Affymetrix, Inc., (NASDAQ:AFFX) today reported its operating
results for the third quarter of 2015.
Results for the three months ended September 30,
2015:
- Total revenue was $86.5 million,
compared to $87.1 million in third quarter of 2014.
- Reported revenue decreased 0.6%,
however, increased 3.6% on a constant currency basis.
- GAAP net loss was $5.3 million, or
$0.07 per diluted share, as compared to a GAAP net income of $2.4
million, or $0.03 per diluted share, in the third quarter of 2014,
a decrease of $7.7 million or $0.10 per diluted share.
- 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.
- Non-GAAP net income was $8.0 million,
or $0.10 per diluted share, compared to a non-GAAP net income of
$6.3 million, or $0.08 per diluted share, for the third 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.
- Total balance in cash and cash
equivalents was $107.6 million, short term investments were $30.0
million and senior debt was $20.0 million as of September 30,
2015.
- 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 $20.0 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 third quarter of 2015 was $80.0 million
and service and other revenue was $6.5 million. This compares to
product revenue of $78.1 million and service and other revenue of
$9.0 million in the third quarter of 2014. Product revenue for the
third quarter of 2015 included consumable revenue of $75.7 million
and instrument revenue of $4.3 million. Product revenue for the
third quarter of 2014 included consumable revenue of $73.7 million
and instrument revenue of $4.4 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 the third quarter of 2015 was 65% compared to 61% 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 third quarter of 2015, operating expenses were $59.5
million on a GAAP basis as compared to $46.6 million in the same
period of 2014. GAAP operating expenses included $10.0 million of
litigation settlement. Excluding non-GAAP adjustments, such as
litigation costs and the amortization of acquired intangible
assets, non-GAAP operating expenses for the third quarter of 2015
were $47.4 million, compared to an adjusted total of $44.1 million
in the same period of 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.
“We generated strong growth in our clinical and eBioscience
businesses in Q3 which grew by more than 30% and 11% respectively,
the strongest organic growth for eBioscience since we completed the
acquisition more than three years ago,” stated Frank Witney,
President and CEO. “We reiterate our FY15 guidance for mid-single
digit revenue growth. As a result of our strong gross margin and
continued cost controls, we are raising our adjusted EBITDA
guidance to 18-20% for 2015.”
Recent developments:
- The Green Super Rice project selected
the Company’s Axiom Solution as the genotyping platform-of-choice
which it will use it to build a genotyping program for large-scale
molecular breeding activities within the international rice
research community. The goal of this project, which is coordinated
by the Chinese Academy of Agricultural Sciences and funded by
the by the Chinese government and the Bill & Melinda Gates
Foundation, is to develop at least fifteen new rice varieties and
deliver them to small-hold farmers in 16 countries
in Africa and Asia within the next three years. The
long-term objective of the project is to benefit at least 20
million resource-limited rice farmers and to boost rice
productivity by 20% in the target countries.
- Introduced the Axiom® Transplant
Genotyping Array, designed in collaboration with an international
team of surgeons and scientists for research studies to improve
transplantation success and individualize donor/patient selection
and treatment. The array includes more than 30,000 variants that
may contribute to transplant rejection or other complications.
Researchers will also find the array useful in the study of
immunology, disease and drug treatments; meta-analyses may be
conducted, combining data with other genotype databases such as the
UK Biobank cohort, a collection of more than 500,000 volunteers
genotyped using the Affymetrix UK Biobank Axiom Array.
- The Company signed a distribution
agreement under which eBioscience, a business unit of
Affymetrix, will sell Luminex’s MAGPIX®, Luminex® 200™ and
FLEXMAP 3D® multiplexed assay platforms in specified countries
in the Americas, Asia and Europe. Affymetrix will sell the Luminex
instruments together with ProcartaPlex® multiplexed
immunoassays and QuantiGene® Plex multiplexed quantitative
gene expression assays, offering complete solutions to customers
working in the fields of drug discovery and development,
immuno-oncology and translational research. Through the first nine
months of 2015 the ProcartaPlex and QuantiGene products lines have
grown by 30% and 15% respectively.
- The Company expanded
its QuantiGene® Single-plex assay for PCR-free gene
expression measurement to include a 384-well format that is easily
automatable for high-throughput compound screening. The
easy-to-use, high-sensitivity assay measures gene expression with
minimal sample preparation, using branched DNA for signal
amplification.
Affymetrix will host a conference call on Wednesday, October 28,
2015 at 2:00 p.m. PT to review its operating results for the third
quarter of 2015. A live webcast can be accessed by visiting the
Investor Relations section of the Company's website at www.affymetrix.com. In addition, investors
and other interested parties can listen by dialing domestic: (877)
407-8291, international: (201) 689-8345.
A replay of this call will be available from 5:00 p.m. PT on
October 28, 2015 until 8:00 p.m. PT on November 4, 2015 at the
following numbers: domestic: (877) 660-6853, international: (201)
612-7415. The conference call passcode to access the replay is
13621453. An archived webcast of the conference call will be
available under the Investor Relations section of the Company's
website.
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
94,500 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
1,200 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, integration of and synergies related to
eBioscience, 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 third 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 third 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) September
30, December 31, 2015 2014
ASSETS: (Note 1) Current assets: Cash and cash equivalents $
107,593 $ 79,923 Short-term investments 30,000 — Accounts
receivable, net 47,849 46,896 Inventories, net—short-term portion
53,391 50,676 Deferred tax assets—short-term portion 3,709 3,778
Prepaid expenses and other current assets 8,580
9,197 Total current assets 251,122 190,470 Property
and equipment, net 21,365 18,087 Inventories, net—long-term portion
4,816 5,956 Goodwill 155,515 156,178 Intangible assets, net 106,374
106,183 Deferred tax assets—long-term portion 306 303 Other
long-term assets 7,802 9,371 Total
assets $ 547,300 $ 486,548
LIABILITIES AND
STOCKHOLDERS’ EQUITY: Current liabilities: Accounts payable and
accrued liabilities $ 59,392 $ 53,063 Current portion of long-term
debt 4,000 4,000 Deferred revenue—short-term portion 7,534
9,210 Total current liabilities 70,926 66,273
Deferred revenue—long-term portion 2,236 2,372 4.00% notes 105,000
105,000 Term loan—long-term portion 15,950 18,950 Other long-term
liabilities 20,694 21,626 Total
liabilities 214,806 214,221
Stockholders’ equity: Common stock 799 743 Additional paid-in
capital 843,120 781,747 Accumulated other comprehensive income
(7,930 ) (612 ) Accumulated deficit (503,495 )
(509,551 ) Total stockholders’ equity 332,494
272,327 Total liabilities and stockholders’ equity $ 547,300
$ 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 Nine Months Ended
September 30, September 30, 2015
2014 2015 2014 REVENUE: Product
sales $ 80,041 $ 78,069 $ 239,305 $ 227,644 Services and other
6,489 9,017 24,909
27,845 Total revenue 86,530 87,086
264,214 255,489
COSTS AND
EXPENSES: Cost of product sales 26,760 29,140 81,501 89,211
Cost of services and other 4,257 6,426 15,284 19,358 Research and
development 13,003 12,926 38,035 37,443 Selling, general and
administrative 36,526 33,718 107,599 108,546 Litigation settlement
10,000 — 10,000
5,100 Total costs and expenses 90,546
82,210 252,419 259,658 Income
(loss) from operations (4,016 ) 4,876 11,795 (4,169 ) Other income
(expense), net 74 (1,008 ) (324 ) 703 Interest expense 1,468
1,595 4,422 4,972
Income (loss) before income taxes (5,410 ) 2,273 7,049 (8,438 )
Income tax expense (benefit) (74 ) (111 ) 993
563 Net income (loss) $ (5,336 ) $ 2,384
$ 6,056 $ (9,001 ) Basic net income (loss) per
common share $ (0.07 ) $ 0.03 $ 0.08 $ (0.12 )
Diluted net income (loss) per common share $ (0.07 ) $ 0.03
$
0.07
$ (0.12 ) Shares used in computing basic net income
(loss) per common share 79,856 73,413
77,930
72,955 Shares used in computing diluted net
income (loss) per common share 79,856 76,315
80,908
72,955
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 Nine Months
Ended September 30, September 30, 2015
2014 2015 2014 GAAP net income
(loss) - basic and diluted $ (5,336 ) $ 2,384 $ 6,056 $ (9,001 )
Amortization of inventory fair value adjustment — — — 4,666
Amortization of acquired intangible assets 3,358 3,913 10,304
12,593 Litigation settlement 10,000 —
10,000 5,100 Non-GAAP net income - basic and diluted
$ 8,022 $ 6,297 $ 26,360 $ 13,358 Non-GAAP
basic net income per common share $ 0.10 $ 0.09 $
0.34
$ 0.18 Non-GAAP diluted net income per common share $ 0.10
$ 0.08 $
0.33
$ 0.18 Shares used in computing Non-GAAP basic net
income per common share 79,856 73,413
77,930
72,955 Shares used in computing Non-GAAP diluted net
income per common share (Note 1) 79,856 76,315
80,908
72,955 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 September 30,
Nine Months Ended September 30, 2015
2014 2015 2014 GAAP total gross margin
$ 55,513 64 % $ 51,520 59 % $ 167,429 63 % $
146,920 58 % Amortization of inventory fair value adjustment
— — % — — % — — % 4,666 2 % Amortization of acquired intangible
assets 1,253 1 % 1,352 2 % 3,768 1 %
4,073 1 % Non-GAAP total gross margin $ 56,766 65 % $ 52,872 61 % $
171,197 64 % $ 155,659 61 %
ITEMIZED RECONCILIATION BETWEEN GAAP
AND NON-GAAP OPERATING EXPENSES
Three Months Ended Nine Months
Ended September 30, September 30, 2015
2014 2015 2014 Total GAAP
operating expenses $ 59,529 $ 46,644 $ 155,634 $ 151,089
Amortization of acquired intangible assets (2,105 ) (2,561 ) (6,536
) (8,520 ) Litigation settlement (10,000 ) —
(10,000 ) (5,100 ) Total Non-GAAP operating expenses
$ 47,424 $ 44,083 $ 139,098 $ 137,469
ITEMIZED RECONCILIATION BETWEEN GAAP
AND NON-GAAP ADJUSTED EBITDA AS PERCENTAGE OF REVENUE
Three Months Ended Nine Months
Ended September 30, September 30, 2015
2014 2015 2014 GAAP net income
(loss) $ (5,336 ) $ 2,384 $ 6,056 $ (9,001 ) Depreciation and
amortization 5,348 7,318 16,222 23,844 Amortization of inventory
fair value adjustment — — — 4,666 Interest expense, net 1,430 1,588
4,399 4,919 Income tax provision (74 ) (111 )
993 563 EBITDA 1,368 11,179 27,670 24,991
Adjustments to EBITDA: Share-based compensation 3,655 3,164
10,943 9,436 (Gain) loss on foreign currency (19 ) 1,472 912 1,807
Litigation charges 10,967 801 11,279 9,160 (Gain) loss on sales of
securities 1 (444 ) (53 ) (1,684 ) Other adjustments (18 )
(14 ) (532 ) (772 ) Adjusted EBITDA $ 15,954
$ 16,158 $ 50,219 $ 42,938
Revenue $ 86,530 $ 87,086 $
264,214 $ 255,489 Adjusted EBITDA as
percentage of revenue 18 % 19 % 19 % 17
%
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151028006623/en/
Affymetrix, Inc.Doug Farrell, 408-731-5285Vice President of
Investor Relations
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