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Sequenom Q4 Revenue Down 24 Percent

This story has been updated to provide comments from Sequenom management made during a conference call with investors.

NEW YORK (GenomeWeb) – Sequenom's fourth quarter 2015 revenues were down 24 percent compared to the fourth quarter 2014, the company reported after the close of the market on Wednesday.

The San Diego, California-based molecular diagnostic company reported total Q4 revenues of $27.8 million compared to $36.8 million in Q4 2014. It missed analysts' average estimate of $28.4 million.

The revenue drop was primarily due to a decline in diagnostic services, which was $6.6 million lower "as a result of the transition of certain customers to licensee status," the firm said in a statement. In 2014, Sequenom struck a deal with Illumina to pool their patents and allow laboratories to license the rights to develop NIPTs to run in-house rather than order from Sequenom or Illumina.

This week, Sequenom also announced it had struck an agreement with Anthem BlueCross in California to provide in-network coverage for Sequenom's high- and average-risk NIPTs beginning on March 1.

Diagnostic revenue was $25.6 million in Q4 2015, down 27 percent from $35.1 million in Q4 2014, while license revenue was up 36 percent to $2.3 million from $1.7 million.

The firm accessioned 42,200 diagnostic tests including 37,300 noninvasive prenatal tests — 17 percent and 15 percent decreases from the prior year period, respectively. Sequenom said the decline in tests accessioned was due to the transition of some customers to licensees, which reduced total Q4 tests accessioned by around 10,000. In addition, the firm noted that the average reimbursement rate per test has also declined.

During a conference call discussing the firm's performance, Sequenom CFO Carolyn Beaver said that although the percentage of tests that are reimbursed has been increasing — in Q4 around 70 percent of tests that were ran were reimbursed — the average rate has been steadily declining. In Q4, the average reimbursement rate was $800, Beaver said. The firm reported in 2013 that average reimbursement was $1,200 per test.

On a sequential basis, tests accessioned were up. Sequenom CEO Dirk van den Boom said in a statement that comparing sequentially is "the clearest view of Sequenom's current business trend. When viewed from this perspective, our commercial efforts are beginning to pay off in the form of higher test volumes, which we expect to continue into 2016."

Sequenom had a net loss of $12.2 million, or $.10 per share, compared to net income of $18.3 million, or $.14 per share, in the year ago quarter, and in line with Wall Street's estimate.

Sequenom's R&D expenses were $5.4 million in Q4 2015, up from $5.1 million in Q4 2014, while SG&A spending was down to $16.5 million, from $17.3 million in the year-ago quarter.

For full-year 2015, Sequenom recognized total revenues of $128.3 million, which it had reported preliminarily in January. Full-year revenues were down 15 percent from its 2014 revenues of $151.6 million. FY 2015 revenues included $119.8 million in diagnostic revenues and $8.4 million in license revenues, compared to 2014 diagnostic revenues of $148.6 million and license revenues of $3.0 million.

The firm's 2015 net loss was $16.3 million, or $.14 per share, compared to net income of $1.0 million in 2014, or $.01 per share. It beat Wall Street's net loss estimate of $.32 per share.

Sequenom's 2015 R&D expenses totaled $22.9 million, down from $25.0 million in 2014, while SG&A expenses were $67.5 million in 2015, down from $77.8 million in 2014.

Van den Boom said during the call that the firm has a goal of being "cash-flow neutral" by the end of 2017. For 2016, van den Boom said the company expects to accession around 170,000 NIPTs, a 9 percent growth from 2015 test volumes that will be driven by the average-risk market. Nonetheless, he said the firm anticipates total revenues to decline to $120 million, of which $10 million will be from test fees and royalties associated with the patent-pool agreement with Illumina.

Sequenom finished the year with $76.2 million in cash, cash equivalents, and marketable securities.