Sequenom, Inc. Reports Financial Results For The Fourth Quarter And Full Year
Diagnostic Services Now Largest Contributor to Total Revenues
SAN DIEGO, March 7, 2013
SAN DIEGO, March 7, 2013 /PRNewswire/ -- Sequenom, Inc. (NASDAQ: SQNM), a life
sciences company providing innovative genetic analysis solutions, today
reported total revenues of $33.7 million and $89.7 million for the fourth
quarter and full year of 2012, respectively. Net loss was $32.8 million, or
$0.29 per share, and $117.1 million, or $1.03 per share, for the fourth
quarter and full year, respectively.
"It has been a little more than one year since the Sequenom Center for
Molecular Medicine (SCMM) launched MaterniT21 PLUS™, the first non-invasive
prenatal test (NIPT) in the United States that measures circulating cell-free
nucleic acids in maternal blood for the detection of fetal aneuploidies.
During 2012, SCMM established itself as the leader in the NIPT field with the
good acceptance of MaterniT21 PLUS by the medical community," said Harry
Hixson, Jr., Ph.D., Chairman and CEO of Sequenom. "SCMM and its licensees
have also seen rapid acceptance of non-invasive prenatal testing in countries
outside the United States."
Fourth Quarter 2012 Performance
Total revenues for the fourth quarter of 2012 increased to $33.7 million, 117%
over revenues of $15.5 million for the comparable period in 2011. Fourth
quarter 2012 revenues from the genetic analysis operating segment were
essentially flat year-over-year, while revenues from the SCMM diagnostics
services operating segment grew to $21.1 million in the fourth quarter of 2012
up from $2.8 million in the prior year period. Revenues from the SCMM
diagnostics segment are recorded primarily on the cash basis.
Total cost of revenues increased to $21.4 million for the fourth quarter of
2012, compared to $9.3 million for the prior year period. Cost of revenues
increased due to the significant increase in the number of diagnostic tests
performed, with accessions of 33,000 samples during the fourth quarter of 2012
compared to 8,000 samples accessioned during the prior year period.
Today we filed a Form 8-K which describes that management identified an
accounting error in our previously issued consolidated financial statements.
The resulting change in classification increased cost of revenues and
decreased selling and marketing expense by the same amount and thus had no
effect on revenues or net loss for this, or any period. This accounting error
related to the classification of costs related to field service personnel for
our genetic analysis business as selling and marketing expenses rather than as
cost of revenues in prior periods. The cost of genetic analysis product sales
and services for the fourth quarter of 2011 now includes an additional $0.8
million in maintenance labor services. These costs were previously classified
as selling and marketing expenses.
Overall gross margin for the fourth quarter of 2012 was 37% as compared to
gross margin of 40% for the fourth quarter of 2011. Fourth quarter gross
margin for our diagnostics services business was positive for the first time
since the launch of SCMM's MaterniT21 PLUS test, even with revenues being
recorded on the cash basis. Gross margin for our genetic analysis business
for the fourth quarter of 2012 was 67% compared to 70% for the prior year
Total operating expenses for the fourth quarter of 2012 were $41.8 million, as
compared to total operating expenses of $28.2 million for the fourth quarter
of 2011. Selling and marketing expenses increased to $13.8 million for the
fourth quarter of 2012 from $8.2 million for the fourth quarter of 2011,
resulting primarily from higher labor costs associated with the expansion of
the SCMM sales force and marketing efforts. Research and development expenses
increased to $14.3 million for the fourth quarter of 2012, as compared to
$13.1 million in the fourth quarter of 2011, resulting primarily from the
expansion of capacity and the progress toward validation of the MaterniT21
PLUS test at the North Carolina facility.
General and administrative expenses for the fourth quarter of 2012 were $13.7
million, as compared to $6.8 million for the fourth quarter of 2011, due to
increased litigation expenses and increased infrastructure to support the
Company's operations. Total stock-based compensation expense was $4.1 million
for the fourth quarter of 2012; an increase from $2.8 million in stock-based
compensation recorded for the fourth quarter of 2011 as a result of a change
in estimate for performance based stock awards.
Net loss for the fourth quarter 2012 was $32.8 million or $0.29 per share, as
compared to net loss of $22.2 million, or $0.22 per share for the same period
in 2011. Net cash used in operating activities was $14.5 million for the
fourth quarter 2012, lower than the previous quarters in 2012.
"We made significant progress in our performance during 2012, with strong
revenue growth during the fourth quarter as our diagnostic services revenues
increased and our overall cash burn declined," said Paul V. Maier, Sequenom's
CFO. "We look forward to continued growth in 2013 through greater testing
volumes and revenues, as well as test capacity expansion. To meet the growing
demand for its testing services, we expect Sequenom CMM's third laboratory
location in North Carolina will become operational later this year."
Full year 2012 Performance
The Company reported revenues of $89.7 million for 2012, an increase of 60%
compared to revenues of $55.9 million for 2011. Diagnostic services revenues
were 52% of total revenues for 2012, surpassing revenues from the genetic
analysis operating segment for the first time in the Company's history. The
Company will continue to account for revenues from its diagnostic testing
services on a cash basis until further experience and third party contracts
are gained and additional internal controls are established that will allow a
reasonable estimate of collectable amounts to be made before moving to the
accrual method of accounting.
Cost of revenues increased to $62.3 million for 2012, compared to $26.4
million for 2011, due to the greatly increased number of diagnostic tests
performed. SCMM accessioned 92,000 samples during 2012 as compared to 23,300
samples accessioned during the prior year. The cost of revenues for 2011
reflects the restatement for the change in classification of the cost of
maintenance services for the genetic analysis business in the amount of $3.1
million as described above.
Overall gross margin for 2012 was 31% of revenues, decreasing from 53% of
revenues for the full year 2011, primarily as a result of the additional costs
of diagnostic services which are expensed when incurred, whereas diagnostic
services revenues are primarily recorded on a cash basis.
Total operating expenses for 2012 were $140.1 million, as compared to total
expenses of $103.8 million for 2011. This increase was primarily the result
of higher selling and marketing expenses to penetrate the market for
noninvasive prenatal testing, in particular, and higher legal costs associated
with patent litigation.
Selling and marketing expenses increased to $44.9 million for 2012 from $28.0
million for 2011, due primarily to higher labor costs associated with the
expansion of SCMM's prenatal and ophthalmology specialty sales forces.
Research and development expenses increased to $54.1 million for 2012 from
$53.6 million in 2011. The incremental expense is related primarily to higher
labor costs to support research and development activities offset by lower
intellectual property licensing and collaboration costs compared to 2011.
General and administrative expenses for 2012 were $41.1 million, as compared
to $22.2 million for 2011, due to increased patent litigation expenses and
increased infrastructure to support the Company's operations. Total
stock-based compensation expense was $13.3 million for 2012, an increase from
the $12.1 million recorded during the full year 2011.
Net loss for 2012 was $117.1 million or $1.03 per share, as compared to net
loss of $74.2 million, or $0.75 per share for 2011.
As of December 31, 2012, the Company's total cash, cash equivalents and
marketable securities were $175.9 million. Net cash used in operating
activities was $78.1 million for 2012, while purchases of capital equipment
for the same period totaled $15.2 million, funded partially through
utilization of the Company's credit facility.
This press release contains certain unaudited financial results for the
Company's fiscal year and fourth quarter ended December 31, 2012. These
unaudited results may change as a result of further review by the Company's
management and its independent auditors. The completion of the audit of our
financial results for 2012 could result in changes to the unaudited financial
results presented in this press release and may identify issues related to the
effectiveness of the Company's internal controls over financial reporting.
Final fourth quarter and annual results will be provided in the company's
annual report to the SEC on Form 10-K.
SCMM accessioned approximately 92,000 total test samples in 2012, including
more than 61,000 MaterniT21 PLUS test samples. At the close of December 2012,
the annualized run rate for the MaterniT21 PLUS test was more than 120,000
test samples accessioned, an average of more than 2,300 samples weekly.
During the fourth quarter, Sequenom recorded significant increases in
revenues, in the amount of $18.2 million, based on cash collections for
samples accessioned in prior periods and the increase in total volumes of
samples processed by SCMM. Positive decisions supporting the use of
noninvasive prenatal testing in high-risk pregnant women were granted jointly
from the American College of Obstetricians and Gynecologists Committee on
Genetics and the Society for Maternal-Fetal Medicine Publications Committee,
as well as The California Technology Assessment Forum. Recent positive
coverage decisions have been issued by national and regional payors for
high-risk pregnancies, and are expected to contribute to stronger revenues
Most recently, SCMM announced that the MaterniT21 PLUS test now reports on the
presence of fetal sex chromosomal aneuploidies, in addition to its
identification of aneuploidies for chromosomes 21, 18 and 13.
In response to sustained growth in sample volume, SCMM is in the process of
increasing its MaterniT21 PLUS test capacity by completing the build out and
initiating the validation of an additional location in North Carolina. This
new location is expected to be operational in the second half of 2013 and will
increase the total non-invasive prenatal testing capacity to a minimum of
300,000 tests per year.
SCMM also continues to expand access to its testing services for physicians
and their patients by hiring additional field sales representatives. The
sales force is expected to grow to more than 85 representatives across the
U.S. by the end of the first quarter 2013.
Conference Call Information
A conference call hosted by Harry F. Hixson, Jr., Ph.D., Chairman and CEO, and
other members of senior management will take place today at 5:00 pm ET (2:00
pm PT) and will be webcast live on the Sequenom website.
To access the live teleconference call, dial 800-860-2442 in the U.S.,
866-605-3852 in Canada (both are toll free), and 412-858-4600 for other
international callers. Please specify to the operator that you would like to
join the "Sequenom Fourth Quarter 2012 Earnings Conference Call." If you are
unable to listen to the live webcast, a teleconference replay will be
available through Friday, March 15, 2013. Interested parties can access the
replay by dialing 877-344-7529 or 412-317-0088 internationally and entering
the conference number 10025204.
The conference call webcast is accessible through the "Investors" section of
the Sequenom website at http://ir.sequenom.com. An online replay will be
available following the initial broadcast until Friday, March 15, 2013.
Sequenom, Inc. (NASDAQ: SQNM) is a life sciences company committed to
improving healthcare through revolutionary genetic analysis solutions.
Sequenom develops innovative technology, products and diagnostic tests that
target and serve discovery and clinical research, and molecular diagnostics
markets. The company was founded in 1994 and is headquartered in San Diego,
California. Sequenom maintains a Web site at http://www.sequenom.com to which
Sequenom regularly posts copies of its press releases as well as additional
information about Sequenom. Interested persons can subscribe on the Sequenom
Web site to email alerts or RSS feeds that are sent automatically when
Sequenom issues press releases, files its reports with the Securities and
Exchange Commission or posts certain other information to the Web site.
SEQUENOM^®, MaterniT21™ and MaterniT21™ PLUS are trademarks of Sequenom, Inc.
All other trademarks and service marks are the property of their respective
About Sequenom Center for Molecular Medicine
Sequenom Center for Molecular Medicine (Sequenom CMM^®) is a CAP accredited
and CLIA-certified molecular diagnostics reference laboratory currently with
two locations dedicated to the development and commercialization of laboratory
developed tests for prenatal and eye conditions and diseases. Utilizing
innovative proprietary technologies, Sequenom CMM provides test results that
can be used by health care professionals in managing patient care. Testing
services are available only upon request by physicians. Sequenom CMM works
closely with key opinion leaders and experts in obstetrics, retinal care and
genetics. Sequenom CMM scientists use a variety of sophisticated and
cutting-edge methodologies in the development and validation of tests.
Sequenom CMM is changing the landscape in genetic diagnostics. Visit
http://www.sequenomcmm.comfor more information on laboratory testing
Except for the historical information contained herein, the matters set forth
in this press release, including statements regarding continually increasing
demand from providers around the world for Sequenom CMM's prenatal tests,
growing Sequenom CMM's market presence, sales expansion and establishing its
leadership position, the Company's 2013 expectations regarding greater test
volumes, revenues, capacity expansion including the opening, build-out, and
licensure of a third laboratory location in North Carolina for Sequenom CMM,
the Company's expectations and timing regarding a move from a cash basis to an
accrual method of accounting for diagnostic testing services, expectations
regarding the impact of positive payor coverage decisions on future revenues
and developing relationships with payors, the Company's commitment to
improving healthcare through revolutionary genetic analysis solutions, and
Sequenom CMM's dedication to the development and commercialization of
laboratory developed tests for prenatal and eye conditions and diseases, and
changing the landscape in genetic diagnostics, are forward-looking statements
within the meaning of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are subject
to risks and uncertainties that may cause actual results to differ materially,
including the risks and uncertainties associated with market demand for and
acceptance and use of technology and tests such as the MaterniT21 PLUS test,
reliance upon the collaborative efforts of other parties such as, without
limitation, healthcare providers, international distributors and licensees,
the Company or third parties obtaining or maintaining regulatory approvals
that impact the Company's business, government regulation particularly with
respect to diagnostic products and laboratory developed tests, publication
processes, the performance of designed product enhancements, the Company's
ability to develop and commercialize technologies and products, particularly
new technologies such as noninvasive prenatal diagnostics, laboratory
developed tests, and genetic analysis platforms, the Company's financial
position, the Company's ability to manage its existing cash resources or raise
additional cash resources, competition, intellectual property protection and
intellectual property rights of others, litigation involving the Company, and
other risks detailed from time to time in the Company's most recently filed
Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, its
most recently filed reports on Form 8-K, and its most recently filed Annual
Report on Form 10-K, and other documents subsequently filed with or furnished
to the Securities and Exchange Commission. These forward-looking statements
are based on current information that may change and you are cautioned not to
place undue reliance on these forward-looking statements, which speak only as
of the date of this press release. All forward-looking statements are
qualified in their entirety by this cautionary statement, and the Company
undertakes no obligation to revise or update any forward-looking statement to
reflect events or circumstances after the issuance of this press release.
[Financial tables follow]
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three months For the years ended
December 31, December 31,
2012 2011 2012 2011
Diagnostic services $ $ $ $
21,066 2,833 46,457 8,319
Genetic analysis product sales and 12,606 12,651 43,240 47,588
Total 33,672 15,484 89,697 55,907
Costs and expenses:
Cost of diagnostics services 17,169 5,409 47,283 10,031
Cost of genetic analysis product sales and 4,193 3,845 15,025 16,360
Total cost of revenues 21,362 9,254 62,308 26,391
Gross 12,310 6,230 27,389 29,516
Selling and marketing 13,772 8,236 44,939 28,010
Research and development 14,339 13,074 54,115 53,585
General and administrative 13,665 6,848 41,090 22,185
Total operating expenses 41,776 28,158 140,144 103,780
Loss from operations (29,466) (21,928) (112,755) (74,264)
Other (loss) income, net (3,610) (206) (4,580) 202
Loss before income taxes (33,076) (22,134) (117,335) (74,062)
Income tax benefit (expense) 311 (42) 269 (95)
Net loss $ $ $ $
(32,765) (22,176) (117,066) (74,157)
Net loss per share, basic and diluted $ $ $ $
(0.29) (0.22) (1.03) (0.75)
Weighted average shares outstanding, basic 114,786 99,325 113,646 99,143
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, December 31,
Cash, cash equivalents, marketable $ 175,942 $ 84,216
Accounts receivable, net 7,887 6,972
Inventories 10,570 8,729
Prepaid expenses and other assets 3,075 3,533
Total current assets 197,474 103,450
Property, equipment and leasehold 33,158 23,902
Other assets 17,987 12,468
Total assets $ 248,619 $ 139,820
Liabilities and Stockholders' Equity:
Accounts payable $ 16,133 $ 8,435
Accrued expenses 24,481 15,975
Long-term debt and obligations, 7,625 2,147
Other current liabilities 2,713 2,924
Total current liabilities 50,952 29,481
Long-term liabilities 149,720 19,183
Stockholders' equity 47,947 91,156
Total liabilities and stockholders' $ 248,619 $ 139,820
SOURCE Sequenom, Inc.
Contact: Marcy Graham, Senior Director, Investor Relations & Corp Comm,
Sequenom, Inc., +1-858-202-9028, email@example.com; or Media, Jakob
Jakobsen, Chandler Chicco Agency, +1-310-309-1003,
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