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Enzo Biochem Q2 Revenues Tick Up Less Than 1 Percent

NEW YORK – Enzo Biochem reported after the close of the market on Thursday that revenues for its fiscal second quarter ticked up less than 1 percent year over year, as the Protecting Access to Medicare Act (PAMA) continued to negatively affect reimbursements from Medicare and third-party payers.

For the three months ended Jan. 31, the diagnostics company reported total revenues of $19.4 million, compared to $19.3 million in the year-ago quarter.

Clinical services revenues rose 4 percent to $12.5 million from $12.0 million a year earlier. Volume increases in core and other non-genetic testing services contributed to the revenue gain, the firm said. Total diagnostic testing volume as measured by the number of accessions rose 7 percent during Q2.

Life science revenues during Q2 fell 6 percent to $6.9 million from $7.3 million. The decrease was primarily due to lower product sales volume in the US, based on the timing of orders, Enzo said.

"Enzo showed strong progress against many of our important growth initiatives during the second quarter," Enzo Chairman and CEO Elazar Rabbani said in a statement. "New York State approval of our proprietary GenFlex molecular diagnostics platform provides additional validation of our program as we focus on the next phase of commercialization of these products and services and we are preparing to engage with the FDA to secure the final stage of approval."

The company announced last month that its Enzo Clinical Labs subsidiary had received approval from the New York State Department of Health for its CT/NG/TV tests using liquid-based cytology sample collection on its proprietary GenFlex platform.

"Enzo's strength in technology and product development is illustrated by GenFlex's rapid development over the past four years as it offers important cost savings over current closed systems. GenFlex particularly addresses the $450 million annualized global CT/NG/TV diagnostic market as well as the $1.3 billion women's health market. Extensions of the GenFlex platform, currently under development, are aimed at addressing the entire $7 billion molecular diagnostic market," Rabbani added.

The company's net loss for the quarter narrowed to $7.7 million, or $.16 per share, from $8.4 million, or $.18 per share, a year earlier. On an adjusted basis, Enzo reported a net loss of $.12 per share for the quarter.

Enzo's R&D costs for Q2 rose 25 percent to $1.0 million from $800,000 in Q2 2019. The increase was entirely attributed to the clinical services division for lab developed tests based on the GenFlex platform, the company said. SG&A expenses for the quarter fell 7 percent to $10.7 million from $11.5 million.

At the end of the quarter, Enzo had cash and cash equivalents of $52.3 million, including restricted cash of $750,000.

In a separate announcement on Friday, Enzo said that its clinical labs subsidiary will begin accepting specimens for COVID-19 testing next week. The test used by Enzo determines the presence of viral RNA in respiratory specimens collected from patients.

The company said it is concurrently developing a next-generation COVID-19 testing option, including virus-inactivating specimen collection media to lessen transmission risks for healthcare providers and clinical laboratory personnel, more relevant positive controls, and improved sensitivity. Enzo is consulting with the US Centers for Disease Control and Prevention on the implementation of these enhanced test features.

The firm's shares rose 54 percent to $3.48 in Friday morning trading on the New York Stock Exchange.