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Affymetrix's Q4 Revenues Shoot up 29 Percent on eBioscience Contribution

NEW YORK (GenomeWeb News) – Affymetrix's revenues in the fourth quarter rose 29 percent year over year on the contribution of the recently acquired eBioscience business, the company reported after the close of the market on Thursday.

For the three months ended Dec. 31, 2012, the Santa Clara, Calif.-based microarray firm posted $84.3 million in revenues, up from $65.1 million a year ago and slightly above the firm's pre-announcement of $84.0 million in revenues last month. Affy edged out the consensus Wall Street estimate of $84.1 million.

eBioscience, which Affy acquired in June 2012, contributed $18.1 million in revenues during the recently completed quarter, and excluding that business, revenues rose 2 percent year over year, Affy said.

Product sales for the fourth quarter increased to $76.4 million from $58.7 million, a 30 percent jump year over year. Core consumable revenues totaled $53.1 million, down from $54.9 million a year ago, and instrument revenues reached $5.2 million, up from $3.8 million a year ago.

Services and other revenues reached $8.0 million, up 25 percent from $6.4 million in the fourth quarter of 2011.

Affy President and CEO Frank Witney said on a conference call after the release of the company's earnings results that the firm generated double-digit growth in the quarter in terms of the volume of arrays it shipped. Growth was driven primarily by the firm's CytoScan cytogenetics and Axiom genotyping product lines, he said.

At the same time, a shift to less expensive arrays put pressure on Affy's expression business unit, which declined by 10 percent year over year in the fourth quarter. Most of that decline was attributable to a 14 percent drop in revenues for its legacy GeneChip expression arrays. The dive in GeneChip revenues was offset in part by 11 percent growth in the company's Panomics business, a subsegment of the expression business unit.

Specifically, Witney said that growth in the expression business was driven by the Panomics QuantiGene ViewRNA molecular pathology offering and its Procarta multiplex immunoassay offering.

Meanwhile, Affy's genetics analysis business unit had a "solid" fourth quarter, Witney said, growing by 31 percent year over year. He said that Q4 CytoScan cytogenetics and Axiom genotyping revenues doubled from the year-ago period. The company's cytogenetics portfolio now accounts for about 10 percent of the firm's revenues.

Affy has been preparing to submit CytoScan for US Food and Drug Administration clearance, and Witney said the firm's filing is "now imminent." Affy expects to have an FDA-cleared cytogenetics product on the market by the middle of the year.

The firm's Life Science reagents business generated $7.8 million in Q4, roughly flat with Q4 2011, and Witney said that Affy believes that life science reagents will grow in the low single digits this year.

The eBioscience unit grew by 6 percent in the quarter. Affy said that it believes that eBio's flow cytometry and immunoassay reagents products will continue to grow at about the same rate this year, with growth driven by new product adoptions and offering eBio products through the firm's global sales channel. Witney estimated that eBio-generated revenues will represent about 22 percent of its total revenue this year.

The firm's net loss for the fourth quarter was reduced to $12.3 million, or $.17 per share, from a net loss of $14.7 million, or $.21 per share, a year ago. On an adjusted basis, the net loss was $.02 per share, beating the Wall Street estimate of a $.03 net loss per share.

In early January Affy announced a restructuring of its business, which includes layoffs of 100 workers. The reorganization is expected to result in savings of $25 million annually. In total, the company expects to take a charge of $7 million related to the restructuring, of which $1.8 million was taken in the fourth quarter. It expects to take a charge for the remaining balance in Q1 2013, Affy said.

Its R&D expenses in the quarter were clipped 13 percent to $14.5 million from $16.7 million a year ago, while SG&A costs rose 32 percent to $38.1 million from $28.8 million.

Revenues for full-year 2012 increased 11 percent to $295.6 million from $267.5 million, ahead of analyst estimates of $295.2 million. Excluding $37.0 million from eBioscience, revenues were down 3 percent from 2011, Affy said.

The company recorded $266.1 million in product sales, up 10 percent from $241.3 million in 2011. Core consumable revenues of $210.7 million were down from $225.0 million a year ago, but instrument revenues were up in 2012 to $18.4 million from $16.3 million in 2011.

The firm slashed its net loss to $10.7 million, or $.15 per share, from a net loss of $28.2 million, or $.40 per share, a year ago. On an adjusted basis, the per-share loss was $.10, bettering the consensus Wall Street estimate of a loss of $.12 per share.

The company cut its R&D spending 9 percent to $57.9 million from $63.6 million a year ago, while its SG&A costs increased 30 percent to $142.9 million from $109.6 million.

"We had a good finish to 2012, achieving modest growth in our core business during the fourth quarter, which was a very challenging environment for academic spending," Witney said in a statement. "Over the last year we have diversified our portfolio, achieved our strategic and revenue goals for our CytoScan product line and demonstrated renewed strength in our genotyping with our Axiom platform. We plan to return to growth and profitability in fiscal 2013."

Affy finished 2012 with $25.7 million in cash and cash equivalents and $699,000 in restricted cash.

Witney gave revenue guidance for 2013 of $330 million.

Affy's stock was up a fraction of 1 percent at $3.82 in Friday morning trade on the Nasdaq.