The article has been updated to include additional comments from the company's earnings conference call.
NEW YORK (GenomeWeb News) – Orchid Cellmark this morning reported a 7 percent revenue increase for the second quarter on the strength of its UK business.
For the three months ended June 30, total revenues increased to $15.7 million from $14.7 million a year ago. UK revenues rose 32 percent year over year, helped primarily by an increase in its forensic business in the region, the company said.
In British pounds, total UK revenues rose 38 percent from a year ago, though the effect of currency exchange had a negative impact of about $409,000.
US revenues slid 17 percent for the quarter, due primarily to a drop in forensic case work, and to a lesser extent government paternity business, Orchid Cellmark said. This was offset, in part, by an increase in its CODIS business.
In a statement, Orchid Cellmark President and CEO Thomas Bologna said that the firm continues to feel the effects of state and local budget constraints, including pricing pressures.
"We remain positive as a result of the growing concern about the backlog of sexual assault kits among victims groups, elected officials, and others," he said. "We believe that this backlog continues, and sooner or later these thousands upon thousands of kits should be and will be tested."
In a conference call following the release of the firm's earnings, Bologna added "We do not believe that public labs have the capacity to process them, and at least not any time soon. With today's budget crunch hitting the states, sooner or later, state governments will realize that it makes no sense to spend money on increasing public lab capacity when a company such as Orchid Cellmark can surely do the work in a timely and cost-effective manner."
During the second quarter, the company's net loss more than doubled from a year ago to $1.6 million, or $.05 per share, from $603,000, $.02 per share, in Q2 2009.
The company's R&D spending spiked to $492,000 in the quarter from $192,000 a year ago. Marketing, sales, general, and administrative costs receded to $4.8 million from $4.9 million in Q2 2009.
The company also recorded a restructuring expense of $520,000 in Q2 2010.
As of June 30, Orchid Cellmark had $18.7 million in cash, cash equivalents, and short-term investments, it said.
Bologna said during the conference call that the company is forecasting revenue growth in the third quarter of between 5 percent and 7 percent over year-ago levels.