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Cancer Genetics Q2 Revenues Drop 17 Percent, Miss Analyst Estimates

NEW YORK (GenomeWeb) – Cancer Genetics today reported a 17 percent year-over-year decrease in its second quarter revenues resulting from a drop in test volumes related to its clinical trials business.

For the three months ended June 30, the Rutherford, NJ-based cancer diagnostics firm said that revenues contracted to $1.5 million from $1.8 million in the year-ago period, missing the consensus Wall Street estimate of $2.1 million.

Medicare revenues were up 77 percent year over year and revenues from clinical testing customers, such as cancer centers, hospitals, laboratories, and pathology and oncology offices, were up 19 percent, but revenues from its genomics testing service called SelectOne were down 55 percent due to delays in the initiation of new trials, Cancer Genetics said.

"This reduction was a timing issue that was due to the later start of two large clinical trials being undertaken by one of our largest biopharma customers," Cancer Genetics President and CEO Panna Sharma said in a statement. "As these trials ramp up, we anticipate recognizing the associated revenues during the next several quarters."

Test volume declined to 2,664 in the quarter from 3,204 in Q2 2013, while average revenue per test slid to $542 from $557. The drop was primarily due to direct bill tests, including the company FISH-based HPV-associated cancer test called FHACT.

Cancer Genetics reported a net loss of $4.2 million, or $.47 per share, for the quarter, compared to a net loss of $9.1 million, or $2.29 per share, a year ago. The average analyst estimate was for a loss of $.37 per share.

It more than doubled its R&D spending year over year to $1.1 million from $455,570, and upped its SG&A expenses 83 percent to $3.3 million from $1.8 million.

More than $300,000 of its R&D expenses resulted from increased activity and the resulting share of the loss from OncoSpire, Cancer Genetics' joint venture with the Mayo Clinic, the company said.

Cancer Genetics finished the second quarter with $37.4 million in cash and cash equivalents.

During the quarter, the company reached agreements to buy BioServe for $1.9 million and Gentris for $6.25 million. Both deals are anticipated to close in the third quarter.