synnex
Nov 09,2018

Oxford Immunotec Reports Third Quarter 2018 Financial Results

  • Closed transformative deal to sell U.S. laboratory services business to Quest Diagnostics
  • T-SPOT®.TB tests sold in the third quarter exceeded one million tests for the first time
  • Significant improvement in GAAP net loss; first quarter of positive non-GAAP adjusted EBITDA

OXFORD, United Kingdom and MARLBOROUGH, Mass., Nov. 09, 2018 (GLOBE NEWSWIRE) -- Oxford Immunotec Global PLC (Nasdaq: OXFD), a global, high-growth diagnostics company, today announced third quarter 2018 financial results.

 “We are very pleased with the continued strong growth in our TB business, as well as the Company’s continued progress on profitability metrics,” said Dr. Peter Wrighton-Smith, Chief Executive Officer of Oxford Immunotec. “The Quest transaction is a transformative event for the Company that well positions us for greater commercial and financial success”.

By revenue type, total revenues were, in millions:

 Three Months Ended September 30, 
  2018  2017 Percent Change 
       
Product$   15.1 $   13.4 12%
Service    1.0     1.6 -40%
Total Revenue$   16.1  $   15.0  7%
       

By geography, total revenues were, in millions:

 Three Months Ended September 30,
     Percent  Change
  2018  2017 As Reported Constant
Currency
(a)
        
United States$  2.9 $   3.4 -15% -15%
Europe & ROW 2.3    2.2 3% 4%
Asia   10.9    9.4 16% 18%
Total Revenue$  16.1  $  15.0  7% 8%
        

 (a) Changes in revenue include the impact of changes in foreign currency exchange rates. We use the non-GAAP financial measure "constant currency basis" in our filings to show changes in our revenue without giving effect to period-to-period currency fluctuations. We consider the use of a period over period revenue comparison on a constant currency basis to be helpful to investors, as it provides a revenue growth measure free of positive or negative volatility due to currency fluctuations.

Third Quarter 2018 Financial Results

Revenue for the third quarter of 2018 was $16.1 million, representing a 7% increase from third quarter 2017 revenue of $15.0 million. On a constant currency basis, revenue growth was 8% versus the prior year period.

2018 third quarter product revenue was $15.1 million, representing a 12% increase from product revenue of $13.4 million in the third quarter of 2017. Service revenue for the third quarter of 2018 was $1.0 million, down 40% from 2017 third quarter service revenue of $1.6 million. The decrease in service revenue was driven by an expected decline in blood donor screening revenue.

United States revenue was $2.9 million in the third quarter of 2018, representing a 15% decline from revenue of $3.4 million in the prior year period. Growth in our core tuberculosis business was offset by an expected decline in blood donor screening revenue.

Europe & ROW revenue was $2.3 million in the third quarter of 2018, representing a 3% increase compared to the third quarter of 2017. On a constant currency basis, Europe & ROW revenue increased 4% versus the third quarter of 2017.

Asia revenue was $10.9 million in the third quarter of 2018, representing an increase of 16% compared to 2017 third quarter revenue of $9.4 million. On a constant currency basis, Asia revenue increased 18% versus the third quarter of 2017.

Gross profit for the third quarter of 2018 was $11.5 million, an increase of approximately $1.7 million from gross profit of $9.8 million in the same period of 2017. Gross margin was 71.5%, an increase of 650 basis points from gross margin of 65.0% in the third quarter of 2017.

Operating expenses were $16.5 million in the third quarter of 2018, a decrease of approximately $11.1 million compared to $27.6 million in the third quarter of 2017. Excluding one-time items, operating expenses for the third quarter of 2018 decreased approximately $900k compared to the third quarter of 2017.

Net loss for the third quarter of 2018 was $3.5 million, or $0.13 per share, compared to $16.8 million, or $0.70 per share, in the third quarter of 2017. Net loss per share was based on 26,033,550 and 24,123,574 weighted average ordinary shares outstanding for the third quarters of 2018 and 2017, respectively. 

EBITDA for the third quarter of 2018 was $(1.2) million compared to $(14.7) million in the third quarter of 2017. Adjusted EBITDA was $2.3 million for the third quarter of 2018 compared to $(2.5) million in the same period in 2017. Both EBITDA and Adjusted EBITDA are non-GAAP measures.

Quest Diagnostics Completes Acquisition of Our U.S. Laboratory Services Business

On November 6, 2018, Quest Diagnostics completed its previously announced acquisition of our U.S. laboratory services business. The T-SPOT.TB tuberculosis and the Accutix tick-borne disease testing services are now part of Quest Diagnostics’ portfolio of innovative infectious disease testing services. As part of the transaction, we will sell T-SPOT.TB test kits and related accessories to Quest Diagnostics under the terms of a long-term supply agreement. In addition, the parties have entered into a strategic collaboration agreement to drive continued growth of T-SPOT.TB testing in the U.S.

The transaction represents a strategic business shift having a major effect on our operations and financial results. Accordingly, the assets and liabilities of this business have been classified as held for sale and the related operations reported in discontinued operations in our condensed consolidated financial statements for all periods presented.

Supplemental Financial Information

To assist investors in understanding third quarter results excluding the disposition of the U.S. laboratory services business, Oxford Immunotec has provided Unaudited Non-GAAP Pro Forma Condensed Combined Statement of Operations for the quarterly period ended September 30, 2018 as Exhibit 99.2 to our Current Report on Form 8-K furnished on November 9, 2018.

Conference Call

Oxford Immunotec will host a conference call on Friday, November 9, 2018 at 8:00 a.m. Eastern Time to discuss its third quarter 2018 financial results. The call will be concurrently webcast. To listen to the conference call on your telephone, please dial (855) 363-5047 for United States callers and +1 (484) 365-2897 for international callers and reference confirmation code 7673307 approximately ten minutes prior to start time. To access the live audio webcast or subsequent archived recording, visit the Investor Relations section of Oxford Immunotec's website at www.oxfordimmunotec.com. The replay will be available on the Company's website for approximately 60 days.

About Oxford Immunotec

Oxford Immunotec Global PLC is a global, high-growth diagnostics company focused on developing and commercializing proprietary tests for the management of underserved immune-regulated conditions. The Company's T-SPOT.TB test has been approved for sale in over 50 countries, including the United States, where it has received pre-market approval from the Food and Drug Administration, Europe, where it has obtained a CE mark, as well as Japan and China. The Company is headquartered near Oxford, U.K. and in Marlborough, MA.  Additional information can be found at www.oxfordimmunotec.com.

T-SPOT and the Oxford Immunotec logo are trademarks of Oxford Immunotec Ltd.

Forward-Looking Statements

This release contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this release are forward-looking statements. This includes statements about Oxford Immunotec's anticipated plans, objectives, intentions, the anticipated benefits of the transaction, the effects of the transaction, including effects on future financial and operating results, prospects for sales of its products and other statements that are not historical facts. Actual events or results may differ materially from those described in this release due to a number of risks and uncertainties. Risks and uncertainties include, among others: the potential disruption of management time from ongoing business operations due to the transaction; the risk that Oxford Immunotec may fail to realize the expected benefits from the transaction; the risk that the announcement of the completion of the transaction could have adverse effects on the market price of Oxford Immunotec's ordinary shares; decisions by regulatory authorities, hospitals and other health care institutions, laboratories, physicians, patients and third party payers that could affect Oxford Immunotec's business and prospects; Oxford Immunotec’s exposure to potential litigation and contingent liabilities pursuant to the transaction; as well as Oxford Immunotec’s ability to expeditiously and successfully expand its sales and distribution networks. The risks included above are not exhaustive. Other factors that could adversely affect Oxford Immunotec's business and prospects are described under the "Risk Factors" section in its filings with the Securities and Exchange Commission ("SEC"). Oxford Immunotec's SEC filings are available for free by visiting the investor section of its website, www.oxfordimmunotec.com, or the SEC's website, www.sec.gov.

Investors should give careful consideration to these risks and uncertainties. Forward-looking statements contained herein are based on current expectations and assumptions and currently available data and are neither predictions nor guarantees of future events or performance. You should not place undue reliance on forward-looking statements contained herein, which speak only as of the date of this release. Oxford Immunotec does not undertake to update or revise any forward-looking statements after they are made, whether as a result of new information, future events, or otherwise, except as required by applicable law.

CONTACTS:

For Media and Investor Inquiries:
Karen Koski
VP, Strategy and Investor Relations
Oxford Immunotec
Tel: +1 (508) 556-1377
kkoski@oxfordimmunotec.com

 
Oxford Immunotec Global PLC
Condensed consolidated statements of operations
(unaudited)
 
  Three months ended
September 30,
 Nine months ended
September 30,
(in thousands, except share and per share data)  2018   2017   2018   2017 
Revenue:        
Product $  15,095   $  13,419   $  40,236   $  37,713  
Service    955      1,592      4,150      4,411  
Total revenue    16,050      15,011      44,386      42,124  
Cost of revenue:        
Product    3,864      4,035      9,993      11,319  
Service    709      1,212      2,877      3,513  
Total cost of revenue    4,573      5,247      12,870      14,832  
Gross profit    11,477      9,764      31,516      27,292  
Operating expenses:        
Research and development    1,754      2,931      5,969      8,092  
Sales and marketing    6,432      7,257      20,655      22,175  
General and administrative    8,132      7,066      19,349      19,456  
Change in fair value of contingent purchase price consideration    —      (880)    —      (3,475)
Intangible assets impairment charge    —      11,064      —      11,064  
Settlement expense    212      196      1,979      9,831  
Total operating expenses    16,530      27,634      47,952      67,143  
Operating loss from continuing operations    (5,053)    (17,870)    (16,436)    (39,851)
Other expense:        
Interest expense, net     (673)    (781)    (2,011)    (2,411)
Foreign exchange losses    (52)    (624)    (306)    (1,277)
Other income (expense)    5      —      (242)    (262)
Loss from continuing operations before income taxes    (5,773)    (19,275)    (18,995)    (43,801)
Income tax expense from continuing operations     (485)    (222)    (1,182)    2,189  
Loss from continuing operations    (6,258)    (19,497)    (20,177)    (41,612)
Discontinued operations:        
Income (loss) from discontinued operations before income taxes    2,774      2,650      (104)    (73)
Income tax expense    —      —      —      —  
 Income (loss) from discontinued operations    2,774      2,650      (104)    (73)
Net loss $  (3,484) $  (16,847) $  (20,281) $  (41,685)
         
Net loss from continuing operations per ordinary share—basic and diluted $  (0.24) $  (0.81) $  (0.78) $  (1.80)
Net income (loss) from discontinued operations per ordinary share—basic and diluted    0.11      0.11      0.00      0.00  
Net loss per ordinary share—basic and diluted $  (0.13) $  (0.70) $  (0.78) $  (1.80)
                 


 
Oxford Immunotec Global PLC
Reconciliation of net loss to Adjusted EBITDA (a)
(unaudited)
 
  Three months ended September 30, Nine months ended September 30,
(in thousands)  2018   2017   2018   2017 
Net loss $  (3,484) $  (16,847) $  (20,281) $  (41,685)
Income tax expense (benefit)    486      222      1,183      (2,189)
Interest expense, net.    534      641      1,590      1,982  
Depreciation and amortization of intangible assets    1,167      1,122      3,410      3,115  
Accretion and amortization of loan fees    140      140      421      429  
EBITDA    (1,157)    (14,722)  (13,677)    (38,348)
         
Reconciling items:        
Share-based compensation expense    1,016      1,506      3,763      4,266  
Unrealized exchange (gains) losses    (234)    333      (717)    614  
Change in fair value of contingent purchase price consideration    —      (880)    —      (3,475)
Intangible assets impairment charges    —      11,064      —      11,064  
Settlement expense    211      196      1,979      9,831  
Transaction expenses    2,445      —      2,445      —  
Adjusted EBITDA $  2,281   $  (2,503) $  (6,207) $  (16,048)
                 

(a) EBITDA and Adjusted EBITDA are non-GAAP measures that we calculate as net loss, adjusted for the impact of earnings or charges resulting from matters that we consider not to be indicative of our ongoing operations. We believe that these measures provide useful information to investors in understanding and evaluating our operating results in the same manner as our management and Board of Directors. Our presentation of these measures is not made in accordance with U.S. GAAP, and our computation of these measures may vary from others in the industry. Our use of these measures has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under U.S. GAAP.

The above table presents a reconciliation of net loss, the most comparable U.S. GAAP measure, to EBITDA and Adjusted EBITDA for each of the periods indicated.

 
Oxford Immunotec Global PLC
Condensed consolidated balance sheets
(unaudited)
 
 September 30, December 31,
(in thousands, except share and per share data)  2018   2017 
  (unaudited)  
Assets    
Current assets:   
Cash and cash equivalents $  70,156   $  90,332  
Accounts receivable, net    7,080      6,021  
Inventory, net    6,114      7,137  
Prepaid expenses and other assets    2,957      2,711  
Current assets held for sale    31,899      14,281  
    
Total current assets    118,206      120,482  
Restricted cash, non-current    200      200  
Property and equipment, net    6,428     2,764 
Goodwill    2,483      2,483  
Other intangible assets, net    958      1,036  
Deferred tax asset    885     2,486  
Noncurrent assets held for sale    —     14,785  
    
Total assets $  129,160  $  144,236 
    
Liabilities and shareholders’ equity   
Current liabilities:   
Accounts payable $  3,685   $  5,552  
Accrued liabilities    10,189      7,807  
Settlement liability    4,530      4,342  
Deferred income    31      36  
Current portion of loans payable    30,200      78  
Current liabilities held for sale    4,361      4,630  
    
Total current liabilities    52,996      22,445  
Long-term portion of loans payable    97      29,856  
Settlement liability    4,064      3,894  
Other liabilities    —     364  
Noncurrent liabilities held for sale    37     48  
    
Total liabilities    57,194      56,607  
    
Shareholders’ equity:   
Ordinary shares, £0.006705 nominal value; 36,183,293 shares authorized at
     September 30, 2018 and December 31, 2017, and 26,337,963 and
     25,661,634 shares issued and outstanding at September 30, 2018 and
     December 31, 2017, respectively
    276      269  
Additional paid-in capital    300,802      294,613  
Accumulated deficit    (221,822)    (201,541)
Accumulated other comprehensive loss    (7,290)    (5,712)
    
Total shareholders’ equity    71,966      87,629  
    
Total liabilities and shareholders’ equity $  129,160   $  144,236