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Q1 2013 Earnings Call
April 30, 2013 5:00 pm ET
Doug Farrell - Vice President of Investor Relations
Franklin R. Witney - Chief Executive Officer, President and Director
Timothy C. Barabe - Chief Financial Officer, Principal Accounting Officer and Executive Vice President
Bryan Brokmeier - Maxim Group LLC, Research Division
Daniel Brennan - Morgan Stanley, Research Division
David C. Clair - Piper Jaffray Companies, Research Division
Daniel L. Leonard - Leerink Swann LLC, Research Division
Doug Schenkel - Cowen and Company, LLC, Research Division
Eric Criscuolo - Mizuho Securities USA Inc., Research Division
Jonathan P. Groberg - Macquarie Research
Jeffrey T. Elliott - Robert W. Baird & Co. Incorporated, Research Division
Isaac Ro - Goldman Sachs Group Inc., Research Division
Daniel Arias - UBS Investment Bank, Research Division
Tycho W. Peterson - JP Morgan Chase & Co, Research Division
Previous Statements by AFFX
» Affymetrix Management Discusses Q4 2012 Results - Earnings Call Transcript
» Affymetrix's CEO Presents at 2012 Lazard Life Sciences Conference (Transcript)
» Affymetrix Management Discusses Q3 2012 Results - Earnings Call Transcript
Thank you, operator. Good afternoon, everyone. Welcome to our first quarter conference call for 2013. At the close of the market today, we released our operating results. That release is available on our website if you don't have a copy already.
Joining me on the call today is our President and CEO, Frank Witney; as well as our Chief Financial Officer, Tim Barabe. I'd like to remind callers that our discussion may include forward-looking statements about our future plans, expectations and prospects. We believe these statements are based reasonable assumptions, but actual results may differ materially from those indicated. Important factors which could cause our actual results to differ are included in our forward-looking statements, which are detailed in our filings with the SEC.
It is our intent that these forward-looking statements be protected under the Safe Harbor created by the Private Securities Litigation Reform Act of 1995. We encourage you to review these documents carefully as forward-looking statements are made as of today's date and we make no obligation to update this information.
Additionally, we will be discussing GAAP and non-GAAP financial measures. A full reconciliation of the non-GAAP to GAAP measures can be found in today's press release, as well as on our website. As a reminder, the call is being recorded and the audio from the call is being webcast on our homepage at affymetrix.com.
So with that, let me turn the call over to Frank.
Franklin R. Witney
Good afternoon and thank you for joining us. Before I review the first quarter, I'd like to briefly put out our results in the context of our overall strategic plan.
Previously, I laid out a 3-phase plan to return the company to profitability and growth. We are now in Phase 2 of the plan where our priorities are: First, to grow revenue by expanding our reach into the translational medicine, molecular diagnostics and applied markets; second, to achieve sustained profitability; and third, to continue to aggressively repay our senior secured debt.
Here's how we're measuring ourselves against the priorities we have laid out for this year. On the growth front, revenues from our Genetic Analysis business unit, which includes our Axiom and cytogenetics product lines, grew 16% compared with Q1 of 2012. And eBioscience also had modest growth and traditionally, healthy operating margins. Taken together, Genetic Analysis and eBioscience constitute 53% of our revenues in the quarter.
Our Gene Expression business accounted for 29% of our revenue in the first quarter of 2013 as compared to 50% of our revenue in the first quarter of 2012. As Expression becomes a smaller percentage of total revenue, you'll reach the point where our realigned portfolio will enable us to return the overall business to growth.
From a bottom line perspective, for the first quarter of 2013, our non-GAAP EBITDA was approximately $10 million or about 14% of revenue, an increase from $7 million or about 11% in the first quarter of last year. Please see our website for GAAP reconciliation.
Lastly, we reduced our senior secured debt by nearly 20% in 9 months from $85 million to $70 million. We have made all required principal payments through April of 2014.
Now I'd like to provide more details on the performance at each of our business units in the first quarter. Q1 was another solid quarter in our Genetic Analysis business unit, with revenues of approximately $22 million, up 16% year-over-year, driven by strong growth in cytogenetics and increasing -- and increased momentum in genotyping.
Our cytogenetic product line grew by more than 40% compared to Q1 of 2012 and now represents more than 10% of our total revenue. We continue to add new customers and applications at a healthy pace.
In addition, postnatal applications -- in addition to postnatal applications, numerous research studies have documented the value of cytogenetic analysis in the diagnosis and prognosis of leukemia and lymphoma and is increasingly clear that high-resolution arrays are an important tool for clinicians. Arrays provide increased stability to detect copy number gains and losses, as well as copy number neutral loss of heterozygosity, which have emerged as some of the most common genetic abnormalities in cancer. We expect that the increased resolution, enabled by arrays, will create new growth opportunities in oncology.
In February, we submitted a 510k application for our CytoScan Dx whole genome cytogenetics test intended to detect chromosomal copy number variants, CNVs, and a loss of heterozygosity associated with developmental delay, intellectual disability, congenital anomalies and dysmorphic features. Our interactions with the FDA are progressing well and we'll keep you posted on the status of our regulatory filings.