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Affymetrix's Q3 Revenues Rise 24 Percent

NEW YORK (GenomeWeb News) – Affymetrix's third-quarter revenues jumped 24 percent year over year with the addition of eBioscience, the microarray firm announced after the close of the market on Monday.

For the period ended Sept. 30, the company's revenues improved to $79.6 million from $64.0 million a year ago, but still fell short of the consensus Wall Street estimate of $80.7 million. eBioscience, which Affy acquired in June, contributed $17.6 million in revenues during the recently completed quarter.

The firm had already announced in early October that it expected to report revenues below analysts' estimates.

Excluding eBioscience, revenues across Affymetrix were down 2 percent year over year on a constant currency basis.

The firm's product revenues increased to $72.7 million from $57.0 million a year ago, a 28 percent increase, while services and other revenues narrowed 1 percent to $6.9 million from $7.0 million a year ago.

Within product revenues, consumables revenues totaled $50.5 million, excluding eBioscience, down from $52.9 million a year ago, while instrument revenues were up to $4.6 million from $4.1 million a year ago.

On a conference call following the release of the earnings results, Affy President and CEO Frank Witney said that the gene expression business unit was down 11 percent year over year with expression array revenues off 15 percent year over year while Panomics expression product revenues grew about 5 percent.

"Stabilizing our array-based expression revenues is our single biggest challenge," Witney said, as the business, which comprises about 34 percent of Affy's total revenues, faces pressure from new technologies as well as pricing pressure from competitors.

The genetic analysis business grew 16 percent year over year driven primarily by the cytogenetic research-use only portfolio of products and the Axiom family of genotyping products, which saw double-digit growth on a sequential basis for the third consecutive quarter, Witney said.

Also, the company is on track to complete the clinical validation of a CytoScan HD cytogenetics product "in the next few months," and Affy anticipates filing for clearance of the product from the US Food and Drug Administration "shortly thereafter."

The life science reagents business continues to recover from the termination of "significant" distribution agreements last year, and Affy "expects this business to grow in the fourth quarter. In the meantime, it continues to generate healthy operating margins," Witney said.

Meanwhile, the eBioscience business grew at 1 percent year over year in the third quarter on a currency-adjusted basis.

Affy's R&D costs of $16.5 million in the quarter were up 8 percent from $15.3 million a year ago. Its SG&A spending rose 35 percent to $36.3 million from $26.9 million.

Affymetrix's net loss for the third quarter shot up to $17.9 million, or $.25 per share, from a net loss of $9.8 million, or $.14 per share, in the third quarter of 2011.

The net loss for the recently completed quarter included $1.9 million in acquisition-related and integration costs; $4.0 million in impairment of its West Sacramento facility; recurring amortization of acquired intangible assets of $5.0 million, and $4.5 million in fair value in the release of step-up inventory. Excluding these items, net loss would have been $2.4 million or $.03 per share, Affy said. Consensus analyst estimates called for a net loss per share of $.05.

Affy exited the quarter with $29.0 million in cash and cash equivalents and $691,000 in restricted cash.

In early Tuesday trade on the Nasdaq shares of Affymetrix were down 1 percent at $3.28.

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