Biochem, Inc. (NYSE:ENZ) today reported results for the fiscal third
quarter ended April 30, 2012. Among the quarter’s highlights were the
Revenue increases compared to year-earlier same period.
Sequential 4% increases in revenues and gross margin at Enzo Clinical
Labs and Enzo Life Sciences combined.
Successful launch of the ColonSentry™ test for providing an assessment
of a patient’s risk of having colorectal cancer.
Continued strong organic growth in excess of industry averages,
sequentially and year over year, of Clinical Lab revenues, the result
of an expanded marketing platform and the resultant increase in new
physician clients as well as greater testing volume.
“We continue to improve results on a sequential basis, despite the
continuing impact of lower spending in life sciences, primarily as a
result of reduced government-sponsored R&D outlays, particularly in
academia. We are quite excited by the strong response we have received
from the market to our initial launch of the ColonSentry™ test. The
assay was launched late in the quarter and we are working to
significantly expand our capacity to address the potential market. In
addition, we have several promising innovative diagnostic tests that we
are optimistic we can bring to market prior to the end of the year,”
said Barry Weiner, President.
“Enzo Clinical Labs is making important progress both organically and in
terms of market share. Enzo Life Sciences, experiencing a slowing
research market particularly as budgets in academia have been reduced,
is focusing more intensively on the pharma industry, where there are
growth opportunities, especially in personalized medicine. In addition,
we continue to rationalize and integrate our operations, and identify
operational efficiencies, from which we expect future benefits. Enzo has
a strong, proprietary base of products and technologies, as well as a
unique infrastructure with Clinical Lab and Life Science sectors that
can closely interact and that enables us to be especially competitive.
“Our efforts over the next few quarters are being directed at realizing
gains in both top and bottom line results, improving cash flow and
Third Quarter Results
Total revenue for the quarter, led by strong gains at Enzo Clinical
Labs, amounted to approximately $26 million, up almost 4% sequentially,
and compared with $25.8 million, a year earlier. The higher Clinical
Labs volume resulted in increased testing expenses, offset by lower cost
of goods at Enzo Life Sciences. As a result, gross margins improved to
$12.1 million, from $11.6 million in the immediately preceding January
2012 quarter, and compared with $12.4 million a year ago. Other
operating costs, including selling, general and administrative, research
and development, provision for uncollectible accounts and legal
increased 1% sequentially and 6% year over year. Increases year over
year in SG&A were primarily attributed to increased sales and marketing
costs reflective of increased volume at Clinical Labs and senior
management additions in the latter half of fiscal 2011 at Life Sciences.
The provision for uncollectible receivables as a percentage of revenues
decreased slightly sequentially, but was up slightly from a year ago.
Legal expenses rose 36% year over year, related largely to pre-trial
expenditures. The increases were offset by a 23% decline in R&D, which
was in line with planned activities. On a sequential basis, the net loss
improved to ($3.4) million or ($0.09) per share, from ($4.2) million, or
($0.11) per share, and compared to ($2.1) million, or ($0.05) per share,
year over year. EBITDA likewise improved with a smaller loss of ($2.4)
million, as compared to a loss of ($3.0) million in the preceding three
month period, and ($0.9) million last year.
Enzo has no long-term debt. On April 30, 2012, cash and cash equivalents
and short term investments, totaled $15.2 million. Cash declined
approximately $8.9 million from July 31, 2011, which includes a one-
time earn-out payment related to a fiscal 2008 acquisition in the amount
of $1.1 million and $1.0 million in payments for capital expenditures.
Working capital amounted to $24.5 million, or a 2.5-to-1 current ratio.
Segment Quarterly Results
Spurred by organic growth that outdistanced the industry average,
reflecting the results of a broader, highly seasoned sales staff, Enzo
Clinical Labs posted a 10% organic revenue gain year over year and 8%
sequentially. The launch of ColonSentry™ in March was too late in the
quarter to materially impact fiscal third quarter results, but is
expected to make a more meaningful contribution throughout the year. The
operating loss sequentially declined by approximately $0.4 million, to
($0.6) million, from ($1.0) million. In the year ago quarter, the
operating loss was ($0.1) million. During the current period, the
increased volume resulted in higher expenses, including testing costs,
commissions and other sales and marketing costs. The provision for
uncollectible accounts receivable as a percentage of revenues increased
to 7.6% from 7.3% year over year.
At Life Sciences, the program to emphasize fewer but higher margin
products is on-going. Revenues in the 2012 third quarter, including
royalties, lagged sequentially and year over year were $10.7 million,
versus $10.8 million and $12.0 million, respectively. Other operating
costs year over year declined $0.6 million, mostly due to lower planned
R&D. Operating income was $0.6 million, compared with $0.7 million in
the preceding quarter and $0.9 million a year ago.
Year to Date Results
For the first nine months of fiscal 2012, total revenues, with Enzo
Clinical Labs up 13%, amounted to $76.7 million, a 2% increase over
$75.2 million a year ago. Along with the increased Lab volume and higher
testing costs, offset by reduced cost of goods at Life Sciences, total
cost of goods amounted to $41.2 million, as compared to $39.0 million a
year ago. Combined with the 2% percentage point decline in gross profit
as a percentage of revenues and other operating expenses up 5%, mostly
due to higher sales and marketing costs, offset by lower R&D, the
operating loss for the nine months was ($11.7) million, or $2.8 million
higher than a year ago. The nine month net loss amounted to ($12.1)
million, or ($0.31) cents per share, compared with ($8.9) million, or
($0.23) cents per share, last year. The year to date EBITDA loss was
In March, as previously reported, the Company filed an application with
the New York State Department of Health for the first assay based on its
proprietary AmpiProbe™ nucleic acid detection platform. Upon approval,
the Company plans to market its HCV RNA Quantification Assay for viral
load determination through its Enzo Clinical Laboratory. The Company
also has moved to obtain CE-IVD designation for this assay in order to
make it available as a diagnostic product in the European Union. Both
applications are still pending.
The Company will conduct a conference call on June 12, 2012 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 87825581. Interested parties may also listen over the Internet at http://phoenix.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=94391&eventID=4789250.
To listen to the live call on the Internet, please go to the web site
at least fifteen minutes early to register, download and install any
necessary audio software. For those who cannot listen to the live
broadcast, a replay will be available approximately two hours after the
end of the live call, through midnight (ET) on June 26, 2012. The replay
of the conference call can be accessed by dialing 1-800-585-8367, and
when prompted, use PIN number 87825581. International callers can dial
1-404-537-3406, using the same PIN number.
NON-GAAP 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 non-GAAP financial information
that may be required in connection with issuing the Company's quarterly
The Company uses EBITDA, as a measure of performance to demonstrate
earnings exclusive of interest, taxes, depreciation and amortization.
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.
About Enzo Biochem
Enzo Biochem is a pioneer in molecular diagnostics, leading the
convergence of clinical laboratories, life sciences and therapeutics
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 rapidly
deploy products systems and services that meet the ever-changing and
rapidly growing needs of health care both 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 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, litigations,
and general business conditions. See Risk Factors in the Company’s Form
10-K for the fiscal year ended July 31, 2011. 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
Nine months ended
Selected operations data:
Clinical laboratory services
Royalty and license fee income
Loss before income tax provision
Provision for income taxes (A)
Basic and diluted loss per share
Weighted average shares outstanding - basic and diluted
Reconciliation of GAAP Net Loss to
Depreciation and amortization
Interest expense (income)
Provision for income taxes
A- All periods reflect effective tax rates below the statutory rate
due to inability to recognize future tax benefits.
B- EBITDA is a non-GAAP measure, as described in the attached press
Selected balance sheet data:
April 30, 2012
July 31, 2011
Cash and cash equivalents and short term investments