SAN DIEGO, Aug. 5, 2015 /PRNewswire/ -- Sequenom, Inc. (NASDAQ: SQNM), a life sciences company committed to enabling healthier lives through the development of innovative products and services, today reported total revenues of $32.8 million for the second quarter of 2015, a decrease of 18% compared to revenues of $39.8 million for the second quarter of 2014. Revenues for the second quarter of 2014 included approximately $6.1 million of incremental "catch-up" payments from payors for services performed in prior periods, as well as the incremental change for the conversion from cash to accrual accounting for certain payors. No significant catch-up collections were received in the second quarter of 2015, as the timeliness of collections has improved with additional payor contracts. Sequenom now has coverage for 172 million commercial lives and 40 million lives under Medicaid programs. The second quarter of 2015 had lower diagnostic services revenues compared to the second quarter of 2014 by approximately $3 million, associated with the conversion of a referring laboratory partner to a patent pool licensee.

License revenues increased to $1.9 million for the second quarter of 2015, compared to $0.4 million for the second quarter of 2014, reflecting the increase in test fees under the Pooled Patents Agreement that was signed in December 2014.

Cash burn for the second quarter of 2015 was $2.9 million, compared to $4.1 million in the same period of 2014. The second quarter 2015 cash burn excludes payment of costs related to the convertible debt exchange of $1.6 million. The loss from continuing operations before income taxes decreased by 41% to $9.0 million for the second quarter of 2015 as compared to $15.3 million for the second quarter of 2014.

"We are pleased with the improvement in our operations and cash burn," said Bill Welch, President and Chief Executive Officer of Sequenom, Inc. "As expected, we increased revenues from global patent pool licensees while we saw a decline in test volume from some referring laboratory partners as they entered the patent pool."

Diagnostic services revenues are recorded primarily on a cash basis with accrual accounting used for several third-party payors and for client bill arrangements. In total, over 36% of Sequenom's diagnostic services revenues in the second quarter of 2015 are accounted for on the accrual basis of accounting.

Total patient samples accessioned decreased by 12% to 44,400 patient samples during the second quarter of 2015, compared to the prior year second quarter. Approximately 36,400 of those patient samples accessioned were for the MaterniT21(® )PLUS laboratory-developed test (LDT), which is a decrease in testing volume of 11% compared to the second quarter of 2014. This decline primarily reflects the strategic shift of certain business from direct testing to tests performed by a licensee, for which Sequenom receives license revenues. MaterniT21 PLUS test sample volume, after excluding this shift of samples, declined slightly in the second quarter of 2015.

Gross margin for the second quarter of 2015 was 49%, as compared to gross margin of 44% for the second quarter of 2014. This improvement is attributable primarily to the improved cost efficiencies in processing patient samples. Total cost of revenues decreased to $16.6 million for the second quarter of 2015, compared to $22.4 million for the prior year period. Cost of revenues decreased primarily due to the change in volume and continued cost improvements to Sequenom Laboratories' existing tests.

Total operating expenses excluding cost of revenues for the second quarter of 2015 were $23.2 million, as compared to total operating expenses of $30.6 million for the second quarter of 2014. The decrease is mainly due to reductions in litigation expense, research and development expense, facilities expense, and stock compensation expense, partially offset by the increase of $1.6 million due to the convertible note exchange transaction costs.

The operating loss for the second quarter of 2015 was $7.0 million, as compared to a loss of $13.2 million for the same period in 2014. Net loss from continuing operations for the second quarter of 2015 was $9.0 million or $0.08 per diluted share, as compared to a net loss of $8.4 million, or $0.07 per share, for the same period in 2014.

Unrecorded accounts receivable for tests performed are estimated to be $27 to $30 million as of June 30, 2015. This range has declined by $2 million, compared to the estimates in the prior quarter.

As of June 30, 2015, total cash, cash equivalents, and marketable securities were $86.8 million.

Operational updates and highlights:


    --  There are now 32 participants in the patent pool, including Sequenom and
        Illumina. Many of those licensees are in the process of developing and
        validating a noninvasive prenatal test to be performed in their own
        laboratories.
    --  Sequenom Laboratories announced the launch of the MaterniT((TM)) GENOME
        test for the third quarter. Initial performance data was shared at the
        19(th) International Conference on Prenatal Diagnosis and Therapy (ISPD)
        in Washington D.C.
    --  During the quarter, a peer-reviewed article published in Prenatal
        Diagnosis reported on Sequenom Laboratories' clinical experience with
        microdeletion testing, with positive predictive values (PPVs) ranging
        between 60% and >99%. The PPVs for microdeletions included in the
        MaterniT21 PLUS test are far superior to the PPVs of competitive NIPT
        tests, which average from 5% to 31% according to information available
        in the public domain.
    --  Sequenom made significant progress in its oncology program and remains
        on track to launch a liquid biopsy test for research use in the second
        half of 2015.

Non-GAAP Financial Measures

"GAAP" refers to financial information presented in accordance with generally accepted accounting principles in the United States. To supplement the condensed consolidated financial statements and discussion presented on a GAAP basis, this press release includes non-GAAP financial measures with respect to the quarter ended June 30, 2015. Management uses non-GAAP financial measures because it believes that a cash flow metric incorporating cash used by operations and certain other uses of cash are important to understand the cash requirements of the business. The Company reported cash burn as a non-GAAP financial measure. This non-GAAP financial measure is not in accordance with or an alternative to GAAP.

Management uses cash burn to evaluate performance compared to forecasts. Cash burn is calculated as the sum of net cash used by operating activities plus purchases of property, equipment and leasehold improvements, and payments on long-term obligations, less cash paid for the convertible debt exchange costs. The reconciliations of cash used by operating activities, the GAAP measure most directly comparable to cash burn, is provided on the attached schedule.

Conference Call Information

A conference call to discuss the second quarter results will take place today, August 5, at 5:00 p.m. EDT (2:00 p.m. PDT) and will be webcast live on the Sequenom Website. To access the live teleconference call, dial 877-883-0383 in the U.S. and Canada, and 412-902-6506 for other international callers. Please use code 4868059. For interested parties unable to listen to the live conference call, a replay will be available through Friday, September 4, 2015. The replay will be accessible by dialing 877-344-7529 or 412-317-0088 international toll or Canada toll free at 855-669-9658, and entering the conference number 10069178.

The conference call webcast is also accessible through the "Invest" section of the Sequenom website at www.sequenom.com/invest. An online replay will be available following the initial broadcast until Friday, September 4, 2015.

About Sequenom

Sequenom, Inc. (NASDAQ: SQNM) is committed to enabling healthier lives through the development of innovative products and services. The Company serves patients and physicians by providing early patient management information. To learn how Sequenom is interpreting the genome to improve your life, visit www.sequenom.com.

About Sequenom Laboratories

Sequenom Laboratories, a CAP-accredited and CLIA-certified molecular diagnostics laboratory, has developed a broad range of laboratory tests, with a focus principally on prenatal care. Branded under the names HerediT(TM), HerediT(TM) UNIVERSAL, MaterniT(TM) GENOME, MaterniT21(®) PLUS, NextView(TM), SensiGene(®) and VisibiliT(TM), these molecular genetic laboratory-developed tests provide early patient management information for obstetricians, geneticists, and maternal fetal medicine specialists. Sequenom Laboratories is changing the landscape in genetic diagnostics using proprietary cutting edge technologies. Visit www.laboratories.sequenom.com and follow @SequenomLabs.

SEQUENOM(®), HerediT(TM), MaterniT(TM) GENOME, MaterniT21(®) PLUS, NextView(TM), SensiGene(®), VisibiliT(TM) and Sequenom Laboratories are trademarks of Sequenom, Inc. All other trademarks and service marks are the property of their respective owners.

Forward-Looking Statements

Statements contained in this press release regarding matters that are not historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the development of innovative products and services, the anticipated launch of the MaterniT((TM)) GENOME test in the third quarter and the anticipated launch of a liquid biopsy test for research use in the second half of 2015. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Risks are described more fully in the Company's filings with the Securities and Exchange Commission, including without limitation the Company's most recent Quarterly Report on Form 10-Q and other documents subsequently filed with or furnished to the Securities and Exchange Commission. All forward-looking statements contained in this press release speak only as of the date on which they were made. The Company undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made.



                                                                       SEQUENOM, INC.

                                                       CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

                                                                        (Unaudited)

                                                        (In thousands, except per share information)

                                                        Three Months Ended June 30,                     Six Months Ended June 30,

                                                           2015                    2014                    2015                     2014
                                                           ----                    ----                    ----                     ----

    Revenues:

    Diagnostic services, net                                       $30,891                             $39,380                           $66,595    $76,100

    License                                               1,875                     402                   3,977                      743
                                                          -----                     ---

    Total revenues                                       32,766                  39,782                  70,572                   76,843
                                                         ------                  ------                  ------                   ------

    Costs and expenses:

    Cost of revenues                                     16,595                  22,410                  35,902                   45,180

    Selling and marketing                                 8,359                   7,920                  16,845                   16,479

    Research and development                              5,652                   7,087                  11,520                   13,876

    General and administrative                            8,511                  14,590                  17,186                   27,070

    Restructuring costs and other charges                   656                     975                     656                    1,885
                                                            ---                     ---

    Total costs and expenses                             39,773                  52,982                  82,109                  104,490

    Gain on pooled patents agreement                          -                      -                 21,000                        -
                                                            ---                    ---                 ------                      ---

    Operating income (loss)                             (7,007)               (13,200)                  9,463                 (27,647)

    Interest and other expense, net                     (1,958)                (2,092)                (4,067)                 (4,190)


    Earnings (loss) from continuing
     operations before income taxes                     (8,965)               (15,292)                  5,396                 (31,837)

    Income tax benefit (expense)                           (48)                  6,928                   (124)                   6,804
                                                            ---                   -----                    ----                    -----

    Earnings (loss) from continuing
     operations                                         (9,013)                (8,364)                  5,272                 (25,033)

    Discontinued operations:

         Earnings from discontinued operations,
          net of tax                                          -                 12,817                       -                  13,812
                                                            ---                 ------                     ---                  ------

    Net earnings (loss)                                           $(9,013)                             $4,453                            $5,272  $(11,221)
                                                                   =======                              ======                            ======   ========


    Net earnings (loss) per common share, basic

    Continuing operations                                          $(0.08)                            $(0.07)                            $0.04    $(0.22)

    Discontinued  operations                                  $          -                              $0.11                        $        -     $0.12

    Net earnings (loss)                                            $(0.08)                              $0.04                             $0.04    $(0.10)

    Net earnings (loss) per common share, diluted

    Continuing operations                                          $(0.08)                            $(0.07)                            $0.04    $(0.22)

    Discontinued  operations                                  $          -                              $0.11                        $        -     $0.12

    Net earnings (loss)                                            $(0.08)                              $0.04                             $0.04    $(0.10)

    Shares used in computing earnings (loss) per share

    Basic                                               118,120                 116,454                 117,930                  116,260

    Diluted                                             118,120                 116,454                 118,684                  116,260


                                                     SEQUENOM, INC.

                                          CONDENSED CONSOLIDATED BALANCE SHEETS

                                                       (Unaudited)

                                                     (In thousands)

                                                      June 30,                  December 31,
                                                                        2015                      2014
                                                                        ----                      ----

    Assets

    Current assets:

    Cash,
     cash
     equivalents
     and
     marketable
     securities                                                      $86,766                   $93,897

    Accounts
     receivable,
     net                                                               5,793                     9,131

    Inventories                                                        3,520                     6,516

    Other
     current
     assets
     and
     prepaid
     expenses                                                          6,129                    12,112
                                                                       -----                    ------

    Total
     current
     assets                                                          102,208                   121,656

     Property,
     equipment
     and
     leasehold
     improvements,
     net                                                              12,482                    15,348

    Other
     assets                                                           21,928                    24,067
                                                                      ------                    ------

    Total
     assets                                                         $136,618                  $161,071
                                                                    ========                  ========


    Liabilities and stockholders' deficit

    Current liabilities:

    Accounts
     payable                                                          $6,054                    $6,089

    Accrued
     expenses                                                         15,127                    22,155

    Long-
     term
     debt
     and
     obligations,
     current
     portion                                                             374                     4,144

    Other
     current
     liabilities                                                         768                     2,581

    Deferred
     gain on
     pooled
     patents
     agreement                                                             -                   21,000
                                                                         ---                   ------

    Total
     current
     liabilities                                                      22,323                    55,969

    Long-
     term
     liabilities                                                     135,341                   136,266

    Total
     stockholders'
     deficit                                                        (21,046)                 (31,164)
                                                                     -------                   -------

    Total
     liabilities
     and
     stockholders'
     deficit                                                        $136,618                  $161,071
                                                                    ========                  ========


                                           SEQUENOM, INC.

                          CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                            (Unaudited)

                                           (In thousands)

                                                                          Six Months Ended

                                                                            June 30,

                                                                               2015             2014
                                                                               ----             ----

    Operating activities

    Net earnings (loss)                                                      $5,272        $(11,221)

    Adjustments to reconcile net earnings (loss) to net cash used in
     operating activities:

    Gain on pooled patents agreement                                       (21,000)               -

    Loss from discontinued operations,
     net of tax                                                                   -        (13,812)

    Share-based compensation                                                  3,407            6,467

    Depreciation and amortization                                             5,716            6,363

    Non-cash restructuring costs and
     other charges                                                              386            1,885

    Other non-cash items                                                        576              568

    Changes in operating assets and liabilities:

    Accounts receivable                                                       3,338          (2,987)

    Inventories                                                               2,996            6,592

    Prepaid expenses and other assets                                         (475)           (144)

    Accounts payable and accrued
     expenses                                                               (7,047)         (4,928)

    Deferred taxes (benefit)                                                    342          (6,816)

    Other liabilities                                                       (1,857)           (153)
                                                                             ------             ----

    Net cash used in operating
     activities of continuing operations                                    (8,346)        (18,186)
                                                                             ------          -------

    Investing activities

    Purchases of property, equipment and
     leasehold improvements                                                 (1,626)           (551)

    Purchases of marketable securities                                     (14,996)         (9,994)

    Maturities of marketable securities                                      15,000           14,158

    Net cash received from sale of
     segment                                                                      -          29,853

    Proceeds from pooled patents
     agreement                                                                6,000                -

    Change in restricted cash                                                   500                -
                                                                                ---              ---

    Net cash provided by investing
     activities of continuing operations                                      4,878           33,466
                                                                              -----           ------

    Financing activities

    Payments on term loan and capital
     lease obligations                                                      (3,934)         (3,814)

    Proceeds from common stock issued
     under employee stock plans                                                 282              885


    Net cash used in financing
     activities of continuing operations                                    (3,652)         (2,929)
                                                                             ------           ------

    Discontinued operations

    Net cash provided by operating
     activities of discontinued
     operations                                                                   -           2,816

    Net cash used in investing
     activities of discontinued
     operations                                                                   -           (164)
                                                                                ---            ----

    Net cash provided by discontinued
     operations                                                                   -           2,652
                                                                                ---           -----

    Effect of exchange rate changes on
     cash and cash equivalents                                                 (37)               -
                                                                                ---              ---

    Net increase (decrease) in cash and
     cash equivalents                                                       (7,157)          15,003

    Cash and cash equivalents at
     beginning of period                                                     63,309           61,589

    Cash and cash equivalents at end of
     period                                                                 $56,152          $76,592
                                                                            =======          =======


                                        SEQUENOM, INC.

                                  RECONCILIATION OF CASH BURN

                                          (Unaudited)

                                        (In thousands)

                          Three Months Ended June 30,                Six months ended June 30,
                          ---------------------------                -------------------------

                                     2015                       2014                  2015        2014
                                     ----                       ----                  ----        ----

    Cash Burn:

    Net cash used in
     operating activities          $1,148                     $2,094                $8,346     $18,186

    Purchases of
     property, equipment
     and leasehold
     improvements                   1,337                        146                 1,626         551

    Payments on long-
     term obligations               2,025                      1,908                 3,934       3,814

    Payment of
     convertible note
     exchange transaction
     costs                        (1,605)                         -              (1,605)          -
                                   ------                        ---               ------         ---

    Cash burn(1)                   $2,905                     $4,148               $12,301     $22,551
                                   ======                     ======               =======     =======


            (1) See accompanying Non-GAAP
           Financial Measures section for
              description of adjustments.

http://photos.prnewswire.com/prnvar/20040415/SQNMLOGO

Logo - http://photos.prnewswire.com/prnh/20040415/SQNMLOGO

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/sequenom-inc-reports-financial-results-for-the-second-quarter-of-2015-300124395.html

SOURCE Sequenom, Inc.