Clarient reports 14.8% increase in first quarter 2010 revenue

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 first quarter ended March 31, 2010.  First quarter 2010 net revenue was $26.6 million, a 14.8 percent increase over the $23.2 million net revenue in the 2009 first quarter and a sequential increase of 14.5 percent over the $23.3 million in the fourth quarter of 2009.  

Test volume in the 2010 first quarter increased to approximately 264,000, a 17.6 percent increase from the same period in 2009.  Clarient's customer base of pathology and oncology practices in the U.S. increased by 52 new customers in the first quarter, taking Clarient's active customer base to approximately 1,200 and reflecting a better than 98 percent customer retention rate.

Ron Andrews, Clarient's Vice Chairman and Chief Executive Officer, said, "Our robust first quarter 2010 results are a direct result of our 2009 infrastructure investments in sales force expansion, billing and collection improvements and the acquisition of Applied Genomics, Inc. (AGI). The combination of new account acquisition, same-store sales to current clients and an increasing adoption of recently launched tests, drove growth in test volumes in all of our primary service categories, providing solid momentum to start the year. We also are encouraged by the early contribution from our newly launched Clarient Insight® Dx Pulmotype® test and our growing biopharmaceutical partnering program.  We continued to see improvements in cost containment, which gives us increasing confidence in our ability to deliver on our 2010 goal to be EPS positive on an annual basis for the first time in the Company's history."  

Operating expenses were $15.7 million for the first quarter of 2010, up from $12.7 million in the same quarter of 2009.  The increase in operating expenses for the quarter was largely related to additional sales and marketing personnel hired during 2009.  Planned investments in research and development related to Clarient's new test pipeline and commercial capabilities added an additional $1.1 million in expenses, including $0.4 million in amortization of intangibles acquired through AGI.  

Michael Rodriguez, Clarient's Senior Vice President and Chief Financial Officer, said, "Key billing and collections metrics continued to improve in the period and continued vigilance in expense management led to improvement in the bottom line.  Days sales outstanding (DSO) continued to decrease and is now 82 days compared to 101 days in the first quarter of 2009.  This decrease has occurred even in the face of the negative impact of a delay in billing for tests during part of the first quarter due to the timing of legislative actions surrounding healthcare reform.  We enjoyed solid cash collections of $20.5 million during the quarter, although the legislative delay in some of our Medicare billings created a net use of cash from operations of $0.7 million in the first quarter.  Bad debt expense for the quarter declined to 13.4 percent of net revenue for the first quarter of 2010, decreasing as a percentage of revenue by 1.4 percentage points from 14.8 percent of net revenue in the fourth quarter of 2009."

Clarient's operating loss for the first quarter of 2010 was $237,000 compared with operating income of $1.5 million for the same period of 2009.  Adjusted EBITDA for the 2010 first quarter was $1.8 million as compared to $2.9 million in the prior year period.  Clarient's loss from continuing operations for the 2010 first quarter was $370,000, or $(0.00) loss per share, compared to a loss from continuing operations of $1.1 million, or $(0.01) loss per share, in the prior year period.  Net loss for the 2010 first quarter was $370,000, an 86 percent sequential decrease from the net loss of $2.7 million in the 2009 fourth quarter.

As of March 31, 2010, Clarient's cash and cash equivalents totaled $10.9 million, a $25,000 increase in the 2010 first quarter.  

Andrews concluded, "Building on the success of the Pulmotype test, additional opportunities for Clarient to use its established commercial engine to bring new tests to market are numerous and growing. The recent publications highlighting our TLE3 marker and its ability to identify patients who will respond to the taxane class of chemotherapies are encouraging, and we are diligently working on reimbursement for these exciting tests that are on track to launch in the fourth quarter of 2010. We have also experienced early success in our biopharmaceutical initiative and believe that the opportunities to deliver molecular pathway mapping capabilities to biopharmaceutical companies will deliver long-term dividends as we help develop and deliver companion diagnostics to the marketplace."

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 range between $108 million to $115 million.  This increase would represent a year-over-year growth rate of between 18 percent and 25 percent from 2009 net revenue.  The Company also indicated that it is expecting to report net income for the 2010 fiscal year.