NEW YORK (GenomeWeb News) — Orchid Cellmark yesterday closed its acquisition of DNA testing services provider Reliagene Technologies and today reported that its third-quarter revenue had inched back one percent, R&D spending fell 16 percent, and its net loss fell 46 percent.
Orchid said on October 23 it had agreed to buy ReliaGene for $5.6 million in cash and 560,539 shares of Orchid’s restricted common stock, valued at around $3 million at the time the deal was struck. Orchid Cellmark’s stock has traded between $5 and $6 a share over the past three months.
When Orchid announced the deal, CEO Thomas Bologna said Reliagene “fits the criteria we are seeking in accelerating the growth of our business through acquisitions.”
Today, he said that the acquisition of ReliaGene, which earned $7.5 million in revenue in 2006, “demonstrates our commitment to grow Orchid's core business and add to the bottom line through acquisitions. We expect a positive impact to our business and customer service offerings as we capitalize on the integration of ReliaGene into Orchid Cellmark."
Orchid reported third-quarter revenue of $15.6 million, down from revenue of $15.7 million in the comparable period a year ago.
Bologna said the revenue sag was due in part to a weak quarter in the company’s agricultural business, which was “due to a decision made by the UK Department for Environmental Food and Rural Affairs (DEFRA) to limit scrapie testing to male sheep.
“Also contributing to the reduced revenues in our UK agricultural business was an outbreak of foot and mouth disease in August which prevented the collection of tens of thousands of samples,” Bologna explained.
Increased US and UK forensics sales had a mitigating effect and kept third-quarter revenue from falling further, he added.
Orchid’s R&D spending decreased to $264,000 from $316,000 year over year.
The firm’s net loss declined to $707,000 from $1.3 million in the year-ago period.
Orchid said it had around $24.5 million in cash and cash equivalents as of Sept. 30.
In afternoon trade on the Nasdaq, Orchid's shares were down nearly 15 percent at $4.74.