Response Biomedical Corp. Announces Fourth Quarter and Fiscal 2012 Financial Results

Response Biomedical Corp. Announces Fourth Quarter and Fiscal 2012 Financial 
Results 
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 03/11/13 -- Response
Biomedical Corp. (TSX:RBM)(OTCBB:RPBIF) ("Response") today reported
financial results for the fourth quarter and year ended December 31,
2012. 
"We are encouraged by our financial results for the fourth quarter
and year ended December 31, 2012, which show continued revenue growth
and the strengthening of our gross margin over the comparative period
last year," said Jeff Purvin, Chief Executive Officer. "We are
committed to continuing this high level of performance and ultimately
achieving Adjusted EBITDA positive growth by implementing the
following four key strategies: 


 
--  Expand our distribution in one of the largest markets in the world, the
    United States, through our newly formed wholly owned subsidiary,
    Response Point of Care Inc. This effort is staffed by our Senior Vice
    President of Worldwide Sales and Marketing, our recently hired Director
    of U.S. Sales and a commission-only Sales Representative who are
    supported by a telesales organization tasked with producing high-
    potential sales leads. Additionally we expect to grow sales in this
    market by our two new U.S. based distributors, Laboratory Supply
    Company, Inc. and Fisher HealthCare, along with additional distributors
    we plan to engage during the year. 
--  Expand our presence in China through our newly formed Representative
    Office in Shanghai so that our new General Manager and the people he
    will be hiring in 2013 will be able to better support our distributors
    in China as well as to expand our distribution network into other
    regions in China. In addition, we expect to own our own product
    registrations in China by the fourth quarter of 2013. 
--  Increase our sales in the rest of the world outside of the U.S. and
    China by supporting existing distributors in the E.U., South America and
    Asia and by signing up new distributors in the Middle East and Mexico
    which are two regions that we believe hold significant promise for our
    products, and 
--  Continue to improve our operating efficiency by increasing our daily
    manufacturing volumes with a minimum of new capital a
nd human resources
    investment, improving customer payment cycles and improving our supply
    chain management." 
 
Financial results for the year ended December 31, 2012
 
--  Product sales increased 30% to $11.75 million for the year ended
    December 31, 2012 compared to $9.0 million for the previous year ended
    December 31, 2011: 
    --  Cardiovascular sales have increased 48%, or $3.5 million, primarily
        due to: 
        --  A $2.7 million increase in sales to our two distributors in
            China as a result of a combination of price and volume increases
            during the year; and 
        --  A $0.8 million increase in sales to the rest of the world
            primarily due to growth of existing distributors in Europe; 
    --  Infectious Disease sales have decreased 70%, or $0.4 million
        compared to 2011, due to the transition from 3M to Fisher HealthCare
        in the fourth quarter of 2012 and Biodefense and Environmental sales
        have decreased 32%, or $0.4 million, primarily due to a significant
        Biodefense sale made in 2011 that did not repeat in 2012 and our
        heightened focus on our Cardiovascular and Infectious Disease
        portfolios. 
--  Gross margin was 36.1% for the year ended December 31, 2012, compared to
    a gross margin of 22.8% in 2011. This increase is primarily due to the
    following: 
    --  An increase in the price of our products to our distributors,
        combined with a change in product mix to higher margin products; 
    --  A 27% increase in the level of production compared to 2011 resulting
        in a spreading of fixed manufacturing overhead costs over a larger
        base of manufactured tests; 
    --  An increase in manufacturing efficiency during 2012 compared to 2011
        resulting in lower material and labor costs per test produced; and 
    --  A decrease of $0.2 million in inventory provisions to account for
        obsolescence and slow-moving inventory items and to reduce inventory
        values down to their net realizable value. 
--  Operating expenses increased to $8.4 million for the year ended December
    31, 2012, compared to $7.4 million in 2011. The increase is primarily
    due to: 
    --  An increase of $0.5 million in research and development costs
        related to the recent CE Mark approval of a new D-dimer assay and
        regulatory activities in China, the United States and Europe offset
        by a $0.4 million decrease in severance costs compared to 2011; An
        increase of $1.0 million in stock based compensation, salaries and
        recruiting costs in general and administrative costs related
        primarily to the hiring of new senior management offset by a $0.5
        million decrease in severance costs compared to 2011; An increase of
        $0.5 million in sales and marketing expenses in both North America
        and China as a result of additional personnel and marketing
        expenditures. 
--  Adjusted EBITDA for the year ended December 31, 2012 was negative $2.6
    million compared to negative $4.2 million in 2011. Adjusted EBITDA for
    the year ended December 31, 2012 and 2011 excludes, for the applicable
    periods, interest expense, interest income, depreciation and
    amortization, stock-based compensation expense, and the unrealized loss
    or gain on the revaluation of the warrant liability. We believe that
    this non-GAAP measure may be useful to investors to analyze the results
    of our business as we use this non-GAAP measure internally to evaluate
    our financial results. A reconciliation between net loss and
    comprehensive loss and Adjusted EBITDA is included below. 
--  Net loss for the year totaled $5.3 million or $0.82 per basic and
    diluted share for the year ended December 31, 2012, compared to a $5.4
    million net loss or $2.72 per basic and diluted share in the comparative
    2011 period. Excluding the $1.1 million non-cash difference due to the
    change in valuation of the Company's warrant liability, the remaining
    Net loss for the year decreased by $1.2 million due to a $2.2 million
    increase in gross margin and $0.4 million of warrant issue costs related
    to a financing completed in 2011 being offset by a reduction of $ 0.4
    million in revenues from collaborative research arrangements due to the
    termination of the Roche Diagnostics contract in 2011, and a $1.0
    million increase in operating expenses. 
 
Financial results for the quarter ended December 31, 2012
 
--  Product sales increased 11% to $3.1 million for the quarter ended
    December 31, 2012 compared to $2.7 million for the same period in 2011
    due primarily to an increase in Cardiovascular sales in China. 
--  Gross margin increased to 35.7% for the quarter ended December 31, 2012,
    compared to a gross margin of 30.3% for the same period in 2011 due to
    an increase in the price of our products to our distributors, a 15%
    increase in the level of production, and a $0.1 million decrease in
    manufacturing overhead costs incurred. 
--  Operating expenses decreased to $1.7 million for the quarter ended
    December 31, 2012, compared to $2.1 million in 2011. This decrease is
    primarily due to: 
    --  A decrease of $0.3 million in research and development costs due to
        the timing of development of a new D-dimer assay and a decrease in
        personnel costs due to a lower head count in addition to severance
        costs incurred in 2011; a decrease of $0.3 million in general and
        administrative costs due to costs incurred with restating the 2010
        financial statements and setting up a note payable in the fourth
        quarter in 2011 offset by increased stock based compensation; and an
        increase of $0.3 million in sales and marketing expenses in both
        North America and China as a result of additional personnel and
        marketing expenditures. 
--  Adjusted EBITDA for the quarter ended December 31, 2012 was negative
    $0.3 million compared to negative $1.4 million in 2011. 
--  Net income for the quarter ended December 31, 2012 totaled $0.7 million
    compared to a $1.2 million net loss in the comparative 2011 period. 
--  Cash and cash equivalents as of December 31, 2012 were $2.1 million
    compared to $7.3 million as of December 31, 2011. 

 
For a further discussion of the Company's financial results for 2012,
please refer to the Company's consolidated financial statements and
related Management Discussion and Analysis, which can be found at
www.responsebio.com, SEDAR (Canada) www.sedar.com or EDGAR (U.S.)
www.sec.gov/edgar/searchedgar/webusers.htm. Information at these
sites is typically available within 24 hours of the distribution of
the news release. 
Non-GAAP Financial Measures 
Management has presented its operating results in accordance with
United States Generally Accepted Accounting Principles ("GAAP") and
on an "adjusted" (or non-GAAP) basis for the quarter and year ended
December 31, 2012 and 2011. The Company believes that the
presentation of non-GAAP financial measures provides useful
supplementary information to and facilitates additional analysis by
investors. These non-GAAP financial measures are in addition to, not
a substitute for, or superior to, measures of financial performance
prepared in conformity with GAAP. Further, our reconciliation of GAAP
Net income (loss) and comprehensive income (loss) to Adjusted EBITDA
are included in the tables below to facilitate a reader's
understanding of the impact of this adjustment to our GAAP financial
results and are not intended to place any undue prominence on our
Adjusted EBITDA. 
About Response Biomedical Corp. 
Response develops, manufactures and markets rapid on-site diagnostic
tests for use with its RAMP(R) Platform for clinical, biodefense and
environmental applications. RAMP(R) represents a unique paradigm in
diagnostics that provides reliable laboratory quality results in
minutes. The RAMP(R) Platform consists of a reader and single-use
disposable test cartridges and has the potential to be adapted to
more than 250 medical and non-medical tests currently performed in
laboratories. Response clinical tests are commercially available for
the early detection of heart attack, congestive heart failure, Flu A
+ B and RSV. In the non-clinical market, RAMP(R) tests are currently
provided for the environmental detection of West Nile Virus and for
Biodefense applications including the rapid on-site detection of
anthrax, smallpox, ricin and botulinum toxin. 
More specifically, the RAMP(R) 200 is an advanced, multi-port version
of Response's single-port RAMP(R) Reader. It is ideally suited for
small laboratories and can also be a less expensive solution for high
throughput laboratories as it allows for the running of up to 36
individual tests per hour. Both the RAMP(R) Reader and RAMP(R) 200
devices utilize Response's patented technology for providing lab
quality test results within minutes. More information on the
proprietary RAMP(R) Platform can be found at www.responsebio.com. 
The Company has achieved CE Marking and 510(k) clearance for Response
Infectious Disease and Response Cardiovascular tests on the RAMP(R)
Platform and its Quality Management System is registered to ISO
13485: 2003 and ISO 9001: 2008. 
Forward-Looking Statements 
This press release may contain forward-looking statements. These
statements relate to future events and are subject to risks,
uncertainties and assumptions about Response Biomedical Corp.
Examples of forward-looking statements in this press release include
statements regarding our target to become Adjusted EBITDA positive,
the engagement of new distributors, our expectation that we will own
our own product registrations in China by the fourth quarter of 2013,
the global expansion of our sales and the continued support of our
existing markets. These statements are only predictions based on the
Company's current expectations and projections about future events.
Although the Company believes the expectations reflected in such
forward-looking statements, and the assumptions upon which such
forward-looking statements are made, are reasonable, there can be no
assurance that such expectations will prove to be correct. 
Readers should not place undue reliance on these statements. Actual
events or results may differ materially. Such forward-looking
statements involve known and unknown risks, uncertainties and other
factors that may cause the Company's actual results, events or
developments to be materially different from any future results,
events or developments expressed or implied by such forward-looking
statements. Many factors may cause the Company's actual results to
differ materially from any forward-looking statement, including the
factors detailed in our filings with the Securities and Exchange
Commission and Canadian securities regulatory authorities, including
but not limited to our annual report on Form 10-K, our quarterly
reports on Form 10-Q, our Annual Information Form and other filings
with the Securities and Exchange Commission and Canadian securities
regulatory authorities. 
The forward-looking statements contained in this news release are
current as of the date hereof and are qualified in their entirety by
this cautionary statement. Except as expressly required by applicable
securities laws, the Company does not undertake any obligation to
publicly update any forward-looking statements, whether as a result
of new information, future events or otherwise. 


 
Selected Financial Data (in Canadian dollars):
 
                               Three months ended                
                          December 31 (unaudited),   Year ended December 31,
                                2012         2011         2012         2011
---------------------------------------------------------------------------
Product sales            $ 3,051,502  $ 2,746,163  $11,750,197  $ 9,024,083
Cost of sales              1,963,423    1,915,379    7,503,888    6,968,832
                         --------------------------------------------------
Gross profit             $ 1,088,079  $   830,784  $ 4,246,309  $ 2,055,251
Gross Margin on Product                                                    
 Sales                         35.7%        30.3%        36.1%        22.8%
Contract service fees                                                      
 and revenues from                                                         
 collaborative research                                                    
 arrangements                      -      (13,376)           -      449,386
Operating Expenses         1,735,508    2,063,546    8,448,635    7,392,375
Other Expenses (Income)   (1,341,151)     (32,192)   1,078,591      483,574
                         --------------------------------------------------
Net Income (loss) and                                                      
 comprehensive income                                                      
 (loss)                  $   693,722  $(1,213,946) $(5,280,917) $(5,371,312)
                         --------------------------------------------------
Earnings (loss) per                                                        
 share - basic and                                                         
 diluted                 $      0.11  $     (0.59) $     (0.82) $     (2.72)
 
 
Reconciliation of GAAP Net Loss to Adjusted EBITDA: 
 
For the year ended December 31,                           2012         2011
---------------------------------------------------------------------------
Adjusted EBITDA                                    $(2,613,240) $(4,173,337)
Interest Expense                                       733,809      864,791
Interest Income                                        (21,783)     (16,974)
Depreciation and Amortization                          977,685    1,168,193
Stock-based compensation                               613,687      (37,961)
Unrealized (gain) loss on revaluation of warrant                           
 liability                                             364,279     (780,074)
                                                   ------------------------
Net loss and comprehensive loss                    $(5,280,917) $(5,371,312)
                                                   ------------------------
                                                                           
For the quarter ended December 31 (Unaudited),            2012         2011
---------------------------------------------------------------------------
Adjusted EBITDA                                    $  (254,480) $(1,437,934)
Interest Expense                                       179,925      275,745
Interest Income                                         (3,208)      (2,927)
Depreciation and Amortization                          249,969      311,379
Stock-based compensation                               121,536      (28,111)
Unrealized (gain) loss on revaluation of warrant                           
 liability                                          (1,496,424)    (780,074)
                                                   ------------------------
Net income (loss) and comprehensive income (loss)  $   693,722  $(1,213,946)
                                                   ------------------------

Contacts:
Response Biomedical Corp.
Patricia Massitti
VP, Administration & Corporate Communications
604-456-6010
pmassitti@responsebio.com
www.responsebio.com