On May 04, 2016 CombiMatrix Corporation (NASDAQ:CBMX), a molecular diagnostics company specializing in DNA-based testing services for pre-implantation genetic diagnostics and screening, miscarriage analysis, prenatal and pediatric diagnostics, reported financial results for the three months ended March 31, 2016 (Press release, CombiMatrix, MAY 4, 2016, View Source [SID:1234511927]).
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"We are reporting another exceptional quarter of financial progress, with 28% revenue growth, expanded gross margin, increased cash collections and well managed operating expenses," said Mark McDonough, CombiMatrix President and CEO. "Our growth was driven by a 39% increase in reproductive health revenue on an 18% increase in test volume, reflecting higher average revenue per test. We are particularly pleased with our performance in miscarriage analysis testing, with revenues up 43% on 13% test volume growth. We also benefited from better productivity from our newer sales representatives, which contributed to an 18% increase in our customer base.
"We anticipate that various industry dynamics will favorably impact our business," he added. "In March, the two leading associations in women’s healthcare, the American College of Obstetricians and Gynecologists (ACOG) and the Society for Maternal-Fetal Medicine (SMFM), issued revised practice bulletins recommending that all women regardless of age or other risk factors are offered prenatal genetic testing. These bulletins reiterated the need to perform confirmatory testing when screening tests reveal positive results for fetal abnormalities. Additionally, a number of health plans, including Cigna and several in the Blue Cross Blue Shield network, have recently revised their medical policies to cover chromosomal microarray testing for recurrent pregnancy loss. We believe that more health plans will follow suit based on the growing clinical support for this valuable patient information.
"We are firmly focused on growth and a path toward profitability, supported by tight execution of our business strategy," said Mr. McDonough. "This year we plan to expand our IVF testing portfolio and expect to increase physician adoption through more clinical validation, improved marketing developed from the insights from our newly appointed Scientific Advisory Board, and greater productivity from our sales organization. We also are seeking opportunities to build upon our leadership position in the growing reproductive health diagnostics market and enhance shareholder value through partnerships and other business development alternatives. With the completion of an $8 million financing in late March, we are well positioned to execute on our plans."
First Quarter Financial and Operational Highlights (all comparisons are with the first quarter of 2015)
Total revenues of $3.0 million, up 28%
Reproductive health revenues of $2.2 million, up 39%
Reproductive health test volume of 1,426, up 18%
Number of billable customers reaches 264, up 18%
Cash collections of $2.5 million, up 15%
Closed $8.0 million underwritten public offering in March of 2016
Launched CombiPGD – Preimplantation Genetic Diagnosis for Single Gene Disorders and Chromosomal Translocations
Formed Scientific Advisory Board
Volumes
Revenues (in 000’s)
Q1 ’16 Q1 ’15 # Δ % Δ Q1 ’16 Q1 ’15 $ Δ % Δ
Prenatal 264 324 (60 ) (19 %) $ 321 $ 422 $ (101 ) (24 %)
Miscarriage analysis 995 882 113 13 % 1,622 1,132 490 43 %
PGS 167 - 167 - 222 - 222 -
Subtotal – reproductive health 1,426 1,206 220 18 % 2,165 1,554 611 39 %
Pediatric 452 467 (15 ) (3 %) 500 497 3 1 %
Subtotal – all arrays 1,878 1,673 205 12 % 2,665 2,051 614 30 %
Non-array tests 770 672 98 15 % 265 236 29 12 %
Total – all tests 2,648 2,345 303 13 % 2,930 2,287 643 28 %
Royalties 42 42 - 0 %
Total revenues $ 2,972 $ 2,329 $ 643 28 %
Financial Results
Total revenues for the first quarter of 2016 increased 28% to $3.0 million from $2.3 million for the first quarter of 2015. Revenues for the first quarter of 2016 were comprised of $2.9 million of diagnostic services revenue and $42,000 in royalties. Reproductive health diagnostic test revenue, which includes prenatal microarrays, miscarriage analysis and PGS, increased 39% to $2.2 million and related testing volumes increased 18% to 1,426. The first quarter 2016 revenue increase was driven partially by higher test volumes, particularly from miscarriage analysis and PGS testing, but primarily by higher average revenue per test in miscarriage analysis testing.
Total operating expenses were $4.4 million for the first quarter of 2016, compared with $4.1 million for the first quarter of 2015. The increase was due primarily to an increase in cost of services related to higher test volumes and from an increase in sales and marketing expenses related to sales force expansion. Gross margins for the first quarter of 2016 improved to 51.6% from 46.2% for the first quarter of 2015 due primarily to improved average reimbursement on miscarriage analysis testing.
The net loss for the first quarter of 2016 was $1.5 million, or $1.73 per share, compared with a net loss for the first quarter of 2015 of $1.8 million, or $2.24 per share. Net loss attributable to common stockholders for the first quarter of 2016 was $3.1 million, or $3.63 per share, compared with a net loss attributable to common stockholders for the first quarter of 2015 of $2.7 million, or $3.37 per share. 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 $6.6 million in cash, cash equivalents and short-term investments as of March 31, 2016, compared with $3.9 million as of December 31, 2015. The Company used $1.7 million in cash to fund operating activities during the first quarter of 2016, compared with $1.2 million to fund operating activities during the comparable period in 2015. The increase in net cash used to fund operating activities in 2016 resulted primarily from the timing of the purchase of inventory supplies, coupled with higher overall headcount in early 2016 compared with 2015.