GenMark Diagnostics third quarter revenues increase 90% to $1.3 million

GenMark Diagnostics, Inc. (Nasdaq:GNMK) today reported financial results for the third quarter ended September 30, 2011.

“The third quarter of 2011 was another strong quarter for our company”

Revenues for the three months ended September 30, 2011 were $1.3 million compared with $684,000 during the third quarter of 2010. The 90% year-over-year increase in total revenue reflects an increase in the number of systems in the field, growth in the Company's test menu and a significant increase in the number of tests sold. Reagent revenues for the third quarter grew 83% year over year to $1.2 million from $656,000, while instrument and other revenues increased $82,000 due mainly to higher partnering contract revenue. The Company placed net 22 analyzers during the quarter, bringing the installed base to 141.

The gross margin was a loss of $469,000 for the three months ended September 30, 2011 compared with a loss of $439,000 for the same period in 2010. The gross loss during the third quarter of 2011 was largely driven by a charge of $421,000 against inventory, the impact of which was $0.02 per share. The inventory charge reflects the write-off of several assay production lots that did not meet the Company's quality standards and other manufacturing inefficiencies arising from the Company's transfer of manufacturing operations from Pasadena to Carlsbad during the second quarter of 2011. The Company believes that these charges are non-recurring since the manufacturing issues were confined to and corrected during the quarter.

Operating expenses increased $1.1 million to $5.6 million during the third quarter of 2011 compared with the third quarter of 2010. The increase in operating expenses was due primarily to higher consulting costs, increased headcount and additional spend in research and development. Research and development expenses were higher due to increased clinical trial costs and spending for new product development, specifically the Company's Hepatitis C Virus genotyping (HCVg) and Respiratory Viral Panel tests. The Company released its HCVg test for research use only during the third quarter of 2011.

Loss per share was $0.31 for the third quarter of 2011, compared with a loss per share of $0.42 in the third quarter of 2010. Excluding the inventory charges, loss per share would have been $0.29 for the third quarter of 2011.

The Company ended the third quarter with $36.0 million in cash and short-term investments compared with $18.3 million at year-end. The Company raised net proceeds of approximately $31.7 million through a follow-on equity offering in June 2011 and used $14.0 million in cash flow from operations during the first nine months of 2011 compared with $13.6 million in the first nine months of 2010. The Company intends to continue utilizing its cash balances for investing in new product development, infrastructure improvements and general corporate purposes.

"The third quarter of 2011 was another strong quarter for our company," commented Hany Massarany, GenMark's President and CEO. "During the quarter we expanded our test menu with the introduction of our Hepatitis C Virus genotyping RUO test, grew our installed base to 141 analyzers, and significantly increased revenue. Our focus continues to be new product development, commercial and operational execution," Mr. Massarany further stated.

Source GenMark Diagnostics