SOURCE: MEDITE Cancer Diagnostics

MEDITE Cancer Diagnostics

August 14, 2017 17:00 ET

MEDITE Cancer Diagnostics Reports 2017 Second Quarter and First Six Month Financial Results

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)
             

Contact Information

  • Investor Contacts:
    Steve Silver / Valter Pinto
    KCSA Strategic Communications
    Phone: 212-896-1220 /
    212-896-1254
    Email: Email Contact