SEQUENOM, INC. SAN DIEGO, May 4, 2016 /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 $27.6 million, total accessioned units of 46,400, and a net loss of $13.4 million, or $0.11 per basic and diluted share, for the first quarter of 2016.
http://photos.prnewswire.com/prnvar/20160225/337675LOGO
"During the quarter, we executed on a number of key initiatives designed to return Sequenom to sustainable growth, resulting in quarter over quarter growth in our unit volume," said Dirk van den Boom, Ph.D., President and CEO of Sequenom. "Overall, we made meaningful progress toward achieving our goal of becoming financially self-sustaining while solidifying our position as a leader in reproductive health."
Operational Updates
To date in 2016, Sequenom and Sequenom Laboratories((TM)) made significant progress on several key corporate objectives:
-- Total tests accessioned in the first quarter of 2016 reflect growth of
10% in test volume compared to the fourth quarter of 2015. Sequenom
Laboratories' total noninvasive prenatal test (NIPT) accessions in the
first quarter of 2016 were up 3,900 units sequentially from the fourth
quarter of 2015, for growth of 11%;
-- Completed the consolidation of Sequenom Laboratories' North Carolina
laboratory location into the San Diego laboratory location;
-- Enhanced San Diego laboratory productivity and restructured other key
functions, consistent with the annualized cost reduction goal of greater
than $20 million before the end of 2016;
-- Negotiated in-network contracts with Anthem Blue Cross and Blue Shield
Health Plans for 11 states. Sequenom Laboratories has coverage for over
200 million commercial lives and 46 million lives under Medicaid
programs;
-- Filed a writ of certiorari asking the U.S. Supreme Court to decide if
the claims of Sequenom's '540 patent are directed to patent-eligible
subject matter;
-- Launched Sequenom Laboratories' testing portfolio into the average-risk
pregnancy market and optimized its sales approach to better serve the
obstetrician channel; and
-- Introduced a multi-faceted physician and patient customer experience
program that seeks to provide a best-in-class experience at every step
of the customer journey.
First Quarter 2016 Results
First quarter 2016 revenues of $27.6 million declined 27% from $37.8 million in the first quarter of 2015. Revenues and unit volumes in the first quarter of 2016 were lower than the first quarter of 2015, primarily reflecting the conversion of certain laboratory customers to licensee status under the Pooled Patents Agreement, and a smaller amount available to collect during the first quarter of 2016 for testing services performed in prior periods. This latter factor reflects the improvement in the timeliness of Sequenom Laboratories collections as a result of additional payor contracts. These changes resulted in approximately $10 million in net revenue reduction for the first quarter of 2016 compared to the first quarter of 2015.
Total patient samples accessioned decreased by 12% to 46,400 patient samples during the first quarter of 2016, compared to the prior year's first quarter. Approximately 41,200 of those patient samples accessioned were for NIPT, including the MaterniT(® )21 PLUS, VisibiliT((TM)) and MaterniT(®) GENOME laboratory-developed tests, which is a 9% decrease in testing volume compared to the first quarter of 2015. The decrease in tests accessioned was driven by the conversions of laboratory customers to licensee status, as described above, partially offset by the increase in tests accessioned for patients in the average-risk pregnancy market.
The total volume of tests from Sequenom's core business increased by 7% over the first quarter of 2015, largely as a result of Sequenom Laboratories' entry into the average-risk pregnancy market. In this press release, "core business" refers to Sequenom's revenue and unit volume excluding the effect of the conversion of certain laboratory customers to licensee status in 2015. Notably, the volume of NIPT tests in Sequenom's core business, which includes average-risk pregnancies, increased by 14% for the first quarter of 2016 over the first quarter of 2015.
License revenue was $2.2 million in the first quarter of 2016, compared to $2.1 million for the first quarter of 2015, and $2.3 million in the fourth quarter of 2015. Sequenom continues to expect a total of $10 million in license fee revenue for 2016.
Total cost of revenues decreased to $16.8 million for the first quarter of 2016, compared to $19.3 million for the prior year period. Cost of revenues decreased primarily due to the decrease in test volumes as a result of the conversion of certain laboratory customers to licensee status.
Gross margin for the first quarter of 2016 was 39% compared to gross margin of 49% for the first quarter of 2015. The effect of laboratory customers who converted to licensee status, costs associated with Sequenom Laboratories' laboratory consolidation and restructuring, the impact of entering the average-risk pregnancy market and increased MaterniT GENOME volume largely drove the decrease. Incremental costs related to the laboratory consolidation reduced gross margin for the first quarter of 2016 by 3%. Sequenom continues to expect gross margin to increase for the remaining quarters of 2016.
Total operating expenses for the first quarter of 2016 were $22.1 million, compared to $23.0 million for the first quarter of 2015. Total operating expenses for the first quarter of 2016 were up only slightly from total operating expenses of $21.9 million for the fourth quarter of 2015, due to the costs associated with Sequenom Laboratories' laboratory consolidation and other restructuring activities, which offset the benefit of reduced spending for research and development and general and administrative activities.
Operating loss for the first quarter of 2016 was $11.4 million, compared to operating income of $16.5 million for the same period in 2015. Operating and net income for the first quarter of 2015 included a $21.0 million gain on the Pooled Patents Agreement with Illumina. Net loss for the first quarter of 2016 was $13.4 million or $0.11 per basic and diluted share, as compared to net income of $14.3 million, or $0.11 per diluted share, and $0.12 per basic share for the same period in 2015.
Cash burn for the first quarter of 2016 was $10.4 million, compared to $9.4 million in the same period of 2015 and $4.7 million in the fourth quarter of 2015. Cash burn increased in the first quarter of 2016 primarily due to reduced revenue collected for testing services performed in prior periods and delays in collections related to the launch of tests into the average-risk pregnancy market. Cash burn in the first quarter also included semi-annual interest payments on Sequenom's convertible debt.
Unrecorded accounts receivable for tests performed and recognized on a cash basis are estimated to be $16 million to $18 million as of March 31, 2016, the same as the estimate as of December 31, 2015.
As of March 31, 2016, cash, cash equivalents, and marketable securities totaled $66.1 million.
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 March 31, 2016. Management uses non-GAAP financial measures because it believes that a cash flow metric incorporating cash used in 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 in operating activities, purchases of property, equipment and leasehold improvements, and payments on long-term obligations. 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 hosted by Dr. Dirk van den Boom, President and CEO of Sequenom, and other members of senior management, will take place on Wednesday, May 4, 2016, at 5:00 p.m. ET (2:00 p.m. PT) and will be webcast live on the Sequenom website.
Call participants should dial 877-883-0383 (U.S. / Canada) or 412-902-6506 (other countries). Please use code 4043466. A telephonic replay will be available through June 3, 2016 by dialing 877-344-7529 (US toll free), 855-669-9658 (Canada toll free), or 412-317-0088 (international toll), and entering the conference number 10085264.
The conference call webcast is also accessible through the "Investors" section of the Sequenom website at http://sequenom.investorroom.com/webcasts
About Sequenom
Sequenom, Inc. (NASDAQ: SQNM) is a pioneering genetic testing company dedicated to women's health through the development of innovative products and services. The Company serves patients and physicians by providing early patient management information. For more information, 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(®), HerediT(®) UNIVERSAL, MaterniT(®) GENOME, MaterniT(®) 21 PLUS, NextView(®), 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(®), MaterniT(®) GENOME, MaterniT(®) 21PLUS, NextView(®), SensiGene(®), VisibiliT((TM)) and Sequenom Laboratories((TM)) 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 initiatives designed to return Sequenom to sustainable growth, Sequenom's goal of becoming financially self-sustaining, solidifying Sequenom Laboratories' position as a leader in reproductive health and a multi-faceted physician and patient customer experience program that seeks to provide a best-in-class experience at every step of the customer journey. 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 Sequenom's filings with the Securities and Exchange Commission, including without limitation Sequenom's most recent Annual Report on Form 10-K, Sequenom's most recent Quarterly Reports on Form 10-Q, Sequenom's most recently filed Current Reports on Form 8-K 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. Sequenom 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
------------------
March 31, March 31,
2016 2015
---- ----
Revenues:
Diagnostic
services,
net $25,410 $35,703
License 2,160 2,102
----- -----
Total
revenues 27,570 37,805
------ ------
Costs and expenses:
Cost of
revenues 16,804 19,306
Selling and
marketing 8,510 8,486
Research
and
development 4,901 5,869
General and
administrative 7,854 8,676
Restructuring
costs 859 -
--- ---
Total costs
and
expenses 38,928 42,337
Gain on
pooled
patents
agreement - 21,000
--- ------
Operating
(loss)
income (11,358) 16,468
Interest
expense (2,057) (1,994)
Interest
income 38 11
Other
income
(expense),
net 23 (125)
--- ----
(Loss)
income
before
income
taxes (13,354) 14,360
Income tax
expense (95) (76)
--- ---
Net (loss)
income $(13,449) $14,284
======== =======
Net (loss) income per common
share, basic
Net (loss)
income per
share $(0.11) $0.12
====== =====
Weighted
average
number of
shares
outstanding,
basic 118,859 117,737
======= =======
Net (loss) income per common
share, diluted
Net (loss)
income per
share $(0.11) $0.11
====== =====
Weighted
average
number of
shares
outstanding,
diluted 118,859 146,642
======= =======
SEQUENOM, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
March 31, December 31,
2016 2015
---- ----
Assets
Current assets:
Cash,
cash
equivalents,
and
marketable
securities $66,057 $76,170
Accounts
receivable,
net 6,950 6,421
Inventories 2,994 2,417
Other
current
assets
and
prepaid
expenses 2,960 2,943
Total
current
assets 78,961 87,951
Property,
equipment,
and
leasehold
improvements,
net 7,651 10,059
Other
assets 18,004 18,718
Total
assets $104,616 $116,728
======== ========
Liabilities and
stockholders' deficit
Current liabilities:
Accounts
payable $7,078 $5,234
Accrued
expenses 12,523 15,368
Long-
term
debt
and
obligations,
current
portion 311 316
Other
current
liabilities 578 589
Total
current
liabilities 20,490 21,507
Long-
term
liabilities 134,054 133,619
Total
stockholders'
deficit (49,928) (38,398)
------- -------
Total
liabilities
and
stockholders'
deficit $104,616 $116,728
======== ========
SEQUENOM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Three Months Ended
------------------
March 31, March 31,
2016 2015
Operating activities
Net (loss)
income $(13,449) $14,284
Adjustments to reconcile net
(loss) income to net cash
used in operating
activities:
Share-
based
compensation 1,694 1,542
Depreciation
and
amortization 2,175 2,892
Other non-
cash
items 343 236
Gain on
pooled
patents
agreement - (21,000)
Changes in operating assets
and liabilities:
Accounts
receivable (529) 1,468
Inventories (148) 1,737
Prepaid
expenses
and other
assets 761 578
Accounts
payable
and
accrued
expenses (1,066) (7,715)
Other
liabilities 146 (1,220)
Net cash
used in
operating
activities (10,073) (7,198)
------- ------
Investing activities
Purchases
of
property,
equipment
and
leasehold
improvements (200) (289)
Purchases
of
marketable
securities (9,967) (10,007)
Maturities
and sales
of
marketable
securities 15,009 10,052
Proceeds
from
pooled
patents
agreement - 6,000
Net cash
provided
by
investing
activities 4,842 5,756
----- -----
Financing activities
Payments
on term
loan and
capital
lease
obligations (87) (1,909)
Proceeds
from
common
stock
issued
under
employee
stock
plans 223 177
Net cash
provided
by (used
in)
financing
activities 136 (1,732)
--- ------
Effect of
exchange
rate
changes
on cash
and cash
equivalents - (45)
Net
decrease
in cash
and cash
equivalents (5,095) (3,219)
Cash and
cash
equivalents
at
beginning
of period 50,344 63,309
Cash and
cash
equivalents
at end of
period $45,249 $60,090
======= =======
SEQUENOM, INC.
RECONCILIATION OF CASH BURN
(Unaudited)
(In thousands)
Three Months Ended
------------------
March 31, March 31,
2016 2015
---- ----
Cash Burn:
Net cash
used in
operating
activities $10,073 $7,198
Purchases
of
property,
equipment
and
leasehold
improvements 200 289
Payments on
term loan
and
capital
lease
obligations 87 1,909
Cash burn
(1) $10,360 $9,396
======= ======
(1) See accompanying Non-GAAP Financial Measures section for description of adjustments
Logo - http://photos.prnewswire.com/prnh/20160225/337675LOGO
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/sequenom-inc-reports-first-quarter-2016-results-300262977.html
SOURCE Sequenom, Inc.
