SAN JOSE, Calif., Nov. 14 /PRNewswire-FirstCall/ -- Applied Imaging Corp. (“Applied Imaging”) , the leading supplier of automated digital imaging and image analysis systems for the detection and characterization of chromosomes and molecular markers in genetics and pathology applications, today announced financial and operating results for the third quarter and nine month period ended September 30, 2005.
Total revenues for the quarter ended September 30, 2005 were $4.9 million. Revenues for the comparable period in 2004, at $5.7 million, were positively impacted by the release of Ariol 2.0, allowing system sale deferrals of $0.8 million from prior periods to be recognized.
Total revenues for the nine months ended September 30, 2005 were $14.7 million. This compares to revenues for the first nine months of 2004 of $14.9 million. Revenues for the first nine months of 2004 included system sale deferrals related to the release of Ariol 2.0 of $0.8 million.
The Company’s operating loss for the three months ended September 30, 2005 was $71,000 versus an operating loss of $242,000 for the equivalent period in 2004. The operating loss for the nine months ended September 30, 2005 was $850,000 compared to an operating loss for the first nine months of 2004 of $1.8 million.
The Company’s net loss for the three months ended September 30, 2005 was $362,000 versus a net loss of $237,000 for the equivalent period in 2004. The net loss for the nine months ended September 30, 2005 was $1.3 million compared to a net loss for the first nine months of 2004 of $1.9 million.
Robin Stracey, President and CEO, said, “We are pleased with our progress this quarter. Third quarter revenues were again in line with our expectation and though our net income was negatively impacted by adverse fluctuations in the dollar-pound exchange rate and the settlement of our tax dispute with the Inland Revenue in the UK, we came close to operating profitability this quarter in spite of our increased level of investment in the circulating tumor cell initiative. We had previously disclosed the tax dispute as a contingent liability of $1.1 million and were pleased to be able to finally settle the matter for $211,000.”
Gross profit for the quarter was $3.2 million, representing a gross margin of 65%, up from 56% for the third quarter of 2004. Gross margin for the nine months ending September 2005 was 61%, up from 59% in the comparable prior year period.
Operating expenses for the quarter, inclusive of $515,000 for the CTC, Inc. subsidiary, were $3.3 million, a 5% decrease from the $3.4 million in the third quarter of 2004. Operating expenses for the nine-month period ended September 30, 2005, inclusive of $1.1 million for the CTC, Inc. subsidiary, were $9.8 million, an 8% decrease from the $10.6 million for the comparable 2004 period.
“2005 to date has been devoted to resolving legacy issues, solidifying the performance of our core imaging business and pushing forward with our circulating tumor cell initiative”, continued Mr. Stracey. “There are three key elements to our long term growth strategy. Firstly, we intend to continue to enhance the profitability of our clinical cytogenetics business through the incremental rollout of high value new software releases, leverage of our installed base of over 4,000 units around the world and ongoing productivity improvement initiatives. Secondly, we intend to capitalize on the unique attributes of our Ariol(R) pathology workstation as a powerful tool for biopharma companies evaluating the efficacy of candidate cancer drugs. Seven leading biopharma companies have now purchased at least one Ariol(R) and we expect to further enhance the system’s value and our opportunity going forward by expanding our offering to include additional, fee-based, customization services. Thirdly, we intend to continue to invest directly, and with a strategic partner, in the development of a leading edge system for the detection, quantification and analysis of tumor cells in the circulating blood of cancer patients. We anticipate that this system, designed around the established analytical capabilities of the Ariol(R) platform, would have the potential to transform the diagnosis and monitoring of the disease and would introduce the Company to what is expected to be a significant new growth market. Additionally, we continue to focus on efficiency and process improvement.”
Mr. Stracey added, “Against these goals, we accomplished a number of key milestones in the third quarter. In cytogenetics, we released CytoVision 3.7, the third in a series of important new releases this year aimed at strengthening our competitive position and further enhancing the profitability of our clinical cytogenetics business. In pathology, we released Ariol(R) 2.1 and added several important new accounts to our marquee list of biopharma and translational research customers. In CTC we made progress in our efforts to adapt the Ariol(R) rare cell detection algorithm for use with circulating tumor cells and in our efforts to optimize several of the components of the kit that we anticipate will be the captive consumable component of the system. And a good example of our progress in process improvement is the 58% reduction we have seen in inventory between December 2004 and September 2005 as a result of the adoption of more efficient supply chain management practices.”
Financial Condition
As of September 30, 2005, the Company had cash and cash equivalents of $3.2 million, compared to $3.0 million at June 30, 2005 and $3.9 million at December 31, 2004.
Outlook
The Company reaffirms its full year revenue projection of approximately $20 million and expects to achieve operating profitability in its core imaging business in the fourth quarter.
About Applied Imaging
Applied Imaging Corp., based in San Jose, California, is the leading supplier of automated imaging and image analysis systems for the detection and characterization of chromosomes and molecular markers in genetics and pathology applications. The Company develops, manufactures and markets a range of scanning and image analysis systems for both conventional (brightfield) and fluorescent microscopic analysis of cellular and tissue specimens. Products are sold to hospital laboratories, cancer centers, prenatal clinics and research institutions for both research and clinical purposes. The Company has installed over 4,000 of its systems in over 1000 laboratories in more than 60 countries around the world. Beyond its core business, through its wholly-owned subsidiary, CTC, Inc., the Company is also developing a system for the detection, quantification and characterization of tumor cells in the blood of cancer patients.
More information about Applied Imaging can be found at www.aicorp.com. Code: AICXG
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: This press release contains forward looking statements as defined in the Private Securities Litigation Reform Act of 1995, regarding, among other matters, the timing of the Company’s Cytovision and Ariol software releases, its ability to execute its long term growth initiatives, including successful development of its circulating tumor cell system and adapting its Ariol platform to new applications, as well as its future financial performance, financial condition, timing of operating profitability in its core imaging business, and the timing and amount of spending for its CTC, Inc. subsidiary. Forward-looking statements are based on management’s current, preliminary, expectations and are subject to risks and uncertainties, which may cause the Company’s actual results to differ materially from the statements contained herein. The Company’s third quarter 2005 financial results, as discussed in this release, are preliminary and unaudited, and subject to adjustment. Actual results could differ materially from those projected in the forward-looking statements as a result of a number of factors, including the failure of Applied Imaging to develop successfully its cancer diagnostics or genetic instrument business and other such factors as set forth in “Business -- Additional Factors that Might Affect Future Results,” commencing on page 11 of Applied Imaging’s Form 10-K for 2004, filed with the Securities and Exchange Commission on April 27, 2005. The forward-looking statements in this news release are made as of November 14, 2005, and Applied Imaging is under no obligation to revise or update the forward-looking statements.
Contacts: For More Information: CCG Investor Relations Crocker Coulson, President 10960 Wilshire Boulevard, Suite 2050 Los Angeles, CA 90024 (310) 231-8600 crocker.coulson@ccgir.com Applied Imaging Corp. Terry Griffin, Chief Financial Officer 120 Baytech Drive, San Jose, CA 95134 (408) 719-6400 tgriffin@aicorp.com APPLIED IMAGING CORP. AND SUBSIDIARIES Consolidated Statement of Operations and Comprehensive Income (Loss) (in thousands, except per share data) (Unaudited) Three Months ended Nine Months ended September 30, September 30, September 30, September 30, 2005 2004 2005 2004 Revenues $4,933 $5,709 $14,735 $14,895 Cost of revenues 1,746 2,535 5,785 6,103 Gross profit 3,187 3,174 8,950 8,792 Operating expenses Research and development 800 887 2,555 2,622 Sales and marketing 1,393 1,619 4,115 4,956 General and administrative 1,065 910 3,130 3,040 Total operating expenses 3,258 3,416 9,800 10,618 Operating loss (71) (242) (850) (1,826) Other income/ (expense) and tax (291) 5 (459) (85) Net loss $(362) $(237) $(1,309) $(1,911) Net loss per share - basic and diluted $(0.08) $(0.05) $(0.27) $(0.43) Weighted average shares outstanding - basic and diluted 4,784 4,784 4,779 4,471 Selected Consolidated Balance Sheet Data (in thousands) (Unaudited) September 30, December 31, 2005 2004 Cash and cash equivalents $3,157 $3,927 Restricted cash 176 193 Working capital (691) 603 Total assets 11,929 14,032 Total stockholders’ equity 2,040 3,436
Applied Imaging Corp.
CONTACT: Crocker Coulson, President of CCG Investor Relations,+1-310-231-8600, crocker.coulson@ccgir.com, for Applied Imaging Corp.; orTerry Griffin, Chief Financial Officer of Applied Imaging Corp.,+1-408-719-6400, tgriffin@aicorp.com
Web site: http://www.aicorp.com/
