GenMark Diagnostics second quarter revenues increase to $901,000

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

Revenues for the three months ended June 30, 2011 were $901,000 and net loss per share was $0.39 per share compared with $665,000 and a net loss of $0.60 per share during the second quarter of 2010. The 35% 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 second quarter grew 104% year-over-year to $825,000 from $404,000, while instrument and other revenues decreased $185,000 due mainly to lower partnering contract revenue. The Company placed net 17 analyzers during the quarter.

The gross margin loss of $393,000 for the three months ended June 30, 2011 as compared to a loss of $84,000 for the same period in 2010 and a loss of $743,000 in the first quarter of 2011 was driven by the transfer and expansion of manufacturing operations to the company's new facility in Carlsbad. The gross loss improvement compared with the first quarter of 2011 was primarily due to the now completed closure of duplicative manufacturing facilities in Pasadena. All operations are now consolidated in Carlsbad, CA.

Operating expenses increased $265,000 to $5.3 million during the second quarter of 2011, due primarily to increased clinical trial costs and spending for new product development, specifically our Hepatitis C genotyping and Respiratory Viral Panel tests.

The Company ended the second quarter with $43.5 million in cash compared with $18.3 million at year-end. The Company raised net proceeds of $31.7 million through a follow-on equity offering in June 2011 and used $8.0 million in cash flow from operations during the first six months of 2011 compared with $9.1 million in the first six months of 2010. The Company intends to use a portion of the offering proceeds to invest more heavily in its sales force, research and development, and other infrastructure improvements during the second half of 2011 compared with spending levels in the first half of the year.

During the first six months of 2011, depreciation and amortization expense was $622,000; capital expenditures and other investing activities were $974,000; and the Company drew $2.0 million on its loan facility.

"The second quarter of 2011 was another strong quarter for GenMark Diagnostics," commented Hany Massarany, GenMark's President and CEO. "During the quarter, we significantly grew revenue, particularly in our core reagents, expanded our installed base, as well as advanced key product development programs. Our successful follow-on fundraising will allow us to accelerate product development and commercial activities during the remainder of 2011 and then next year as we look to execute our high growth strategy," Massarany further stated.