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LipoScience Reports First Quarter 2013 Financial Results
GlobeNewswirePress Release: LipoScience, Inc. – Thu, May 9, 2013 4:05 PM EDT
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RALEIGH, N.C., May 9, 2013 (GLOBE NEWSWIRE) -- LipoScience, Inc. (LPDX), a diagnostic company pioneering a new field of personalized NMR diagnostics to advance the quality of patient care, today announced its financial results for the first quarter ended March 31, 2013.
First Quarter Results
During the first quarter of 2013, clinicians ordered approximately 518,000 NMR LipoProfile tests, representing an increase of 8.7% over the first quarter of 2012. Total revenue was $13.6 million for the first quarter ended March 31, 2013, a decline of 1.2% compared to the first quarter ended March 31, 2012.
"We are dissatisfied with our unit growth and revenue performance, and our responses are already underway," commented Richard Brajer, President and Chief Executive Officer. "Based on a comprehensive review, the four primary factors contributing to the first quarter 2013 revenue shortfall were 1) we were unable to get the needed number of new sales representatives up and running, 2) our direct business is converting to our lab partners at a faster rate than prior years, 3) managed care headwinds, and 4) Vantera system placement delays."
"Given these factors and our slow start, we are reducing our full year 2013 revenue guidance to $54 to $56 million," said Mr. Brajer. "Unfortunately, these issues cannot be fixed overnight. But I can assure you that we fully understand what the issues are, and we are assertively implementing our responses as we continue to drive toward becoming a clinical standard of care."
"Despite these operational challenges, we continue to make important progress in attracting the support and validation of leading institutions and medical societies," added Mr. Brajer. "LipoScience is pleased to report that Mayo Clinic has successfully completed its Vantera system testing, and we are working with them to achieve 'Go Live' with clinical reporting of test results in the very near future. Additionally, the American Association of Clinical Endocrinologists (AACE) recently recommended LDL particle number (LDL-P) in their cardiovascular disease (CVD) risk factor modifications algorithm for patients with diabetes. TMAO, the diagnostic test that LipoScience has exclusive rights to commercialize from the Cleveland Clinic, has recently received broad press coverage, with a recent publication in the New England Journal of Medicine and coverage on NBC News. Moreover, the National Institutes of Health has signed a contract for a Vantera system to be used for research and clinical purposes. With these strong endorsements for our test and our platform by leading institutions and medical societies, we believe that the NMR LipoProfile test and Vantera system will become an important clinical standard of care in the future."
Additional First Quarter Operating Results
For the first quarter ended March 31, 2013, gross profit was $10.8 million compared to $11.5 million in the prior year, a decrease of 6.1%. Gross margin for the first quarter of 2013 was 79.1%, as compared to 83.2% for the first quarter of 2012 due primarily to increased costs incurred in 2013 associated with the launch of the Vantera system at third-party customer sites.
The overall average selling price of NMR LipoProfile tests decreased 6.4% to $25.25 for the first quarter of 2013, compared to $26.99 for the prior year period. The decline was primarily the result of certain reductions in price for some clinical laboratory customers based on their achievement of higher test volumes set forth in their agreements as well as the continuing shift in channel mix toward high-volume clinical laboratory customers. The percentage of total NMR LipoProfile tests sold through the Company's direct distribution channel, whereby clinicians ordered the test directly from LipoScience, decreased from 6% for the first quarter ended March 31, 2012 to 3% for the first quarter ended March 31, 2013. This trend reflects the Company's strategy of increasing the proportion of its business conducted through clinical diagnostic laboratories, resulting in an overall increase in test volumes, but a decreasing average selling price due to the shift in channel mix.
During the first quarter of 2013, sales and marketing expenses of $6.7 million were up 19.6% compared to $5.6 million in the prior year period. Sales and marketing expenses represented 48.9% of total revenues for the first quarter of 2013 compared to 40.4% in the first quarter of 2012. The increase in sales and marketing expenses as a percentage of revenue for the first quarter of 2013 is due to the continued expansion of the Company's direct sales force, growing geographic presence and an expansion in the Health, Policy & Reimbursement organization. These increases were partially offset by lower marketing expenses experienced during the first quarter of 2013 as a result of the timing of various marketing programs and medical education initiatives to drive awareness and adoption of the NMR LipoProfile test.
For the first quarter ended March 31, 2013, research and development expenses of $3.1 million increased by 45.9% as compared to $2.1 million during the prior year period. As a percentage of total revenues, research and development expenses increased to 23.0% for the first quarter of 2013, compared to 15.6% for the first quarter of 2012. This increase over the prior year period primarily reflects higher personnel-related expenses due to increased headcount, higher consulting fees for external research and development studies in support for our publication efforts, and other engineering projects, as well as higher allocated information technology and facility charges.
General and administrative expenses in the first quarter of 2013 were $3.3 million, up 47.0% compared to $2.3 million in the first quarter of 2012.The increase versus the prior year period resulted primarily from higher fees associated with the expansion of our business operations, compliance obligations in connection with becoming a publicly traded company and increased salaries and benefits due to higher staffing levels. The Company also incurred $0.3 million in tax liability as a result of the new U.S. medical device tax that became effective in January 2013 and that applies to sales of the NMR LipoProfile test. These higher costs were partially offset by lower bad debt expense. General and administrative expenses represented 24.3% of total revenues for the first quarter of 2013 compared to 16.3% in the first quarter of 2012.
Net loss for the first quarter of 2013 was $2.8 million compared to net income of $1.3 million in the prior year period.
As of March 31, 2013, LipoScience had approximately $55.0 million of cash and cash equivalents and $15.7 million of long-term debt. In the initial public offering, or IPO, completed in January 2013, LipoScience raised net proceeds of $44.4 million after the underwriting discount and offering expenses. Contemporaneous with the closing of the IPO, the Company paid $5.2 million in accrued dividends to holders of the Company's Series F preferred stock, which converted into common stock upon the closing of the IPO. In the first quarter, LipoScience also paid off the outstanding balance of $5.0 million on the Company's revolving line of credit.
Full Year 2013 Revenue Outlook
Based on information available as of May 9, 2013, the Company expects that total revenue for the full year 2013 will range from approximately $54 to $56 million as compared to reported revenue of $54.8 million for the full year 2012.
Conference Call Information
LipoScience management will host a conference call today at 4:30 p.m. EDT to discuss the first quarter 2013 financial results. To participate in the call, please dial (877) 303-2523 (U.S. and Canada) or (253) 237-1755 (international). A live webcast will be available on the Investor Relations section of the corporate website at http://investor.liposcience.com.
A replay of the conference call will be available beginning May 9, 2013 at 7:30 p.m. EDT and ending on May 21, 2013 by dialing (855) 859-2056 (U.S. and Canada) or (404) 537-3406 (international), Conference ID Number: 60327831. A replay of the webcast will be available on the corporate website for two weeks, through May 21, 2013.
About LipoScience, Inc.
LipoScience, Inc. is pioneering a new field of personalized diagnostics based on nuclear magnetic resonance (NMR) technology. Its first proprietary diagnostic test, the NMR LipoProfile test, measures the number of low density lipoprotein particles (LDL-P) in a blood sample and provides physicians and their patients with actionable information to personalize management of risk for heart disease. To date, over 9 million NMR LipoProfile tests have been ordered. LipoScience's automated clinical analyzer, the Vantera(R) system, has been cleared by the FDA. It requires no previous knowledge of NMR technology to operate and has been designed to significantly simplify complex technology through ease of use and walk-away automation. The Vantera system will be placed with national and regional clinical laboratories.
LipoScience is driving toward becoming a clinical standard of care by decentralizing its technology and expanding its menu of personalized diagnostic tests to address a broad range of cardiovascular, metabolic and other diseases. For further information on LipoScience, please visit www.liposcience.com and www.theparticletest.
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