Full Press Release Details
Reports Second Quarter 2014 Financial Results
Call to Be Held at 5:00 PM Eastern Time Today
OMAHA, Neb.--(BUSINESS WIRE)--August 6, 2014--Transgenomic, Inc.
(NASDAQ:TBIO) today reported financial results for the second
quarter ended June 30, 2014, and provided a business update.
Second Quarter Financial Results
Net sales for the second quarter of 2014 were $6.8 million compared with
$7.3 million for the same period in 2013. The year-to-year decline is
attributable to a $0.3 million decrease in the Genetic Assays and
Platforms segment, due to fewer instrument sales, and a $0.2 million
decrease in the Laboratory Services segment, resulting from lower sales
of contract development services to pharmaceutical clients. Partially
offsetting the decline in contract lab services were higher sales of
patient tests, spurred by a number of new products launched in late
2013. Net sales in the second quarter of 2014 showed a nearly
double-digit increase over net sales in the first quarter of 2014,
including a second consecutive quarter of increases in the patient
Gross profit was $2.4 million, or 35 percent of net sales, compared with
gross profit of $3.0 million or 41 percent of net sales for the same
period in 2013. Gross profit decreased approximately $0.6 million as a
result of fewer instrument sales in the Genetic Assays and Platforms
segment and the impact of lower sales in the Laboratory Services segment.
Operating expenses were $6.3 million during the second quarter of 2014,
compared with $5.9 million in the prior year. The increase in operating
expenses was primarily due to higher non-cash stock compensation costs
and a higher bad debt provision in the second quarter of 2014 as
compared to the second quarter of 2013.
In the second quarter of both 2014 and 2013, there was $0.2 million of
non-cash income related to warrant revaluation. This income for each
period resulted from a lower value being assigned to the warrants.
The net loss for the second quarter of 2014 was $3.9 million or $0.57
per share, compared with a net loss of $2.9 million or $0.41 per share
for the second quarter of 2013.
Modified EBITDA, which is a non-GAAP measure that Transgenomic views as
an appropriate and sound measure of the Company's results, was a loss of
$3.2 million for the second quarter of 2014, compared to a $2.2 million
loss for the same period in 2013. A reconciliation of Net Loss to
Modified EBITDA is presented below.
Cash and cash equivalents were $1.2 million as of June 30, 2014,
compared with $1.6 million as of December 31, 2013. After the close of
the quarter, in July 2014, the Company sold the rights to its SURVEYOR
Nuclease technology and assets for a minimum of $4.25 million. The net
proceeds from this sale will be used to pay down debt under the
Company's revolving credit facility, which may be redrawn as needed, and
for working capital and other general corporate purposes.
Six Month Financial Results
Net sales for the six months ended June 30, 2014 were $13.0 million
compared with $14.7 million for the same period in 2013. The decline
includes an 11 percent decrease in the Laboratory Services segment,
which resulted from lower sales of contract laboratory services and from
a higher than usual level of sales in the first half of 2013 that
resulted from working down a backlog of Nuclear Mitome tests from the
previous year. These decreases were partially offset by higher sales of
patient tests, reflecting revenues from a number of new products
launched in late 2013, and a continuing increase in revenues from our
core patient testing products. In the Genetic Assays and Platforms
segment, net sales for the six months ended June 30, 2014 declined 12
percent as compared to the same period in 2013 as a result of fewer
Gross profit was $4.9 million or 38 percent of net sales, compared with
gross profit of $6.2 million, or 42 percent of net sales, for the same
period in 2013. The decrease was largely attributable to the impact of
lower sales of contract laboratory services and fewer instrument sales
in the Genetic Assays and Platforms segment.
Operating expenses were $12.4 million during the first half of 2014,
compared with $13.0 million in the first half of 2013. The decrease is
mainly due to lower bad debt provisions in the first half of 2014 as
compared to 2013, along with lower salaries and employee-related costs
due to a mid-year 2013 reduction in our Laboratory Services sales force.
These decreases were partially offset by increased non-cash stock
For the six months ended June 30, 2014 and 2013, non-cash income related
to warrant revaluation was $0.3 million and $0.6 million, respectively.
The net loss for the six months ended June 30, 2014 was $8.1 million or
$1.17 per share compared with a net loss of $6.5 million, or $0.95 per
share, for the comparable period of 2013.
Paul Kinnon, President and Chief Executive Officer of Transgenomic,
commented, "During the second quarter, we continued to make progress
putting in place the elements needed to reach our goal of creating a
revitalized company. Operationally, our patient testing business
continues to show renewed strength, with revenues again growing
sequentially quarter over quarter. We expect that this trend will
continue in the third quarter, along with growth from new projects in
our contract services laboratory."
Mr. Kinnon continued, "Strategically, we have executed on a number of
actions that illustrate our roadmap for creating shareholder value.
Importantly, during the quarter the company finalized two transactions
that are foundational to our strategy. The first was our exclusive
license from Dana-Farber Cancer Institute for the multiplexed version of
our groundbreaking ICE COLD-PCRTM technology, which makes
possible the simultaneous detection of multiple DNA mutations from a
single liquid sample, such as blood or urine, or from tissue.
Multiplexing makes ICE COLD-PCR far more efficient and allows us to
assemble targeted panels of relevant mutations, which should greatly
increase its utility for routine use in cancer therapy, as well as for
biopharmaceutical customers who will use the technology to develop new
cancer treatments and companion diagnostics."
"The second transaction involved the redeployment of a non-core asset,"
said Mr. Kinnon. "The sale of our SURVEYOR Nuclease technology to IDT
for the research market allows us to focus more resources on
commercialization efforts in our core businesses. By licensing back
exclusive rights to clinical and diagnostic uses, we ensured our