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Genoptix Reports Strong Financial Results for the Second Quarter and Raises Guidance for Full-Year 2008

CARLSBAD, Calif., July 31 /PRNewswire-FirstCall/ -- Genoptix, Inc. (Nasdaq: GXDX), a specialized laboratory services provider, today reported revenues of $27.8 million for the second quarter of 2008 and $50.1 million for the first half of 2008, as compared to revenues of $13.9 million and $24.6 million for the respective periods in 2007. Stated revenue for the first half of 2008 included a $1.3 million benefit from changes in accounting estimates relating to prior periods.

"Our strong performance in the first half of the year resulted in growth in all segments, as revenues increased by 99% over the second quarter of 2007 and 104% over the first half of last year," said Tina Nova Bennett, Ph.D., President and CEO of Genoptix. "Expanding our sales efforts and improving our ability to provide high quality diagnostic services to a wider audience continues to drive customer growth nationwide. Higher case volumes reflect the success of these initiatives, increasing 77% year-over-year to more than 9,300 cases since the beginning of April, our sixteenth consecutive quarter of solid growth in volumes and in revenues."

The Company also reported GAAP net income of $5.6 million for the second quarter ended June 30, 2008 and $10.6 million for the first half of 2008 compared to GAAP net income of $3.8 million for the second quarter ended June 30, 2007 and $5.1 million for the first half of 2007. Diluted earnings per share, or EPS, for the second quarter of 2008 was $0.32 based on 17.5 million weighted average common shares outstanding, including the $0.14 impact from increased costs associated with non-cash stock-based compensation expense, resulting from the launch of our employee stock purchase program following our initial public offering, or IPO. Diluted EPS was $0.60 for the first half of the year, including $0.19 of non-cash stock-based compensation expense.

The Company completed its IPO on November 2, 2007. On a pro forma basis, assuming conversion of all outstanding preferred stock, diluted EPS for the three and six months ended June 30, 2007 would have been $0.30 and $0.40, respectively (see "Pro Forma Net Income Per Share" table below).

Gross profit for the second quarter of 2008 improved 94% to $16.6 million from $8.6 million for the second quarter of 2007, or 59.7% of revenues as compared to 61.3% of revenues, respectively. Gross margins reflect the impact of additional costs associated with stock-based compensation and the investment in additional personnel to support our growing operations. For the first half of 2008, gross profits totaled $29.7 million, improving 104% as compared to $14.6 million for the same period in 2007, with gross profit at approximately 59.3% of revenues for the first half of 2008 being effectively flat year-over-year.

Operating expenses for the second quarter of 2008 increased to $11.4 million from $4.7 million in the second quarter of 2007 and to $20.4 million in the first half of 2008 from $9.3 million during the same period in 2007. These expenses were higher primarily due to investment in additional personnel to support organizational growth efforts, stock-based compensation expense and the increased costs associated with operating as a public company. Operating income for the second quarter of 2008 was $5.2 million, or 18.6% of revenues, as compared to $3.9 million, or 27.7% of revenues, during the same period in 2007. Operating income was $9.3 million, or 18.6% of revenues for the first half of 2008, up from $5.2 million, or 21.3% of revenues, for the first half of 2007.

As of June 30, 2008, the Company's cash and cash equivalents and investment securities available-for-sale totaled $96.1 million. For the six months ended June 30, 2008, cash generated from operations was $12.9 million, while purchases of capital equipment for the same period totaled $2.6 million. The quarter closed with bad debt expense of 3.0% of total revenues and days sales outstanding of 54 days.

"We closed another quarter of solid execution and superior growth, all while enhancing our capability to reach more customers and the capacity to manage increasing case volumes," said Sam Riccitelli, Genoptix EVP and COO. "Our staff has expanded to include 44 sales representatives and 19 Cartesian hematopathologists on-site to service our more than 850 ordering physicians nationwide, as we continue to effectively pace our expansion relative to our growing customer base."

Performance Outlook

Based on second quarter results and the recent confirmation of Medicare reimbursement rates, Genoptix is adjusting its performance outlook upward for the full-year 2008, and now expects revenues of between $105 and $108 million, up from the most recent guidance of between $90 and $95 million, which was provided following the first quarter of 2008.

Net income expectations for the year are moving up from the previously provided range of between $15 and $17 million to approximately $20 million for the year, assuming an average annual tax rate of 5%. This includes the impact of an estimated $7 million in non-cash stock-based compensation for 2008, an increase resulting primarily from expenses associated with the initiation of the Company's equity incentive programs. Diluted GAAP EPS, which includes non-cash stock-based compensation of approximately $0.40 per share, is now expected to be between $1.11 and $1.16 on an estimated 17.6 million shares for the full year 2008.

Based on continued infrastructure expansion and implementation of its strategic plan, the Company is now projecting capital expenditures of approximately $11.0 million for the full-year 2008, up from prior estimates of approximately $6.0 million due to the accelerated growth experienced during the first half of 2008 and higher than expected capitalized costs associated with related facilities expansion.

Conference Call Information

A conference call will take place on Thursday, July 31, 2008, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time), hosted by President and CEO Tina Nova Bennett, Ph.D., and other members of senior management. To access the live conference call via phone, dial 800-599-9829 in the U.S. or Canada and 617-847-8703 for international callers. Please specify to the operator that you would like to join the "Genoptix Second Quarter 2008 Earnings Conference Call." The participant code for the call is 23465316. If you are unable to listen to the live webcast, a replay of the call will be available through Thursday, August 7, 2008. Interested parties can access the rebroadcast by dialing 1-888-286-8010 or 1-617-801-6888 internationally and entering the reservation number 31909392.

The conference call will also be webcast live under the investor relations section of the Genoptix website at http://www.genoptix.com. Please connect to the Genoptix website several minutes prior to the start of the webcast to ensure adequate time for any software download that may be necessary. If you are unable to listen to the live webcast, a replay will be available through Friday, August 29, 2008, on the Genoptix website at http://www.genoptix.com.

About Genoptix, Inc.

Genoptix is a specialized laboratory service provider focused on delivering personalized and comprehensive diagnostic services to community-based hematologists and oncologists. Genoptix is headquartered in Carlsbad, California.

Non-GAAP Financial Measures

In addition to disclosing financial results calculated in accordance with generally accepted accounting principles (GAAP), this release contains non-GAAP financial measures. The non-GAAP diluted EPS information for the three and six months ended June 30, 2008 assumes the conversion of all outstanding preferred stock at the beginning of the period. The Company believes that the non-GAAP financial measures included in this release provide meaningful supplemental information to both management and investors that is indicative of the Company's core operating results. The Company further believes these non-GAAP financial measures facilitate comparison of operating results across reporting periods, and uses these non-GAAP financial measures when evaluating its financial results, as well as for internal planning and forecasting purposes. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP that are also included in this release.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Any statements in this press release regarding the Company's business that are not historical facts may be considered "forward-looking statements," including statements regarding the value of the Company's services, the success of the Company's business model, improving case volumes, increasing revenues, customer adoption and growth, the Company's ability to continue to invest in future growth and expand its business and consistently provide specialized, personalized and comprehensive diagnostic services, the Company's growth prospects and the Company's financial guidance for 2008. Forward-looking statements are based on management's current preliminary expectations and are subject to risks and uncertainties, which may cause the Company's results to differ materially and adversely from the statements contained herein. Some of the potential risks and uncertainties that could cause actual results to differ from the results predicted include, without limitation, commercial and governmental reimbursement decisions, compliance and regulatory risks, the Company's ability to hire personnel and manage its growth and the competitive landscape within our industry. These and other risks and uncertainties are detailed in the Company's Annual Report on Form 10-K for the full-year period ended December 31, 2007, most recent Quarterly Report on Form 10-Q and subsequent filings with the United States Securities and Exchange Commission. Undue reliance should not be placed on forward-looking statements, which speak only as of the date they are made. The Company undertakes no obligation to update any forward-looking statements to reflect new information, events or circumstances after the date they were made, or to reflect the occurrence of unanticipated events.

                          [Financial tables follow]



                                GENOPTIX, INC.
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (unaudited)
                    (in thousands, except per share data)

                                          Three Months Ended  Six Months Ended
                                               June 30,          June 30,
                                            2008     2007     2008     2007

    Revenues                               $27,825  $13,948  $50,123  $24,599
    Cost of revenues                        11,206    5,393   20,381   10,030
    Gross profit                            16,619    8,555   29,742   14,569
    Operating expenses:
      Sales and marketing                    5,170    2,421    9,431    4,742
      General and administrative             5,918    2,131   10,306    4,265
      Research and development                 354      142      671      320
    Total operating expenses                11,442    4,694   20,408    9,327
    Income from operations                   5,177    3,861    9,334    5,242
    Interest income                            677       79    1,608      127
    Interest expense                           -        (77)     -       (159)
    Other income                                17       13       45       42
    Income before income taxes               5,871    3,876   10,987    5,252
    Provision for income taxes                 300      109      409      160
    Net income                              $5,571   $3,767  $10,578   $5,092

    Net income per share: (1)(2)
      Basic                                  $0.34    $0.31    $0.65    $0.33
      Diluted                                $0.32    $0.03    $0.60    $0.03

    Shares used to compute net income per
     share: (1)(2)
      Basic                                 16,337      178   16,235      166
      Diluted                               17,512    1,663   17,507    1,652

(1) As a result of the conversion of the Company's preferred stock into 11,032 shares of common stock upon completion of the Company's initial public offering in November 2007, there is a lack of comparability in the basic and diluted net income per share amounts for the periods presented above.

(2) For the three and six months ended June 30, 2007, the Company had net income of $3.8 million and $5.1 million, respectively, of which $3.7 million and $5.0 million, respectively, was allocated to preferred stockholders for purposes of calculating net income per share pursuant to the terms of the preferred stock, resulting in $55,000 of net income allocable to common stockholders for both periods.



                                GENOPTIX, INC.
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                                (in thousands)

                                                   June 30,       December 31,
                                                    2008              2007
                                                 (unaudited)
    Assets
    Current assets:
      Cash and cash equivalents                     $51,223           $50,624
      Investment securities available-for-sale       44,907            34,836
      Accounts receivable, net                       13,074             9,013
      Other current assets                            1,782             1,409
    Total current assets                            110,986            95,882
    Property and equipment, net                       4,800             1,950
    Other long-term assets                              161                 -
    Total assets                                   $115,947           $97,832

    Liabilities and Stockholders' Equity
    Current liabilities:
      Accounts payable and accrued expenses          $6,522            $4,312
      Accrued compensation                            4,317             2,496
      Deferred revenues                                  68                95
    Total current liabilities                        10,907             6,903
    Deferred rent, net of current portion               313               324
    Commitments and contingencies
    Stockholders' equity:
      Preferred stock                                     -                 -
      Common stock                                       17                16
    Additional paid-in capital                      136,200           132,532
    Accumulated other comprehensive
     (loss) income                                      (72)               53
    Accumulated deficit                             (31,418)          (41,996)
    Total stockholders' equity                      104,727            90,605
    Total liabilities and stockholders' equity     $115,947           $97,832



                                GENOPTIX, INC.
                      PRO FORMA NET INCOME PER SHARE (1)
                                 (Unaudited)
                    (in thousands, except per share data)

                                         Three Months Ended  Six Months Ended
                                              June 30,          June 30,
                                                   Pro Forma         Pro Forma
                                            2008     2007     2008      2007
                                         (in thousands, except per share data)
    Numerator:
      Pro forma net income allocable to
       common stockholders                 $5,571   $3,767   $10,578   $5,092

    Denominator:
      Weighted average shares of common
       stock outstanding                   16,380      230    16,283      214
      Weighted average unvested shares of
       common stock subject to repurchase     (43)     (52)      (48)     (48)
      Adjustments to reflect the weighted
       average effect of the assumed
       conversion of convertible preferred
       stock                                  -     11,032       -     11,032

      Pro forma weighted average shares of
        common stock outstanding - basic   16,337   11,210    16,235   11,198
      Dilutive effect of common equivalent
       shares                               1,175    1,548     1,272    1,547

      Pro forma weighted average shares of
       common stock outstanding - diluted  17,512   12,758    17,507   12,745

    Pro forma net income per share:
      Basic                                 $0.34    $0.34     $0.65    $0.45
      Diluted                               $0.32    $0.30     $0.60    $0.40

(1) As a result of the conversion of the Company's preferred stock into 11,032 shares of common stock upon completion of the Company's initial public offering in November 2007, there is a lack of comparability in the basic and diluted net income per share amounts for the periods presented above.

SOURCE Genoptix, Inc.

CONTACT: Marcy Graham, Sr. Director, Investor Relations of Genoptix, Inc., +1-760-930-7150, investorrelations@genoptix.com; or Joleen Schultz, Principal, of Mentus, +1-858-455-5500, ext 215, jschultz@mentus.com, for Genoptix, Inc.

Web site: http://www.genoptix.com
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