·

Finalizing launch plans for two new offerings:

o

A new platform and cloud service for decentralizing OVA1 testing. The platform and web service will allow OVA1 and its OVA Calc to be performed locally at hospital systems/integrated delivery networks, regional labs, & large OBGyn super groups. Decentralizing OVA1 allows for increased reach and access in the markets we serve with the goal of accelerating adoption.

o

A new clinical pathway offering OVA1/Overa Reflex.  OVA1/Overa Reflex is designed to improve accuracy and reduce false positives by nearly 40% by leveraging the strengths of each product: OVA1’s sensitivity and Overa’s specificity.  This new offering will also be available through a decentralized structure.

·

Named Mr. Chris Goulart as Senior Vice President of Commercial Operations, a newly created position focusing on the Company’s growth operations. Added three Senior Large Practice Sales professionals focused on our new platform and cloud service offering. The total number of sales representatives is now 11, all of whom will focus on our new platform in addition to our historical Gynecology practice targets. 

·

Completed an equity financing through the public offering of common and preferred stock on April 17, 2018, with net proceeds raised after offering expenses of $13.5 million. The financing enables the Company to drive its commercialization strategy for OVA1 in the U.S.

·

Total revenue in the second quarter of 2018 was $708 thousand compared to $898 thousand in the prior year quarter.

·

Product revenue in the second quarter of 2018 totaled $627 thousand compared to $860 thousand in the prior year quarter, representing a 27% year-over-year decrease.  1,884 OVA1 tests were performed in the second quarter of 2018, versus 2,418 OVA1 tests performed in the prior year quarter. The revenue and volume decrease were attributable to the loss of a significant client bill customer in Q3 2017, as well as reductions in volume in uncovered territories. Despite these reductions, revenue associated with Medicare increased more than five-fold driven by a 19% increase in volume and a 440% increase in price. 

·

Revenue on a per-test-performed GAAP basis was $333 in the second quarter of 2018, representing a 15% increase over revenue per test performed on a comparable GAAP basis of $287 in the second quarter of 2017. (This second quarter 2017 GAAP amount reflects Vermillion’s first quarter 2018 adoption of a new revenue recognition accounting rule, so it differs from the $356 per-test-performed reported last year for the second quarter of 2017.)

·

Cost of product revenue in the second quarter of 2018 totaled $528 thousand, representing a 23% increase from the second quarter of 2017 due to increased postage and kits delivered to physicians, non-recurring lab supply costs for our new offerings and clinical validation, as well as Quest Diagnostics Incorporated project management fees incurred in 2018.

·

Total operating expenses in the second quarter of 2018 increased to $2.9 million compared to $2.6 million in the same year-ago quarter, representing an increase of 15%. The increase includes one-time costs for severance, increased consulting costs as well as increased investment in sales resources.

·

Net loss for the second quarter of 2018 was $3.0 million or $(0.04) per share, as compared to a net loss of $2.4 million or $(0.04) per share in the same year-ago quarter.

·

There were 75.3 million common shares outstanding at June 30, 2018.

·

Cash and cash equivalents at June 30, 2018 were $14.1 million.

·

The company utilized $2.5 million in cash in the second quarter of 2018, exclusive of the $13.5 million received from the April 2018 public offering net of issuance costs.  





June 30,

December 31,



2018

2017

Assets

Current assets:

Cash and cash equivalents

$

$

Accounts receivable, net

Prepaid expenses and other current assets

Inventories

Total current assets

Property and equipment, net

Other assets

 -

Total assets

$

$



Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

$

$

Accrued liabilities

Short-term debt

Other current liabilities

Total current liabilities

Non-current liabilities:

Long-term debt

Total liabilities

Commitments and contingencies

Stockholders’ equity:

Common stock, par value $0.001 per share, 150,000,000 shares authorized at

June 30, 2018 and December 31, 2017; 75,274,251 and 60,036,017 shares

issued and outstanding at June 30, 2018 and December 31, 2017,

respectively

Additional paid-in capital

Accumulated deficit

Total stockholders’ equity

Total liabilities and stockholders’ equity

$

$





Three Months Ended June 30,

Six Months Ended June 30,



2018

2017

2018

2017

Revenue:

Product

$

$

$

$

Service

Total revenue

Cost of revenue:(1)

Product

Service

Total cost of revenue

Gross profit (loss)

Operating expenses:

Research and development(2)

Sales and marketing(3)

General and administrative(4)

Total operating expenses

Loss from operations

Interest income (expense), net

Other income (expense), net

Net loss

$

$

$

$

Net loss per share - basic and diluted

$

$

$

$

Weighted average common shares used to compute basic and diluted net loss per common share

Non-cash stock-based compensation expense included in cost of revenue and operating expenses:

(1)  Cost of revenue

$

$

$

$

(2)  Research and development

(3)  Sales and marketing

(4)  General and administrative