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GenMark Diagnostics Q2 Revenues More Than Double on COVID-19 Testing

NEW YORK – GenMark Diagnostics reported after the close of the market on Tuesday a 118 percent increase in second quarter revenues, driven by COVID-19 testing sales.

The Carlsbad, California-based molecular diagnostics firm reported $40.1 million in revenue, up from $18.4 million in Q2 of 2019 and beating the consensus analyst estimate of $32.7 million.

The firm booked ePlex revenues of $35.2 million for the quarter, representing 195 percent growth over the prior-year quarter, with average annuity per analyzer up 74 percent to $188,000.

The company placed 71 net new ePlex analyzers during the quarter, increasing its global installed base to 652 placements, a growth of 48 percent compared to a year ago. On a conference call to discuss the financial results, President and CEO Scott Mendel said 40 of the placements during the quarter were new customers, and that the firm repositioned a few underutilized instruments outside of the US. However, the vast majority of revenue was made up of sales to US customers, CFO Johnny Ek said on the call.

Mendel added that more than 70 percent of the ePlex placements in 2020 had already contracted to use other GenMark tests beyond the SARS-CoV-2-only test they were originally interested in, which would result in recurring revenue streams. Mendel also noted that the company doesn't anticipate instrument capacity to be a supply constraint as demand for COVID-19 tests continues.

The firm submitted its ePlex Respiratory Pathogen Panel 2 for Emergency Use Authorization from the US Food and Drug Administration at the end of June. The panel can identify 21 respiratory pathogens, including SARS-CoV-2, influenza A, and influenza B, and has been launched in the US for commercial distribution. Mendel said the RP2 has an improved limit of detection and sensitivity and it reduces hands-on time by 50 percent. It also has a turnaround time of under 2 hours, he added.

GenMark is adding two ePlex manufacturing lines to increase the capacity for the upcoming flu season and expects to exit 2020 with the capacity to produce 150,000 tests per month, according to Mendel. The firm currently has three manufacturing lines in place and expects to add the fourth in the middle of the fourth quarter. Ek added that the company has invested $751,000 in the manufacturing expansion.

He said on the call that GenMark is continuing to focus on its gastrointestinal panel that is in development but said the "top priority" is supplying ePlex tests, for which there is "extraordinary demand."

R&D costs for the quarter decreased slightly to $7.6 million from $7.7 million in Q2 of last year. SG&A expenses increased 2 percent to $10.9 million from $10.7 million a year ago.

The company's net loss for the quarter narrowed to $4.7 million or $.07 per share, from $13.3 million or $.23 per share during the same quarter last year, beating analysts' average estimate of a loss of $.09 per share.

GenMark ended the quarter with $82.4 million in cash and cash equivalents and $50.4 million in short-term marketable securities.

The company increased its 2020 revenue guidance to $155 million to $165 million from the previously stated range of $120 million to $130 million. It also anticipates placing 230 to 250 net new ePlex analyzers this year, each with an annuity per analyzer of $175,000 to $200,000.

GenMark's stock was down nearly 7 percent in aftermarket trading on the Nasdaq, at $17.80 per share.