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Enzo Biochem Q4 Revenues Up 6 Percent

NEW YORK (GenomeWeb) – Enzo Biochem reported after the close of the market on Wednesday that its fourth quarter revenues rose 6 percent, largely due to a 13 percent uptick in its clinical labs segment driven by increased sales of its molecular diagnostics tests.

For the three months ended July 31, the company reported total revenues of $28.2 million, up from $26.6 million a year earlier.

Clinical laboratory services revenues rose to $20.4 million from $18.1 million in Q4 2016, offsetting a 7 percent dip in product revenues to $7.5 million from $8.1 million. Royalty and license fee income fell 31 percent to $272,000 from $392,000 the year before.

The company credited an increase in molecular diagnostic activity, especially from increased market penetration and wider geographic reach, in addition to growing women's health diagnostics testing, for the increased revenues in in its clinical labs segment. It also said the dip in product sales was the result of a strategy shift focusing on clinical markets, as well as continued softness in academic and government-sponsored R&D markets around the world.

"This quarter was one of tremendous growth across Enzo and an auspicious close to a remarkable year of progress and accomplishment," Enzo President Barry Weiner said in a statement. "We have been rapidly expanding the diagnostic services we provide to patients in the leading national healthcare insurance networks, which has begun to drive fresh growth at Enzo Clinical Labs. Our position as an innovative provider of low cost but highly versatile women's health diagnostics has likewise resulted in expanding opportunities."

The company's Q4 net income dropped to $94,000, or $.00 per share, from $36.1 million, or $.77 per share, in the year-ago quarter.

Weiner noted that the year-ago quarter's net income included legal settlements of $38.8 million, without which that quarter would have shown a $1.9 million net loss. "Despite the cost challenges of the market, especially those related to medical reimbursements, we are aiming for continued growth as we gain market share and further benefit from new and future product developments," he added.

Enzo's Q4 R&D expenses were flat at $900,000, while its SG&A costs dipped 3 percent to $10.9 million from $11.2 million in Q4 2016.

For full-year 2017, the company reported total revenues rose 5 percent to $107.8 million, up from $102.8 million in 2016.

Clinical lab revenues rose 9 percent to $77.4 million from $70.9 million in 2016, offsetting a 4 percent dip in product revenues to $29.2 million from $30.3 million. Royalty and license fee income fell 20 percent to $1.2 million from $1.5 million the year before.

Enzo reported a net loss of $2.5 million, of $.05 per share, for 2017 compared to net income of $45.3 million, or $.97 per share, in 2016.

The firm's R&D costs for the year fell 17 percent to $2.9 million from $3.5 million in 2016, while its SG&A expenses rose less than 1 percent to $44.0 million from $43.6 million.

Enzo ended the year with $64.2 million in cash and cash equivalents.

On a conference call with analysts Thursday morning to discuss the earnings, Weiner noted that the Centers for Medicare & Medicaid Services' initial prices for clinical lab tests issued under the Protecting Access to Medicare Act (PAMA) would likely prove to be a benefit to Enzo, as the company is able to provide tests at prices measurably below reimbursement prices, giving Enzo an edge in a post-PAMA market.

While Enzo's testing service business will be modestly targeted by the PAMA pricing, he said, other labs will likely be "devastated" as they eliminate services and lay off employees, with some labs even being forced out of business. However, Weiner noted, Enzo's business strategy and operations are important to the health of the industry because the company could help independent labs save up to 35 percent on products and services for high-volume tests, which is a unique option in the market at this time.

Weiner also noted that PAMA pricing could result in a plus or minus $500,000 bottom-line swing for Enzo's clinical labs segment, but said this is not a very big problem for the company. He added that women's health diagnostic testing didn't seem to be heavily affected by PAMA pricing, which was a stroke of good fortune for Enzo.

The firm's shares fell 8 percent to $10.52 in Thursday morning trading on the New York Stock Exchange.