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Cancer Genetics Q4 Revenues Down 9 Percent

NEW YORK (GenomeWeb) – Cancer Genetics reported on Tuesday that its fourth quarter revenues fell 9 percent year over year, partially due to the impact on its clinical services business unit from the adoption of new revenues recognition standards at the beginning of 2018.

For the three months ended Dec. 31, 2018, the firm reported total revenues of $6.8 million, down from $7.5 million in the fourth quarter of 2017. 

Biopharma services revenues rose nearly 6 percent to $3.7 million from $3.5 million, but clinical services revenues fell 26 percent to $1.4 million from $1.9 million in the prior-year quarter. This decrease in revenue was primarily related to the adoption of the ASC 606 revenue recognition standard, which resulted in implicit price concessions that lowered the overall average revenue per test, the company said. Revenues from the firm's discovery services unit fell 19 percent during Q4 to $1.7 million from $2.1 million, also partially as a result of the adoption of ASC 606 and the inherent variability in project start and end times at the individual contract level, Cancer Genetics added.

"In 2018, we focused on executing our transformation strategy to lower our costs and position our business to capitalize on the growing biopharma services industry, which leverages our expertise and quality systems to support innovative immuno-oncology drug development through precision oncology tests and services," Cancer Genetics CEO John Roberts said in a statement.

Roberts noted that the firm finished the relocation of its operations to the east coast at the end of Q3, and that the firm expects this move to reduce its total expenses by more than $4 million on an annualized basis.

He also said Cancer Genetics signed 105 new contracts for discovery and biopharma services during Q4, with anticipated future revenues of up to approximately $9.8 million, and that the company completed the year with up to approximately $38 million in signed contracts with revenues yet to be recognized.

"Recently, we raised gross proceeds of $6.5 million through two public offerings, which we believe provide the company with greater financial stability," Roberts added. "We remain committed to enhancing our unique test and service offerings that will help us expand our business overall, and our biopharma business in particular."

The company further noted that it continues to engage Raymond James as a financial advisor to assist with evaluating options for its strategic direction, including raising additional capital, the acquisition of another company, the sale of the company, or another type of strategic partnership.

Cancer Genetics' Q4 net loss narrowed to $3.8 million, or $.14 per share, from $7.9 million, or $.35 per share, in the fourth quarter of 2017.

Total operating expenses for Q4 fell 45 percent to $6.5 million from $11.8 million in Q4 2017. The decrease was primarily the result of the company's consolidation of its lab operations formerly in Los Angeles, and further reductions in R&D and sales and marketing-related expenses during the quarter.

For full-year 2018, Cancer Genetics' total revenues fell 6 percent to $27.5 million from $29.1 million in 2017.

The firm's 2018 net loss narrowed to $20.4 million, or $.75 per share, from $20.9 million, or $1.01 per share in 2017.

Cancer Genetics' R&D expenses for the year fell 48 percent to $2.5 million from $4.8 million in 2017. Its SG&A costs for 2018 dipped 2 percent to $24.5 million from $24.9 million in the prior year.

The firm ended the year with $161,000 in cash and cash equivalents and $350,000 in restricted cash.

Cancer Genetics' shares rose more than 4 percent to $.27 in midday trading on the Nasdaq.