Genoptix Inc. posted third-quarter sales of $50.8 million for the three months ended Sept. 30, up 58.3 percent compared with $32.1 million during the same period last year. Net income fell 38.7 percent to $9.5 million, compared with $15.4 million during Q3 2008:
Genoptix Reports Continued Strong Growth for the Third Quarter and First Nine Months of 2009
Company Reports Record Quarter With Revenues Of More Than $50 Million
CARLSBAD, Calif., Nov. 5 /PRNewswire-FirstCall/ — Genoptix, Inc. (Nasdaq: GXDX), a specialized laboratory services provider, today reported revenues of $50.8 million for the third quarter of 2009, which includes a $4.4 million benefit from changes in accounting estimates resulting primarily from strong cash collections related to prior period revenue. Third quarter revenue increased 58% over revenue of $32.1 million for the comparable period in 2008, which included a $2.5 million benefit from changes in accounting estimates.
“Our performance in the third quarter was the product of exceptional execution, reflected by the increase in sales and new customer acquisitions, even during what is typically the slower summer vacation season,” said Tina S. Nova, Ph.D., President and CEO of Genoptix. “By the end of September we were servicing approximately 1,300 community physicians across the country and managing more than 14,700 patient cases, an increase of approximately 45% from the number of cases managed during the same period in 2008.”
Gross profit for the third quarter of 2009 was $32.4 million, or 64% of revenues, up from $19.8 million, or 62% of revenues, for the third quarter of 2008. Operating income for the third quarter of 2009 was $16.4 million, or 32% of revenues, compared to operating income of $8.6 million, or 27% of revenues, for the same period in 2008.
Net income was $9.5 million for the third quarter of 2009, or $0.53 diluted earnings per share (EPS), based on 18.0 million weighted average common shares outstanding and a tax rate of 43%. This compares to net income of $15.4 million for the third quarter of 2008, or EPS of $0.87, based on 17.8 million weighted average common shares outstanding, which would have been reduced by $0.57 if taxed at the comparable rate of 43%.
As of September 30, 2009, the Company’s total cash, cash equivalents and investment securities were $141.9 million. Cash generated from operations was $14.0 million for the third quarter of 2009, with days sales outstanding of 51 days, as compared to 56 days at the end of the third quarter of 2008.
2009 Year-To-Date Performance
Revenues for the first nine months of 2009 totaled $135.3 million, including a $6.4 million benefit from changes in accounting estimates resulting primarily from strong cash collections related to revenue from prior years. This is an increase of 65% over revenues of $82.2 million for the comparable period in 2008, which included a $2.2 million benefit from changes in accounting estimates.
Gross profit for the first nine months of 2009 was $84.7 million, or 63% of revenues, up from $49.5 million, or 60% of revenues, for the first nine months of 2008. Operating income for the first nine months of 2009 was $39.9 million, or 30% of revenues, compared to operating income of $17.9 million, or 22% of revenues, for the same period in 2008.
Net income was $23.3 million for the first nine months of 2009, or EPS of $1.30, based on 17.9 million weighted average common shares outstanding and a tax rate of 44%. This compares to net income of $26.0 million for the first nine months of 2008, or EPS of $1.48, which would have been reduced by $0.84 if taxed at the comparable rate of 44%.
For the first nine months of 2009, cash generated from operations was $33.6 million, while purchases of capital equipment for the same period totaled $3.2 million. Bad debt expense for the first nine months of 2009 was 2% of revenue, as compared to 3% for the same period in 2008.
“It was another quarter of solid performance as we continued to fine-tune our operations and drive new business while maintaining our signature high-quality service offering,” said Sam Riccitelli, Genoptix EVP and COO. “We made great progress on our hiring initiatives, ending the third quarter with 34 hematopathologists on staff with our Cartesian Medical Group, and 67 sales representatives in the field. The outstanding productivity of these groups has allowed us to revise our hiring plan through the close of 2009, which we now expect to end with the 34 physicians currently on staff, adding more at the start of 2010. Our sales team is expected to expand to approximately 85 field representatives by the end of the year, with additional sales staff to come as the new year begins.”
Recognizing the strength of our collection efforts and financial results in the third quarter, Genoptix expects revenues for the full-year 2009 of approximately $180 million with full-year gross margins of approximately 60%.
Operating margins for 2009 are expected to be in the mid- to high-twentieth percentile, with net income of approximately $29 million, up from prior estimates of approximately $25 million. Diluted EPS for the full-year 2009 is now expected to be approximately $1.60, increasing from a prior range of $1.40 to $1.45, on about 18.0 million shares. This assumes a tax rate of approximately 44%, down from initial estimations of 45%.
Based on continued infrastructure expansion and implementation of its strategic plan, the Company projects capital expenditures of $8.5 million for the full-year 2009, which includes approximately $4.5 million in maintenance capital. A planned laboratory expansion beginning this quarter is now expected to cost approximately $9.5 million, with approximately $4 million to be spent in 2009 and the remainder in the first half of 2010.
For 2010, revenues are expected to grow to approximately $235 million. The Company intends to provide more detailed guidance in February when reporting results for the fourth quarter and full-year 2009.
Conference Call Information
A conference call will take place on Thursday, November 5, 2009, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time), hosted by President and CEO, Tina S. Nova, Ph.D., and other members of senior management. To access the live conference call via phone, dial 866-318-8620 in the U.S. or Canada and 617-399-5139 for international callers. Please specify to the operator that you would like to join the “Genoptix Third Quarter 2009 Earnings Conference Call.” The participant code for the call is 65066785. If you are unable to listen to the live webcast, a replay of the call will be available through Thursday, November 12, 2009. Interested parties can access the rebroadcast by dialing 1-888-286-8010 or 1-617-801-6888 internationally and entering the reservation number 62495576.
The conference call will also be webcast live on the “Investors” section of the Genoptix website at www.genoptix.com. Please connect to the Genoptix website several minutes prior to the start of the webcast to ensure adequate time for any software download that may be necessary. If you are unable to listen to the live webcast, a replay will be available through Thursday, December 3, 2009.
About Genoptix, Inc.
Genoptix is a specialized laboratory service provider focused on delivering personalized and comprehensive diagnostic services to community-based hematologists and oncologists. Genoptix is headquartered in Carlsbad, California.
This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Any statements in this press release regarding the Company’s business that are not historical facts may be considered “forward-looking statements,” including statements regarding the value of the Company’s services, the Company’s ability to provide high quality services and facilitate personalized medicine, the success of the Company’s business model, improving case volumes, increasing revenues, customer adoption and growth, the Company’s capacity to manage and support future growth and ability to expand its business, hire additional personnel and consistently provide specialized, personalized and comprehensive diagnostic services, the Company’s growth prospects and ability to capture additional market share in the U.S., estimated effective tax rates and the Company’s financial guidance for 2009 and 2010. Forward-looking statements are based on management’s current preliminary expectations and are subject to risks and uncertainties, which may cause the Company’s results to differ materially and adversely from the statements contained herein. Some of the potential risks and uncertainties that could cause actual results to differ from the results predicted include, without limitation, commercial and governmental reimbursement decisions, compliance and regulatory risks, financial risks, the Company’s ability to hire personnel and manage its growth and the competitive landscape within our industry. These and other risks and uncertainties are detailed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 and most recent Quarterly Report on Form 10-Q and subsequent filings with the United States Securities and Exchange Commission. Undue reliance should not be placed on forward-looking statements, which speak only as of the date they are made. The Company undertakes no obligation to update any forward-looking statements to reflect new information, events or circumstances after the date they were made, or to reflect the occurrence of unanticipated events.