On August 03, 2016 CombiMatrix Corporation (NASDAQ:CBMX), a family health molecular diagnostics company specializing in DNA-based reproductive health and pediatric testing services, reported financial results for the three and six months ended June 30, 2016, and provided a business update (Press release, CombiMatrix, AUG 3, 2016, View Source [SID:1234514235]).
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"During the second quarter we made excellent progress toward our goal of achieving profitability with revenue growth, expanded gross margin, improved cash collections and a narrowed operating loss," said Mark McDonough, CombiMatrix President and CEO. "Diagnostic services revenues grew 21%, driven by a 32% increase in reproductive health revenues reflecting increased average revenue per test for miscarriage analysis and prenatal testing.
"We are prudently managing expenses while focusing on our commercial organization to support continued growth," Mr. McDonough added. "Our operating expenses increased by 5% on 22% total revenue growth and we achieved record cash reimbursement of $3 million, representing 95% of total revenues. We also are reporting an 840 basis point improvement in gross margin to 53%, our second consecutive quarter of gross margin above 50%.
"We expect improved financial and operational performance throughout 2016 and 2017 with continued growth in revenue and test volume, along with consistent cash reimbursement and prudent expense management," added Mr. McDonough. "Given our current outlook, we expect to reach positive cash flow from operations by the fourth quarter of 2017."
Second Quarter Financial and Operating Highlights (all comparisons are with the second quarter of 2015)
Total revenues of $3.1 million, up 22%
Reproductive health revenues of $2.2 million, up 32%
Total test volume of 2,780, up 7%
Reproductive health test volume of 1,403, up 9%
Gross margin of 53.0%, up 840 basis points
Number of billable customers of 261, up 16.5%
Number of customers sending 50 or more tests reaching 10, up 100%
Cash collections of 95% of total revenue to $3.0 million, up 21%
Volumes Revenues (in 000’s) Average Revenue / Test
Q2 ’16 Q2 ’15 # Δ % Δ Q2 ’16 Q2 ’15 $ Δ % Δ Q2 ’16 Q2 ’15 $ Δ % Δ
Prenatal 302 340 (38 ) (11 %) $ 472 $ 424 $ 48 11 % $ 1,566.41 $ 1,247.76 $ 319 26 %
Miscarriage analysis 901 916 (15 ) (2 %) 1,457 1,190 267 22 % $ 1,616.72 $ 1,299.32 $ 317 24 %
PGS 200 30 170 567 % 252 42 210 500 % $ 1,258.55 $ 1,389.17 $ (131 ) (9 %)
Subtotal – reproductive health 1,403 1,286 117 9 % 2,181 1,656 525 32 % $ 1,554.84 $ 1,287.78 $ 267 21 %
Pediatric 497 581 (84 ) (14 %) 558 630 (72 ) (11 %) $ 1,121.83 $ 1,083.59 $ 38 4 %
Subtotal – all arrays 1,900 1,867 33 2 % 2,739 2,286 453 20 % $ 1,441.57 $ 1,224.24 $ 217 18 %
Non-array tests 880 732 148 20 % 310 238 72 30 % $ 352.27 $ 325.14 $ 27 8 %
Total – all tests 2,780 2,599 181 7 % 3,049 2,524 525 21 % $ 1,096.90 $ 971.23 $ 126 13 %
Royalties 58 25 33 132 %
Total revenues $ 3,107 $ 2,549 $ 558 22 %
Percentage of arrays 68.3 % 71.8 % 89.8 % 90.6 %
Volumes Revenues (in 000’s) Average Revenue / Test
6 Mo’s. ’16 6 Mo’s. ’15 # Δ % Δ 6 Mo’s. ’16 6 Mo’s. ’15 $ Δ % Δ 6 Mo’s. ’16 6 Mo’s. ’15 $ Δ % Δ
Prenatal 566 664 (98 ) (15 %) $ 794 $ 847 $ (53 ) (6 %) $ 1,403.13 $ 1,274.86 $ 128 10 %
Miscarriage analysis 1,896 1,798 98 5 % 3,079 2,322 757 33 % $ 1,623.76 $ 1,291.57 $ 332 26 %
PGS 367 30 337 1123 % 473 40 433 1083 % $ 1,290.67 $ 1,324.00 $ (33 ) (3 %)
Subtotal – reproductive health 2,829 2,492 337 14 % 4,346 3,209 1,137 35 % $ 1,536.41 $ 1,287.50 $ 249 19 %
Pediatric 949 1,048 (99 ) (9 %) 1,058 1,128 (70 ) (6 %) $ 1,114.41 $ 1,076.74 $ 38 3 %
Subtotal – all arrays 3,778 3,540 238 7 % 5,404 4,337 1,067 25 % $ 1,430.41 $ 1,225.11 $ 205 17 %
Non-array tests 1,650 1,404 246 18 % 575 474 101 21 % $ 348.48 $ 337.61 $ 11 3 %
Total – all tests 5,428 4,944 484 10 % 5,979 4,811 1,168 24 % $ 1,101.52 $ 973.19 $ 128 13 %
Royalties 100 67 33 49 %
Total revenues $ 6,079 $ 4,878 $ 1,201 25 %
Percentage of arrays 69.6 % 71.6 % 90.4 % 90.1 %
Financial Results
Three Months Ended June 30, 2016 and 2015
Total revenues for the second quarter of 2016 increased 22% to $3.1 million from $2.5 million for the second quarter of 2015. Revenues for the second quarter of 2016 were comprised of $3.05 million of diagnostic services revenue and $58,000 in royalties. Reproductive health diagnostic test revenue, which includes prenatal microarrays, miscarriage analysis and PGS, increased 32% to $2.2 million and related testing volumes increased 9% to 1,403. The second quarter 2016 revenue increase was driven primarily by higher average revenue per test particularly for miscarriage analysis and prenatal microarray tests, as well as by an increase in the number of billable customers.
Total operating expenses were $4.3 million for the second quarter of 2016 compared with $4.1 for the prior year period. The increase was due primarily to higher general & administrative expenses from increased severance and bonus accruals, an increase in research & development expenses due to development and launch of new diagnostic testing platforms, and higher cost of services as a result of higher test volume. Gross margin for the second quarter of 2016 improved to 53.0% from 44.6% for the second quarter of 2015.
The net loss attributable to common stockholders for the second quarter of 2016 was $1.2 million, or $0.89 per share, improved by $377,000 from a net loss attributable to common stockholders for the second quarter of 2015 of $1.6 million, or $1.91 per share.
Six Months Ended June 30, 2016 and 2015
Total revenues for the first six months of 2016 increased 25% to $6.1 million from $4.9 million for the first six months of 2015. Revenues for the first six months of 2016 included $6.0 million in diagnostic services revenue and $100,000 in royalty revenues.
Operating expenses for the first six months of 2016 were $8.8 million compared with $8.2 million from the prior-year period, with the increase mainly due to higher cost of services resulting from increased testing volumes. Gross margin improved to 52.3% for the first six months of 2016 from 45.4% for the first six months of 2015.
The net loss attributable to common stockholders for the first six months of 2016 was $4.4 million, or $3.89 per share, compared to $4.3 million, or $5.23 per share in 2015. The higher net loss attributable to common stockholders in 2016 reflected one-time, non-cash charges of $1.9 million related to deemed dividends from the issuance of Series F convertible preferred stock and warrants in the $8.0 million public offering that closed on March 24, 2016. This increase was partially offset by the reversal of the $890,000 Series E deemed dividend recognized in 2015 from the repurchase of those securities upon closing of our public offering, partially reduced by the $656,000 deemed dividend paid to the Series E investors in February of 2016.
The Company reported $5.2 million in cash, cash equivalents and short-term investments as of June 30, 2016, compared with $3.9 million as of December 31, 2015. The Company used $0.9 million and $2.5 million in cash to fund operating activities during the quarter and six months ended June 30, 2016, respectively, compared with $1.5 million and $2.6 million used to fund operating activities during the comparable 2015 periods, respectively. The significant decreases in net cash used to fund operating activities for the 2016 periods resulted primarily from improved cash reimbursement of $3.0 million and $5.4 million for the three and six months ended June 30, 2016, respectively, compared with $2.5 million and $4.6 million for the three and six months ended June 30, 2015, respectively.