0001487371-19-000177.txt : 20190805 0001487371-19-000177.hdr.sgml : 20190805 20190805160817 ACCESSION NUMBER: 0001487371-19-000177 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20190805 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20190805 DATE AS OF CHANGE: 20190805 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GenMark Diagnostics, Inc. CENTRAL INDEX KEY: 0001487371 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 272053069 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-34753 FILM NUMBER: 19998690 BUSINESS ADDRESS: STREET 1: 5964 LA PLACE COURT CITY: CARLSBAD STATE: CA ZIP: 92008 BUSINESS PHONE: (760) 448-4300 MAIL ADDRESS: STREET 1: 5964 LA PLACE COURT CITY: CARLSBAD STATE: CA ZIP: 92008 8-K 1 form8-k20190630.htm 8-K Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 5, 2019
 
GENMARK DIAGNOSTICS, INC.
(Exact name of registrant as specified in its charter)

Commission File Number: 001-34753
 
Delaware
 
27-2053069
(State or other jurisdiction
of incorporation)
 
(I.R.S. Employer
Identification No.)
5964 La Place Court
Carlsbad, California 92008
(Address of principal executive offices, including zip code)
760-448-4300
(Registrant’s telephone number, including area code)
 
(Former Name or Former Address, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading
 Symbol(s)
 
Name of each exchange on which registered
Common Stock, par value $0.0001 per share
 
GNMK
 
The NASDAQ Stock Market LLC
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).
Emerging Growth Company o
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Selection 13(a) of the Exchange Act. o
 




Item 2.02. Results of Operations and Financial Condition.

On August 5, 2019, GenMark Diagnostics, Inc. (the "Company") issued a press release announcing its financial results for the fiscal quarter ended June 30, 2019. A copy of the press release is attached hereto as Exhibit 99.1.

The information contained under this Item 2.02, including Exhibit 99.1 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, regardless of any general incorporation language in any such filing, unless the Company expressly sets forth in such filing that such information is to be considered “filed” or incorporated by reference therein.
Item 9.01. Financial Statements and Exhibits.
 
(d)
The following exhibit is furnished with this Current Report:
 
 
99.1
Press release dated August 5, 2019
 




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
GENMARK DIAGNOSTICS, INC.
 
 
 
 
 
 
Date:
August 5, 2019
/s/ Johnny Ek
 
 
Johnny Ek
 
 
Chief Financial Officer
 
 
 
 
 
 
 
 
 




EXHIBITS
 
 
 
 
Exhibit
Number
 
Description
 



 EX-99.1 2 exhibit99120190630.htm EXHIBIT 99.1 Exhibit

    

August 5, 2019


GenMark Diagnostics Reports Second Quarter 2019 Results

CARLSBAD, Calif - GenMark Diagnostics, Inc. (Nasdaq: GNMK), a leading provider of automated, multiplex molecular diagnostic testing systems, today announced financial results for the quarter ended June 30, 2019.

Highlights
•
Recognized total revenue of $18.4 million
◦
ePlex revenue of $12.0 million represented 66% of total revenue
◦
ePlex revenue grew 70% compared to the prior year period
•
Placed 45 net new ePlex analyzers, expanding the global installed base to 438 placements
◦
ePlex installed base grew 64% compared to the prior year period
•
Achieved gross margin of 36%, a 600-basis point increase over the prior year period
•
Raised full year 2019 gross margin guidance to a range of 31% to 33%

“In the second quarter, we delivered strong commercial results and increased operational efficiency, while also continuing to advance innovation and future product development. The significant revenue growth and installed base expansion of our ePlex system, underscored its continued strong adoption across a wide range of healthcare settings in the marketplace. Furthermore, we made excellent progress driving manufacturing efficiencies in the quarter. Once again, we saw strong improvement in ePlex gross margin, giving us further confidence that we can reach our overall gross margin target of 60%-plus over the next 2-3 years,” said Hany Massarany, President and Chief Executive Officer. “I believe that the combination of our ePlex platform, its differentiated test menu and broad market adoption, together with the continued strong execution of our commercial teams, signal a very exciting inflection point in our business with a long runway for future growth.”

Second Quarter Financial Results
Revenue was $18.4 million in the second quarter of 2019, an increase of 23% versus $14.9 million in the second quarter of 2018. Gross profit was $6.6 million, or 36% of revenue, compared with $4.4 million, or 30% of revenue in the same period of 2018.

Operating expenses for the second quarter of 2019 were $18.5 million compared to $20.2 million in the same period of 2018. The decrease was largely due to reduced development expenses related to the completion of the ePlex BCID clinical studies, partially offset by increased investment in the commercial function to support the BCID launch. Expense in the quarter also included investment in R&D to support key technology and product improvement initiatives, primarily attributable to the cost of ePlex consumables required to support these projects.

Loss per share was $0.23 for the second quarter of 2019, compared to a $0.30 loss per share in the second quarter of 2018.

Cash and investments were $41.4 million as of June 30, 2019.

Updated Guidance for Full Year 2019
GenMark continues to expect total revenue for the full year 2019 to be in the range of $85 million to $90 million.

The Company also reiterated global ePlex placements are expected to range from 170 to 190 net new analyzers with an annuity per analyzer of $135,000 to $145,000.

Gross margin is now expected to be in the 31% to 33% range compared to prior guidance of 28% to 30%. The Company continues to expect operating expenses to be approximately $65 million to $70 million.

Cash usage continues to be projected in the range of $25 million to $30 million.





    

Webcast and Conference Call Information
GenMark will be hosting a conference call to discuss second quarter results in further detail on Monday, August 5, 2019 starting at 4:30 p.m. ET. The conference call will be concurrently webcast. The link to the webcast will be available on the GenMark Diagnostics, Inc. website at www.genmarkdx.com under the investor relations section and will be archived for future reference. To listen to the conference call, please dial (877) 312-5847 (US/Canada) or (253) 237-1154 (International) and use the conference ID number 7472679 approximately five minutes prior to the start time.

About GenMark Diagnostics
GenMark Diagnostics (NASDAQ: GNMK) is a leading provider of multiplex molecular diagnostic solutions designed to enhance patient care, improve key quality metrics, and reduce the total cost-of-care. Utilizing GenMark's proprietary eSensor® detection technology, GenMark's eSensor XT-8® and ePlex® systems are designed to support a broad range of molecular diagnostic tests with compact, easy-to-use workstations and self-contained, disposable test cartridges. GenMark’s ePlex: The True Sample-to-Answer Solution™ is designed to optimize laboratory efficiency and address a broad range of infectious disease testing needs, including respiratory, bloodstream, and gastrointestinal infections.  For more information, visit www.genmarkdx.com.

Safe Harbor Statement
This press release includes forward-looking statements regarding events, trends and business prospects, which may affect the Company’s future operating results and financial position. Such statements, including, but not limited to, those regarding its future financial performance, achievement of profitability targets, plans and objectives of management, and the timely and effective commercialization and clinical impact of the Company’s ePlex system, are all subject to risks and uncertainties that could cause actual results and financial position to differ materially. Some of these risks and uncertainties include, but are not limited to, GenMark’s ability to successfully commercialize our ePlex system and its related test menu in a timely manner, constraints or inefficiencies caused by unanticipated acceleration and deceleration of customer demand, the Company’s ability to successfully expand sales of its product offerings outside the United States, and third-party payor reimbursement to its customers, as well as other risks and uncertainties described under the “Risk Factors” in GenMark’s public filings with the Securities and Exchange Commission. The Company assumes no responsibility to update or revise any forward-looking statements to reflect events, trends or circumstances after the date they are made.


Investor Relations Contact                
Leigh Salvo             
(415) 937-5404     
ir@genmarkdx.com






    

GENMARK DIAGNOSTICS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)

 
June 30,
2019
 
December 31,
2018
ASSETS:
Current Assets:
 
 
 
Cash and cash equivalents
$
23,733

 
$
36,286

Short-term marketable securities
17,627

 
8,882

Accounts receivable, net of allowances of $107 and $75, respectively
6,756

 
11,534

Inventories, net
9,912

 
10,244

Prepaid expenses and other current assets
2,085

 
1,483

Total current assets
60,113

 
68,429

 
 
 
 
Property and equipment, net
18,927

 
21,070

Intangible assets, net
1,727

 
2,023

Restricted cash
758

 
758

Noncurrent operating lease right-of-use assets
4,883

 
—

Other long-term assets
766

 
701

Total assets
$
87,174

 
$
92,981

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
 
 
 
Accounts payable
$
8,390

 
$
9,886

Accrued compensation
5,349

 
7,358

Current operating lease liability
1,815

 
—

Other current liabilities
2,167

 
3,043

Total current liabilities
17,721

 
20,287

 
 
 
 
Deferred rent
—

 
2,996

Long-term debt
48,271

 
36,042

Noncurrent operating lease liability
6,339

 
—

Other noncurrent liabilities
62

 
109

Total liabilities
72,393

 
59,434

 
 
 
 
Stockholders' equity:
 
 
 
Preferred stock, $0.0001 par value; 5,000 authorized, none issued
—

 
—

Common stock, $0.0001 par value; 100,000 authorized; 57,430 and 56,240 shares issued and outstanding, respectively
6

 
6

Additional paid-in capital
506,949

 
500,344

Accumulated deficit
(492,271
)
 
(466,883
)
Accumulated other comprehensive income
97

 
80

Total stockholders’ equity
14,781

 
33,547

Total liabilities and stockholders’ equity
$
87,174

 
$
92,981












    

GENMARK DIAGNOSTICS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands, except per share data)
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2019
 
2018
 
2019
 
2018
Revenue:
 
 
 
 
 
 
 
Product revenue
$
18,220

 
$
14,867

 
$
39,591

 
$
35,443

License and other revenue
154

 
74

 
316

 
143

Total revenue
18,374

 
14,941

 
39,907

 
35,586

Cost of revenue
11,801

 
10,527

 
27,471

 
27,007

Gross profit
6,573

 
4,414

 
12,436

 
8,579

Operating expenses:
 
 
 
 
 
 
 
Sales and marketing
5,803

 
5,187

 
11,712

 
10,589

General and administrative
4,931

 
4,547

 
9,452

 
8,680

Research and development
7,749

 
10,482

 
14,092

 
15,902

Total operating expenses
18,483

 
20,216

 
35,256

 
35,171

Loss from operations
(11,910
)
 
(15,802
)
 
(22,820
)
 
(26,592
)
Other income (expense):
 
 
 
 
 
 
 
Interest income
179

 
202

 
312

 
389

Interest expense
(1,528
)
 
(797
)
 
(2,804
)
 
(1,585
)
Other income (expense)
(4
)
 
(90
)
 
(15
)
 
(102
)
Total other income (expense)
(1,353
)
 
(685
)
 
(2,507
)
 
(1,298
)
Loss before provision for income taxes
(13,263
)
 
(16,487
)
 
(25,327
)
 
(27,890
)
Income tax expense
45

 
34

 
61

 
54

Net loss
$
(13,308
)
 
$
(16,521
)
 
$
(25,388
)
 
$
(27,944
)
Net loss per share, basic and diluted
$
(0.23
)
 
$
(0.30
)
 
$
(0.45
)
 
$
(0.50
)
Weighted average number of shares outstanding, basic and diluted
57,171

 
55,547

 
56,878

 
55,377

 
 
 
 
 
 
 
 
Other comprehensive loss:
 
 
 
 
 
 
 
Net loss
$
(13,308
)
 
$
(16,521
)
 
$
(25,388
)
 
$
(27,944
)
Other comprehensive income/(loss):
 
 
 
 
 
 
 
Foreign currency translation adjustments, net of tax
15

 
(14
)
 
9

 
20

Net unrealized gains on marketable securities, net of tax
6

 
15

 
8

 
23

Total other comprehensive income
21

 
1

 
17

 
43

Total comprehensive loss
$
(13,287
)
 
$
(16,520
)
 
$
(25,371
)
 
$
(27,901
)















    

GENMARK DIAGNOSTICS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
Six Months Ended 
 June 30,
 
2019
 
2018
Operating activities:
 
 
 
Net loss
$
(25,388
)
 
$
(27,944
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
Depreciation and amortization
3,616

 
3,507

Net amortization/(accretion) of premiums/discounts on investments
(98
)
 
(78
)
Amortization of deferred debt issuance costs
816

 
583

Stock-based compensation
5,711

 
5,799

Provision for bad debt
46

 
34

Non-cash inventory adjustments
897

 
809

Other non-cash adjustments
125

 
(13
)
Changes in operating assets and liabilities:
 
 
 
Accounts receivable
4,720

 
3,501

Inventories
(1,387
)
 
353

Prepaid expenses and other assets
(784
)
 
340

Accounts payable
(1,143
)
 
(1,853
)
Accrued compensation
(2,490
)
 
(853
)
Other current and non-current liabilities
(257
)
 
(622
)
Net cash used in operating activities
(15,616
)
 
(16,437
)
Investing activities:
 
 
 
Purchases of property and equipment
(467
)
 
(924
)
Purchases of marketable securities
(19,440
)
 
(23,622
)
Maturities of marketable securities
10,800

 
42,600

Net cash (used in) provided by investing activities
(9,107
)
 
18,054

Financing activities:
 
 
 
Proceeds from issuance of common stock
464

 
535

Principal repayment of borrowings
(35,140
)
 
(45
)
Proceeds from borrowings
50,000

 
—

Payments associated with debt issuance
(3,588
)
 
(20
)
Proceeds from stock option exercises
432

 
22

Net cash provided by financing activities
12,168

 
492

Effect of exchange rate changes on cash, cash equivalents, and restricted cash
2

 
28

Net increase (decrease) in cash, cash equivalents, and restricted cash
(12,553
)
 
2,137

Cash, cash equivalents, and restricted cash at beginning of year
37,044

 
27,512

Cash, cash equivalents, and restricted cash at end of period
$
24,491

 
$
29,649

Non-cash investing and financing activities:
 
 
 
Transfer of systems to property and equipment from inventory
$
822

 
$
956

Property and equipment included in accounts payable
$
18

 
$
168

Supplemental cash flow information:
 
 
 
Cash paid for income taxes, net
$
104

 
$
113

Cash paid for interest
$
1,837

 
$
1,003