Orchid third quarter revenue increases 18% to $17.3 million

Orchid Cellmark Inc. (Nasdaq:ORCH), a leading international provider of identity DNA testing services, today reported revenues increased 18% to $17.3 million for the third quarter 2010, as compared to $14.7 million in the third quarter 2009. Gross margin increased to 38% and operating income in the quarter was $141 thousand.

Total U.K. revenues for the third quarter of 2010 rose 44% compared to the third quarter of 2009, primarily as a result of the increase in U.K. forensic business. Exchange rate changes of the British pound as compared to the U.S. dollar had a negative impact on U.K. revenue of approximately 6% or $679 thousand. In British pounds, total U.K. revenues for the third quarter of 2010 grew 52% compared to the third quarter of 2009.

U.S.-based revenues for the third quarter of 2010 decreased approximately 13% compared to the third quarter of 2009, primarily due to a decline in forensic casework offset, in part, by increases in CODIS and government paternity business.

The company's gross margin for the third quarter of 2010 was 38% compared to 33% for the third quarter of 2009.  Operating expenses, excluding cost of service revenue, for the third quarter of 2010 increased to $6.4 million from $5.3 million for the comparable 2009 period, primarily due to $538 thousand in restructuring expenses and increased marketing and sales expenses of $279 thousand. Operating income for the third quarter of 2010 was $141 thousand, compared to a $465 thousand loss for the third quarter of last year. Excluding restructuring expenses, operating income for the third quarter 2010 was approximately $679 thousand as compared to an operating loss of $465 thousand for the same quarter in 2009.

Orchid Cellmark reported a net loss of $665 thousand, or $(0.02) per share, for the third quarter of 2010, compared to a net loss of $625 thousand, or $(0.02) per share, for the third quarter of 2009. Total income tax expense for the third quarter 2010 increased by approximately $665 thousand compared to the third quarter of last year. Net losses for the third quarters of 2010 and 2009 include charges of $900 thousand and $984 thousand, respectively, for depreciation and amortization. 

At September 30, 2010, cash, cash equivalents, and short term investments were approximately $18.5 million.

"Our third quarter results reflect the inherent strength of our business.  We reported a healthy third quarter increase in sales as well as a strong gross margin and a quarterly operating profit," said Thomas Bologna, Orchid Cellmark president and chief executive officer.  "Our U.K. operation was particularly strong as a result of significant organic top line growth. In the U.S., we continue to mitigate anticipated near-term challenges, through careful planning and solid execution. The consolidation of our U.S. testing facilities and increased CODIS and government paternity business has already favorably impacted our U.S. results."

Mr. Bologna concluded, "We believe that the combination of a strong balance sheet, solid organic U.K. growth and what we believe is an ever growing number of sexual assault kits backlogged in U.S. public labs positions us to take advantage of both near- and long-term growth opportunities."

Source: Orchid Cellmark Inc.