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Decline in UK Sales Leads to Dip in Orchid's Q2 Revenues

NEW YORK (GenomeWeb News) - Orchid Cellmark today blamed lower revenues in its UK business for a 3 percent decline in total revenues for the second quarter of 2008.
 
Orchid’s total revenues were $15.2 million for the quarter ended June 30, 2008, compared to $15.7 million for the second quarter of 2007. Orchid said that the decrease was largely due to lower volumes of animal DNA testing for scrapie susceptibility and immigration identity testing in the UK, as well as reduced forensic revenue in the UK due to the expiration of the company's agreement with LGC, which ended in April.
 
US revenue increased by 9 percent over the year-ago period, however, largely as a result of the ReliaGene DNA-testing business, which it acquired last fall.
 
Orchid said that it saw growth in its US DNA-profiling and paternity testing business during the quarter, which was partially offset by lower revenues from its US forensic casework business.
 
Thomas Bologna, president and CEO of Orchid Cellmark, said in a statement that revenues from the LGC-related business in the UK decreased by around $2.6 million, but this was slightly offset by growth in the company’s DNA testing and other forensics services work for several UK police forces. As a result, total UK revenue decreased by around $1.2 million in the quarter.
 
Bologna added that Orchid expects the ReliaGene acquisition to be accretive in the second half of the year.
 
The company’s R&D spending decreased by 29 percent to $206,000 from $289,000 in the second quarter of 2007. Marketing and sales costs increased to $1.6 million from $1.5 million while general and administrative spending rose 9 percent to $4.4 million from $4 million in the year-ago period.
 
Orchid’s total operating expenses rose 2 percent to $16.8 million from $16.4 million in the comparable period of 2007.
 
Net loss widened to $1.2 million, or $.04 per share, from $745,000, or $.03 per share, for the second quarter of 2007. Net loss for the second quarter of 2008 and 2007 includes charges of $1.2 million and $1.1 million, respectively, for depreciation and amortization.
 
Bologna cited costs related to the company’s recent litigation in Florida against Laboratory Corporation of America regarding a contract to conduct all of the state’s paternity testing as a key reason for the increase in its operating expenses for the quarter.
 
Excluding legal costs related to the bid dispute, the company’s second-quarter net loss would have been $.03 per share, he said.
 
As of June 30, Orchid’s cash and cash equivalents were $17.3 million.

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