Strengthening of manufacturing controls and comprehensive corporate review has positioned MEDITE for new product launches and sustainable growth
ORLANDO, FL--(Marketwired - Aug 14, 2017) - MEDITE Cancer Diagnostics, Inc. (OTCQB: MDIT) (the "Company"), specializing in the development, manufacturing and marketing of molecular biomarkers and premium medical devices for detection, risk assessment and diagnosis of cancer and precancerous conditions, today announced its 2017 second quarter and first six month financial results.
David Patterson, CEO of MEDITE, stated, "During the second quarter of 2017, our team focused on taking the necessary steps to improve our manufacturing process and efficiencies. We undertook a purposeful slowdown in production in order to fully address the various issues and required changes. This in-depth manufacturing analysis was part of a full review of the Company's manufacturing, marketing and R&D infrastructure. We took tangible steps towards bolstering each segment to ensure that they support our long-term growth strategy and help build sustainable shareholder value. By the end of June, we saw a recovery in sales, which supports our confidence in end-user demand for our products, and positions MEDITE for a strong second half of the year, which are typically the Company's strongest quarters."
Operational Highlights
MEDITE Plans Worldwide Launch of the C1 SureCyte™ Stain at the 29th European Congress of Pathology in Amsterdam:
- Scheduled the global launch of a "first of its kind" innovative stain that is self-mounting and allows physicians to utilize high quality digital imaging to visualize and quantify cellular structure in a time saving, cost containment method that has not been available to the market previously.
- Product will be available for order at the 29th European Congress of Pathology in Amsterdam, which will take place September 2-5, 2017 initially focused on the U.S., Europe and China markets.
- Initial revenues are expected in the fourth quarter of 2017.
MEDITE Restructures Manufacturing and Production:
- Restructured manufacturing division to meet the demands of customers who are increasingly expecting shorter delivery times of high quality and innovative products.
- Increased the efficiency of production at Burgdorf, Germany campus in order to be able to meet customer demand in Europe and the rest of the world.
- By upgrading its manufacturing infrastructure, the Company expects to increase margins and simultaneously ensure higher quality products.
MEDITE Initiates Marketing Plan for Next-Generation Diagnostic Products:
- Prioritized its marketing plan around next-generation diagnostic products that will be patient driven, while allowing the care provider to have access to accurate and cost effective diagnostics tools.
- Planned for release in 2018, Softkit™ is a cell collection device that will allow patients to collect necessary cellular material in the privacy of their own home and deliver specimens to a lab or hospital for processing, as directed by their physician.
- This at-home collection process will enable physicians to have a completed laboratory analysis at the time of the patient's visit, resulting in a more comfortable and less time consuming exam.
- The new technology will ultimately be offered for multiple specialties, but will be initially focused on the GYN market, allowing female patients to avoid undergoing embarrassing and uncomfortable PAP smear procedures during an office visit.
MEDITE Begins Development Phase of Innovative Bio-assays:
- Began the development of bio-assays that are projected to reduce the number and complications of current methods of diagnostic procedures.
- New bio-assays are intended to help care providers and clinicians deliver high quality care by enabling more accurate diagnoses and in less time.
- MEDITE plans to secure partnerships to drive late-stage development and commercialization of these next-generation products that the Company believes have the potential to become future standards of care in the cancer diagnostics industry.
Three Month Financial Results for the Period Ended June 30, 2017
For the three months ended June 30, 2017, the Company reported $1.28 million in revenue, a decrease of 55% compared with the corresponding quarter in 2016. Gross profit of $49,000 represented 4% of revenue, compared with $1.27 million, or 45% of revenue, in the corresponding quarter of 2016, with the decline in margin specifically due to higher fixed costs and increased costs related to the manufacturing and service issues. The decline in revenues was attributable to a purposeful reduction in production, as MEDITE identified and addressed issues related to the Company's manufacturing, quality control, installation and service. Sales increased from April to June, and the Company anticipates that these issues have been resolved and that all quality standards are in place to support future production and sales growth.
At June 30, 2017 the Company's sales backlog was $335,000.
R&D expenses declined by 22% to $329,000 in the second quarter of 2017 over the same 2016 period, as the Company focused on resolving manufacturing and service issues, as mentioned above. SG&A expenses rose by 34% to $1.23 million in the second quarter of 2017 compared with the same period in 2016, partly attributable to severance payments of $119,000 to MEDITE's previous management as well as new hires to MEDITE's current leadership team of $90,000 for the quarter and $62,000 attributed to bad debt expenses.
Net loss for the second quarter of 2017 totaled $1.63 million, or $0.06 per share, compared with a $202,000 loss, or $0.01 per share, in the first quarter of 2017.
Six Month Financial Results for the Period Ended June 30, 2017
For the six months ended June 30, 2017, the Company reported $3.17 million in revenue, a decrease of 36% compared with $4.95 million in the corresponding period in 2016. Gross profit of $729,000 represented 23% of revenue, compared with $2.19 million, or 44% of revenue, in the first six months of 2016.
R&D expenses decreased to $754,000 in the six months ended June 30, 2017, compared with $781,000 in the corresponding 2016 period. SG&A expenses were $2.01 million in the six months ended June 30, 2017 compared with $1.78 million in the same period in 2016. The increase in SG&A expenses for the six month period is attributable to the same factors as the quarter, discussed above.
Net loss for the six months ended June 30, 2017 totaled $2.58 million, or $0.11 per share, compared with an $824,000 loss, or $0.04 per share, for the same period in 2016.
Balance Sheet as of June 30, 2017
At June 30, 2017, the Company's cash position was $410,000, compared with $108,000 at December 31, 2016.
Upcoming Catalysts
By the end of 2017, MEDITE intends to:
- Launch SureCyte™ C1 flourogenic instant stain in U.S., Europe and China.
- Launch SureThin™ cell preservation solution for GYN uses in China and the U.S.
- Expand world-wide coverage for MEDITE's product portfolio with the addition of new distributors in regions currently not selling MEDITE products.
- Leverage relationship with China's UNIC Medical to expand commercial presence of MEDITE products in China.
About MEDITE Cancer Diagnostics, Inc.
MEDITE Cancer Diagnostics, Inc. is a global company that specializes in the development, engineering, manufacturing and marketing of premium medical devices and consumables for detection, risk assessment and diagnosis of cancer and related diseases. The Company is developing a suite of innovative products, both Histo-Pathology (tissue biopsy) and Cyto-Pathology (liquid cell) based, that target large markets and cover the complete laboratory process from biopsy to finished slide, and through diagnosis. MEDITE's current and future products assist in the early diagnoses of cancer, with a target result of contributing to more lives saved at lower costs. MEDITE's products are currently being distributed in over 80 countries worldwide.
Forward Looking Statement
This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding future operating performance, events, trends and plans. All statements other than statements of historical fact contained herein, including, without limitation, statements regarding our future financial position, business strategy, budgets, projected revenues and costs, and plans and objectives of management for future operations, are forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "expects," "intends," "plans," "projects," "estimates," "anticipates," or "believes" or the negative thereof or any variation thereon or similar terminology or expressions. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are not guarantees and are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Important factors that could cause our actual results to differ from our expectations include, but are not limited to, MEDITE's ability to maintain and grow its revenues. Readers are cautioned not to place undue reliance on our forward-looking statements, as they speak only as of the date made. Such statements are not guarantees of future performance or events and we undertake no obligation to disclose any revision to these forward-looking statements to reflect events or circumstances occurring after the date hereof.
| MEDITE CANCER DIAGNOSTICS, INC. AND SUBSIDIARIES | ||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
| (In thousands, except share and per share amounts) | ||||||
| June 30, 2017 | December 31, | |||||
| (unaudited) | 2016 | |||||
| Assets | ||||||
| Current Assets: | ||||||
| Cash | $ | 410 | $ | 108 | ||
| Accounts receivable, net of allowance for doubtful accounts of $191 and $123, respectively | 1,054 | 1,346 | ||||
| Inventories | 3,969 | 3,811 | ||||
| Prepaid expenses and other current assets | 189 | 79 | ||||
| Total current assets | 5,622 | 5,344 | ||||
| Property and equipment, net | 1,576 | 1,557 | ||||
| In-process research and development | 4,620 | 4,620 | ||||
| Trademarks, trade names | 1,240 | 1,240 | ||||
| Goodwill | 4,658 | 4,658 | ||||
| Other assets | 398 | 351 | ||||
| Total assets | $ | 18,114 | $ | 17,770 | ||
| Liabilities and Stockholders' Equity | ||||||
| Current Liabilities: | ||||||
| Accounts payable and accrued expenses | $ | 3,737 | $ | 3,306 | ||
| Secured lines of credit and current portion of long-term debt | 3,226 | 3,214 | ||||
| Notes due to employees, current portion | 339 | 681 | ||||
| Advances - related party | 154 | 146 | ||||
| Total current liabilities | 7,456 | 7,347 | ||||
| Long-term debt, net of current portion | 32 | 60 | ||||
| Notes due to employees, net of current portion | 90 | 135 | ||||
| Deferred tax liability | 2,205 | 2,205 | ||||
| Total liabilities | 9,783 | 9,747 | ||||
| Commitments and contingencies | ||||||
| Stockholders' equity : | ||||||
| Preferred stock, $0.001 par value; 10,000,000 shares authorized; 198,355 shares issued and outstanding (liquidation value of all classes of preferred stock $2,579 and $2,533 as of June 30, 2017 and December 31, 2016, respectively) | 962 | 962 | ||||
| CCommon stock, $0.001 par value; 50,000,000 and 35,000,000 shares authorized, 27,658,820 and 22,421,987 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively | 28 | 23 | ||||
| Additional paid-in capital | 12,090 | 9,366 | ||||
| Stock subscription | 25 | 25 | ||||
| Treasury stock | (327) | (327) | ||||
| Accumulated other comprehensive loss | (483) | (642) | ||||
| Accumulated deficit | (3,964) | (1,384) | ||||
| Total stockholders' equity | 8,331 | 8,023 | ||||
| Total liabilities and stockholders' equity | $ | 18,114 | $ | 17,770 | ||
| MEDITE CANCER DIAGNOSTICS, INC. AND SUBSIDIARIES | ||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | ||||||
| (In thousands, except share and per share amounts) | ||||||
| Three Months Ended June 30, | ||||||
| 2017 (unaudited) | 2016 (unaudited) | |||||
| Net sales | $ | 1,277 | $ | 2,816 | ||
| Cost of revenues | 1,228 | 1,546 | ||||
| Gross profit | 49 | 1,270 | ||||
| Operating expenses | ||||||
| Depreciation and amortization expense | 54 | 50 | ||||
| Research and development | 329 | 421 | ||||
| Selling, general and administrative | 1,228 | 918 | ||||
| Total operating expenses | 1,611 | 1,389 | ||||
| Operating loss | (1,562) | (119) | ||||
| Other expenses | ||||||
| Interest expense, net | 67 | 139 | ||||
| Other income, net | (8) | (50) | ||||
| Total other expense, net | 59 | 89 | ||||
| Loss before income taxes | (1,621) | (208) | ||||
| Income tax provision (benefit) | 4 | (6) | ||||
| Net loss | (1,625) | (202) | ||||
| Preferred dividend | (23) | (23) | ||||
| Net loss available to common stockholders | $ | (1,648) | $ | (225) | ||
| Loss per share | ||||||
| Basic and diluted loss per share | $ | (0.06) | $ | (0.01) | ||
| Weighted average basic and diluted shares outstanding | 25,866,163 | 21,058,235 | ||||
| Condensed consolidated statements of comprehensive loss | ||||||
| Net loss | $ | (1,625) | $ | (202) | ||
| Other comprehensive income (loss) | ||||||
| Foreign currency translation adjustments | 212 | (136) | ||||
| Comprehensive loss | $ | (1,413) | $ | (338) | ||
| MEDITE CANCER DIAGNOSTICS, INC. AND SUBSIDIARIES | ||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | ||||||
| (Dollars in thousands, except shares and per share amounts) | ||||||
| Six Months Ended June 30, | ||||||
| 2017 | 2016 | |||||
| (unaudited) | (unaudited) | |||||
| Net sales | $ | 3,168 | $ | 4,947 | ||
| Cost of revenues | 2,439 | 2,759 | ||||
| Gross profit | 729 | 2,188 | ||||
| Operating expenses | ||||||
| Depreciation and amortization expense | 103 | 101 | ||||
| Research and development | 754 | 781 | ||||
| Selling, general and administrative | 2,010 | 1,775 | ||||
| Total operating expenses | 2,867 | 2,657 | ||||
| Operating loss | (2,138) | (469) | ||||
| Other expenses | ||||||
| Interest expense | 260 | 400 | ||||
| Loss on extinguishment of notes due to employees | 158 | - | ||||
| Other (income) expenses, net | 20 | (39) | ||||
| Total other expenses, net | 438 | 361 | ||||
| Loss before income taxes | (2,576) | (830) | ||||
| Income tax provision (benefit) | 4 | (6) | ||||
| Net loss | (2,580) | (824) | ||||
| Preferred dividend | (46) | (46) | ||||
| Net loss to common stockholders | $ | (2,626) | $ | (870) | ||
| Loss per share | ||||||
| Basic and diluted loss per share | $ | (0.11) | $ | (0.04) | ||
| Weighted average basic and diluted shares outstanding | 24,411,435 | 21,058,235 | ||||
| Condensed consolidated statements of comprehensive loss | ||||||
| Net loss | (2,580) | (824) | ||||
| Other comprehensive income (loss) | ||||||
| Foreign currency translation adjustments | 159 | 55 | ||||
| Comprehensive loss | $ | (2,421) | $ | (769) | ||
Investor Contacts:
Steve Silver / Valter Pinto
KCSA Strategic Communications
Phone: 212-896-1220 /
212-896-1254
Email: Email Contact