CombiMatrix Corporation (NASDAQ:CBMX), a family health molecular diagnostics company specializing in DNA-based reproductive health and pediatric testing services, today reported financial results for the three and nine months ended September 30, 2016, and provided a business update.
“Excellent execution on our business initiatives keeps us squarely on the path to profitability,” said Mark McDonough, CombiMatrix President and CEO. “Among quarterly financial highlights, we are reporting revenue growth of 29%, our third consecutive quarter of gross margin above 50% and record cash reimbursement of $3.1 million, or 95% of total revenues. Combined with our ability to manage expenses, we reduced both our operating loss and our cash burn by nearly half from one year ago.
“We are pleased with our recent performance and expect continued growth in revenue and test volume, along with consistent cash reimbursement and prudent expense management in the coming year with a focus on creating value for our shareholders,” Mr. McDonough added. “Given our outlook, we are increasingly confident we will reach our goal of positive cash flow from operations by the fourth quarter of 2017.”
Third Quarter Financial and Operating Highlights (all comparisons are with the third quarter of 2015)
|●||Total revenues of $3.2 million, up 29%|
|●||Total test volume of 2,835, up 14%|
|●||Reproductive health revenues of $2.3 million, up 39%|
|●||Reproductive health test volume of 1,483, up 17%|
|●||Gross margin of 54.0%, up from 43.6%|
|●||Number of billable customers of 257, up 10%|
|●||Cash collections at new record of $3.1 million, or 95% of total revenue, up 29%|
Total revenues for the third quarter of 2016 increased 29% to $3.2 million from $2.5 million for the third quarter of 2015. Reproductive health diagnostic test revenue, which includes prenatal microarrays, miscarriage analysis and preimplantation genetic screening (PGS), increased 39% to $2.3 million and testing volume increased 17% to 1,483. The third quarter 2016 revenue increase was driven primarily by higher test volume for reproductive health diagnostics, higher average revenue per test particularly for miscarriage analysis and PGS tests, and from an increase in the number of billable customers, which reached 257 during the third quarter of 2016 compared to 234 in the prior-year period.
Total operating expenses were $4.1 million for the third quarter of 2016 compared with $4.2 for the prior-year period. The decrease was due primarily to lower sales and marketing and research and development expenses, partially offset by higher general and administrative expenses due to higher personnel, investor relations and consulting costs and higher cost of services as a result of higher test volume. Gross margin for the third quarter of 2016 improved to 54.0% from 43.6% for third quarter of 2015.
The net loss attributable to common stockholders for the third quarter of 2016 was $856,000, or $0.38 per share, compared with a net loss attributable to common stockholders for the third quarter of 2015 of $1.7 million, or $2.00 per share, an improvement of $831,000.
Nine Months Ended September 30, 2016 and 2015
Total revenues for the first nine months of 2016 increased 26% to $9.3 million from $7.4 million for the first nine months of 2015. Revenues for the first nine months of 2016 included $9.2 million in diagnostic services revenue and $137,000 in royalty revenues.
Operating expenses for the first nine months of 2016 were $12.9 million compared with $12.4 million for the prior-year period, with the increase mainly due to higher general and administrative expenses and higher cost of services resulting from increased testing volumes, partially offset by lower sales and marketing expenses. Gross margin improved to 52.9% for the first nine months of 2016 from 44.8% for the first nine months of 2015.
The net loss attributable to common stockholders for the first nine months of 2016 was $5.2 million, or $3.48 per share, compared to $6.0 million, or $7.21 per share in 2015. The 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 Series F public offering, partially reduced by the $656,000 deemed dividend paid to the Series E investors in February of 2016.
The Company reported $4.3 million in cash, cash equivalents and short-term investments as of September 30, 2016, compared with $3.9 million as of December 31, 2015. The Company used $817,000 and $3.4 million in cash to fund operating activities during the quarter and nine months ended September 30, 2016, respectively, compared with $1.5 million and $4.2 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 $3.1 million and $8.5 million for the three and nine months ended September 30, 2016, respectively, compared with $2.4 million and $7.0 million for the three and nine months ended September 30, 2015, respectively.
Conference Call and Webcast
CombiMatrix will hold an investment-community conference call and audio webcast today beginning at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these results and answer questions. The conference call dial-in numbers are (866) 634-2258 for domestic callers and (330) 863-3454 for international callers. A live webcast of the call will be available at http://investor.combimatrix.com/events.cfm.
A recording of the call will be available for seven days beginning approximately two hours after the completion of the call by dialing (855) 859-2056 for domestic callers or (404) 537-3406 for international callers, and entering passcode 93599356. The webcast of the call will be archived for 30 days on the Company’s website at http://investor.combimatrix.com/events.cfm.
About CombiMatrix Corporation
CombiMatrix Corporation provides best-in-class molecular diagnostic solutions and comprehensive clinical support to foster the highest quality in patient care. CombiMatrix specializes in pre-implantation genetic diagnostics and screening, prenatal diagnosis, miscarriage analysis and pediatric developmental disorders, offering DNA-based testing for the detection of genetic abnormalities beyond what can be identified through traditional methodologies. Our testing focuses on advanced technologies, including single nucleotide polymorphism (“SNP”) chromosomal microarray analysis (“CMA”), next generation sequencing (“NGS”), fluorescent in situ hybridization (“FISH”) and high resolution karyotyping. Additional information about CombiMatrix is available at www.combimatrix.com or by calling (800) 710-0624.