(Source: MARKETWIRE)
Chembio Diagnostics, Inc. (OTCBB: CEMI), which develops, manufactures, markets and licenses point-of-care diagnostic tests, reported its first quarterly profit since its merger in May 2004. Total revenues were $3.37 million for the quarter ended June 30, 2009, which compares to total revenues of $2.72 million for the quarter ended June 30, 2008, a 24% increase. The Company recorded Net Income of approximately $110,000, or less than a $0.01 per share, for the quarter ended June 30, 2009, compared to a Net Loss of approximately $363,000, or $0.01 per share, for the quarter ended June 30, 2008.
The operating results in the second quarter of 2009 include $1,161,000 of revenues from the sale of rapid HIV tests to Inverness Medical Innovations, Inc., the Company's exclusive U.S. marketing partner for its FDA approved rapid HIV tests. This represents an increase of $737,000, or 174%, compared to $424,000 for the quarter ended June 30, 2008. The operating results also reflect steps the Company took during 2008 and in the current year to reduce overhead expenses while still maintaining a strong R&D effort to develop future products based on its patented DPP(R) technology.
Commenting on the results, Chembio's President, Lawrence A. Siebert, stated, "We are pleased with the growing demand for our rapid HIV tests in the U.S. market as evidenced by the 174% increased sales to our U.S. marketing partner, Inverness, during the second quarter. When combined with our other revenue streams, our continued improvements in manufacturing and our control of our costs, these results prove that we can have a profitable base business. I believe we will see continued improvements in the second half of 2009 as compared with the second half of 2008, as we anticipate realizing new revenues based upon the opportunities we have developed with our patented DPP(R) technology."
Financial Highlights for the Second Quarter of 2009
-- Product sales for the three months ended June 30, 2009 increased 23.7% from $2.46 million to $3.05 million. Net product sales to Inverness for the second quarter increased more than $735,000, or approximately 174%, as compared to the second quarter of 2008, indicating that our sales to Inverness are continuing their strong upward trajectory in 2009 as compared to 2008. -- Product sales also included the shipment of HIV and other tests and components to customers in Africa ($999K), South America ($639K), and Asia, Europe, and the Middle East ($161K). -- The increased product and R&D revenues combined to produce gross margin dollars that were $350,000 or 34.6% ($1,362,000 vs. $1,012,000) greater than the gross margin dollars in the comparable period in 2008. -- Selling General & Administrative Expenses decreased by $267,000 or 33% in the 2009 period as compared to the second quarter of 2008 -- Operating profit was approximately $117,000, in the 2009 period as compared to an operating loss in the second quarter of 2008 of $365,000, a swing of $482,000. -- Net Income for the three-month period was calculated with non-cash expenses associated with the issuance of options issued as compensation in the amount of $74,666 and depreciation and amortization expenses of $92,550 as compared with $70,248 and $78,247 respectively in 2008. -- The Company increased its cash position during the quarter by approximately $569,000 to $1.86 million. This is primarily attributable to the operating cash flows. The increase in operating cash flows included the net income of $110,000 increased by $92,000 in depreciation and $75,000 in stock option compensation expenses. Also adding to the increased cash flow was a decrease in accounts receivable and inventories by a combined $39,000 and increases in accounts payable, deferred revenue and accrued liabilities by a combined $300,000. Partially offsetting the increase in cash during the quarter was the funding of $50,000 in progress payments for the design and development of an automated system related to assembly of its products.
Financial Highlights for the first half of 2009
-- Product sales for the six months ended June 30, 2009 increased $617,000, or 13%, from $4.70 million to $5.32 million. Net product sales to Inverness for the first half increased more than $1,040,000, or approximately 108%, as compared to the first half of 2008. -- Research and Development Revenues increased 44% to $546,000. Net R&D Expense (R&D Expense net of R&D Income) decreased 1.3% from $815,000 in the 2008 period to $804,000 in the 2009 period. -- The increased product and R&D revenues combined to produce gross margin dollars that were $516,000 or 28% greater than the gross margin dollars in the comparable period in 2008. -- Selling General & Administrative Expenses decreased by $610,000 or 33.4% in the 2009 period as compared to the first half of 2008 -- Operating loss decreased by 82% or $969,000 to $208,000 in the 2009 period as compared to an operating loss in the first half of 2008 of $1,177,000. -- Net Income for the six-month period was calculated with non-cash expenses associated with the issuance of options issued as compensation in the amount of $91,850 and depreciation and amortization expenses of $191,999 as compared with $ 244,338 and $154,101 respectively in 2008. -- The Company increased its cash position during the first half of 2009 by approximately $647,000 to $1.86 million. This is primarily attributable to the operating cash flows. The increase in operating cash flows included the net loss of $215,000 which was offset by increases in cash flow attributable to depreciation of $192,000 and stock option compensation expense of $92,000. Also adding to the increased cash flow was a decrease in accounts receivable and inventories by a combined $365,000 and an increase in deferred revenue of $495,000, which includes receiving a $340,000 payment from Bio-Rad Laboratories, Inc. with respect to a license agreement as previously reported.
