decrease) in cash and cash equivalents
10,795

 
(19,426
)
 
(1,470
)
Cash and cash equivalents at beginning of year
15,959

 
35,385

 
36,855

Cash and cash equivalents at end of year
$
26,754

 
$
15,959

 
$
35,385

Non-cash investing and financing activities:
 
 
 
 
 
Transfer of systems from property and equipment into inventory
$
4,885

 
$
263

 
$
225

Property and equipment costs incurred but not paid included in accounts payable
$
227

 
$
1,159

 
$
146

Intellectual property acquisition included in accrued expenses
$
—

 
$
—

 
$
800

Supplemental cash flow information:
 
 
 
 
 
Cash paid for interest
$
1,643

 
$
1,130

 
$
572

Cash paid for income taxes, net
$
61

 
$
65

 
$
10




GenMark Diagnostics, Inc. Reports