On July 15, 2019 Champions Oncology, Inc. (Nasdaq: CSBR), engaged in the development of advanced technology solutions and services to personalize the development and use of oncology drugs, reported its financial results for the fourth fiscal quarter and 12 months ended April 30, 2019 (Press release, Champions Oncology, JUL 15, 2019, View Source [SID1234537542]).
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Fiscal Year 2019 Financial and Recent Business Highlights:
Record annual revenue of $27.1 million, an increase of 34% year-over-year
Record quarterly revenue of $7.7 million, an increase of 57% year-over-year
Launched ex-vivo platform and clinical flow services
Forecast of revenue growth of 15% – 30% in FY 2020
Ronnie Morris, CEO of Champions, commented, "we’ve completed another year having achieved significant accomplishments for the Company. We’ve grown our year over year revenue by 34%, recorded annual profitable results while also adding to our product line by launching our ex-vivo platform and flow cytometry services. Expanding our suite of services is an important step in our long-term growth strategy for the Company."
David Miller, CFO of Champions added, "Our record quarterly and annual revenue demonstrates the continued strength in our core business lines. As we look ahead to fiscal year 2020, our PDx services will lead our anticipated revenue growth while sales of flow cytometry will set the stage for sustained financial success over the long term."
Fourth Fiscal Quarter Financial Results
For the fourth quarter of fiscal 2019, revenue increased 56.8% to $7.7 million compared to $4.9 million for the fourth quarter of fiscal 2018. The overall increase in revenue is due to the continuing increase in sales, both in number and size of studies, expanding our customer base, and demand for our services. Total costs and operating expenses for the fourth quarter of fiscal 2019 were $7.8 million compared to $5.5 million for the fourth quarter of fiscal 2018, an increase of $2.3 million or 42.0%.
For the fourth quarter of fiscal 2019, Champions reported loss from operations of $117,000, which includes $143,000 in stock-based compensation and $174,000 in depreciation, an improvement of $477,000, compared to the loss from operations of $594,000, inclusive of $172,000 in stock-based
Exhibit 99.1
compensation and $110,000 depreciation expense, in the fourth quarter of fiscal 2018. Excluding stock-based compensation and depreciation, Champions reported income from operations for the quarter of $200,000, an improvement of $512,000 compared to a loss of $312,000 in the year ago period.
Cost of oncology solutions was $4.3 million for the three months ended April 30, 2019, an increase of $1.5 million, or 52.6% compared to $2.8 million for the three months ended April 30, 2018. The increase in cost of sales was primarily due to an increase resulting from study volume as evidenced by the growth in revenue; and, approximately $500,000 in expenses due to repeating studies. For the three months ended April 30, 2019, gross margin was 44.3% compared to 42.7% for the three months ended April 30, 2018. The gross margin in the fourth quarter of fiscal 2019 was impacted by the additional expenses related to study delays.
Research and development expense was $1.2 million for the three months ended April 30, 2019 an increase of $154,000, or 14.1% compared to $1.1 million in the prior year. The increase is due to costs associated with the development of our ex-vivo and flow products. Sales and marketing expense for the three months ended April 30, 2019 was $918,000, an increase of $203,000, or 28.4% compared to $715,000 for the three months ended April 30, 2018. The increase is mainly due to an increase in salaries. General and administrative expense was $1.37 million for the three months ended April 30, 2019 compared to $888,000 for the three months ended April 30, 2018, an increase of $479,000 or 53.9%. The increase is mainly due to an increase in salaries and professional fees.
Year-to-Date Financial Results
For the twelve months of fiscal 2019, revenue increased 33.7% to $27.1 million, as compared to $20.2 million for the twelve months of fiscal 2018. For the twelve months of fiscal 2019, total operating expenses increased 24.1% to $26.8 million, as compared to $21.6 million for the twelve months of fiscal 2018.
For the twelve months ended April 30, 2019, Champions reported income from operations of $270,000, which includes $649,000 in stock-based compensation and $606,000 in depreciation, an improvement of $1.6 million, compared to the loss from operations of $1.4 million, inclusive of $1.0 million in stock-based compensation and $360,000 depreciation, for the twelve months ended April 30, 2018. Excluding stock-based compensation and depreciation, Champions reported operating income of $1.5 million for the twelve months ended April 30, 2019.
Net cash provided by operations was $1.9 million for the twelve months ended April 30, 2019 compared to the net cash used in operations of $1.2 million for the twelve months ended April 30, 2019, an increase of $3.1 million. The increase in cash is the result of our sales growth.
Cost of oncology solutions was $14.3 million for the twelve months ended April 30, 2019 compared to $10.6 million for the twelve months ended April 30, 2018, an increase of $3.7 million or 35.2%. The increase in cost of sales was due to an increase in salary and mice costs resulting from the increase in study volume along with expenses from repeating studies. Gross margin was 47.3% for the twelve months ended April 30, 2019 compared to 47.9% for the twelve months ended April 30, 2018.
Research and development expense was $4.8 million for the twelve months ended April 30, 2019 an increase of $397,000, or 9.0% compared to $4.4 million for the twelve months ended April 30, 2018. The increase was due to the costs associated with the development of new products. Sales and marketing expense for the twelve months ended April 30, 2019 was $3.1 million, an increase
Exhibit 99.1
of $486,000, or 18.9% compared to $2.6 million for the twelve months ended April 30, 2018. The increase is mainly due to commissions paid to the business development team on bookings. General and administrative expense was $4.7 million for the twelve months ended April 30, 2019, an increase of $607,000 or 14.9% compared to $4.1 million for the twelve months ended April 30, 2018. The increase was mainly due to an increase in recruiting and salary expenses.
Conference Call Information:
The Company will host a conference call today at 4:30 p.m. EDT (1:30 p.m. PDT) to discuss its fourth quarter financial results. To participate in the call, please call 877-407-8035 (domestic) or 201-689-8035 (international) ten minutes ahead of the call and give the verbal reference "Champions Oncology."
Full details of the Company’s financial results will be available Monday July 29, 2019 in the Company’s Form 10-K at www.championsoncology.com.
* Non-GAAP Financial Information
See the attached Reconciliation of GAAP to non-GAAP Net Income (Loss) (Unaudited) for an explanation of the amounts excluded to arrive at non-GAAP net income (loss) and related non-GAAP net income (loss) per share amounts for the three and twelve months ended April 30, 2019 and 2018. Non-GAAP financial measures provide investors and management with supplemental measures of operating performance and trends that facilitate comparisons between periods before and after certain items that would not otherwise be apparent on a GAAP basis. Certain unusual or non-recurring items that management does not believe affect the Company’s basic operations do not meet the GAAP definition of unusual or non-recurring items. Non-GAAP net income (loss) and non-GAAP income (loss) per share are not, and should not be viewed as a substitute for similar GAAP items. Champions’ defines non-GAAP dilutive income (loss) per share amounts as non-GAAP net income (loss) divided by the weighted average number of diluted shares outstanding. Champions’ definition of non-GAAP net income (loss) and non-GAAP diluted income (loss) per share may differ from similarly named measures used by others.