PRINCETON, N.J., Oct. 30 /PRNewswire-FirstCall/ -- Orchid Cellmark Inc.
(Nasdaq: ORCH), a leading worldwide provider of identity DNA testing services,
today reported its financial results for the third quarter of 2008.
Total revenues were $14.9 million for the third quarter of 2008 compared
to $15.6 million for the third quarter of 2007. The decrease in total
revenues for the third quarter of 2008 compared to a year ago was largely due
to lower revenues in the U.K.
Total U.S.-based revenues rose by 4% over the comparable quarter in 2007,
principally due to increases in the U.S. paternity testing business. This was
partially offset by lower revenues from forensic casework business as well as
a decline in the company's business that generates DNA profiles for the
federal CODIS (Combined DNA Index System) and state DNA databases. The
decrease in U.K.-based revenues in the quarter compared to a year ago was due
to lower volumes of animal DNA testing for scrapie susceptibility and slightly
reduced forensics revenues due to adverse exchange rates.
Excluding cost of service revenue, operating expenses for the quarter
declined to $5.8 million compared to $6.0 million for the third quarter of
2007 as a result of reduced general and administrative expenses.
Operating loss for the third quarter of 2008 was $1.4 million compared to
a $466 thousand loss for the third quarter of 2007. The operating loss
increase was principally due to decreases in gross margins in both the U.S.
and the U.K. Gross margin for the U.S. business decreased for the third
quarter of 2008 compared to the third quarter of 2007 largely as a result of a
decline in the average selling prices in the CODIS and forensic casework
businesses. Gross margin for the U.K. business in the quarter was adversely
impacted by lower margin forensics revenues replacing the DNA testing volumes
related to the loss of former LGC business and the buildup of casework
management capabilities in the U.K. to service the business the company won
under the North West/South West and Wales regional forensics services tender.
Orchid Cellmark reported a net loss of $1.5 million, or $(0.05) per share,
for the third quarter of 2008 compared to a net loss of $707 thousand, or
$(0.02) per share, for the third quarter of 2007. Net loss for the third
quarter of 2008 and 2007 includes charges of $1.1 million and $1.2 million,
respectively, for depreciation and amortization.
At September 30, 2008, cash and cash equivalents were $15.9 million.
Thomas Bologna, president and chief executive officer of Orchid Cellmark
commented, 'Our results for the third quarter reflect a challenging industry
environment where pricing pressures, declining U.K. scrapie orders and adverse
foreign exchange rates all contributed to the revenue decline, despite
increases in forensics casework volume.'
Mr. Bologna added, 'We did achieve important gains in core business
segments, including U.S. paternity, U.S. forensic casework in the Dallas
facility and U.K. police force tender revenues. U.K. forensics crime revenue
grew by 6% in the third quarter over the second quarter of this year, and
would have made up completely for the loss of the LGC-related business had it
not been for adverse foreign exchange rates. This is a considerable
achievement given that the LGC business represented approximately 40% of U.K.
revenues just a year ago.'
Mr. Bologna concluded: 'The challenges encountered in the third quarter
will continue in the fourth quarter of 2008 and put downward pressure on our
previously discussed operating targets. Specifically, the impact of the
adverse foreign exchange rate, the timing of sample receipts in the U.S., and
the continuing buildup of casework management capabilities in the U.K. will
influence revenue and gross margin in the fourth quarter.
