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Affymetrix, Inc., (NASDAQ: AFFX) today reported its operating results
for the third quarter of 2012. Total revenue for the quarter was $79.6
million, including approximately $17.6 million in revenue from
eBioscience during the third quarter of 2012. This compares to total
revenue of $64.0 million for the same period of 2011.
The Company reported a net loss of approximately $17.9 million, or $0.25
per diluted share, in the third quarter of 2012, which included the
following one-time items: (1) acquisition-related and integration costs
of $1.9 million and (2) impairment of the West Sacramento facility of
$4.0 million. Excluding these one-time items and recurring amortization
of acquired intangible assets of $5.0 million and release of step-up in
inventory fair value of $4.5 million, the Company would have reported a
net loss of $2.4 million, or $0.03 per diluted share. This compares to a
net loss of $9.8 million, or $0.14 per diluted share, in the same period
of 2011, which included one-time impairment charges on investments
totaling $0.7 million and a reserve on a note receivable from a private
biotechnology company of $2.2 million, and recurring amortization of
acquired intangible assets of $1.5 million. Excluding these charges, net
loss was $5.3 million, or $0.08 per diluted share, for the third quarter
of 2011.
Revenue for the third quarter of 2012 was comprised of product revenue
of $72.7 million and service and other revenue of $6.9 million. Product
revenue included consumable revenue of $50.5 million excluding
eBioscience, instrument revenue of $4.6 million and revenue from
eBioscience of $17.6 million. This compares to total revenue of $64.0
million in the third quarter of 2011, comprised of product revenue of
$57.0 million and service and other revenue of $7.0 million. Product
revenue included consumable revenue of $52.9 million and instrument
revenue of $4.1 million in the third quarter of 2011.
For the third quarter of 2012, cost of product sales, including
eBioscience, was $34.0 million, as compared to $24.6 million in the same
period of 2011. Product gross margin was 53%, as compared to 57% in the
same period of 2011, the decrease is due primarily to the amortization
of the step-up in inventory fair value of $4.5 million. Excluding the
inventory step-up amortization, product gross margin for the third
quarter of 2012 was 57%. Cost of services and other was $4.0 million
compared to $3.0 million in the same period of 2011.
For the third quarter of 2012, operating expenses were $52.8 million,
including acquisition- and integration-related non-recurring costs of
$1.9 million, and recurring amortization of acquired intangible assets
of $3.4 million and eBioscience operating expense of approximately $7.5
million. This compared to operating expenses of $42.2 million in the
same period of 2011.
“For the third quarter of 2012 we’ve continued to make steady progress
in stabilizing our business. On a constant currency basis, our revenue
excluding eBioscience for the third quarter of 2012 was down by about 2%
as compared to the same period in the previous year,” said Frank Witney,
president and CEO. “In the third quarter of 2012, we generated revenue
growth of more than 16% as compared to the third quarter of 2011 in our
Genetic Analysis business, which was offset by continued headwinds in
our Gene Expression unit. With the addition of eBioscience, we have
further diversified our revenues and added important capabilities to
provide customers in translational medicine and clinical diagnostics
with a comprehensive set of tools to improve healthcare outcomes.”
Third quarter highlights:
The Company signed a Powered by Affymetrix (PbA) agreement with
PathGEN Dx Pte. Ltd., a spin-off molecular diagnostics company founded
by researchers from the Genome Institute of Singapore. Under this PbA
agreement, PathGEN Dx will develop an in-vitro diagnostic kit for
comprehensive pathogen detection using their PathGEN® PathChip and is
based on a patented, efficient, and accurate microarray-based protocol
and analysis method. The kit will be comprised of PathGEN Dx’s
proprietary reagents, an automated software package, and a contract
manufactured GeneChip® microarray from Affymetrix. It will detect the
presence of more than 70,000 viral and bacterial genomes from a wide
variety of human samples, annotate the genomic information, and
identify co-infecting pathogens.
The Company announced the availability of SensationPlus™ FFPE
Amplification and 3’ IVT Labeling Kit (SensationPlus™ FFPE Reagent
Kit), consisting of RNA amplification and labeling modules, to enable
gene expression profiling of formalin-fixed, paraffin-embedded (FFPE)
samples on GeneChip 3’ IVT arrays and Almac Xcel™ Array for disease
clinical research and retrospective studies. SensationPlusTM
FFPE Reagent Kit is an advanced version of the Genisphere® technology
Affymetrix licensed last year.
The Company announced the expansion of its license agreement with
Siemens Healthcare Diagnostics for the company’s branched DNA (bDNA)
technology whereby Affymetrix is the exclusive licensee for in situ
products, including in vitro diagnostics. This expanded license grants
Affymetrix rights to develop and sell in situ QuantiGene®
ViewRNA products, currently for research use only, in the in vitro
diagnostic market. Additionally, this license includes exclusive
rights to alkaline phosphatase conjugated oligonucleotides and their
use in bDNA methods for in situ detection utilizing Fast Red
substrates.
Affymetrix will host a conference call on November 5, 2012 at 2:00 p.m.
PT to review its operating results for the third quarter of 2012. A live
webcast can be accessed by visiting the Investor Relations section of
the Company’s website at www.affymetrix.com.
In addition, investors and other interested parties can listen by
dialing domestic: (877) 407-8291, international: (201) 689-8345.
A replay of this call will be available from 5:00 p.m. PT on November 5,
2012 until 8:00 p.m. PT on November 12, 2012 at the following numbers:
domestic: (877) 660-6853, international: (201) 612-7415. The conference
call passcode to access the replay is 401334. An archived webcast of the
conference call will be available under the Investor Relations section
of the Company's website.
About Affymetrix
Affymetrix technology is used by the world's top pharmaceutical,
diagnostic, and biotechnology companies, as well as leading academic,
government, and nonprofit research institutes. More than 2,200 systems
have been shipped around the world and almost 26,000 peer-reviewed
papers have been published using the technology. Affymetrix is
headquartered in Santa Clara, California, and has manufacturing
facilities in Cleveland, Ohio, and Singapore. eBioscience is
headquartered in San Diego, California and has manufacturing facilities
in San Diego and Vienna, Austria. Including eBioscience, the Company has
about 1,200 employees worldwide and maintains sales and distribution
operations across Europe, Asia and Latin America.
All statements in this press release that are not historical are
"forward-looking statements" within the meaning of Section 21E of the
Securities Exchange Act as amended, including statements regarding
Affymetrix's "expectations," "beliefs," "hopes," "intentions,"
"strategies" or the like. Such statements are subject to risks and
uncertainties that could cause actual results to differ materially for
Affymetrix from those projected, including, but not limited to:
Affymetrix's ability to timely and successfully integrate and realize
the anticipated strategic benefits and costs savings or other synergies
of the acquisition of eBioscience in a cost-effective manner while
minimizing the disruption to its business; risks that eBioscience’s
future performance may not be consistent with its historical
performance; risks relating to Affymetrix's ability to make scheduled
payments of the principal of, to pay interest on or to refinance its
indebtedness; risks relating to Affymetrix's ability to successfully
develop and commercialize new products, including its ability to
successfully develop and commercialize novel molecular solutions based
on eBioscience’s portfolio of reagents; risks relating to past and
future acquisitions, including the ability of Affymetrix to successfully
integrate such acquisitions into its existing business; risks of
Affymetrix's ability to achieve and sustain higher levels of revenue,
higher gross margins and reduced operating expenses; risks relating to
Affymetrix’s ability to generate cash in the second half of 2012 after
interest and principal payments; uncertainties relating to technological
approaches; risks associated with manufacturing and product development;
personnel retention; uncertainties relating to cost and pricing of
Affymetrix products; dependence on collaborative partners; uncertainties
relating to sole-source suppliers; uncertainties relating to FDA and
other regulatory approvals; competition; risks relating to intellectual
property of others and the uncertainties of patent protection and
litigation. These and other risk factors are discussed in Affymetrix's
Annual Report on Form 10-K for the year ended December 31, 2011, and
other SEC reports. Affymetrix expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change in
Affymetrix's expectations with regard thereto or any change in events,
conditions or circumstances on which any such statements are based.
In addition to providing financial measures based on generally accepted
accounting principles in the United States (GAAP), Affymetrix has
disclosed in this press release its net loss and net loss per share as
well as its gross margins for the third quarter of 2012 excluding
specified one-time items. Reconciliation of non-GAAP net loss to GAAP
net loss can be found in the tables included in this press release.
Affymetrix has determined to disclose this financial information to
investors because it believes it will be useful, as a supplement to GAAP
measures, in comparing Affymetrix’s operating performance in the third
quarter of 2012 to the prior-year period. These non-GAAP financial
measures should not be considered in isolation from, or as a substitute
for, financial information prepared in accordance with GAAP.
PLEASE NOTE:
Affymetrix, the Affymetrix logo, GeneChip, and all other trademarks
are the property of Affymetrix, Inc.
AFFYMETRIX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
September 30,
December 31,
2012
2011
(Unaudited)
(See Note 1)
ASSETS:
Current assets:
Cash and cash equivalents
$
29,026
$
201,937
Restricted cash
691
692
Available-for-sale securities—short-term portion
2,575
7,937
Accounts receivable, net
52,534
44,021
Inventories—short-term portion
74,891
42,851
Deferred tax assets—short-term portion
379
364
Property and equipment, net—held for sale
5,000
9,000
Prepaid expenses and other current assets
15,078
7,785
Total current assets
180,174
314,587
Available-for-sale securities—long-term portion
7,337
54,501
Property and equipment, net
30,988
30,583
Inventories—long-term portion
14,668
-
Goodwill
159,420
-
Intangible assets, net
157,930
29,525
Deferred tax assets—long-term portion
3,445
450
Other long-term assets
16,224
8,369
Total assets
$
570,186
$
438,015
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current liabilities:
Accounts payable and accrued liabilities
$
56,852
$
44,774
Convertible notes—short-term portion
3,855
-
Term loan—short-term portion
6,375
-
Deferred revenue—short-term portion
10,749
9,852
Total current liabilities
77,831
54,626
Deferred revenue—long-term portion
3,453
3,959
Convertible notes—long-term portion
105,000
95,469
Term loan—long-term portion
76,500
-
Other long-term liabilities
22,345
9,127
Stockholders’ equity:
Common stock
707
704
Additional paid-in capital
757,051
750,332
Accumulated other comprehensive income
4,420
2,492
Accumulated deficit
(477,121
)
(478,694
)
Total stockholders’ equity
285,057
274,834
Total liabilities and stockholders’ equity
$
570,186
$
438,015
Note 1: The condensed consolidated balance sheet at December 31,
2011 has been derived from the audited consolidated financial
statements at that date included in the Company’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2011.
AFFYMETRIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2012
2011
2012
2011
REVENUE:
Product sales
$
72,685
$
57,001
$
189,681
$
182,608
Services and other
6,939
6,986
21,593
19,762
Total revenue
79,624
63,987
211,274
202,370
COSTS AND EXPENSES:
Cost of product sales
33,979
24,647
81,907
70,913
Cost of services and other
3,959
3,001
11,057
9,627
Research and development
16,498
15,328
43,417
46,894
Selling, general and administrative
36,302
26,915
104,752
80,802
Total costs and expenses
90,738
69,891
241,133
208,236
Loss from operations
(11,114
)
(5,904
)
(29,859
)
(5,866
)
Interest income and other, net
(3,933
)
(2,154
)
(1,631
)
(3,549
)
Interest expense
2,993
991
4,191
2,866
Loss before income taxes
(18,040
)
(9,049
)
(35,681
)
(12,281
)
Income tax (benefit) provision
(181
)
740
(37,254
)
1,141
Net (loss) income
$
(17,859
)
$
(9,789
)
$
1,573
$
(13,422
)
Basic net (loss) income per common share
$
(0.25
)
$
(0.14
)
$
0.02
$
(0.19
)
Diluted net (loss) income per common share
$
(0.25
)
$
(0.14
)
$
0.02
$
(0.19
)
Shares used in computing basic net (loss) income per common share
70,403
69,719
70,181
70,790
Shares used in computing diluted net (loss) income per common share
70,403
69,719
70,610
70,790
AFFYMETRIX, INC.
ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP NET (LOSS)
INCOME
(IN THOUSANDS)
(UNAUDITED)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2012
2011
2012
2011
GAAP net (loss) income - diluted
$
(17,859
)
$
(9,789
)
$
1,573
$
(13,422
)
Amortization of inventory fair value adjustment
4,536
-
4,855
-
Amortization of acquired intangible assets
5,016
1,544
7,919
4,632
Acquisition-related transaction costs
326
-
6,093
-
Acquisition-related integration costs
1,541
-
1,541
-
Share-based compensation charge related to acquisition
-
-
8,265
-
Provision (recovery) of notes receivable
-
2,215
(2,215
)
2,215
Impairment of non-marketable investments
-
743
-
1,900
Impairment of held-for-sale property
4,000
-
4,000
-
Income tax benefit related to acquisition
-
-
(37,462
)
-
Non-GAAP net loss - diluted
$
(2,440
)
$
(5,287
)
$
(5,431
)
$
(4,675
)
Basic net loss per common share
$
(0.03
)
$
(0.08
)
$
(0.08
)
$
(0.07
)
Diluted net loss per common share
$
(0.03
)
$
(0.08
)
$
(0.08
)
$
(0.07
)
Shares used in computing basic net loss per common share
70,403
69,719
70,181
70,790
Shares used in computing diluted net loss per common share
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