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Molecular Assay Approvals from New York State Department of Health and Planned Acquisition of New Facility Highlight Progress Advancing Growth Strategy
NEW YORK--(BUSINESS WIRE)-- Enzo Biochem Inc. (NYSE:ENZ), an integrated diagnostic and therapeutics company, today reported results for the fourth quarter and fiscal year ended July 31, 2018, in addition to announcing New York State department of Health’s approval of additional assays for new women’s health infectious disease panel continuing to drive focus in development of lower cost products, platforms and services for the clinical laboratory market.
Recent Developments
The Company expects the commercialization from the developments of its strategic initiatives will begin over the next year at which time it anticipates returning to revenue and margin growth. The significant implementation steps include:
Barry Weiner, Enzo President, Comments:
“Fiscal 2018 was a year of solid progress in our strategic plan, and one in which each of the principal operating units posted volume increases and achieved objectives towards our growth initiatives. These initiatives began over three years ago now provide the potential for multiple ventures and partnerships that could generate significant shareholder value. Our focus is centered on providing cost efficient products and services utilizing our proprietary assays optimized for our automated, open system platforms that are compatible with existing sample collection devices as well as our own lower cost option. These have been designed to provide not only high-performance and adaptable solutions to existing lab workflow, but also to address a critical need for lower cost solutions. Besides the number of assays already approved, in process is the development of a screening assay for oncogenic forms of HPV, among others. Today’s clinical laboratories including Enzo face a two-fold challenge - to maintain revenue growth and profitability, amidst declining reimbursements and unreasonably high operating costs. The latter stem from “closed system” diagnostics platforms, sample collection devices and accessories that are a barrier to the use of low-cost and efficient third-party solutions.
Our efforts were not limited to laboratory product development, but also included building an internal sales force that will enable us to grow this business. We also have added to our development staff, and hired experienced professionals especially knowledgeable about health care providers in order to bring them into our fold as clients. In the next few quarters, our strategic plans call for a number of new tests currently under development to be submitted for New York State Department of Health for conditional approval to add to those already authorized, which will further expand our already sizable test menu. Our Women’s Health Panel was expanded with three more tests this quarter to 16 analytes that can be processed in one sample.
Our acquisition of a new facility ties in directly with the anticipated expansion of our capabilities at the Farmingdale, NY campus. In addition to enhancing efficiency, the purchase represents an important vote of confidence in our strategic plan. The new facility will provide Good Manufacturing Practices (GMP) and ISO compliant manufacturing and logistics space for Enzo’s diagnostics and life science products business. Moreover, the new facility will enhance space for GMP production of the Company’s development-stage clinical candidates, including Enzo’s proprietary sphingosine kinase 1 inhibitor, SK1-I, which is being investigated for potential applications in oncology and autoimmune diseases. This effort opens potential for strategic partnerships. It is a time-consuming, capital intensive effort, to transform an entity into a provider of platform, products and services in a relatively short time. We believe when the transition is completed over the next year that the Company will look very different than it does today, with an anticipated return to revenue and margin growth.”
Fiscal 2018 Operating Results
Fourth Quarter Operating Results
Total cash and cash equivalents at July 31, 2018 were $60.0 million compared to $64.2 million at July 31, 2017. Cash used in operations was $2.7 million during fiscal 2018 and cash used for investing activities, principally capital expenditures, was $1.9 million. Operating segments continue to be cash flow positive. Working capital at July 31, 2018 was over $63.0 million.
Conference Call
The Company will conduct a conference call Tuesday, October 16, 2018 at 8:30 AM ET. The call can be accessed by dialing 1-888-459-5609. International callers can dial 1-973-321-1024. Please reference PIN number 6096026.
Interested parties may also listen over the Internet at: https://tinyurl.com/y8kzakd2
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 12 AM (E.T.) Tuesday, October 30, 2018. The replay of the conference call can be accessed by dialing 1-855-859-2056 (International callers can dial 1-404-537-3406) and, when prompted, use the same PIN number 6096026.
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.
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 | Twelve months ended | |||||||||||||||||||||||||||
Selected operations data: |
July 31, | July 31, | ||||||||||||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||||||||||||
2018 |
2017 |
2018 |
2017 |
|||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||
Clinical laboratory services | $ | 16,776 | $ | 20,429 | $ | 74,777 | $ | 77,407 | ||||||||||||||||||||
Product revenues | 7,606 | 7,471 | 29,224 | 29,192 | ||||||||||||||||||||||||
Royalty and license fee income | 73 | 272 | 712 | 1,205 | ||||||||||||||||||||||||
Total revenues | $ | 24,455 | $ | 28,172 | $ | 104,713 | $ | 107,804 | ||||||||||||||||||||
Gross profit | $ | 9,665 | $ | 12,387 | $ | 44,328 | $ | 48,329 | ||||||||||||||||||||
Gross profit % | 40 | % | 44 | % | 42 | % | 45 | % | ||||||||||||||||||||
Income (loss) before income taxes | (5,764 | ) | 94 | (11,418 | ) | (2,504 | ) | |||||||||||||||||||||
Benefit for income taxes (1) | - | - | 1,097 | - | ||||||||||||||||||||||||
Net income (loss) | $ | (5,764 | ) |
|
$ | 94 | $ | (10,321 | ) | $ | (2,504 | ) | ||||||||||||||||
Basic net income (loss) per share | ($0.12 | ) | $ | 0.00 | ($0.22 | ) | ($0.05 | ) | ||||||||||||||||||||
Diluted net income (loss) per share | ($0.12 | ) | $ | 0.00 | ($0.22 | ) | ($0.05 | ) | ||||||||||||||||||||
Weighted average shares outstanding - basic | 47,173 | 46,473 | 46,972 | 46,350 | ||||||||||||||||||||||||
Weighted average shares outstanding - diluted | 47,173 | 47,720 | 46,972 | 46,350 | ||||||||||||||||||||||||
(1) The statement of operations for the twelve months ended July 31, 2018 includes a one-time tax benefit related to the passing of the Tax Cut and Jobs Act, which was signed into law in December 2017. |
Selected balance sheet data: |
7/31/2018 |
7/31/2017 |
|||||
Cash and cash equivalents | $60,041 | $64,167 | |||||
Working capital | $63,014 | $71,274 | |||||
Stockholders' equity | $81,121 | $88,872 | |||||
Total assets | $101,660 | $107,665 | |||||
The following table presents a reconciliation of reported net income (loss) and basic and diluted net income (loss) per share to Adjusted net income (loss) and basic and diluted net income (loss) per share for the three and twelve months ended July 31, 2018 and 2017: |
ENZO BIOCHEM, INC. | ||||||||||||||||||||||||||||||||||
Adjusted Reconciliation Table | ||||||||||||||||||||||||||||||||||
(Unaudited, in thousands, except per share data) | ||||||||||||||||||||||||||||||||||
Three months ended | Twelve months ended | |||||||||||||||||||||||||||||||||
July 31, | July 31, | |||||||||||||||||||||||||||||||||
2018 |
2017 |
2018 |
2017 |
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Reported GAAP net income (loss) | $ | (5,764 | ) | $ | 94 | $ | (10,321 | ) | $ | (2,504 | ) | |||||||||||||||||||||||
Adjusted for: | ||||||||||||||||||||||||||||||||||
Benefit for income taxes | - | - | (1,097 | ) | - | |||||||||||||||||||||||||||||
Adjusted net income (loss) | $ | (5,764 | ) | $ | 94 | $ | (11,418 | ) | $ | (2,504 | ) | |||||||||||||||||||||||
Weighted Shares Outstanding: | ||||||||||||||||||||||||||||||||||
Basic | 47,173 | 46,473 | 46,972 | 46,350 | ||||||||||||||||||||||||||||||
Diluted | 47,173 | 47,720 | 46,972 | 46,350 | ||||||||||||||||||||||||||||||
Basic and diluted earnings per share: | ||||||||||||||||||||||||||||||||||
Basic net income (loss) per share - GAAP | ($0.12 | ) | $ | 0.00 | ($0.22 | ) | ($0.05 | ) | ||||||||||||||||||||||||||
Diluted net income (loss) per share - GAAP | ($0.12 | ) | $ | 0.00 | ($0.22 | ) | ($0.05 | ) | ||||||||||||||||||||||||||
Basic net income (loss) per share - Adjusted | ($0.12 | ) | $ | 0.00 | ($0.24 | ) | ($0.05 | ) | ||||||||||||||||||||||||||
Diluted net income (loss) per share - Adjusted | ($0.12 | ) | $ | 0.00 | ($0.24 | ) | ($0.05 | ) | ||||||||||||||||||||||||||
(1) The statement of operations for the twelve months ended July 31, 2018 includes a one-time tax benefit related to the passing of the Tax Cut and Jobs Act, which was signed into law in December 2017. The Company has excluded the one-time impact of this law in the calculation of Adjusted net income as it is non-recurring. |
The following table presents a reconciliation of reported net income (loss) for the three and twelve months ended July 31, 2018 and 2017 to EBITDA and Adjusted EBITDA: |
ENZO BIOCHEM, INC. | ||||||||||||||||||||||||||||
EBITDA & Adjusted EBITDA Reconciliation Table | ||||||||||||||||||||||||||||
(Unaudited, in thousands) | ||||||||||||||||||||||||||||
Three months ended | Twelve months ended | |||||||||||||||||||||||||||
July 31, | July 31, | |||||||||||||||||||||||||||
2018 |
2017 |
2018 |
2017 |
|||||||||||||||||||||||||
GAAP net income (loss) | $ | (5,764 | ) | $ | 94 | $ | (10,321 | ) | $ | (2,504 | ) | |||||||||||||||||
Plus (minus): | ||||||||||||||||||||||||||||
Depreciation and amortization | 780 | 906 | 3,130 | 3,598 | ||||||||||||||||||||||||
Interest income | (284 | ) | (144 | ) | (853 | ) | (384 | ) | ||||||||||||||||||||
Benefit for income taxes | - | - | (1,097 | ) | - | |||||||||||||||||||||||
EBITDA and Adjusted EBITDA | $ | (5,268 | ) | $ | 856 | $ | (9,141 | ) | $ | 710 | ||||||||||||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20181015005893/en/
For: Enzo Biochem, Inc.
Steve Anreder, 212-532-3232
steven.anreder@anreder.com
or
CEOcast,
Inc.
Michael Wachs, 212-732-4300
mwachs@ceocast.com
Source: Enzo Biochem Inc.
Released October 15, 2018