Clarient second-quarter net revenue increases 21% to $28.7 million

Clarient, Inc. (Nasdaq: CLRT), a premier anatomic pathology and molecular testing services resource for pathologists, oncologists and the biopharmaceutical industry, today reported financial results for the second quarter ended June 30, 2010.  Second quarter 2010 net revenue was $28.7 million, a 21 percent increase over the $23.7 million net revenue in the 2009 second quarter and a sequential increase of nearly eight percent over the $26.6 million in the first quarter of 2010.  

Test volume in the 2010 second quarter increased to approximately 287,000, a 22 percent increase from the same period in 2009.  Clarient's customer base of pathology and oncology practices in the U.S. increased by 31 new customers in the second quarter, taking Clarient's active customer base to approximately 1,300 and reflecting a better than 98 percent customer retention rate.

Ron Andrews, Clarient's Vice Chairman and Chief Executive Officer, said, "Our results in the second quarter are indicative of the strength of Clarient's business model as we continue to grow revenues via new customer additions, new product introductions and increasing same-store sales. Our focus on bringing a diverse spectrum of high-value technologies and services to the community pathologist is a clear differentiator from others in our space.  We believe our unique model provides insulation from some of the uncertainty surrounding healthcare reform and potential reimbursement changes.  Our first half momentum is a validation of this strategy as both commercial and operating elements of our business continue to perform well, posting double-digit growth in net revenue and test volumes.  In addition, we made solid progress in our proprietary test initiatives, improved collections metrics and achieved net income." 

Operating expenses were $15.4 million for the second quarter of 2010, up from $13.0 million in the same quarter of 2009.  The increase in operating expenses for the quarter was largely related to infrastructure improvements made in 2009.  Planned investments in research and development related to Clarient's new test pipeline and commercial capabilities added an additional $0.8 million in expenses, including $0.2 million in amortization of intangibles.

Michael Rodriguez, Clarient's Senior Vice President and Chief Financial Officer, said, "Key billing and collections metrics continued to improve in the period on the heels of record cash collections of $25.6 million in the quarter, and continued vigilance in expense management led to a profitable bottom line.  Days sales outstanding continued to decrease and is now 78 days compared to 104 days in the second quarter of 2009.  We generated cash flows from operating activities of $2.5 million in the second quarter, and bad debt expense declined to 10.9 percent of net revenue, decreasing from 13.4 percent of net revenue in the first quarter of 2010."

Clarient's net income for the second quarter of 2010 was $942,000, or $0.01 per diluted share, compared with net income of $29,000, or $0.00 per diluted share, for the same period of 2009.  Adjusted EBITDA for the 2010 second quarter was $3.3 million as compared to $2.3 million in the prior year period.    

As of June 30, 2010, Clarient's cash and cash equivalents totaled $9.6 million.  

Andrews concluded, "The results for the first half of 2010 are a testament to the commitment of all Clarient employees who have worked to improve systems, find efficiencies and better serve our physician partners and their patients. We anticipate maintaining this momentum into the second half of the year driven by continued success growing both new accounts and same-store sales.  We are also looking forward to accelerating the pace of new test introductions – including our new breast cancer prognostic test Clarient Insight^® Dx Mammostrat^®.  The fact that the significant expected contributions from our exciting product pipeline are not included in our strong first half momentum is encouraging.  This strengthens our confidence in Clarient's ability to emerge as the leading molecular cancer diagnostics company, even in the face of the uncertainties that exist in the current market environment."

Company Outlook

Based on Clarient's current net revenue run rate, anticipated new product introductions and other market factors, Clarient expects net revenue for the full year 2010 to be within stated guidance of between $108 million to $115 million.  This range represents a year-over-year growth rate of between 18 percent and 25 percent from 2009 net revenue.  The Company also expects to report net income for the 2010 fiscal year.