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Enzo Biochem Q1 2022 Revenues Down 8 Percent

NEW YORK – Enzo Biochem reported after the close of the market on Wednesday that revenues for its fiscal 2022 first quarter fell 8 percent year over year, largely due to a 9 percent decrease in revenues from its life sciences business.

For the three months ended Oct. 31, the diagnostics company reported total revenues of $26.5 million compared to $28.7 million in the year-ago quarter. The quarter's revenues, which grew 7 percent sequentially, reflected continuing expansion of operations following the nadir of COVID-19 testing in late summer, the company said.

"COVID has shed a new light on the global need for precise, cost-effective diagnostic approaches. Enzo has a unique opportunity to extend the capabilities and offerings of our multiple platforms, just as we did in the rapid development of our COVID-19 molecular platforms," Enzo CEO Hamid Erfanian said in a statement.

"We can bring this capability to multiple diagnostic segments, including sexually transmitted diseases, upper respiratory diseases, and cancer," Erfanian added. "While continuing to expand our life sciences reach across underserved geographies, we will expand our diagnostics offerings to meet the needs of a wider segment of end users and global markets by leveraging our current capabilities and expanding our sales force."

Erfanian, who most recently served as chief commercial officer of PerkinElmer's Euroimmun, was appointed Enzo's CEO in October. He succeeded Elazar Rabbani, who remained as chairperson of the board of directors and assumed the role of Enzo's CSO.

Revenues from the life sciences business fell to $6.8 million from $7.4 million in Q1 2021 as a result of the transition of the firm's operations to its upgraded campus in Farmingdale, New York, as well as ongoing COVID-19-related shutdowns in Europe. On a conference call with analysts following the release of the earnings, Erfanian said the life sciences division incurred added one-time costs related to investments in staffing and temporary delays in relation to the transition to Farmingdale.

"These costs were anticipated and part of our budget for the project, but understandably affected the first quarter's financials," he added. "While the benefits will accrue over time, we expect to see efficiencies of these initiatives begin to be accretive in the second half of fiscal year 2022."

Enzo's clinical lab revenues fell 7 percent to $19.7 million from $21.2 million a year ago. However, the company noted that net revenues for the quarter increased to more than $70 per accession compared to approximately $69 per accession in the prior-year period. Billed accessions grew to more than 100,000 per month in the last two months of the quarter, and continuing into November, compared to approximately 70,000 during the summer months, reflecting increased COVID-19 testing volume from the back-to-school season and emerging variants.

Enzo CFO David Bench also noted that Enzo Clinical Labs added 70 new customers in Q1, an increase of nearly 50 percent from 47 new customers in the previous year's first quarter, with accounts ranging from urgent care facilities to government entities such as Suffolk County.

For the long term, Erfanian said the company is establishing strategies in three key areas: market expansion of its current product portfolio, commercialization of its diagnostics platforms, and optimal utilization of its clinical services segment.

For example, he noted, the company has generated more than $50 million in revenues over the past year and a half from its GenFlex platform. The platform currently runs COVID-19 tests, which includes testing for the Omicron variant.

Most recently, Erfanian added, Enzo has introduced an enhancement to the GenFlex platform that provides it with a more streamlined workflow, improves the platform's overall cost structure, and shortens the turnaround time from sample collection to result.

The company reported a net loss for the quarter of $2.3 million, or $.05 per share, compared to an income of $299,000, or $.01 per share, a year earlier. On an adjusted basis, Enzo reported a net loss of $.04 per share for the quarter.

Enzo's Q1 R&D expenses were unchanged at $700,000 compared to the prior-year period. Its SG&A costs rose 10 percent to $11.0 million from $10 million a year earlier.

At the end of the quarter, Enzo had cash, cash equivalents, and marketable securities of $36.9 million, including restricted cash of $750,000.

Bench said the company remains committed to investing in key growth areas, such as its proprietary lab-developed tests and its four platforms, including molecular, immunology, cytology, and immunohistochemistry.

Erfanian also noted that the company plans to put many of its diagnostic tests through US Food and Drug Administration approval processes in the coming year, whether through the 510(k) process or as de novo devices.

The firm's shares were down a fraction of a percent to $3.47 in early Thursday morning trading on the New York Stock Exchange.

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