Revenue growth, gross margin expansion and strong
cash reimbursement support progress toward goal of
profitability
CombiMatrix Corporation (NASDAQ:CBMX), a family health molecular
diagnostics company specializing in DNA-based reproductive health
and pediatric testing services, today reported financial results
for the three and six months ended June 30, 2016, and provided a
business update.
“During the second quarter we made excellent
progress toward our goal of achieving profitability with revenue
growth, expanded gross margin, improved cash collections and a
narrowed operating loss,” said Mark McDonough, CombiMatrix
President and CEO. “Diagnostic services revenues grew 21%,
driven by a 32% increase in reproductive health revenues reflecting
increased average revenue per test for miscarriage analysis and
prenatal testing.
“We are prudently managing expenses while
focusing on our commercial organization to support continued
growth,” Mr. McDonough added. “Our operating expenses
increased by 5% on 22% total revenue growth and we achieved record
cash reimbursement of $3 million, representing 95% of total
revenues. We also are reporting an 840 basis point
improvement in gross margin to 53%, our second consecutive quarter
of gross margin above 50%.
“We expect improved financial and operational
performance throughout 2016 and 2017 with continued growth in
revenue and test volume, along with consistent cash reimbursement
and prudent expense management,” added Mr. McDonough. “Given
our current outlook, we expect to reach positive cash flow from
operations by the fourth quarter of 2017.”
Second Quarter Financial and Operating
Highlights (all comparisons are with the second quarter of
2015)
- Total revenues of $3.1 million, up 22%
- Reproductive health revenues of $2.2 million, up 32%
- Total test volume of 2,780, up 7%
- Reproductive health test volume of 1,403, up 9%
- Gross margin of 53.0%, up 840 basis points
- Number of billable customers of 261, up 16.5%
- Number of customers sending 50 or more tests reaching 10, up
100%
- Cash collections of 95% of total revenue to $3.0 million, up
21%
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|
|
Volumes |
|
Revenues (in
000's) |
|
Average Revenue /
Test |
|
|
|
|
Q2
'16 |
|
Q2
'15 |
|
#
Δ |
|
% Δ |
|
Q2
'16 |
|
Q2
'15 |
|
$
Δ |
|
% Δ |
|
Q2
'16 |
|
Q2
'15 |
|
$
Δ |
|
% Δ |
|
|
Prenatal |
|
|
302 |
|
|
|
340 |
|
|
|
(38 |
) |
|
|
(11 |
%) |
|
$ |
472 |
|
|
$ |
424 |
|
|
$ |
48 |
|
|
|
11 |
% |
|
$ |
1,566.41 |
|
|
$ |
1,247.76 |
|
|
$ |
319 |
|
|
|
26 |
% |
|
|
Miscarriage analysis |
|
|
901 |
|
|
|
916 |
|
|
|
(15 |
) |
|
|
(2 |
%) |
|
|
1,457 |
|
|
|
1,190 |
|
|
|
267 |
|
|
|
22 |
% |
|
$ |
1,616.72 |
|
|
$ |
1,299.32 |
|
|
$ |
317 |
|
|
|
24 |
% |
|
|
PGS |
|
|
200 |
|
|
|
30 |
|
|
|
170 |
|
|
|
567 |
% |
|
|
252 |
|
|
|
42 |
|
|
|
210 |
|
|
|
500 |
% |
|
$ |
1,258.55 |
|
|
$ |
1,389.17 |
|
|
$ |
(131 |
) |
|
|
(9 |
%) |
|
|
Subtotal - reproductive health |
|
|
1,403 |
|
|
|
1,286 |
|
|
|
117 |
|
|
|
9 |
% |
|
|
2,181 |
|
|
|
1,656 |
|
|
|
525 |
|
|
|
32 |
% |
|
$ |
1,554.84 |
|
|
$ |
1,287.78 |
|
|
$ |
267 |
|
|
|
21 |
% |
|
|
Pediatric |
|
|
497 |
|
|
|
581 |
|
|
|
(84 |
) |
|
|
(14 |
%) |
|
|
558 |
|
|
|
630 |
|
|
|
(72 |
) |
|
|
(11 |
%) |
|
$ |
1,121.83 |
|
|
$ |
1,083.59 |
|
|
$ |
38 |
|
|
|
4 |
% |
|
|
Subtotal - all arrays |
|
|
1,900 |
|
|
|
1,867 |
|
|
|
33 |
|
|
|
2 |
% |
|
|
2,739 |
|
|
|
2,286 |
|
|
|
453 |
|
|
|
20 |
% |
|
$ |
1,441.57 |
|
|
$ |
1,224.24 |
|
|
$ |
217 |
|
|
|
18 |
% |
|
|
Non-array tests |
|
|
880 |
|
|
|
732 |
|
|
|
148 |
|
|
|
20 |
% |
|
|
310 |
|
|
|
238 |
|
|
|
72 |
|
|
|
30 |
% |
|
$ |
352.27 |
|
|
$ |
325.14 |
|
|
$ |
27 |
|
|
|
8 |
% |
|
|
Total - all tests |
|
|
2,780 |
|
|
|
2,599 |
|
|
|
181 |
|
|
|
7 |
% |
|
|
3,049 |
|
|
|
2,524 |
|
|
|
525 |
|
|
|
21 |
% |
|
$ |
1,096.90 |
|
|
$ |
971.23 |
|
|
$ |
126 |
|
|
|
13 |
% |
|
|
Royalties |
|
58 |
|
|
|
25 |
|
|
|
33 |
|
|
|
132 |
% |
|
|
|
|
|
|
|
|
|
|
Total revenues |
$ |
3,107 |
|
|
$ |
2,549 |
|
|
$ |
558 |
|
|
|
22 |
% |
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of
arrays |
|
|
68.3 |
% |
|
|
71.8 |
% |
|
|
|
|
|
|
89.8 |
% |
|
|
90.6 |
% |
|
|
|
|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Volumes |
|
Revenues (in
000's) |
|
Average Revenue /
Test |
|
|
|
|
6 Mo's.
'16 |
|
6 Mo's.
'15 |
|
#
Δ |
|
% Δ |
|
6 Mo's.
'16 |
|
6 Mo's.
'15 |
|
$
Δ |
|
% Δ |
|
6 Mo's.
'16 |
|
6 Mo's.
'15 |
|
$
Δ |
|
% Δ |
|
|
Prenatal |
|
|
566 |
|
|
|
664 |
|
|
|
(98 |
) |
|
|
(15 |
%) |
|
$ |
794 |
|
|
$ |
847 |
|
|
$ |
(53 |
) |
|
|
(6 |
%) |
|
$ |
1,403.13 |
|
|
$ |
1,274.86 |
|
|
$ |
128 |
|
|
|
10 |
% |
|
|
Miscarriage analysis |
|
|
1,896 |
|
|
|
1,798 |
|
|
|
98 |
|
|
|
5 |
% |
|
|
3,079 |
|
|
|
2,322 |
|
|
|
757 |
|
|
|
33 |
% |
|
$ |
1,623.76 |
|
|
$ |
1,291.57 |
|
|
$ |
332 |
|
|
|
26 |
% |
|
|
PGS |
|
|
367 |
|
|
|
30 |
|
|
|
337 |
|
|
|
1123 |
% |
|
|
473 |
|
|
|
40 |
|
|
|
433 |
|
|
|
1083 |
% |
|
$ |
1,290.67 |
|
|
$ |
1,324.00 |
|
|
$ |
(33 |
) |
|
|
(3 |
%) |
|
|
Subtotal - reproductive health |
|
|
2,829 |
|
|
|
2,492 |
|
|
|
337 |
|
|
|
14 |
% |
|
|
4,346 |
|
|
|
3,209 |
|
|
|
1,137 |
|
|
|
35 |
% |
|
$ |
1,536.41 |
|
|
$ |
1,287.50 |
|
|
$ |
249 |
|
|
|
19 |
% |
|
|
Pediatric |
|
|
949 |
|
|
|
1,048 |
|
|
|
(99 |
) |
|
|
(9 |
%) |
|
|
1,058 |
|
|
|
1,128 |
|
|
|
(70 |
) |
|
|
(6 |
%) |
|
$ |
1,114.41 |
|
|
$ |
1,076.74 |
|
|
$ |
38 |
|
|
|
3 |
% |
|
|
Subtotal - all arrays |
|
|
3,778 |
|
|
|
3,540 |
|
|
|
238 |
|
|
|
7 |
% |
|
|
5,404 |
|
|
|
4,337 |
|
|
|
1,067 |
|
|
|
25 |
% |
|
$ |
1,430.41 |
|
|
$ |
1,225.11 |
|
|
$ |
205 |
|
|
|
17 |
% |
|
|
Non-array tests |
|
|
1,650 |
|
|
|
1,404 |
|
|
|
246 |
|
|
|
18 |
% |
|
|
575 |
|
|
|
474 |
|
|
|
101 |
|
|
|
21 |
% |
|
$ |
348.48 |
|
|
$ |
337.61 |
|
|
$ |
11 |
|
|
|
3 |
% |
|
|
Total - all tests |
|
|
5,428 |
|
|
|
4,944 |
|
|
|
484 |
|
|
|
10 |
% |
|
|
5,979 |
|
|
|
4,811 |
|
|
|
1,168 |
|
|
|
24 |
% |
|
$ |
1,101.52 |
|
|
$ |
973.19 |
|
|
$ |
128 |
|
|
|
13 |
% |
|
|
Royalties |
|
100 |
|
|
|
67 |
|
|
|
33 |
|
|
|
49 |
% |
|
|
|
|
|
|
|
|
|
|
Total revenues |
$ |
6,079 |
|
|
$ |
4,878 |
|
|
$ |
1,201 |
|
|
|
25 |
% |
|
|
|
|
|
|
|
|
|
|
Percentage of
arrays |
|
|
69.6 |
% |
|
|
71.6 |
% |
|
|
|
|
|
|
90.4 |
% |
|
|
90.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Results
Three Months Ended June 30, 2016 and 2015
Total revenues for the second quarter of 2016
increased 22% to $3.1 million from $2.5 million for the second
quarter of 2015. Revenues for the second quarter of 2016 were
comprised of $3.05 million of diagnostic services revenue and
$58,000 in royalties. Reproductive health diagnostic test
revenue, which includes prenatal microarrays, miscarriage analysis
and PGS, increased 32% to $2.2 million and related testing volumes
increased 9% to 1,403. The second quarter 2016 revenue
increase was driven primarily by higher average revenue per test
particularly for miscarriage analysis and prenatal microarray
tests, as well as by an increase in the number of billable
customers.
Total operating expenses were $4.3 million for
the second quarter of 2016 compared with $4.1 for the prior year
period. The increase was due primarily to higher general &
administrative expenses from increased severance and bonus
accruals, an increase in research & development expenses due to
development and launch of new diagnostic testing platforms, and
higher cost of services as a result of higher test volume.
Gross margin for the second quarter of 2016 improved to 53.0% from
44.6% for the second quarter of 2015.
The net loss attributable to common stockholders
for the second quarter of 2016 was $1.2 million, or $0.89 per
share, improved by $377,000 from a net loss attributable to common
stockholders for the second quarter of 2015 of $1.6 million, or
$1.91 per share.
Six Months Ended June 30, 2016 and 2015
Total revenues for the first six months of 2016
increased 25% to $6.1 million from $4.9 million for the first six
months of 2015. Revenues for the first six months of 2016
included $6.0 million in diagnostic services revenue and $100,000
in royalty revenues.
Operating expenses for the first six months of
2016 were $8.8 million compared with $8.2 million from the
prior-year period, with the increase mainly due to higher cost of
services resulting from increased testing volumes. Gross
margin improved to 52.3% for the first six months of 2016 from
45.4% for the first six months of 2015.
The net loss attributable to common stockholders
for the first six months of 2016 was $4.4 million, or $3.89 per
share, compared to $4.3 million, or $5.23 per share in 2015.
The higher net loss attributable to common stockholders in
2016 reflected one-time, non-cash charges of $1.9 million related
to deemed dividends from the issuance of Series F convertible
preferred stock and warrants in the $8.0 million public offering
that closed on March 24, 2016. This increase was partially
offset by the reversal of the $890,000 Series E deemed dividend
recognized in 2015 from the repurchase of those securities upon
closing of our public offering, partially reduced by the $656,000
deemed dividend paid to the Series E investors in February of
2016.
The Company reported $5.2 million in cash, cash
equivalents and short-term investments as of June 30, 2016,
compared with $3.9 million as of December 31, 2015. The
Company used $0.9 million and $2.5 million in cash to fund
operating activities during the quarter and six months ended June
30, 2016, respectively, compared with $1.5 million and $2.6 million
used to fund operating activities during the comparable 2015
periods, respectively. The significant decreases in net cash
used to fund operating activities for the 2016 periods resulted
primarily from improved cash reimbursement of $3.0 million and $5.4
million for the three and six months ended June 30, 2016,
respectively, compared with $2.5 million and $4.6 million for the
three and six months ended June 30, 2015, respectively.
Conference Call and Webcast
CombiMatrix will hold an investment-community
conference call and audio webcast today beginning at 4:30 p.m.
Eastern time (1:30 p.m. Pacific time) to discuss these results and
answer questions. The conference call dial-in numbers are (866)
634-2258 for domestic callers and (330) 863-3454 for international
callers. A live webcast of the call will be available at
http://investor.combimatrix.com/events.cfm.
A recording of the call will be available for
seven days beginning approximately two hours after the completion
of the call by dialing (855) 859-2056 for domestic callers or (404)
537-3406 for international callers, and entering passcode 53433797.
The webcast of the call will be archived for 30 days on the
Company’s website at
http://investor.combimatrix.com/events.cfm.
About CombiMatrix
Corporation
CombiMatrix Corporation is a family health
focused company that provides valuable molecular diagnostic
solutions and comprehensive clinical support to foster the highest
quality in patient care. CombiMatrix specializes in
pre-implantation genetic diagnostics and screening, miscarriage
analysis, prenatal and pediatric diagnostics, offering DNA-based
testing for the detection of genetic abnormalities beyond what can
be identified through traditional methodologies. CombiMatrix
performs genetic testing utilizing a variety of advanced
cytogenomic techniques, including chromosomal microarray,
standardized and customized fluorescence in situ hybridization
(FISH) and high-resolution karyotyping. CombiMatrix is
dedicated to providing high-level clinical support for healthcare
professionals in order to help them incorporate the results of
complex genetic testing into patient-centered medical decision
making. Additional information about CombiMatrix is available at
www.combimatrix.com or by calling (800) 710-0624.
Safe Harbor Statement under the Private
Securities Litigation Reform Act of 1995
This press release contains forward-looking
statements within the meaning of the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995. These
statements are based upon our current expectations, speak only as
of the date hereof and are subject to change. All statements, other
than statements of historical fact included in this press release,
are forward-looking statements. Forward-looking statements can
often be identified by words such as "anticipates," "expects,"
"intends," "plans," "goal," "predicts," "believes," "seeks,"
"estimates," "may," "will," "should," "would," "could,"
"potential," "continue," "ongoing," similar expressions, and
variations or negatives of these words and include, but are not
limited to, statements regarding projected results of operations,
including projected cash flow-positive operating results,
management's future business, operational and strategic plans,
recruiting efforts and test menu expansion. These forward-looking
statements are not guarantees of future results and are subject to
risks, uncertainties and assumptions that could cause our actual
results to differ materially and adversely from those expressed in
any forward-looking statement. The risks and uncertainties referred
to above include, but are not limited to: our ability to grow
revenue and improve gross margin; delays in achieving cash
flow-positive operating results; the risk that test volumes and
reimbursements level off or decline; the risk that payors decide to
not cover our tests or to reduce the amounts they are willing to
pay for our tests; the risk that we will not be able to grow our
business as quickly as we need to; the inability to raise capital;
the loss of members of our sales force; our ability to successfully
expand the base of our customers, add to the menu of our diagnostic
tests, develop and introduce new tests and related reports, expand
and improve our current suite of services, optimize the
reimbursements received for our microarray testing services, and
increase operating margins by improving overall productivity and
expanding sales volumes; our ability to successfully accelerate
sales, steadily increase the size of our customer rosters in all of
our genetic testing markets; our ability to attract and retain
a qualified sales force in wider geographies; our ability to ramp
production from our sales; rapid technological change in our
markets; changes in demand for our future services; legislative,
regulatory and competitive developments; general economic
conditions; and various other factors. Further information on
potential factors that could affect our financial results is
included in our Annual Report on Form 10-K, Quarterly Reports of
Form 10-Q, and in other filings with the Securities and
Exchange Commission. We undertake no obligation to revise or update
publicly any forward-looking statements for any reason, except as
required by law.
Company Contact: |
|
Investor Contact: |
Mark McDonough |
|
LHA |
President & CEO, CombiMatrix Corporation |
|
Jody Cain |
(949) 753-0624 |
|
(310) 691-7100 |
|
|
jcain@lhai.com |
Tables to Follow
COMBIMATRIX
CORPORATIONCONSOLIDATED STATEMENTS OF
OPERATIONS(In thousands, except share and per
share information)(Unaudited)
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
|
|
|
June
30, |
|
June 30, |
|
|
|
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
Diagnostic
services |
|
$ |
3,049 |
|
|
$ |
2,524 |
|
|
$ |
5,979 |
|
|
$ |
4,811 |
|
|
|
Royalties |
|
|
58 |
|
|
|
25 |
|
|
|
100 |
|
|
|
67 |
|
|
|
Total revenues |
|
|
3,107 |
|
|
|
2,549 |
|
|
|
6,079 |
|
|
|
4,878 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
Cost of services |
|
|
1,432 |
|
|
|
1,398 |
|
|
|
2,851 |
|
|
|
2,628 |
|
|
|
Research and
development |
|
|
149 |
|
|
|
62 |
|
|
|
292 |
|
|
|
219 |
|
|
|
Sales and
marketing |
|
|
1,141 |
|
|
|
1,173 |
|
|
|
2,477 |
|
|
|
2,363 |
|
|
|
General and
administrative |
|
|
1,586 |
|
|
|
1,488 |
|
|
|
3,112 |
|
|
|
2,963 |
|
|
|
Patent amortization and
royalties |
|
|
25 |
|
|
|
25 |
|
|
|
50 |
|
|
|
50 |
|
|
|
Total operating
expenses |
|
|
4,333 |
|
|
|
4,146 |
|
|
|
8,782 |
|
|
|
8,223 |
|
|
|
Operating loss |
|
|
(1,226 |
) |
|
|
(1,597 |
) |
|
|
(2,703 |
) |
|
|
(3,345 |
) |
|
|
Other
income (expense): |
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
8 |
|
|
|
5 |
|
|
|
12 |
|
|
|
8 |
|
|
|
Interest expense |
|
|
(17 |
) |
|
|
(20 |
) |
|
|
(35 |
) |
|
|
(40 |
) |
|
|
Total other income
(expense) |
|
|
(9 |
) |
|
|
(15 |
) |
|
|
(23 |
) |
|
|
(32 |
) |
|
|
Net loss |
|
$ |
(1,235 |
) |
|
$ |
(1,612 |
) |
|
$ |
(2,726 |
) |
|
$ |
(3,377 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deemed dividend paid for right to repurchase Series E
convertible preferred stock |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
(656 |
) |
|
$ |
- |
|
|
|
Deemed dividend from issuing Series E convertible preferred
stock and warrants |
|
|
- |
|
|
|
- |
|
|
|
890 |
|
|
|
(890 |
) |
|
|
Deemed dividend from issuing Series F convertible preferred
stock and warrants |
|
|
- |
|
|
|
- |
|
|
|
(1,877 |
) |
|
|
- |
|
|
|
Net loss attributable to common stockholders |
|
$ |
(1,235 |
) |
|
$ |
(1,612 |
) |
|
$ |
(4,369 |
) |
|
$ |
(4,267 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per share |
|
$ |
(0.89 |
) |
|
$ |
(1.91 |
) |
|
$ |
(2.43 |
) |
|
$ |
(4.14 |
) |
|
|
Deemed dividend paid for right to repurchase Series E
convertible preferred stock |
|
|
- |
|
|
|
- |
|
|
|
(0.58 |
) |
|
|
- |
|
|
|
Deemed dividend from issuing Series E convertible preferred
stock |
|
|
- |
|
|
|
- |
|
|
|
0.79 |
|
|
|
(1.09 |
) |
|
|
Deemed dividend from issuing Series F convertible preferred
stock |
|
|
- |
|
|
|
- |
|
|
|
(1.67 |
) |
|
|
- |
|
|
|
Basic and diluted net loss per share attributable to common
stockholders |
|
$ |
(0.89 |
) |
|
$ |
(1.91 |
) |
|
$ |
(3.89 |
) |
|
$ |
(5.23 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average common shares
outstanding |
|
|
1,382,019 |
|
|
|
845,395 |
|
|
|
1,122,975 |
|
|
|
816,076 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED BALANCE SHEET INFORMATION:
|
June 30,
2016 |
June 30,
2015 |
Total cash, cash equivalents and short-term
investments |
$ |
5,227 |
|
$ |
3,901 |
|
Total assets |
|
9,753 |
|
|
7,922 |
|
Total liabilities |
|
2,142 |
|
|
2,066 |
|
Total stockholders’ equity |
|
7,611 |
|
|
5,856 |
|
|
|
|
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