Global genetic devices maker,
) reported third quarter 2012 adjusted loss of 3 cents per share,
narrower than the Zacks Consensus Estimate of a loss of 4 cents a
share. Adjusted earnings exclude one-time items such as
acquisition, integration and amortization-related expenses along
with impairment charges associated with the West Sacramento
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Reported net loss in the quarter was $17.9 million (or 25 cents
per share) versus a loss of $9.8 million (or a loss of 14 cents
per share) in the year-ago quarter, mainly due to acquisition and
integration-related expenses associated with eBioscience.
Revenues increased 24.4% year over year to $79.6 million, which
lagged the Zacks Consensus Estimate of $81 million marginally.
Revenues included roughly $17.6 million from the eBiocience
acquisition. Excluding eBioscience, revenues dipped 2% on a
constant currency basis, as weak Gene Expression array sales
offset higher revenues from the Genetic Analysis business and the
Revenues from products were up 27.5% year over year to $72.7
million in the quarter, which included consumable sales of $50.5
million (excluding eBioscience), down 4.5%. However, instrument
sales grew 12.2% to $4.6 million. The eBioscience unit grew 1%
year over year in terms of constant currency to $17.6 million.
Services and other revenues inched down 1.4% to $6.9 million.
Gross margin declined to 52.4% from 56.8% in the year-ago period,
due to inventory step-up amortization cost of $4.5 million,
associated with the eBioscience acquisition, and amortization of
intangibles worth $1.6 million. Product gross margin declined to
53% from 57% in the prior-year quarter.
Operating loss was $11.1 million in the quarter compared with a
loss of $5.9 million, a year-ago, mostly due to expenses related
to the eBiosciense acquisition and the CytoScan clinical trials.
This was partially offset by savings in headcount and facilities
Selling, general and administrative (SG&A) expenses were
higher at 45.6% of sales versus 42.1% in the year-ago quarter,
Research and Development (R&D) expenses, as a percentage of
sales, fell to 20.7% from 24% in the year-ago period, due to
reduced headcount-related expenses partially offset by higher
spending on clinical trials.
Affymetrix ended the third quarter of 2012 with cash and cash
equivalents of $29 million, down 10.5% year over year.
During the quarter, Affymetrix inked a 'Powered by Affymetrix'
("PbA") Program agreement with Singapore-based molecular
diagnostics company, PathGEN Dx Pte. Ltd. Per the terms of the
deal, PathGEN Dx will adopt a contract manufactured GeneChip
microarray from Affymetrix and use its own proprietary PathGEN
PathChip kit along with an automated software package to develop
an in-vitro diagnostic ("IVD") test for pathogen detection.
Affymetrix also launched the SensationPlus FFPE Amplification and
3' IVT Labeling Kit (SensationPlus FFPE Reagent Kit) in the
quarter. It is an advanced form of the company's Genisphere
Furthermore, the company expanded its license agreement with
Siemens Healthcare Diagnostics, whereby, among other things,
Affymetrix has the exclusive right to develop and market in situ
QuantiGene ViewRNA products in the in vitro diagnostic market.
Affymetrix is a leading provider of microarray-based products and
services to the global research community. Along with
), it is one of the two major providers of microarray
technologies, primarily used in the field of genetic research.
Affymetrix holds a leading position in the gene expression
products and services market.
Affymetrix is expanding its customer base through new product
launches and strategic alliances and has reorganized its business
to drive future profitability. Moreover, the company is pursuing
a number of strategies (including acquisitions and expansion into
new markets) aimed at expanding its top line.
However, Research and development (R&D) spending by
Affymetrix's customers have fallen considerably due to a weak
macroeconomic environment coupled with stringent government
actions including budget cuts.
Moreover, a declining Euro as well as a difficult global academic
funding backdrop is adversely affecting the gene expression and
eBioscience unit, thereby constricting the company's top-line
growth. We also remain cautious regarding integration-related
risks associated with the e-Bioscience acquisition.
We are currently Neutral on the stock, which carries a short-term
Zacks #3 Rank (Hold rating).