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Nanosphere Posts 42 Percent Q2 Revenue Growth but Lowers 2014 Guidance

NEW YORK (GenomeWeb) – Nanosphere reported after the close of the market on Wednesday that its revenues rose 42 percent year over year, driven by a sharp uptick in consumables sales.

However, Nanosphere fell short of analysts' consensus estimates and lowered its guidance for the year. Investors drove shares of the firm down 29 percent to $1.01 in Thursday morning trade on the Nasdaq.

Northbrook, Ill.-based Nanosphere said that for the three months ended June 30 revenues increased to $2.7 million from $1.9 million in the year-ago quarter, but fell short of the average analyst estimate of $3.9 million. Consumables sales more than doubled year over year to $2.2 million, but instrument sales were down year over year and sequentially, Nanosphere said.

Nanosphere President and CEO Michael McGarrity said in a statement that while the consumables business improved and the company's customer base grew — new customer placements in Q2 2014 totaled 37 — instrument sales were "well short of expectations due to timing of hospital capital budgets and a continued lengthy customer implementation process."

As a result, Nanosphere lowered its full-year 2014 revenue guidance to $14 million from a previous guidance of between $19 million and $21 million. It also revised its guidance for customer placements for the year to a range of 175 to 200, down from a previous guidance of about 200.

Highlights in Q2 included clearance from the US Food and Drug Administration for the bacterial targets on the Verigene Enteric Pathogens Nucleic Acid Test. Nanosphere said it has submitted an application to the agency for the viral targets that it plans to include on the test.

Also, in June HealthTrust selected the company to provide multi-target molecular diagnostic tests for about 1,400 acute care facilities.

For the quarter, Nanosphere recorded a net loss of $10 million, or $.13 per share, compared to a net loss of $7.8 million, or $.14 per share, a year ago, missing the consensus Wall Street estimate of a loss of $.12 per share.

In the most recently completed quarter, Nanosphere used an average 75,904 shares to calculate its net loss per-share figure, compared to 56,998 shares a year ago.

Its R&D costs were essentially flat year over year at $4.0 million, while its SG&A costs increased 60 percent to $6.7 million from $4.2 million.

Nanosphere finished the quarter with $21.8 million in cash and cash equivalents.