Chembio Diagnostics, Inc. Reports Second Quarter 2009 Results
MEDFORD, NY--(Marketwire - August 07, 2009) - Chembio Diagnostics, Inc. (OTCBB: CEMI), which develops, manufactures, markets and licenses point-of-care diagnostic tests, reported its first quarterly profit since its merger in May 2004. Total revenues were $3.37 million for the quarter ended June 30, 2009, which compares to total revenues of $2.72 million for the quarter ended June 30, 2008, a 24% increase. The Company recorded Net Income of approximately $110,000, or less than a $0.01 per share, for the quarter ended June 30, 2009, compared to a Net Loss of approximately $363,000, or $0.01 per share, for the quarter ended June 30, 2008.
The operating results in the second quarter of 2009 include $1,161,000 of revenues from the sale of rapid HIV tests to Inverness Medical Innovations, Inc., the Company's exclusive U.S. marketing partner for its FDA approved rapid HIV tests. This represents an increase of $737,000, or 174%, compared to $424,000 for the quarter ended June 30, 2008. The operating results also reflect steps the Company took during 2008 and in the current year to reduce overhead expenses while still maintaining a strong R&D effort to develop future products based on its patented DPP® technology.
Commenting on the results, Chembio's President, Lawrence A. Siebert, stated, "We are pleased with the growing demand for our rapid HIV tests in the U.S. market as evidenced by the 174% increased sales to our U.S. marketing partner, Inverness, during the second quarter. When combined with our other revenue streams, our continued improvements in manufacturing and our control of our costs, these results prove that we can have a profitable base business. I believe we will see continued improvements in the second half of 2009 as compared with the second half of 2008, as we anticipate realizing new revenues based upon the opportunities we have developed with our patented DPP® technology."
Financial Highlights for the Second Quarter of 2009
-- Product sales for the three months ended June 30, 2009 increased 23.7%
from $2.46 million to $3.05 million. Net product sales to Inverness for the
second quarter increased more than $735,000, or approximately 174%, as
compared to the second quarter of 2008, indicating that our sales to
Inverness are continuing their strong upward trajectory in 2009 as compared
to 2008.
-- Product sales also included the shipment of HIV and other tests and
components to customers in Africa ($999K), South America ($639K), and Asia,
Europe, and the Middle East ($161K).
-- The increased product and R&D revenues combined to produce gross
margin dollars that were $350,000 or 34.6% ($1,362,000 vs. $1,012,000)
greater than the gross margin dollars in the comparable period in 2008.
-- Selling General & Administrative Expenses decreased by $267,000 or 33%
in the 2009 period as compared to the second quarter of 2008
-- Operating profit was approximately $117,000, in the 2009 period as
compared to an operating loss in the second quarter of 2008 of $365,000, a
swing of $482,000.
-- Net Income for the three-month period was calculated with non-cash
expenses associated with the issuance of options issued as compensation in
the amount of $74,666 and depreciation and amortization expenses of $92,550
as compared with $70,248 and $78,247 respectively in 2008.
-- The Company increased its cash position during the quarter by
approximately $569,000 to $1.86 million. This is primarily attributable to
the operating cash flows. The increase in operating cash flows included the
net income of $110,000 increased by $92,000 in depreciation and $75,000 in
stock option compensation expenses. Also adding to the increased cash flow
was a decrease in accounts receivable and inventories by a combined $39,000
and increases in accounts payable, deferred revenue and accrued liabilities
by a combined $300,000. Partially offsetting the increase in cash during
the quarter was the funding of $50,000 in progress payments for the design
and development of an automated system related to assembly of its products.
Financial Highlights for the first half of 2009
-- Product sales for the six months ended June 30, 2009 increased
$617,000, or 13%, from $4.70 million to $5.32 million. Net product sales to
Inverness for the first half increased more than $1,040,000, or
approximately 108%, as compared to the first half of 2008.
-- Research and Development Revenues increased 44% to $546,000. Net R&D
Expense (R&D Expense net of R&D Income) decreased 1.3% from $815,000 in the
2008 period to $804,000 in the 2009 period.
-- The increased product and R&D revenues combined to produce gross
margin dollars that were $516,000 or 28% greater than the gross margin
dollars in the comparable period in 2008.
-- Selling General & Administrative Expenses decreased by $610,000 or
33.4% in the 2009 period as compared to the first half of 2008
-- Operating loss decreased by 82% or $969,000 to $208,000 in the 2009
period as compared to an operating loss in the first half of 2008 of
$1,177,000.
-- Net Income for the six-month period was calculated with non-cash
expenses associated with the issuance of options issued as compensation in
the amount of $91,850 and depreciation and amortization expenses of
$191,999 as compared with $ 244,338 and $154,101 respectively in 2008.
-- The Company increased its cash position during the first half of 2009
by approximately $647,000 to $1.86 million. This is primarily attributable
to the operating cash flows. The increase in operating cash flows included
the net loss of $215,000 which was offset by increases in cash flow
attributable to depreciation of $192,000 and stock option compensation
expense of $92,000. Also adding to the increased cash flow was a decrease
in accounts receivable and inventories by a combined $365,000 and an
increase in deferred revenue of $495,000, which includes receiving a
$340,000 payment from Bio-Rad Laboratories, Inc. with respect to a license
agreement as previously reported. Partially offsetting these increases
during the first half of 2009 were increases in accounts payable and
accrued liabilities by a combined $138,000 together with the funding of
$200,000 in progress payments for the design and development of an
automated system related to assembly of its products.
Update On DPP® Product Commercialization and Research & Development
The Company is progressing in commercializing its initial products developed on its patented DPP® rapid point-of-care diagnostic platform and also continues to have an active research and development program, as follows.
-- New DPP® Product Commercialization - During the second quarter, we
completed development of two additional products, our DPP®
Syphilis Screen & Confirm Test that we have developed in
collaboration with the United States Centers for Disease Control
("CDC") and our multiplex 5-band point-of-care test for the
confirmation of HIV 1 & 2 that we have developed for public health
settings in Brazil pursuant to our agreement with the Oswaldo Cruz
Foundation of Brazil ("FIOCRUZ").
-- A multi-center phase one evaluation sponsored by the World
Health Organization, in which our product is the only multiplex
point-of-care test that detects both markers for syphilis in a
single point-of-care test device, was recently initiated and is
anticipated to be completed during the fourth quarter. In the
interim we anticipate finalizing a clinical plan with the FDA
in order to begin the process of seeking an FDA 510(k) clearance
of this product during 2010.
-- We still anticipate that FIOCRUZ will receive required approvals
from its regulatory agencies during 2009 for the DPP® HIV 1/2
Confirmatory test, the first commercialized point-of-care test
for the confirmation of HIV. We also anticipate regulatory
approvals in Brazil for the previously completed DPP® HIV 1/2
Screening Assay and the DPP® Canine Leishmaniasis screen tests.
These approvals, if granted, would trigger approximately
$900,000 of technology transfer fees to Chembio.
-- The DPP® HIV 1/2 Screening Assay for Oral Fluid is also being
evaluated in Africa. We also intend to begin clinical trials
during 2009 toward obtaining regulatory approval for this
product in the United States. This product will enable Chembio
to participate in the oral fluid testing segments of the United
States, where we believe there is a significant opportunity to
penetrate a market segment not available to whole blood tests.
-- We have not yet received the CE Mark for our HIV tests. During
the second quarter, we were informed that due to changes that
occurred in the EU regulatory requirements, we would need to
complete a small additional study We are completing this study
now and we anticipate that this will be the final item we need
in order to complete our filing for the CE Mark. Under our
agreement with Inverness we are obligated to use commercially
reasonable efforts to obtain a CE Marking for the Clearview®
Complete HIV 1/2 test, and we are doing this for that product
as well as for our HIV 1/2 STAT-PAK® product.
-- Research & Development Progress - We continue to have a very robust
research and development program, a substantial portion of which is
funded by development agreements with commercial, governmental, and
non-governmental organizations. These activities are helping us to
create a growing pipeline of new products, all based upon the
Company's patented Dual Path Platform (DPP®). These projects have
also enabled the Company to cost effectively develop know-how which
may be applicable to future product endeavors. Funded projects in
the second quarter, which are continuing into at least the current
third quarter, include those with Bio-Rad Laboratories, Inc.
(multiplex product), FIND (TB and Malaria antigen detection), CDC
(Influenza), and IDRI (Human Leishmaniasis and Leprosy). Also, in
June, the Company was awarded a three-year $3 million Small Business
Innovative Research (SBIR) Phase II grant from the United States
National Institutes of Health (NIH) to fully develop, validate, and
commercialize a rapid diagnostic test for leptospirosis for general
use worldwide.
Further information concerning the Company's DPP® technology, products, and projects can be found on the Company's web site, www.chembio.com
Conference Call
Chembio has scheduled a conference call and webcast for 10:00 a.m. Eastern time on Friday, August 7, 2009. Participants may access the call by dialing (877) 407-0778 in the U.S. or (201) 689-8565 outside the U.S. Following the completion of the call, a telephone replay will be accessible until November 7, 2009 at 11:59 p.m. Eastern Time by dialing (877) 660-6853 from the U.S. or (201) 612-7415 from outside the U.S. and entering reservation account number 286 and conference ID 329825. The conference call may also be accessed via the internet at http://www.investorcalendar.com/IC/CEPage.asp?ID=148316. An archive of the webcast will be available for 90 days on the Company's website at www.chembio.com.
About Chembio Diagnostics
Chembio Diagnostics, Inc. develops, manufactures, licenses and markets proprietary rapid diagnostic tests in the growing $5 billion point-of-care testing market. Chembio's two FDA PMA-approved, CLIA-waived, rapid HIV tests are marketed in the U.S. by Inverness Medical Innovations, Inc. Chembio markets its HIV STAT-PAK® line of rapid HIV tests internationally to government and donor-funded programs directly and through distributors. Chembio has developed a patented point-of-care test platform technology, the Dual Path Platform (DPP®) technology, which has significant advantages over lateral-flow technologies. This technology is providing Chembio with a significant pipeline of business opportunities for the development and manufacture of new products based on DPP®. Headquartered in Medford, NY, with approximately 100 employees, Chembio is licensed by the U.S. Food and Drug Administration (FDA) as well as the U. S. Department of Agriculture (USDA), and is certified for the global market under the International Standards Organization (ISO) directive 13.485.
Forward-Looking Statements
Statements contained herein that are not historical facts may be forward-looking statements within the meaning of the Securities Act of 1933, as amended. Forward-looking statements include statements regarding the intent, belief or current expectations of the Company and its management. Such statements are estimates only, as the Company has not completed the preparation of its financial statements for those periods, nor has its auditor completed a review or audit of those results. Actual revenue may differ materially from those anticipated in this press release. Such statements reflect management's current views, are based on certain assumptions and involve risks and uncertainties. Actual results, events, or performance may differ materially from the above forward-looking statements due to a number of important factors, and will be dependent upon a variety of factors, including, but not limited to Chembio's ability to obtain additional financing, to obtain regulatory approvals in a timely manner and the demand for Chembio's products. Chembio undertakes no obligation to publicly update these forward-looking statements to reflect events or circumstances that occur after the date hereof or to reflect any change in Chembio's expectations with regard to these forward-looking statements or the occurrence of unanticipated events. Factors that may impact Chembio's success are more fully disclosed in Chembio's most recent public filings with the U.S. Securities and Exchange Commission.
(Tables to follow)
Chembio Diagnostics, Inc.
Summary of Results of Operations
(UNAUDITED)
For the three months ended For the six months ended
--------------------------- --------------------------
June 30, June 30, June 30, June 30,
2009 2008 2009 2008
============= ============ ============ ============
Net product sales $ 3,051,385 $ 2,466,241 $ 5,320,802 $ 4,704,212
License and royalty
income 52,322 - 52,322 -
Research grant
income 269,817 251,543 545,998 378,300
------------- ------------ ------------ ------------
Total Revenues $ 3,373,524 $ 2,717,784 $ 5,919,122 $ 5,082,512
Gross Profit $ 1,361,945 $ 1,011,820 $ 2,360,634 $ 1,844,989
Research and
development
expenses $ 702,986 $ 567,249 $ 1,350,358 $ 1,193,586
Selling, general
and administrative
expenses $ 542,449 $ 809,830 $ 1,218,262 $ 1,828,231
Income (loss) from
operations $ 116,510 $ (365,259) $ (207,986) $ (1,176,828)
Net income (loss) $ 109,939 $ (363,129) $ (215,294) $ (1,161,311)
Basic earnings
(loss) per share $ - $ (0.01) $ - $ (0.02)
Diluted earnings
(loss) per share $ - $ (0.01) $ - $ (0.02)
Chembio Diagnostics, Inc.
Summary of Balance Sheets
December 31,
June 30, 2009 2008
------------- -------------
CURRENT ASSETS: (UNAUDITED)
Cash $ 1,859,069 $ 1,212,222
Accounts receivable, net of allowances 610,869 809,303
Inventories 1,652,850 1,819,037
Other current assets 247,083 225,153
------------- -------------
TOTAL CURRENT ASSETS 4,369,871 4,065,715
NET FIXED ASSETS 703,791 881,406
OTHER ASSETS 1,093,310 967,820
------------- -------------
$ 6,166,972 $ 5,914,941
============= =============
TOTAL CURRENT LIABILITIES $ 2,769,157 $ 2,401,801
TOTAL OTHER LIABILITIES 945,175 935,808
------------- -------------
TOTAL LIABILITIES 3,714,332 3,337,609
TOTAL STOCKHOLDERS’ EQUITY 2,452,640 2,577,332
------------- -------------
$ 6,166,972 $ 5,914,941
============= =============
Chembio Diagnostics, Inc.
Summary of Cash Flow
(UNAUDITED)
For the six months ended
--------------------------
June 30, June 30,
2009 2008
------------ ------------
Net cash provided by (used in) operating
activities $ 847,768 $ (1,569,600)
Net cash used in investing activities (221,080) (289,311)
Net cash provided by (used) in financing
activities 20,159 (14,301)
------------ ------------
Net increase (decrease) in cash and cash
equivalents $ 646,847 $ (1,873,212)
============ ============
Company Contact:
Susan Norcott
631-924-1135 x125
snorcott@chembio.com
Investor & Public Relations:
The Investor Relations Group
212-825-3210
James Carbonara
JCarbonara@investorrelationsgroup.com
Susan Morgenbesser
SMorgenbesser@investorrelationsgroup.com