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NEW YORK--(BUSINESS WIRE)-- Enzo Biochem, Inc. (NYSE:ENZ), an integrated diagnostics and therapeutics company, today reported results for the fiscal quarter and first half ended January 31, 2019 along with providing more detail on its investments in the development of novel diagnostic system and centralized clinical services.
Recent Developments
Barry Weiner, President, Comments
“We continue to focus relentlessly on our strategic program to provide lower cost, highly efficient and effective platforms and reagents to offset today’s reimbursement challenges facing independent and institutional clinical diagnostic laboratories. Our financial results thus far this year, and for the second fiscal quarter we are reporting today, have been directly impacted by lower reimbursement from governmental and commercial payors and a notable shift away from high margin esoteric molecular diagnostics testing to lower cost routine core tests. On balance, volume of accessions have remained constant but price per accession has decreased impacting both revenues and profitability.
“Enzo’s position as the leading independent clinical laboratory serving the important metropolitan New York-New Jersey-Connecticut market, which we now have extended into the New England states and as far south as Pennsylvania, remains intact. Enzo’s growing advanced testing menu, and especially our comprehensive women’s health panel using AMPIPROBE® multiplex real-time PCR assays featuring detection of infectious disease tests for a total of 16 organisms from a single vaginal swab specimen, continues to put our expertise at the forefront of quality, cost effective, high performance diagnostic technology.
“The challenges from reduced diagnostic reimbursements, which have been instituted without regard to the serious harm it has done to independent and hospital clinical labs profit margins, is a development Enzo foresaw early on in embarking on our strategic program. Moreover, private healthcare insurers are implementing tightened standards for approving tests and determining medical necessity is further evidence of more critical adverse reimbursement policies. All this has made Enzo’s developmental program to provide testing platforms and reagents easily adaptable to existing open systems more valuable. Our program to establish Enzo as a nationwide reference laboratory providing overnight services utilizing our technology also is aimed at shoring up independent operating margins for those for whom investing in new platforms is uneconomic.
“Our efforts currently are directed at developing a well-rounded offering of wide-ranging tests for approval by both the FDA and New York State Department of Health. In the meantime, while Enzo continues to be financially strong and highly liquid, our operating results are reflective of the cross currents now affecting the diagnostic laboratory industry. Despite the revenue shortfall, we are diligently working to invest behind our strategic program while we also focus on expense reductions and even more heightened efficiencies. When completed, our advanced Farmingdale campus will be important in that regard and we plan to continue to invest in our strategic plan. We also are taking steps to aggressively expand marketing and sales to reach a wider customer base, to maintain the high service standards for which we are known, and to control those aspects of our business that are within our reach to achieve improved results. We are confident that our efforts to do so and achieve our goals on the development front will pay off.”
Second Quarter Operating Results
Total cash, cash equivalents and restricted cash at January 31, 2019 were $42.7 million compared to $60.0 million at July 31, 2018. This amount does not include the net proceeds of the $21 million settlement paid in February as a result of the legal settlement noted above. Cash used in operations was $8.6 million during the second quarter of fiscal 2019 and cash used in investing activities, principally due to the purchase of our new facility and capital expenditures, was $6.0 million. Working capital at January 31, 2019 was over $47.0 million.
First Half Operating Results
Total revenues were $40.6 million compared to $53.0 million in the prior year, a decline of $12.4 million or 23% lower than prior year. Gross profit totaled $11.6 million, compared to $22.0 million a year ago, with gross margins of 29% and 41%, respectively. SG&A of $22.5 million decreased $0.5 million. Legal expenses increased to $2.4 million, from $2.1 million a year ago. The GAAP and Non-GAAP net loss totaled $14.4 million, or $0.30 per share, compared to $1.5 million and $2.6 million or $0.03 and $0.06 per share, respectively. EBITDA and adjusted EBITDA was a loss of $13.4 million compared to losses of $1.4 million, a year ago.
Conference Call
The Company will conduct a conference call Tuesday, March 12, 2019 at 8:30 AM ET. The call can be accessed by dialing (888) 459-5609. International callers can dial (973) 321-1024. Please reference PIN number 2037608.
Interested parties may also listen over the Internet at: http://tinyurl.com/y6ojnfqw
To listen to the live call, individuals should go to the website at least 15 minutes early to register, download and install any necessary audio software. Any pop up blocker installed on your PC should be disabled while accessing the webcast. A rebroadcast of the call will be available starting approximately two hours after the conference call ends, through March 26, 2019. The replay of the conference call can be accessed by dialing (855)-859-2056. International callers can dial (404) 537-3406), and when prompted, used the same PIN number 2037608.
Adjusted Financial Measures
To comply with Regulation G promulgated pursuant to the Sarbanes-Oxley Act, Enzo Biochem attached to this news release and will post to the Company's investor relations web site (www.enzo.com) any reconciliation of differences between GAAP and Adjusted financial information that may be required in connection with issuing the Company's quarterly financial results.
The Company uses EBITDA as a measure of performance to demonstrate earnings exclusive of interest, taxes, depreciation and amortization. Adjustments to EBITDA are for items of a non-recurring nature and are reconciled on the table provided. The Company manages its business based on its operating cash flows. The Company, in its daily management of its business affairs and analysis of its monthly, quarterly and annual performance, makes its decisions based on cash flows, not on the amortization of assets obtained through historical activities. The Company, in managing its current and future affairs, cannot affect the amortization of the intangible assets to any material degree, and therefore uses EBITDA as its primary management guide. Since an outside investor may base its evaluation of the Company's performance based on the Company's net loss not its cash flows, there is a limitation to the EBITDA measurement. EBITDA is not, and should not be considered, an alternative to net loss, loss from operations, or any other measure for determining operating performance of liquidity, as determined under accounting principles generally accepted in the United States (GAAP). The most directly comparable GAAP reference in the Company's case is the removal of interest, taxes, depreciation and amortization.
We refer you to the tables attached to this press release which includes reconciliation tables of GAAP to Adjusted net income (loss) and EBITDA to Adjusted EBITDA.
About Enzo Biochem
Enzo Biochem is a pioneer in molecular diagnostics, leading the convergence of clinical laboratories, life sciences and intellectual property through the development of unique diagnostic platform technologies that provide numerous advantages over previous standards. A global company, Enzo Biochem utilizes cross-functional teams to develop and deploy products, systems and services that meet the ever-changing and rapidly growing needs of health care today and into the future. Underpinning Enzo Biochem’s products and technologies is a broad and deep intellectual property portfolio, with patent coverage across a number of key enabling technologies.
Except for historical information, the matters discussed in this news release may be considered "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include declarations regarding the intent, belief or current expectations of the Company and its management, including those related to cash flow, gross margins, revenues, and expenses which are dependent on a number of factors outside of the control of the Company including, inter alia, the markets for the Company’s products and services, costs of goods and services, other expenses, government regulations, litigation, and general business conditions. See Risk Factors in the Company’s Form 10-K for the fiscal year ended July 31, 2018. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties that could materially affect actual results. The Company disclaims any obligations to update any forward-looking statement as a result of developments occurring after the date of this press release.
ENZO BIOCHEM, INC. | ||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||
Three months ended | Six months ended | |||||||||||||||||
Selected operations data: |
January 31 | January 31, | ||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||||
Total revenues | $ | 19,327 | $ | 26,152 | $ | 40,587 | $ | 53,028 | ||||||||||
Gross profit | $ | 4,579 | $ | 10,545 | $ | 11,600 | $ | 21,990 | ||||||||||
Gross profit % | 24 | % | 40 | % | 29 | % | 41 | % | ||||||||||
Loss before income taxes | (8,408 | ) | (1,998 | ) | (14,389 | ) | (2,638 | ) | ||||||||||
Benefit for income taxes | - | 1,097 | - | 1,097 | ||||||||||||||
Net loss | $ | (8,408 | ) | $ | (901 | ) | $ | (14,389 | ) | (1,541 | ) | |||||||
Basic and diluted net income (loss) per share | ($0.18 | ) | ($0.02 | ) | ($0.30 | ) | ($0.03 | ) | ||||||||||
Weighted average shares outstanding - basic and diluted | 47,199 | 46,941 | 47,197 | 46,806 | ||||||||||||||
Selected balance sheet data: |
1/31/2019 |
7/31/2018 |
||||||||||||||||
Cash and cash equivalents (including restricted cash $750) | $ | 42,728 | $ | 60,041 | ||||||||||||||
Working capital | $ | 47,044 | $ | 63,014 | ||||||||||||||
Stockholders' equity | $ | 67,497 | $ | 81,121 | ||||||||||||||
Total assets | $ | 89,120 | $ | 101,660 | ||||||||||||||
The following table presents a reconciliation of reported net
income (loss) and basic and diluted net |
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ENZO BIOCHEM, INC. | ||||||||||||||||
Non-GAAP Reconciliation Table | ||||||||||||||||
(Unaudited, in thousands, except per share data) | ||||||||||||||||
Three months ended | Six months ended | |||||||||||||||
January 31 | January 31, | |||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
Reported GAAP net loss | $ | (8,408 | ) | $ | (901 | ) | $ | (14,389 | ) | $ | (1,541 | ) | ||||
Adjusted for: | ||||||||||||||||
Legal settlements, net | - | - | - | - | ||||||||||||
Legal fees associated with settlements | - | - | - | - | ||||||||||||
Benefit for income taxes | - | (1,097 | ) | - | (1,097 | ) | ||||||||||
Non-GAAP net loss | $ | (8,408 | ) | $ | (1,998 | ) | $ | (14,389 | ) | $ | (2,638 | ) | ||||
Weighted Shares Outstanding | ||||||||||||||||
Basic and diluted | 47,199 | 46,941 | 47,197 | 46,806 | ||||||||||||
Basic and diluted earnings per share | ||||||||||||||||
Basic and diluted net income (loss) per share GAAP | ($0.18 | ) | ($0.02 | ) | ($0.30 | ) | ($0.03 | ) | ||||||||
Basic and diluted net income (loss) per share non-GAAP | ($0.18 | ) | ($0.04 | ) | ($0.30 | ) | ($0.06 | ) | ||||||||
The following table presents a reconciliation of reported net
income (loss) for the three and six months ended |
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ENZO BIOCHEM, INC. | ||||||||||||||||
EBITDA & Adjusted EBITDA Reconciliation Table | ||||||||||||||||
(Unaudited, in thousands) | ||||||||||||||||
Three months ended | Six months ended | |||||||||||||||
January 31 | January 31, | |||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
GAAP net loss | $ | (8,408 | ) | $ | (901 | ) | $ | (14,389 | ) | $ | (1,541 | ) | ||||
Plus (minus): | ||||||||||||||||
Depreciation and amortization | 768 | 786 | 1,534 | 1,535 | ||||||||||||
Interest income | (227 | ) | (185 | ) | (501 | ) | (342 | ) | ||||||||
Benefit for income taxes | - | (1,097 | ) | - | (1,097 | ) | ||||||||||
EBITDA | $ | (7,867 | ) | $ | (1,397 | ) | $ | (13,356 | ) | $ | (1,445 | ) | ||||
Adjusted for: | ||||||||||||||||
Legal settlements, net | - | - | - | - | ||||||||||||
Legal fees associated with settlements | - | - | - | - | ||||||||||||
Separation payments | - | - | - | - | ||||||||||||
Adjusted EBITDA | $ | (7,867 | ) | $ | (1,397 | ) | $ | (13,356 | ) | $ | (1,445 | ) | ||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20190311005805/en/
For: Enzo Biochem, Inc.
Steve Anreder, 212-532-3232
steven.anreder@anreder.com
or
Michael
Wachs, CEOcast, Inc., 212-732-4300
mwachs@ceocast.com
Source: Enzo Biochem, Inc.
Released March 11, 2019