[October 30, 2014]

Affymetrix Reports Third Quarter 2014 Operating Results

Affymetrix, Inc., (NASDAQ:AFFX) today reported its operating results for the third quarter of 2014.

Results for the three months ended September 30, 2014:

• Total revenue was $87.1 million, compared to $80.4 million in third quarter of 2013. Total revenue grew by 8.4% over the third quarter of 2013.
• Product revenue was $78.1 million compared to $74.8 million in the third quarter of 2013, an increase of 4.4%.
• GAAP net income was $2.4 million, or $0.03 per diluted share, as compared to a GAAP net loss of $4.2 million, or $0.06 per diluted share, in the third quarter of 2013, an increase of $6.6 million or $0.09 per diluted share.
• Non-GAAP net income was $6.3 million, or $0.08 per diluted share, compared to a non-GAAP net income of $3.3 million, or $0.05 per diluted share, for the third quarter of 2013. Please refer to "Itemized Reconciliation Between GAAP and Non-GAAP Net Income (Loss)" for a reconciliation of these GAAP and non-GAAP financial measures.
• Total balance in cash and cash equivalents was $68.3 million and senior debt was $24.0 million as of September 30, 2014.

Product revenue for the third quarter of 2014 was $78.1 million and service and other revenue was $9.0 million. This compares to product revenue of $74.8 million and service and other revenue of $5.6 million in the third quarter of 2013. Product revenue for the third quarter of 2014 included consumable revenue of $73.7 million and instrument revenue of $4.4 million. Product revenue for the third quarter of 2013 included consumable revenue of $72.0 million and instrument revenue of $2.8 million.

Total GAAP gross margin was 59%, as compared to 55% in the same period of 2013. Excluding non-GAAP adjustments such as the amortization of acquired intangible assets, gross margin for the third quarter of 2014 was 61% compared to 61% in the same period of 2013. Please refer to the "Itemized Reconciliation Between GAAP and Non-GAAP Gross Margin" for a reconciliation of these GAAP and non-GAAP financial measures.

For the third quarter of 2014, operating expenses were $46.6 million on a GAAP basis as compared to $45.1 million in the same period of 2013. Excluding non-GAAP adjustments, such as the amortization of acquired intangible assets and non-recurring charges, operating expenses for the third quarter of 2014 were $44.1 million, compared to an adjusted total of $41.9 million in the same period of 2013. The increase is primarily due to higher variable compensation costs and legal costs associated with litigation matters. Please refer to the "Itemized Reconciliation Between GAAP and Non-GAAP Operating Expenses" for a reconciliation of these GAAP and non-GAAP financial measures.

"We are pleased with our overall financial performance for the third quarter. From a year-to-date perspective, we have grown our total revenue by approximately 7.5%," stated Frank Witney, President and CEO. "This underscores the strength of our product portfolio and validates our strategy of diversifying our revenues and focusing on high-growth markets."

"During the third quarter, we generated a GAAP profit driven by strong topline growth, rigorous cost controls and exceeding our target non-GAAP gross margin," stated Gavin Wood, EVP and CFO. "As a result of our strong year-to-date performance, we are raising our full-year guidance to total revenue of $345 million and adjusted EBITDA of approximately 17% of revenue."

Recent developments:

• The Company signed a multi-year supply agreement covering Affymetrix arrays and instruments to be utilized as part of Ariosa's Harmony™ Non-Invasive Prenatal Test (NIPT). The partnership enables Ariosa to pursue the development of a Harmony test kit that will allow other laboratories around the world to adopt and perform this test. This announcement follows the recent publication of a study in Fetal Diagnosis and Therapy online in which Ariosa's scientists successfully tested and implemented Affymetrix microarrays as part of a DNA quantification method for the Harmony test. The study demonstrated better performance of Affymetrix microarrays in comparison to a next generation sequencing approach in regard to shorter turn-around time and improved precision in measuring chromosome concentration and fetal fraction of cell-free DNA.
• Affymetrix exclusively licensed technology from Peptide Groove LLP that enables HLA typing of human samples from genotyping data generated from a variety of assays including the company's Axiom® genotyping assays. The partners at Peptide Groove LLP developed HLA*IMP, the first HLA typing statistical imputation method which can call 4-digit HLA types from SNP genotyping data with high accuracy. Alternative methods for HLA typing, such as DNA sequencing, can be laborious, time consuming, and expensive. Imputing HLA types from genotyping data, such as those from Affymetrix' Axiom genotyping platform, offers a new, very high-throughput, and low-cost approach. The technology will enable purpose-built, highly efficient HLA typing screening arrays that could prove useful for a broad range of HLA typing application needs, including donor repositories, drug development clinical trials, and many translational research studies. Additionally, customers using Affymetrix Axiom biobank arrays and other genotyping arrays for GWAS and fine mapping will be able to ascertain HLA type information without the need for further experimentation.

Affymetrix will host a conference call on Thursday, October 30, 2014 at 2:00 p.m. PT to review its operating results for the third quarter of 2014. A live webcast can be accessed by visiting the Investor Relations section of the Company's website at www.affymetrix.com. In addition, investors and other interested parties can listen by dialing domestic: (877) 407-8291, international: (201) 689-8345.

A replay of this call will be available from 5:00 p.m. PT on October 30, 2014 until 8:00 p.m. PT on November 7, 2014 at the following numbers: domestic: (877) 660-6853, international: (201) 612-7415. The conference call passcode to access the replay is 13592101. An archived webcast of the conference call will be available under the Investor Relations section of the Company's website.

About Affymetrix

Affymetrix technology is used by the world's top pharmaceutical, diagnostic, and biotechnology companies, as well as leading academic, government, and nonprofit research institutes. More than 2,300 systems have been shipped around the world and more than 65,000 peer-reviewed papers have been published using the technology. Affymetrix is headquartered in Santa Clara, California, and has manufacturing facilities in Cleveland, Ohio, San Diego, California, Singapore and Vienna, Austria. The Company has about 1,100 employees worldwide and maintains sales and distribution operations across Europe, Asia and Latin America.

All statements in this press release that are not historical are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act as amended, including statements related to our plans to return to growth and sustained profitability as well as other statements regarding Affymetrix's "expectations," "beliefs," "hopes," "intentions," "strategies" or the like. Such statements are subject to risks and uncertainties that could cause actual results to differ materially for Affymetrix from those projected, including, but not limited to: Affymetrix's ability to stabilize its business and grow revenue, Affymetrix's ability to timely and successfully integrate and realize the anticipated strategic benefits and costs savings or other synergies of the acquisition of eBioscience in a cost-effective manner while minimizing the disruption to its business; risks that eBioscience's future performance may not be consistent with its historical performance; risks relating to Affymetrix's ability to make scheduled payments of the principal of, to pay interest on or to refinance its indebtedness; risks relating to Affymetrix's ability to successfully develop and commercialize new products, including its ability to successfully develop and commercialize novel molecular solutions based on eBioscience's portfolio of reagents; risks relating to past and future acquisitions, including the ability of Affymetrix to successfully integrate such acquisitions into its existing business; risks of Affymetrix's ability to achieve and sustain higher levels of revenue, higher gross margins and reduced operating expenses; risks relating to Affymetrix's ability to generate cash after interest and principal payments; uncertainties relating to technological approaches; risks associated with manufacturing and product development; personnel retention; uncertainties relating to cost and pricing of Affymetrix products; dependence on collaborative partners; uncertainties relating to sole-source suppliers; uncertainties relating to FDA and other regulatory approvals; competition; risks relating to intellectual property of others and the uncertainties of patent protection and litigation. These and other risk factors are discussed in Affymetrix's Annual Report on Form 10-K for the year ended December 31, 2013, and other SEC (News - Alert) reports. Affymetrix expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Affymetrix's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.

In addition to providing financial measures based on generally accepted accounting principles in the United States (GAAP), Affymetrix has disclosed in this press release its net loss and net loss per share as well as its total gross margin and operating expenses for the third quarter of 2014 and 2013 excluding specified items. Reconciliation of GAAP to Non-GAAP measures can be found in the tables included in this press release. Affymetrix has determined to disclose this financial information to investors because it believes it will be useful, as a supplement to GAAP measures, in comparing Affymetrix's operating performance in the third quarter of 2014 as compared to the prior-year period. These Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.

PLEASE NOTE:

Affymetrix, the Affymetrix logo, GeneChip, and all other trademarks are the property of Affymetrix, Inc.

- Financial Charts to Follow -

[ Back To TMCnet.com's Homepage ]