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GenMark's Q1 Revenues up Sharply on Reagents Sales

NEW YORK (GenomeWeb News) – GenMark Diagnostics reported after the close of the market on Wednesday that its first-quarter revenues rose five-fold year over year.

The Carlsbad, Calif.-based company reported revenues of $11.1 million for the three months ended March 31, up from $2.2 million in the year-ago period, and beating the consensus Wall Street estimate of $9.5 million.

Revenue growth was driven by reagents sales, which spiked 468 percent year over year to $10.8 million in the quarter from $1.9 million a year ago, GenMark said. On a conference call following the release of the earnings results, GenMark President and CEO Hany Massarany added that reagent annuity per analyzer was $146,000 in the quarter, or more than $100,000 more than the figure in the first quarter of 2012. He added that reagent annuities were boosted by growth in GenMark's core test assays and the adoption of its US Food and Drug Administration-approved respiratory virus panel.

Instrument and other revenues also increased 23 percent year over year to $295,000 from $240,000. During the quarter, the firm placed 42 analyzers, bringing the total installed based to 339. Massarany said that the firm expects to place more than 150 analyzers in 2013.

Product revenues rose to $11.0 million, compared to $2.1 million in the first quarter of 2012, while license and other revenues reached $133,000, up from $39,000 a year ago.

The firm's net loss in the quarter was reduced to $4.2 million, or $.13 per share, from a net loss of $5.6 million, or $.28 per share, a year ago, beating the average Wall Street estimate of a loss of $.17 per share.

Its R&D costs were up 184 percent to $5.4 million from $1.9 million a year ago due to an increase in R&D personnel, menu development for the XT-8 molecular diagnostic system, and continued work on the company's NextGen sample-to-answer MDx platform.

The firm's SG&A costs rose 23 percent to $4.9 million from $4.0 million.

In late March, the American Clinical Laboratory Association wrote a letter to an official at the Centers for Medicare & Medicaid Services outlining issues its members were seeing in getting paid due to changes in CPT codes. On GenMark's call CFO Richard Slansky said that the company "began to feel some pricing pressures, but not enough to materially affect our financial performance."

He noted, though, that "certain sectors of our customer base" are experiencing delays in getting reimbursed by Medicare. As a result, despite the strong Q1 results, the company is choosing not to increase guidance and, instead, reaffirmed GenMark's full-year 2013 revenue guidance of $35 million.

GenMark exited the quarter with $32.0 million in cash and cash equivalents, $1.1 million in restricted cash, and $11.8 million in investments.

Massarany provided an update on the development of the NexGen system, saying that completion of the platform is now expected in the second quarter of 2014, a delay of about two quarters.

"We believe it is not at all unusual for such an integrated, highly technical development program to experience this type of timeline adjustment," he said. "This should not be interpreted to bring into question our ability to complete the project. We are working on minimizing any schedule overrun to our original development plan and continue to believe we will bring to market the most competitively differentiated sample-to-answer solution."

He added that the deal would not negatively impact the opportunity before GenMark "or the success of NexGen in the global market."