Chembio Diagnostics, Inc. (“Chembio” or the “Company”) (Nasdaq:
CEMI), a leading point-of-care diagnostics company focused on
infectious diseases, today reported financial results for the
quarter ended March 31, 2022.
Recent Highlights
- Achieved total revenue of $18.8
million including record quarterly product revenue of $18.5 million
in the first quarter of 2022, representing growth of 116% and 360%,
respectively, compared to the prior year period:
- U.S. product revenue of $4.5
million, representing growth of 530% compared to the prior year
period
- Latin America product revenue of
$12.5 million, compared to $0.3 million in the prior year
period
- Completed shipments under the $28.3
million purchase order from Bio-Manguinhos for DPP SARS-COV-2
Antigen Tests in Brazil and continued shipments on the $4 million
HIV test purchase order supported by The Global Fund, which are
expected to be completed in the second quarter of 2022
- Improved gross product margin to
18% in the first quarter of 2022 from negative 9% in the fourth
quarter of 2021
- Reduced cash usage in the first
quarter of 2022 to $4.4 million, from $8.7 million in the prior
year period and $7.2 million in the preceding quarter
- Expanded distributor relationships
in Europe to supply the Sure Check HIV Self-tests in the UK and
France
- Enhanced operations at Chembio
Diagnostics Brazil by increasing low-cost manufacturing
capabilities for over-the-counter packaging to support Sure Check
Self-test supply for state, local and retail pharmacies
“We are pleased with our first quarter
performance which included record quarterly product sales and
substantial sequential gross product margin improvement,” said
Richard Eberly, Chembio’s President and Chief Executive Officer.
“In light of decreasing international demand for COVID-19 testing,
we are repositioning our commercial focus toward our core products.
The HIV self-testing market continues to grow across Europe, Brazil
and Africa, and with renewed marketing efforts we believe our Sure
Check products can address the needs of this patient population and
further penetrate this market. Going forward, we will continue to
prioritize use of our resources to drive more profitable growth and
operational efficiency in accordance with our previously announced
Global Competitiveness Program.”
First Quarter 2022 Financial
ResultsTotal revenue for the first quarter of 2022 was
$18.8 million, an increase of 116% compared to the prior year
period. Net product sales for the first quarter of 2022 were $18.5
million, an increase of 360% compared to the prior year period.
Government grant, license and royalty, and R&D revenue for the
first quarter of 2022 totaled $0.3 million, a decrease of 94%
compared to the prior year period.
Gross product margin for the first quarter of
2022 was $3.3 million, compared to $0.5 million for the prior year
period. Gross product margin percentage for the first quarter of
2022 was 18%, compared to 12% for the prior year period. Gross
product margin in the first quarter of 2022 was driven by increased
product volume sold in US and Latin America at higher average
selling prices and operational productivity.
Research and development expenses decreased by
$1.2 million, or 42%, in the first quarter of 2022 compared to the
prior year period. Selling, general and administrative expenses
increased by $0.9 million, or 14%, in the first quarter of 2022
compared to the prior year period.
Impairment, restructuring, severance and related
costs for the first quarter of 2022 totaled $3.0 million, including
an impairment of goodwill.
Net loss for the first quarter of 2022 was $8.8
million, or $0.29 per diluted share, compared to a net loss of $4.5
million, or $0.22 per diluted share, for the prior year
period. The net loss includes impairment, restructuring,
severance and related costs of $3.0 million, or $0.10 per share,
for the first quarter of 2022, compared to a de minimis amount in
the prior year period.
Cash and cash equivalents as of March 31, 2022 totaled $24.4
million, compared to $28.8 million at December 31, 2021.
Going Concern ConsiderationsThe Company
continued to experience market, clinical trial and regulatory
complications in seeking to develop and commercialize a portfolio
of COVID-19 test systems during the continuing, but evolving,
uncertainty caused by COVID-19. For the three months ended March
31, 2022, the Company continued to incur significant expenses in
connection with pending legal matters.
The Company performed an assessment to determine
whether there were conditions or events that, considered in the
aggregate, raised substantial doubt about the Company’s ability to
continue as a going concern within one year after the date the
Company’s unaudited condensed consolidated financial statements for
the three months ended March 31, 2022 are being issued (the “Q1
Financials Issuance Date”). Initially, this assessment did not
consider the potential mitigating effect of management’s plans that
had not been fully implemented. Because, as described below,
substantial doubt was determined to exist as the result of this
initial assessment, management then assessed the mitigating effect
of its plans to determine if it is probable that the plans (1)
would be effectively implemented within one year after the Q1
Financials Issuance Date and (2) when implemented, would mitigate
the relevant conditions or events that raise substantial doubt
about the Company’s ability to continue as a going concern.
The Company achieved significant revenue growth
in recent years while profitability has not been at levels as
expected. It has taken steps, including investments in automation,
to mitigate headwinds such as labor availability, volatile capacity
planning and implementation of operational efficiency targets to
proactively monitor production with the overarching goal for
profitable growth. During the three months ended March 31, 2022,
the Company undertook measures to increase its total revenues and
improve its liquidity position by implementing the Global
Competitiveness Program. The main pillars of the Global
Competitiveness Program include the following:
- Focus on higher margin business in growth markets
- Lower manufacturing costs
- Reduce infrastructure costs
- Strategic review of non-core businesses and assets:
In addition, the Company will continue to focus
on regulatory approvals for its DPP SARS-CoV-2 Antigen test system,
DPP Respiratory Antigen Panel, and DPP HIV-Syphilis test system.
These measures and other plans and initiatives have been designed
to provide the Company with adequate liquidity to meet its
obligations for at least the twelve-month period following the Q1
Financials Issuance Date. The Company’s execution of those measures
and its other plans and initiative continue to depend, however, on
factors and uncertainties that are beyond the Company’s control, or
that may not be addressable on terms acceptable to the Company or
at all.
The Company considered in particular how:
- The ongoing healthcare and economic impacts of COVID-19 on the
global customer base for the Company’s non-COVID-19 products
continue to negatively affect the timing and rate of recovery of
the Company’s revenues from those products by, for example,
decreasing the allocation of funding for HIV testing, thereby
continuing to adversely affect the Company’s liquidity.
- Although the Company has entered into agreements to distribute
third-party COVID-19 products in the United States, its ability to
sell those products could be constrained because of staffing and
supply chain limitations affecting the suppliers of those
products.
The Company further considered how these factors
and uncertainties could impact its ability over the next year to
meet the obligations specified in its existing Credit Agreement.
Those obligations include covenants requiring: i) minimum cash
balance of $3.0 million and ii) minimum total revenue amounts for
the twelve months preceding each quarter end. For the next year,
the minimum total revenue requirements range from $43.8 million for
the twelve months ending June 30, 2022 to $48.8 million for the
twelve months ending March 31, 2023. Upon an event of default under
the Credit Agreement, the Lender could elect to declare all amounts
outstanding thereunder, together with accrued interest, to be
immediately due and payable. In such an event, there can be no
assurance that the Company would have sufficient liquidity to fund
payment of the amounts that would be due under the Credit Agreement
or that, if such liquidity were not available, the Company would be
successful in raising additional capital on acceptable terms, or at
all, or in completing any other endeavor to continue to be
financially viable and continue as a going concern. The Company’s
inability to raise additional capital on acceptable terms in the
near future, whether for purposes of funding payments required
under the Credit Agreement or providing additional liquidity needed
for its operations, could have a material adverse effect on its
business, prospects, results of operations, liquidity and financial
condition.
Accordingly, management determined the Company
could not be certain that the Company’s plans and initiatives would
be effectively implemented within one year after the Q1 Financials
Issuance Date. Without giving effect to the prospect of raising
additional capital pursuant to the Company’s existing At the Market
Offering Agreement, increasing product revenue in the near future
or executing other mitigating plans, many of which are beyond the
Company’s control, it is unlikely that the Company will be able to
generate sufficient cash flows to meet its required financial
obligations, including its debt service and other obligations due
to third parties. The existence of these conditions raises
substantial doubt about the Company’s ability to continue as a
going concern for the twelve-month period following the Q1
Financials Issuance Date.
The Company’s unaudited condensed consolidated
financial statements for the three months ended March 31, 2022 have
been prepared assuming the Company will continue as a going
concern, which contemplates continuity of operations, realization
of assets and the satisfaction of liabilities in the normal course
of business for the twelve-month period following the Q1 Financials
Issuance Date. As such, those unaudited condensed consolidated
financial statements do not include any adjustments relating to the
recoverability and classification of assets and their carrying
amounts, or the amount and classification of liabilities that may
result should the Company be unable to continue as a going
concern.
Conference CallChembio will
host a conference call today beginning at 4:30 pm ET to discuss its
financial results and recent business highlights. Investors
interested in listening to the call may do so by dialing
888-506-0062 from the United States or 973-528-0011 from outside
the United States and providing entry code 898553. To listen to a
live webcast of the call, please visit the Investor Relations
section of Chembio's website at www.chembio.com. Following the
call, a replay will be available on the Investor Relations section
of Chembio’s website. A telephone replay will be available until
4:30 pm ET on May 19, 2022 by dialing 877-481-4010 from the United
States or 919-882-2331 from outside the United States and using
passcode 45278.
About Chembio
DiagnosticsChembio is a leading diagnostics company
focused on developing and commercializing point-of-care tests used
for the rapid detection and diagnosis of infectious diseases,
including sexually transmitted disease, insect vector and tropical
disease, COVID-19 and other viral and bacterial infections,
enabling expedited treatment. Coupled with Chembio’s extensive
scientific expertise, its novel DPP technology offers broad market
applications beyond infectious disease. Chembio’s products are sold
globally, directly and through distributors, to hospitals and
clinics, physician offices, clinical laboratories, public health
organizations, government agencies, and consumers. Learn more at
www.chembio.com.
Forward-Looking
StatementsCertain statements contained in the second
bulleted item under “Recent Highlights” above and in the paragraph
following the bulleted items under “Recent Highlights” above are
not historical facts and may be forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements include statements regarding the
intent, belief or current expectations with respect to the
Chembio’s R&D investments, development of certain products and
registration of existing products in new geographies. Such
statements, which are expectations only, reflect management's
current views, are based on certain assumptions, and involve risks
and uncertainties. Actual results, events or performance may differ
materially from forward-looking statements due to a number of
important factors, and will be dependent upon a variety of factors,
including, but not limited to, the following, any of which could be
exacerbated even further by the continuing COVID-19 outbreak in the
United States and globally: the ability of Chembio to continue to
generate revenue from the HIV test purchase order supported by The
Global Fund or other product orders, and the margins it can realize
from that revenue, or its ability to develop new products, will
depend on the availability and cost of human, material and other
resources required to build and deliver the tests, which factors
are largely outside Chembio’s control; the ability of Chembio to
maintain existing, and timely obtain additional, regulatory
approvals, which approvals are subject to processes that can change
recurringly without notice; the highly competitive and rapidly
developing diagnostics market, which includes a number of competing
companies with strong relationships with current and potential
customers, including governmental authorities, and with
significantly greater financial and other resources that are
available to Chembio; and the risks of doing business with foreign
governmental entities, including geopolitical, international and
other challenges as well as potential material adverse effects of
tariffs and other changes in U.S. trade policy. Chembio undertakes
no obligation to publicly update forward-looking statements in this
release to reflect events or circumstances that occur after the
date hereof or to reflect any change in Chembio's expectations with
regard to the forward-looking statements or the occurrence of
unanticipated events. Factors that may impact Chembio's success are
more fully disclosed in Chembio's periodic public filings with the
U.S. Securities and Exchange Commission, including its Annual
Report on Form 10-K for the fiscal year ended December 31, 2021,
particularly under the heading “Risk Factors.”
DPP is Chembio’s registered trademark, and the
Chembio logo is Chembio’s trademark. For convenience, these
trademarks appear in this release without ® or ™ symbols, but that
practice does not mean that Chembio will not assert, to the fullest
extent under applicable law, its rights to the trademarks. All
other trademarks appearing in this release are the property of
their respective owners.
Investor Relations
ContactPhilip TaylorGilmartin Group(415)
937-5406investor@chembio.com
CHEMBIO DIAGNOSTICS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
|
|
|
|
|
|
For the three months
ended(Unaudited) |
|
|
March 31, 2022 |
|
March 31, 2021 |
|
REVENUES: |
|
|
|
|
Product revenue |
$ |
18,527,456 |
|
|
$ |
4,024,662 |
|
|
R&D revenue |
|
18,173 |
|
|
|
1,106,639 |
|
|
Government grant income |
|
- |
|
|
|
3,350,000 |
|
|
License and royalty
revenue |
|
270,982 |
|
|
|
243,058 |
|
|
TOTAL
REVENUES |
|
18,816,611 |
|
|
|
8,724,359 |
|
|
|
|
|
|
|
COSTS AND
EXPENSES: |
|
|
|
|
Cost of product revenue |
|
15,223,861 |
|
|
|
3,548,441 |
|
|
Research and development
expenses |
|
1,653,706 |
|
|
|
2,863,338 |
|
|
Selling, general and
administrative expenses |
|
6,946,271 |
|
|
|
6,085,067 |
|
|
Impairment, restructuring,
severance and related costs |
|
3,043,179 |
|
|
|
83,087 |
|
|
TOTAL COSTS AND
EXPENSES |
|
26,867,017 |
|
|
|
12,579,933 |
|
|
LOSS FROM
OPERATIONS |
|
(8,050,406 |
) |
|
|
(3,855,574 |
) |
|
|
|
|
|
|
OTHER
EXPENSE: |
|
|
|
|
Interest expense, net |
|
(733,561 |
) |
|
|
(712,477 |
) |
|
|
|
|
|
|
LOSS BEFORE INCOME
TAXES |
|
(8,783,967 |
) |
|
|
(4,568,051 |
) |
|
|
|
|
|
|
Income tax
(expense)/benefit |
|
(6,327 |
) |
|
|
67,888 |
|
|
|
|
|
|
|
NET LOSS |
$ |
(8,790,294 |
) |
|
$ |
(4,500,163 |
) |
|
|
|
|
|
|
Basic and diluted loss
per share |
$ |
(0.29 |
) |
|
$ |
(0.22 |
) |
|
|
|
|
|
|
Weighted average
number of shares outstanding, basic and diluted |
|
30,090,045 |
|
|
|
20,163,386 |
|
|
|
|
|
|
|
CHEMBIO DIAGNOSTICS, INC. AND SUBSIDIARIES |
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
AS OF |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2022 |
|
December 31, 2021 |
|
|
|
|
|
|
|
- ASSETS - |
|
|
|
|
|
CURRENT
ASSETS: |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
24,399,388 |
|
|
$ |
28,772,892 |
|
|
Accounts receivable |
|
|
9,879,954 |
|
|
|
11,441,107 |
|
|
Inventories, net |
|
|
11,844,121 |
|
|
|
12,920,451 |
|
|
Prepaid expenses and other
current assets |
|
|
2,097,491 |
|
|
|
2,096,399 |
|
|
TOTAL CURRENT
ASSETS |
|
|
48,220,954 |
|
|
|
55,230,849 |
|
|
|
|
|
|
|
|
FIXED
ASSETS: |
|
|
|
|
|
Property, plant and equipment,
net |
|
|
8,414,313 |
|
|
|
8,556,773 |
|
|
Finance lease right-of-use
asset, net |
|
|
190,526 |
|
|
|
191,870 |
|
|
TOTAL FIXED ASSETS,
net |
|
|
8,604,839 |
|
|
|
8,748,643 |
|
|
|
|
|
|
|
|
OTHER
ASSETS: |
|
|
|
|
|
Operating lease right-of-use
assets, net |
|
|
5,693,482 |
|
|
|
5,891,906 |
|
|
Goodwill |
|
|
- |
|
|
|
3,022,787 |
|
|
Deposits and other assets |
|
|
370,940 |
|
|
|
358,010 |
|
|
|
|
|
|
|
|
TOTAL
ASSETS |
|
$ |
62,890,215 |
|
|
$ |
73,252,195 |
|
|
|
|
|
|
|
|
- LIABILITIES AND STOCKHOLDERS’ EQUITY - |
|
|
|
|
|
CURRENT
LIABILITIES: |
|
|
|
|
|
Accounts payable and accrued
liabilities |
|
$ |
10,542,851 |
|
|
$ |
13,127,993 |
|
|
Current portion of long-term
debt |
|
|
2,100,000 |
|
|
|
1,200,000 |
|
|
Operating lease
liabilities |
|
|
916,524 |
|
|
|
886,294 |
|
|
Finance lease liabilities |
|
|
72,203 |
|
|
|
68,176 |
|
|
TOTAL CURRENT
LIABILITIES |
|
|
13,631,578 |
|
|
|
15,282,463 |
|
|
|
|
|
|
|
|
OTHER
LIABILITIES: |
|
|
|
|
|
Long-term operating lease
liabilities |
|
|
5,733,214 |
|
|
|
5,976,151 |
|
|
Long-term finance lease
liabilities |
|
|
134,955 |
|
|
|
139,678 |
|
|
Long-term debt, less current
portion, net |
|
|
16,855,322 |
|
|
|
17,589,003 |
|
|
TOTAL
LIABILITIES |
|
|
36,355,069 |
|
|
|
38,987,295 |
|
|
|
|
|
|
|
|
STOCKHOLDERS’
EQUITY: |
|
|
|
|
|
Common stock - $0.01 par
value |
|
|
302,699 |
|
|
|
301,050 |
|
|
Additional paid-in
capital |
|
|
166,483,376 |
|
|
|
165,772,636 |
|
|
Accumulated deficit |
|
|
(139,800,154 |
) |
|
|
(131,009,860 |
) |
|
Treasury stock |
|
|
(206,554 |
) |
|
|
(206,554 |
) |
|
Accumulated other
comprehensive (loss) |
|
|
(244,221 |
) |
|
|
(592,372 |
) |
|
TOTAL STOCKHOLDERS’
EQUITY |
|
|
26,535,146 |
|
|
|
34,264,900 |
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
$ |
62,890,215 |
|
|
$ |
73,252,195 |
|
|
|
|
|
|
|
|
CHEMBIO DIAGNOSTICS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWSFOR THE THREE MONTHS
ENDED(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2022 |
|
March 31, 2021 |
|
|
|
|
|
|
|
Net cash used in operating activities |
|
$ |
(4,368,959 |
) |
|
$ |
(7,261,260 |
) |
|
Net cash used in
investing activities |
|
|
(286,544 |
) |
|
|
(1,239,168 |
) |
|
Net cash used by
financing activities |
|
|
(55,444 |
) |
|
|
(129,341 |
) |
|
Effect of exchange
rate changes on cash |
|
|
337,442 |
|
|
|
(85,579 |
) |
|
INCREASE IN CASH AND
CASH EQUIVALENTS |
|
|
(4,373,504 |
) |
|
|
(8,715,348 |
) |
|
Cash and cash equivalents -
beginning of the period |
|
|
28,772,892 |
|
|
|
23,066,301 |
|
|
Cash and cash
equivalents - end of the period |
|
$ |
24,399,388 |
|
|
$ |
14,350,953 |
|
|
|
|
|
|
|
|
Chembio Diagnostics (NASDAQ:CEMI)
Historical Stock Chart
From Aug 2024 to Sep 2024
Chembio Diagnostics (NASDAQ:CEMI)
Historical Stock Chart
From Sep 2023 to Sep 2024