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Chembio Diagnostics Reports Fourth Quarter and Full Year 2018 Financial Results

Issues 2019 Revenue Guidance

MEDFORD, N.Y., March 07, 2019 (GLOBE NEWSWIRE) -- Chembio Diagnostics, Inc. (CEMI), a leading point-of-care diagnostics company focused on infectious diseases, today reported financial results for the fourth quarter and year ended December 31, 2018.

Recent Accomplishments & Highlights

  • Achieved total revenue of $7.6 million for the fourth quarter of 2018 and $33.4 million for the full year 2018, increases of 27% and 39% respectively, over prior year
  • Introduced 5-year targets of $100 million in revenue by 2023 and 50% gross margins by year end 2023
  • Acquired opTricon GmbH, the developer and manufacturer of the DPP® Micro Reader
  • Received CE mark for DPP® eosinophilic respiratory disease test developed in collaboration with AstraZeneca
  • Received U.S. FDA Emergency Use Authorization for DPP® Ebola test and DPP® Micro Reader
  • Obtained $10.5 million 2019 commitment from Bio-Manguinhos for production of DPP® Assays in Brazil
  • Completed public offering of common stock raising $16.5 million in net proceeds

“Chembio had a milestone year in 2018, marked by continued execution in our core business which drove strong product sales growth, and the advancement of strategic and operational initiatives that will lay the foundation for continued growth,” said John Sperzel, Chembio’s Chief Executive Officer. “As we look to 2019, the Chembio team is focused on three priorities: expand our commercialization, advance our R&D pipeline, and prepare for growth. We are excited about 2019 and increasingly confident about the company’s growth trajectory and long-term potential.”

Fourth Quarter 2018 Financial Results
Total revenue for the fourth quarter of 2018 was $7.6 million, an increase of 26.8% compared to the fourth quarter of 2017. Net product sales for the fourth quarter of 2018 were $5.6 million, an increase of 15.6% compared to the fourth quarter of 2017. License and royalty and R&D, milestone and grant revenue for the fourth quarter of 2018 was $2.0 million, an increase of 75.7% compared to the fourth quarter of 2017. 

Gross product margin for the fourth quarter of 2018 was $1.0 million, a decrease of 28.3% compared to the fourth quarter of 2017. Gross product margin percent for the fourth quarter of 2018 was 18.3% compared to 29.5% for the fourth quarter of 2017. The lower gross product margin percent for the 2018 fourth quarter resulted primarily from sales growth in markets with lower average selling prices and costs associated with the current manual product assembly process.

Research and development expenses increased $0.3 million, or 10.7% for the three months ended December 31, 2018 compared to the three months ended December 31, 2017. Selling, general and administrative expenses increased by $1.0 million, or 46.9% for the three months ended December 31, 2018 compared to the three months ended December 31, 2017. The increase is primarily associated with increased personnel, compensation and acquisition costs.

Net loss for the fourth quarter of 2018 was $3.2 million, or $0.21 per diluted share, compared with a net loss of $2.0 million, or $0.16 per diluted share, for the fourth quarter of 2017. 

Full Year 2018 Financial Results
Total revenues for 2018 were $33.4 million, an increase of 39.1% compared to 2017. Net product sales for 2018 were $26.7 million, an increase of 38.4% compared to 2017. License and royalty and R&D, milestone and grant revenues in 2018 totaled $6.7 million, an increase of 42.1% compared to 2017.

Gross product margin for 2018 was $5.3 million, a decrease of 17% compared to 2017, the $1.1 million decrease was primarily due to increased product sales volume. Gross product margin percent for 2018 was 19.9% compared to 33.1% for 2017. The lower gross product margin percent for 2018 resulted primarily from sales growth in markets with lower average selling prices and costs associated with the current manual product assembly process.

Research and development expenses of $8.5 million for the year ended December 31, 2018 were flat compared to the year ended December 31, 2017. Selling, general and administrative expenses increased by $2.1 million, or 23.8% for the year ended December 31, 2018 compared to the year ended December 31, 2017. The increase was primarily associated with increased personnel, compensation and acquisition costs.

Net loss for 2018 was $7.9 million, or $0.55 per diluted share, compared with net loss of $6.4 million, or $0.52 per diluted share, in 2017.

Cash and cash equivalents as of December 31, 2018 totaled $12.5 million.

2019 Financial Outlook
Management expects 2019 full year revenue to be in the range of $36.0 million to $40.0 million

Conference Call
Chembio will host a conference call today beginning at 4:30pm ET to discuss financial results and recent business highlights. Investors interested in listening to the call may do so by dialing 844-369-8770 from the U.S. or 862-298-0840 from outside the U.S. To listen to a live webcast, please visit the Investor Relations section of Chembio's website at www.chembio.com. Following the call, a replay will be available on the Investor Relations section of the company’s website for 90 days. A telephone replay will be available by dialing 877-481-4010 from the U.S. or (919) 882-2331 from outside the U.S. using the conference ID: 44364 until 4:30pm ET on March 14, 2019. 

About Chembio Diagnostics
Chembio is a leading point-of-care diagnostics company focused on detecting and diagnosing infectious diseases. The company’s patented DPP® technology platform, which uses a small drop of blood from the fingertip, provides high-quality, cost-effective results in 15-20 minutes. Coupled with Chembio’s extensive scientific expertise, its novel DPP® technology offers broad market applications beyond infectious disease, a number of which are under active development with collaboration partners. Chembio’s products are sold globally, directly and through distributors, to hospitals and clinics, physician offices, clinical laboratories, public health organizations, government agencies, and consumers. Learn more at www.chembio.com.

Forward-Looking Statements
Statements contained in the second bullet and the last paragraph under “Recent Accomplishments & Highlights” and in the paragraph under “2019 Financial Outlook” 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, which are estimates only, 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 regulatory approvals in a timely manner, as well as 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, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and its Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2018, June 30, 2018 and September 30, 2018, particularly under the heading “Risk Factors.”

(Tables to follow)

Investor Relations Contact
Lynn Pieper Lewis
Gilmartin Group
(415) 937-5402
investor@chembio.com

           
CHEMBIO DIAGNOSTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
           
      For the twelve months ended 
      December 31, 2018   December 31, 2017
REVENUES:          
Net product sales     $    26,741,020     $ 19,322,302  
License and royalty revenue         948,773       741,534  
R&D, milestone and grant revenue         5,719,458       3,951,591  
TOTAL REVENUES         33,409,251       24,015,427  
           
COSTS AND EXPENSES:          
Cost of product sales         21,427,243       12,921,157  
Research and development expenses         8,526,256       8,555,381  
Selling, general and administrative expenses         11,100,775       8,963,363  
Acquisition Costs         337,645       58,076  
          41,391,919       30,497,977  
LOSS FROM OPERATIONS         (7,982,668 )     (6,482,550 )
           
OTHER INCOME:          
Interest income, net       49,498       22,845  
           
LOSS BEFORE INCOME TAXES         (7,933,170 )     (6,460,065 )
           
Income tax provision         (67,521 )     (88,305 )
           
NET LOSS     $    (7,865,649 )   $ (6,371,760 )
           
Basic and diluted loss per share     $    (0.55 )   $ (0.52 )
           
Weighted average number of shares outstanding, basic and diluted         14,432,505       12,300,031  
           
Weighted average number of shares outstanding, diluted         14,432,505         12,300,031  
           
 
 
Gross Product Margin     $ 5,313,777     $ 6,401,145  
Gross Product Margin %       19.9 %     33.1 %
 
Other costs & expenses (R&D + SG&A)     $ 19,627,031     $ 17,518,744  
                   


           
CHEMBIO DIAGNOSTICS, INC. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF
(Unaudited)  
    December 31, 2018   December 31, 2017  
           
- ASSETS -          
CURRENT ASSETS:          
Cash and cash equivalents   $    12,524,551   $ 3,790,302  
Accounts receivable, net       7,373,971     2,085,340  
Inventories, net       7,851,222     4,423,618  
Prepaid expenses and other current assets       702,010     554,383  
TOTAL CURRENT ASSETS       28,451,754     10,853,643  
           
FIXED ASSETS, net       2,873,920     1,909,232  
           
OTHER ASSETS:          
Intangible assets, net       3,884,831     1,597,377  
Goodwill       4,348,127     1,666,610  
Deposits and other assets       715,658     589,159  
           
TOTAL ASSETS   $    40,274,290   $ 16,616,021  
           
- LIABILITIES AND STOCKHOLDERS’ EQUITY -          
CURRENT LIABILITIES:          
Accounts payable and accrued liabilities   $    5,888,681   $ 3,046,303  
Deferred revenue       422,905     50,000  
Current Portion of Note Payable       207,694      
TOTAL CURRENT LIABILITIES       6,519,280     3,096,303  
           
OTHER LIABILITIES:          
Note payable       171,821     99,480  
Deferred tax liability       315,332     341,042  
TOTAL LIABILITIES       7,006,433     3,536,825  
           
TOTAL STOCKHOLDERS’ EQUITY       33,267,858     13,079,196  
           
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $    40,274,290   $ 16,616,021  
           


         
CHEMBIO DIAGNOSTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
     
    For the twelve months ended 
    December 31, 2018   December 31, 2017
         
Net cash used in operating activities   $    (11,789,043 )   $ (5,034,515 )
Net cash used in investing activities       (6,950,796 )     (1,876,954 )
Net cash provided by financing activities       27,483,693       134,280  
Effect of exhange rate changes on cash       (9,608 )     13,027  
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS       8,734,246       (6,764,162 )
Cash and cash equivalents - beginning of the period       3,790,305       10,554,464  
Cash and cash equivalents - end of the period   $    12,524,551     $ 3,790,302