PARSIPPANY, N.J., Nov. 12, 2015 /PRNewswire/ -- PDI, Inc. (NASDAQ: PDII) today reported financial and operational results for the third quarter and nine months ended September 30, 2015.
On November 2, the Company announced that it entered into a definitive asset purchase agreement with Publicis Healthcare Communications Group to acquire PDI’s Commercial Services business (CSO). This transaction is subject to PDI’s stockholder approval and is expected to close in the fourth quarter. The following financial results include PDI’s Commercial Services operations.
Net revenue for the third quarter of 2015 was $36.6 million, an increase of 29% over $28.3 million in the third quarter of 2014. Net revenue from Commercial Services was $34.1 million for the third quarter of 2015, an increase of approximately 21% over the previous year. Interpace Diagnostics net revenue was $2.5 million for the third quarter of 2015, up 11% sequentially from the second quarter of 2015. Most of the net revenue generated by Interpace Diagnostics was from PancraGEN testing given the anticipated lag in collections from the recently launched ThyGenX® and ThyraMIR thyroid tests. PDI recognized limited revenues from Interpace Diagnostics during the third quarter of 2014 because PDI’s principal diagnostic assets were acquired in the fourth quarter of 2014.
Gross profit for the third quarter of 2015 was $7.2 million, or 19.7% of net revenue, as compared to $3.9 million, or 13.6% of net revenue in 2014, reflecting the positive contribution of Interpace Diagnostics revenue. Total operating expenses for the period were $11.2 million as compared to $7.1 million for the same period in 2014 due primarily to investment spending related to the Company’s Interpace Diagnostics business. The loss from continuing operations before income tax for the third quarter of 2015 was $5.0 million as compared to $3.2 million for the third quarter of 2014.
“We believe that our recently announced plan to focus our energy and resources entirely on our expanding molecular diagnostics business, along with the implementation of numerous cost efficiencies will build long term value for our shareholders. With our improved balance sheet following the close of the deal, we plan to be able to further develop our commercial capabilities as well as bring new products to market, namely BarreGen for Barrett’s Esophagus, which we plan to launch in 2016,” commented Nancy Lurker, President and Chief Executive Officer of PDI.
“In the third quarter, the combined test volume for our three commercialized molecular diagnostics showed a sequential increase of 13%, including 36% growth from our thyroid tests, building off the momentum from our three managed care wins over the summer months,” Ms. Lurker added. “However, we face some challenges that are delaying our revenue growth, primarily with the PancraGen test. We are executing strategies to address these challenges and believe that PancraGen remains an important test in the diagnosis and prognosis of pancreatic cancer risk. In addition, our recently launched thyroid nodule molecular diagnostic tests are growing at a faster rate than our peers. This growing market acceptance can be directly attributed to the strong clinical validity and utility results published in peer review journals illustrating the patient benefits of ThyraMIR and ThyGenX. We are building traction in the marketplace for all of our molecular diagnostic tests, producing impressive data flow, maintaining a presence at major medical conferences and increasing coverage of our tests from multiple large, national payers.
Recent Operational Highlights
Progress Report
- On November 2, the Company announced a definitive agreement to sell its commercial services business to Publicis Healthcare Communications Group. PDI will use the proceeds of the deal, worth up to approximately $33 million in an upfront payment, $7 million of which is contingent upon securing certain CSO client commitments, and a future contingent earnout payment based upon 2016 CSO revenue (expected to range from $5 million to $15 million), to pay down debt and to focus on its expanding molecular diagnostics business. The Company expects to close the deal during the fourth quarter.
- The combined molecular diagnostic tests ordered during the third quarter were approximately 2,200, an increase of 13% over the 2015 second quarter. Thyroid tests ordered grew 36% as compared to the second quarter level.
- In July, Interpace Diagnostics’ Thyroid Mutation Panel, ThyGenX, was approved by Aetna for coverage of fine needle aspiration (FNA) samples from indeterminate thyroid nodules. The Company was also awarded additional managed care contracts for both its GI and Thyroid tests. These networks include CareFirst BlueCross Blue Shield for Thyroid, and the entire Humana network for PancraGEN . The total number of covered lives for Interpace Diagnostics products is now 109 million for all tests combined.
Publications and Presentations
- On October 19, Interpace Diagnostics presented two posters during the American College of Gastroenterology (ACG) Annual Scientific Meeting and Postgraduate Course. The first poster was a clinical utility study demonstrating that PancraGEN provides a more optimal negative predictive value (NPV) than the 2015 American Gastroenterological Association (AGA) guideline criteria, detecting nearly 80% of the malignancies missed by the newly proposed criteria. This was without compromise to the improved positive predictive value (PPV) proposed by AGA. This work received one of the prestigious ACG Presidential Poster Awards. Results of the second analysis demonstrated that initial PancraGEN testing is predictive of future clinical management decisions that, importantly, benefit patient outcomes more than solely relying on guideline recommended use imaging and cytology testing.
On October 21, Interpace Diagnostics also presented new data at the 15th International Thyroid Congress and 85th Annual Meeting of the American Thyroid Association. The results demonstrated that combination testing by ThyGenX® and ThyraMIR has been analytically validated on cytology slides and Thin Prep slides as well as fixed nodule specimens including Formalin Fixed Paraffin Embedded samples, in addition to the current molecular analysis of fine needle aspirations. Interpace Diagnostics is the only molecular diagnostics company offering validated testing of thyroid nodules on all four forms of pathology samples.
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