OREANDA-NEWS. Chembio Diagnostics, Inc. (Nasdaq:CEMI), a leader in point-of-care (“POC”) diagnostic tests for infectious diseases, today reported financial results for the three months ended March 31, 2016.

John J. Sperzel III, Chief Executive Officer, stated, “The first quarter of 2016 was exceptional for Chembio, with meaningful advancements in each of our business segments. In our sexually transmitted disease business, we achieved sales growth in North America, South America, Europe and Asia during the quarter, with a significant increase in U.S. sales.  In our fever disease business, driven by the serious threat posed by both Malaria and now by Zika virus, and through collaborations with leading health research and funding organizations, Chembio is working to leverage its patented DPP® technology into products that may allow healthcare workers to change current testing paradigms and contain the spread of life-threatening diseases.  During the period, we received a grant from the Paul G. Allen Family Foundation to initiate development of a DPP® Zika Assay.  Less than three months later, we announced our filing with Brazil’s regulatory agency and plans to introduce the DPP® Zika IgM/IgG Assay in Brazil through our partner Bio-Manguinhos/Fiocruz, which is responsible for supplying diagnostics to Brazil’s Ministry of Health.  And, in April, we received a grant from the Bill and Melinda Gates Foundation to complete feasibility on our DPP® technology platform, to develop the world’s first POC Malaria assay using oral fluid/saliva. We are honored by the confidence of our partners in these endeavors and committed to delivering these much-needed POC diagnostic tools.”

Addressing the company’s financial results, Mr. Sperzel commented, “In the first quarter of 2016, Chembio’s sexually transmitted disease product sales in North America, South America, Asia and Europe increased 29% as compared to the same quarter of the prior year.  Notably, in the U.S., we saw an increase in sales of approximately $1.0 million, an increase of approximately 78%, compared to the first quarter of 2015.  We are pleased with the demand for our HIV products in the U.S., and, as previously noted, effective June 1, 2016 we will begin selling the SURE CHECK® HIV 1/2 assay in the U.S. through our existing sales force and distribution channels.  Associated with the increase in sales, we’ve recorded an increase in accounts receivable of approximately $2.5 million as compared with the 1st Quarter of 2015, resulting in total receivables of $4.9 million.  We are confident in our ability to collect these receivables, which will significantly increase our cash balance.  Though we saw a decrease in lateral flow product sales to Africa and South America during the first quarter, revenues for our DPP® products during the three months ended March 31, 2016 increased by approximately $195,000 over the same period in 2015, primarily due to increased sales in Brazil.  Chembio continues to have strong relationships with the Ministry of Health and Bio-Manguinhos/Fiocruz in Brazil, as evidenced by our recent fever disease collaboration, as well as other groups throughout Latin America, and we believe this region will continue to be a strong market for Chembio.”

Selected Summary Financial Information comparing the 2016 first quarter to the 2015 first quarter:

  • Total revenues of $6.60 million, compared with $6.23 million (an increase of 5.9%).
  • Product sales of $5.92 million, compared with $5.61 million (an increase of 5.4%).
  • Operating loss of $468,000, compared with operating loss of $875,000.
  • Net loss of $304,000, or $0.03 per diluted share, compared with net loss of $647,000, or $0.07 per diluted share.

Additional Financial Information

First Quarter:

Total revenues for the first quarter of 2016 of $6.60 million increased 5.9% compared with total revenues of $6.23 million in the prior-year period. Product sales in the 2016 first quarter of $5.92 million increased 5.4% compared with product sales of $5.61 million in the prior-year period.  R&D milestone, and grant and royalty revenues for the three months ended March 31, 2016 increased to $662,000 from $609,000 in the prior-year period.

Gross margin dollars for the 2016 first quarter increased 17.8% to $3.17 million compared with $2.69 million for the prior-year period, due primarily to the mix in product revenues. The amount of product gross margin dollars for the first quarter of 2016 increased 19.9% to $2.48 million, from $2.07 million in the prior-year period.

R&D expenses in the first quarter of 2016 were $1.63 million, compared with $1.58 million in the prior-year period. This increase is due primarily to increased R&D activities for projects and grants.  Some projects are on a milestone basis for which revenue cannot be recognized until the milestone is achieved, while expenses to reach that milestone are expensed in the period incurred.

Selling, general and administrative expenses in the first quarter of 2016 increased to $2.00 million from $1.98 million in the prior-year period, largely due to increased professional fees, investor relations expenses and consulting partially offset by decreased wages and related expenses, commissions and stock-based compensation.

Operating loss for the first quarter of 2016 was $468,000, compared with an operating loss of $875,000 for the prior-year period.

Net loss for the first quarter of 2016 was $304,000, or $0.03 per diluted share, compared with net loss of $647,000, or $0.07 per diluted share, for the prior-year period.

Balance Sheet Highlights:

The Company had cash and cash equivalents of $2.66 million as of March 31, 2016, compared with $5.38 million as of December 31, 2015. The decrease was primarily due to net cash used in operating activities of $2.69 million. Our working capital decreased by $193,000 during the year from $9.48 million to $9.29 million.

About Chembio Diagnostics

Chembio Diagnostics, Inc. develops, manufactures, licenses and markets proprietary rapid diagnostic tests in the growing $8.0 billion point-of-care testing market. Chembio markets its DPP® HIV 1/2 Assay and HIV 1/2 STAT-PAK® Assay in the U.S. and internationally. The Company's SURE CHECK® HIV 1/2 Assay is marketed exclusively in the U.S. as Clearview® Complete by a single entity. Outside the U.S., Chembio markets its SURE CHECK® HIV 1/2 Assay primarily through distributors.

Chembio has developed a patented point-of-care (POC) test platform technology, the Dual Path Platform (DPP®) technology, which has significant advantages over lateral-flow technologies. This technology is providing Chembio with a significant pipeline of business opportunities for the development and manufacture of new products.

Headquartered in Medford, NY, Chembio is licensed by the U.S. Food and Drug Administration (FDA) as well as the U.S. Department of Agriculture (USDA), and is certified for the global market under the International Standards Organization (ISO) directive 13485. Chembio Diagnostic Systems, Inc. is a wholly-owned subsidiary of Chembio Diagnostics, Inc. 

             
Chembio Diagnostics, Inc. & Subsidiary    
Summary of Consolidated Results of Operations    
(UNAUDITED)    
             
    For the three months ended    
    March 31, 2016   March 31, 2015    
 Net product sales    $    5,917,019     $ 5,614,685      
             
 License and royalty revenue        22,201       7,051      
             
 R&D, milestone and grant revenue        661,879       609,401      
             
 TOTAL REVENUES    $    6,601,099     $ 6,231,137      
             
 GROSS MARGIN    $    3,165,548     $ 2,686,618      
             
 Research and development expenses    $    1,634,298     $ 1,584,536      
             
 Selling, general and administrative expenses    $    1,999,404     $ 1,977,574      
             
 LOSS FROM OPERATIONS    $    (468,154 )   $ (875,492 )    
             
 OTHER INCOME:    $    2,564     $ 1,175      
             
 Income tax benefit    $    (162,000 )   $ (227,500 )    
             
 NET LOSS    $    (303,590 )   $ (646,817 )    
             
 Basic loss per share    $    (0.03 )   $ (0.07 )    
             
 Diluted loss per share    $    (0.03 )   $ (0.07 )    
             
 Weighted average number of shares outstanding, basic        9,631,686       9,624,691      
             
 Weighted average number of shares outstanding, diluted        9,631,686       9,624,691      
             
           
Chembio Diagnostics, Inc. & Subsidiary  
Summary of Consolidated Balance Sheets  
(UNAUDITED)  
           
    March 31, 2016   December 31, 2015  
           
CURRENT ASSETS:          
Cash and cash equivalents   $    2,657,914     $ 5,376,931    
Accounts receivable, net of allowance for doubtful accounts of $52,000 at March 31, 2016 and December 31, 2015, respectively       4,896,609       2,422,971    
Inventories       3,383,273       3,578,025    
Prepaid expenses and other current assets       1,109,410       1,256,879    
TOTAL CURRENT ASSETS       12,047,206       12,634,806    
           
FIXED ASSETS, net of accumulated depreciation        2,202,373       2,374,308    
           
OTHER ASSETS       5,922,632       5,807,230    
           
TOTAL ASSETS   $   20,172,211     $ 20,816,344    
           
CURRENT LIABILITIES:          
Accounts payable and accrued liabilities   $    2,416,122     $ 2,801,432    
Deferred revenue       344,585       353,406    
TOTAL CURRENT LIABILITIES       2,760,707       3,154,838    
           
TOTAL LIABILITIES       2,760,707       3,154,838    
           
STOCKHOLDERS’ EQUITY:          
Common stock - $.01 par value; 100,000,000 shares authorized; 9,650,707 and 9,628,248 shares issued and outstanding for March 31, 2016 and December 31, 2015, respectively       96,507       96,282    
Additional paid-in capital       47,944,005       47,890,642    
Accumulated deficit      (30,629,008 )     (30,325,418 )  
TOTAL STOCKHOLDERS’ EQUITY       17,411,504       17,661,506    
           
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $   20,172,211     $ 20,816,344    
           
           
Chembio Diagnostics, Inc. & Subsidiary  
Summary of Consolidated Cash Flow  
For the three months ended  
(UNAUDITED)  
    March 31, 2016   March 31, 2015  
           
Net cash used in operating activities   $   (2,690,610 )   $   (941,808 )  
Net cash used in investing activities       (28,407 )       (856,968 )  
Net cash provided by financing activities       -          -     
Decrease in cash and cash equivalents   $    (2,719,017 )   $    (1,798,776 )