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eBioscience Purchase Nudges Affymetrix Q2 Revenues up 3 Percent

NEW YORK (GenomeWeb News) – Affymetrix said after the close of the market on Tuesday that second-quarter revenues increased 3 percent year over year, helped along by a $1.4 million contribution from its eBioscience acquisition.

For the three months ended June 30, revenues for the Santa Clara, Calif.-based microarray firm increased to $66.4 million, up from $64.7 million in the year-ago period. The results beat the average analyst estimate of $65.6 million.

Product sales for the quarter totaled $58.5 million, up nearly 1 percent from $58.1 million a year ago, while services and other revenues were up 22 percent to $7.9 million from $6.5 million a year ago.

Product revenues consisted of $53.3 million in consumables revenues, $3.8 million in instrument revenues, and the $1.4 million in eBioscience revenues. That compares to $54.3 million in consumables revenues and $3.8 million in instrument revenues during Q2 2011.

On a conference call following the release of the results, Affymetrix President and CEO Frank Witney noted that the life science reagents business was down 8 percent year over year. He portrayed this as a temporary slowdown as the company ended a North American distribution agreement for "a key product," which he did not name, late last year. The company is now selling the product directly.

Its expression revenues also were down 8 percent, but that compares to a 14 percent decline in the second quarter of 2011. Company officials said they are "making progress toward stabilizing the business." This stabilization was aided by growth in Affy's Quantigene and Procarta family of RNA and protein expression products which grew by double digits in Q2.

The firm's genetic analysis and clinical business grew by 20 percent year over year, driven by adoption of the company's CytoScan HD product. Witney said the firm still plans to submit the cytogenetics tool to the FDA for clearance by year end. "Our cytogenetic portfolio is less dependent on academic funding, and we think it will fuel our long-term growth in a significant way," he said.

The company turned a profit of $30.9 million, or $.43 per share in the quarter, compared to a net loss of $3.7 million, or $.05 per share, a year ago.

Affy lowered its R&D spending during the quarter 11 percent year over year to $13.6 million from $15.3 million. Its SG&A costs, however, increased 52 percent to $40.5 million from $26.7 million.

The recently completed quarter also included an income tax benefit related to the eBioscience deal of $44.7 million; acquisition-related non-recurring costs of $4.7 million; a stock compensation charge of $8.3 million related to the acceleration of stock options held under eBioscience equity incentive plans; and a recovery of a $2.2 million note that had been provided for in full.

On an adjusted basis, Affy had a net loss of $1.2 million, or $.02 per share. Wall Street had a consensus net loss per share of $.07.

Affy exited the quarter with $27.4 million in cash, cash equivalents, and restricted cash.

In Wednesday morning trade on the Nasdaq, shares of Affymetrix were up 1 percent at $4.24.

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