Affymetrix, Inc., (NASDAQ: AFFX) today reported its operating
results for the first quarter of 2014.
Results for the three months ended March 31,
2014:
- Total revenue was $83.0 million,
compared to $77.9 million in first quarter of 2013. The first
quarter of 2013 included $1.5 million of revenue associated with a
product line which was divested in the fourth quarter of 2013.
Adjusting for the divestiture, total revenue grew by 8.6% over the
first quarter of 2013.
- Product revenue was $73.7 million
compared to $71.6 million in the first quarter of 2013. Adjusted
for the divested product line, the year-over-year revenue growth
was 5.2%.
- GAAP net loss was $10.5 million, or
$0.14 per diluted share, as compared to a GAAP net loss of $15.4
million, or $0.22 per diluted share, in the first quarter of 2013.
2014 GAAP net loss includes $5.1 million or $0.07 per share in
settlement costs associated with a long standing breach-of-contract
dispute.
- Non-GAAP net income was $1.9 million,
or $0.03 per diluted share, compared to a Non-GAAP net loss of $0.9
million, or $0.01 per diluted share, for the first quarter of 2013.
Please refer to "Itemized Reconciliation Between GAAP and Non-GAAP
Net Income (Loss)" for a reconciliation of these GAAP and Non-GAAP
financial measures.
- Total balance in cash and cash
equivalents was $57.7 million and senior debt was $36.3 million as
of March 31, 2014.
Product revenue for the first quarter of 2014 was $73.7 million
and service and other revenue was $9.3 million. This compares to
product revenue of $71.6 million and service and other revenue of
$6.4 million in the first quarter of 2013. Product revenue for the
first quarter of 2014 included consumable revenue of $69.9 million
and instrument revenue of $3.8 million. Product revenue for the
first quarter of 2013 included consumable revenue of $68.1 million
and instrument revenue of $3.4 million.
Total gross margin was 56%, as compared to 51% in the same
period of 2013. Excluding Non-GAAP adjustments such as the
amortization of step-up in inventory fair value, total margin for
the first quarter of 2014 was 61% compared to 59% in the same
period of 2013. Please refer to the "Itemized Reconciliation
Between GAAP and Non-GAAP Gross Margin" for a reconciliation of
these GAAP and Non-GAAP financial measures.
For the first quarter of 2014, operating expenses were $55.3
million on a GAAP basis as compared to $52.2 million in the same
period of 2013. Excluding Non-GAAP adjustments, such as a
litigation settlement of $5.1 million, the amortization of acquired
intangible assets and non-recurring charges, operating expenses for
the first quarter of 2014 were $47.2 million, compared to an
adjusted total of $43.6 million in the same period of 2013. The
increase is primarily due to higher variable compensation cost and
legal costs associated with our ongoing litigation. Please refer to
the "Itemized Reconciliation Between GAAP and Non-GAAP Operating
Expenses" for a reconciliation of these GAAP and Non-GAAP financial
measures.
"We have achieved year-over-year revenue growth for the third
consecutive quarter. Our focus on execution is clearly paying off
and I'm confident that we are on track to return the Company to
sustainable growth and profitability," said Frank Witney, President
and CEO.
"2014 is off to a strong start at Affymetrix," stated Gavin
Wood, EVP and CFO. "In the first quarter we achieved 8.6% revenue
growth on a like-for-like comparison and we were profitable on a
non-GAAP basis for the quarter. In the first four months of this
year we prepaid $6.4 million against our Senior Debt reducing our
outstanding balance to approximately $33 million as of today."
Recent developments:
- The Company announced that it would
collaborate with Akesogen on a $7.5 million contract by the U.S.
Department of Veterans Affairs (VA) for genotyping samples from
U.S. veterans as part of the Million Veteran Program (MVP). This
award covers the genotyping of 105,000 veterans in the first year
of a five year contract using Affymetrix’s Axiom Genotyping
Solution to support the VA's goal of building one of the largest
genetic databases in order to improve healthcare for our
veterans.
- In addition to receiving FDA 510K
clearance in January, in March the Company received CE/IVD
clearance for CytoScan Dx in Europe.
Affymetrix will host a conference call on Thursday, May 1,
2014 at 2:00 p.m. PT to review its operating results for the first
quarter of 2014. 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
May 1, 2014 until 8:00 p.m. PT on May 1, 2014 at the following
numbers: domestic: (877) 660-6853, international: (201) 612-7415.
The conference call passcode to access the replay is 13579729. 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
2,300 systems have been shipped around the world and more than
65,000 peer-reviewed papers have been published using the
technology. Affymetrix is headquartered in Santa Clara, California,
and has manufacturing facilities in Cleveland, Ohio, San Diego,
California, Singapore and Vienna, Austria. The Company has about
1,100 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
related to our plans to return to growth and sustained
profitability as well as other 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 stabilize its business and grow revenue, 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 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, 2013, 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 total gross margin and operating
expenses for the first quarter of 2014 and 2013 excluding specified
items. Reconciliation of GAAP to Non-GAAP measures 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
first quarter of 2014 as compared 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.
UNAUDITED CONDENSED CONSOLIDATED
BALANCE SHEETS
(IN THOUSANDS)
March
31,
December 31, 2014 2013 ASSETS: (Note 1)
Current assets: Cash and cash equivalents $ 57,706 $ 57,128
Accounts receivable, net 50,826 50,862 Inventories—short-term
portion 57,506 58,059 Deferred tax assets—short-term portion 1,222
767 Prepaid expenses and other current assets 6,882
8,920 Total current assets 174,142 175,736 Property
and equipment, net 16,969 18,671 Inventories—long-term portion
5,865 5,972 Goodwill 161,548 161,595 Intangible assets, net 125,530
131,108 Deferred tax assets—long-term portion 363 355 Other
long-term assets 12,701 11,074 Total
assets $ 497,118 $ 504,511
LIABILITIES AND
STOCKHOLDERS' EQUITY: Current liabilities: Accounts payable and
accrued liabilities $ 49,321 $ 45,534 Term loan—short-term portion
12,800 12,750 Deferred revenue—short-term portion 16,283
18,660 Total current liabilities 78,404 76,944
Deferred revenue—long-term portion 2,676 2,824 Convertible notes
105,000 105,000 Term loan—long-term portion 23,450 26,700 Other
long-term liabilities 21,419 21,496
Total liabilities 230,949 232,964
Stockholders' equity: Common stock 727 723 Additional paid-in
capital 771,474 768,149 Accumulated other comprehensive income
10,159 8,392 Accumulated deficit (516,191 ) (505,717
) Total stockholders' equity 266,169 271,547
Total liabilities and stockholders' equity $ 497,118
$ 504,511 Note 1:
The condensed consolidated balance sheet
at December 31, 2013 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,
2013.
AFFYMETRIX, INC. UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS) Three Months Ended March
31, 2014 2013 REVENUE: Product
sales $73,695 $71,557 Services and other 9,276 6,388
Total revenue 82,971 77,945
COSTS AND
EXPENSES: Cost of product sales 29,512 34,433 Cost of services
and other 6,904 3,507 Research and development 11,635 12,248
Selling, general and administrative 38,562 35,121 Litigation
settlement 5,100 — Restructuring charges — 4,842
Total costs and expenses 91,713 90,151 Loss from
operations (8,742 ) (12,206 ) Interest income and other, net 293
342 Interest expense 1,753 2,898 Loss before income
taxes (10,202 ) (14,762 ) Income tax provision (benefit) 272
675 Net (loss) income $(10,474 ) $(15,437 ) Basic and
diluted net (loss) income per common share $(0.14 ) $(0.22 )
Shares used in computing basic and diluted net (loss) income per
common share 72,498 70,919
AFFYMETRIX, INC. RESULTS OF OPERATIONS – NON-GAAP
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP NET
INCOME (LOSS) Three Months Ended March 31,
2014 2013 GAAP net loss - basic and diluted $
(10,474 ) $ (15,437 ) Amortization of inventory fair value
adjustment 2,896 4,589 Amortization of acquired intangible assets
4,382 4,635 Acquisition-related integration costs — 515 Litigation
settlement 5,100 — Restructuring charges —
4,842 Non-GAAP net income (loss) - basic and diluted $ 1,904
$ (856 ) Non-GAAP basic and diluted net income (loss)
per common share $ 0.03 $ (0.01 ) Shares used in
computing Non-GAAP basic and diluted net income (loss) per common
share 72,498 70,919
ITEMIZED RECONCILIATION BETWEEN GAAP
AND NON-GAAP GROSS MARGIN
Three Months Ended March 31, 2014
2013 GAAP total gross margin $
46,555
56 % $ 40,005 51 % Amortization of
inventory fair value adjustment 2,896 3 % 4,589 6 % Amortization of
acquired intangible assets 1,359 2 % 1,366
2 % Non-GAAP total gross margin $
50,810
61 % $ 45,960 59 %
ITEMIZED RECONCILIATION BETWEEN GAAP
AND NON-GAAP OPERATING EXPENSES
Three Months Ended March 31, 2014
2013 Total GAAP operating expenses $ 55,297 $ 52,211
Amortization of acquired intangible assets (3,023 ) (3,269 )
Acquisition-related integration costs — (515 ) Litigation
settlement (5,100 ) — Restructuring charges —
(4,842 ) Total Non-GAAP operating expenses $ 47,174 $ 43,585
Affymetrix, Inc.Doug Farrell, 408-731-5285Vice President of
Investor Relations
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