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Oxford Immunotec

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Oxford Immunotec Reports Fourth Quarter and Full Year 2016 Financial Results

  • Fourth quarter revenue of $23.7 million, an increase of 41% compared to prior year period
  • Fourth quarter Tuberculosis revenue of $20.4 million, an increase of 22% compared to prior year period
  • Fourth quarter Tick-borne disease and other revenue of $3.3 million
  • Full year 2016 revenue of $86.1 million increased 37% compared to prior year
  • Completed $40 million debt financing made up of term loan and revolving line of credit
  • Announces guidance for full year 2017 revenue of between $102 and $105 million

OXFORD, United Kingdom and MARLBOROUGH, Mass., Feb. 28, 2017 (GLOBE NEWSWIRE) -- Oxford Immunotec Global PLC (Nasdaq:OXFD), a global, high-growth diagnostics company focused on developing and commercializing proprietary tests for the management of underserved immune-regulated conditions, today announced fourth quarter and full year 2016 financial results.

“We are very pleased with our performance during the fourth quarter and throughout 2016, as we evolved from a single-product company to a multi-product company” said Dr.Peter Wrighton-Smith, Chief Executive Officer ofOxford Immunotec. "Our core tuberculosis (TB) business grew ahead of our expectations, with strong growth in the U.S. market during the fourth quarter. As we look to 2017 and beyond, we expect to continue to drive top line growth through the continued strong performance of our core TB business, growth in our recently acquired tick-borne disease franchise and the introduction of products currently in development. Additionally, we are focused on progressing towards profitability through expanding margins and driving operating leverage.”

By revenue type, total revenues were, in millions:

Three Months Ended December 31, Full Year Ended December 31,
2016 2015 Percent
Change
2016 2015 Percent
Change
Product $ 9.3 $ 8.2 14 % $ 36.4 $ 30.2 21 %
Service 14.4 8.6 67 % 49.7 32.6 52 %
Total Revenue $ 23.7 $ 16.8 41 % $ 86.1 $ 62.8 37 %

By indication, total revenues were, in millions:

Three Months Ended December 31, Full Year Ended December 31,
2016 2015 Percent
Change
2016 2015 Percent
Change
Tuberculosis $ 20.4 $ 16.8 22 % $ 78.7 $ 62.8 25 %
Tick-Borne Disease and Other 3.3 - N/M 7.4 - N/M
Total Revenue $ 23.7 $ 16.8 41 % $ 86.1 $ 62.8 37 %

By geography, total revenues were, in millions:

Three Months Ended December 31, Full Year Ended December 31,
Percent Change Percent Change
2016 2015 As
Reported
Constant
Currency
(1)
2016 2015 As
Reported
Constant
Currency
(1)
United States $ 14.7 $ 8.4 76 % 76 % $ 49.5 $ 31.4 58 % 58 %
Europe & ROW 1.7 1.8 -5 % 4 % 7.0 7.1 -1 % 5 %
Asia 7.3 6.6 9 % 3 % 29.6 24.3 22 % 15 %
Total revenue $ 23.7 $ 16.8 41 % 39 % $ 86.1 $ 62.8 37 % 35 %

(1)Changes in revenue include the impact of changes in foreign currency exchange rates. We use the non-GAAP financial measure "constant currency basis" in our filings to show changes in our revenue without giving effect to period-to-period currency fluctuations. We consider the use of a period over period revenue comparison on a constant currency basis to be helpful to investors, as it provides a revenue growth measure free of positive or negative volatility due to currency fluctuations.

Fourth Quarter 2016 Financial Results

Revenue for the fourth quarter of 2016 was$23.7 million, representing 41% growth over the fourth quarter 2015 revenue of$16.8 million. On a constant currency basis, revenue growth was 39% versus the prior year period. Tuberculosis revenue for the fourth quarter of $20.4 million increased 22% over the prior year period.

2016 fourth quarter product revenue was$9.3 million,representing a 14% increase from product revenue of$8.2 millionin the fourth quarter of 2015. The increase in product revenue was primarily attributable to growth in China as well as revenue from Immunetics. Service revenue for the fourth quarter of 2016 was $14.4 million, up 67% from 2016 fourth quarter revenue of$8.6 million. The increase in service revenue was primarily driven by tuberculosis volume increases in the United States as well as revenues from Imugen.

United Statesrevenue was$14.7 millionin the fourth quarter of 2016, representing 76% growth over revenue of$8.4 millionin the prior year period. The increase was primarily due to revenue related to the Imugen and Immunetics acquisitions, as well as strong organic growth in our core tuberculosis business. United States tuberculosis revenue grew 37% over the prior year period, driven primarily by increased volume in the institutional and physician office segment.

Europe& ROW revenue was$1.7 millionin the fourth quarter of 2016, representing a 5% decrease compared to the fourth quarter of 2015. On a constant currency basis, Europe & ROW increased 4% versus the fourth quarter of 2015.

Asiarevenue was$7.3 millionin the fourth quarter of 2016, representing 9% growth over 2015 fourth quarter revenue of$6.6 million. On a constant currency basis,Asiagrew 3% versus the fourth quarter of 2015.

Gross profit for the fourth quarter of 2016 was$12.5 million, an increase of$4.0 millionover gross profit of$8.5 millionin the same period of 2015. Gross margin was 52.8%, an increase of 240 basis points from the gross margin of 50.4% in the fourth quarter of 2015. The increase in gross margin was driven by favorable product mix, operational efficiency and the favorable impact of currency movements.

Operating expenses were$19.7 millionin the fourth quarter of 2016, an increase of$5.0 million compared to$14.7 millionin the same period last year. The increase in operating expenses was largely due to the inclusion of operating expenses and deal costs related to the Imugen and Immunetics acquisitions, as well as increased clinical expenses. In addition, during the fourth quarter we recorded impairment charges related to acquired IPR&D substantially offset by a credit related to the change in fair value of the related contingent consideration.

Net loss for the fourth quarter of 2016 was$4.9 million, or$0.22per share, compared to$6.4 million, or$0.29per share, in the fourth quarter of 2015. Net loss per share was based on 22,412,691 and 22,264,307 weighted average ordinary shares outstanding for the fourth quarters of 2016 and 2015, respectively.

EBITDA for the fourth quarter was$(6.9) millioncompared to$(5.7) millionin the fourth quarter of 2015.Adjusted EBITDA was$(5.2) millionfor the fourth quarter compared to$(4.7) millionin the same period in 2015. Both EBITDA and Adjusted EBITDA are non-GAAP measures.

Full Year 2016 Financial Results

Revenue for the full year 2016 was$86.1 million, representing 37% growth over the full year 2015 revenue of$62.8 million. On a constant currency basis, revenue growth was 35% versus the prior year. Tuberculosis revenue for the full year of $78.6 million increased 25% over the prior year period.

2016 full year product revenue was$36.4 millionrepresenting a 21% increase from product revenue of$30.2 millionin the full year 2015. The increase in product revenue was primarily attributable to volume growth in Asia. Service revenue for the full year 2016 was $49.6 million, up 52% from $32.6 million in the full year 2015. The increase in service revenue was primarily driven by increased volume in the United States, specifically in the institutional and patient testing segments, as well as revenue from Imugen.

United Statesrevenue was$49.5 millionin the full year 2016 representing 58% growth compared to full year 2015 revenue of$31.4 million. Growth was driven primarily by significant volume increases in the institutional and patient testing segments as well as the contribution from Imugen and Immunetics.

Europe& ROW revenue was$7.0 millionin the full year 2016 representing a 1% decrease compared to full year 2015 revenue of$7.1 million. On a constant currency basis, Europe & ROW grew 5% versus the full year 2015. Asiarevenue was$29.6 millionin the full year 2016 representing 22% growth over full year 2015 revenue of$24.3 million. On a constant currency basis,Asiagrew 15% versus the full year 2015. The increase was driven by continued growth in both China and Japan.

Gross profit for the full year 2016 was$46.6 million, an increase of$13.4 millionover gross profit of$33.2 millionin the full year 2015. Gross margin was 54.1%, an increase of 120 basis points from a gross margin of 52.9% in the full year 2015. The increase in gross margin was primarily due to product mix, cost efficiency gains and the favorable impact of currency movements, partially offset by the negative impact of lower margin revenue from Imugen and Immunetics.

Operating expenses were$72.6 millionin the full year 2016, an increase of$15.2 millioncompared to$57.4 millionin the full year 2015. The increase in operating expenses was primarily due to the inclusion of operating costs from both Imugen and Immunetics as well as increased headcount, acquisition related expenses and clinical expenses. In addition, we recorded impairment charges related to acquired IPR&D and a substantially offsetting credit related to the change in fair value of the related contingent consideration.

Net loss for the full year 2016 was$22.3 million, or$1.00 per share, compared toa loss of $24.5 million, or$1.12per share, for the full year 2015. Net loss per share was based on 22,353,713 and 21,781,933 weighted average ordinary shares outstanding for the full years 2016 and 2015, respectively.

EBITDA for the full year 2016 was $(22.2) millioncompared to$(22.1) millionfor the full year 2015.Adjusted EBITDA was$(18.5) millionfor the full year 2016 compared to$(18.2) millionfor the full year 2015. Both EBITDA and Adjusted EBITDA are non-GAAP measures.

Cash and cash equivalents were$59.1 millionas ofDecember 31, 2016compared to$37.3 millionas ofSeptember 30, 2016.

Immunetics Acquisition

On October 12, 2016, the Company completed the acquisition of Immunetics, Inc., a Massachusetts-based diagnostics company focused on developing specialized tests for infectious diseases, such as Lyme disease, for $6 million in cash and up to an additional $6 million in cash payable on the achievement of certain revenue thresholds and pipeline related milestones over the next three years.

Debt Financing

On October 4, 2016, the Company entered into an agreement with MidCap Financial that provided the Company with $40 million in debt financing, comprised of both a term loan and a revolving line of credit.

The agreement provides the Company with a term loan of $30 million which matures five years from closing. The term loan accrues interest at a rate of LIBOR plus 7.60% with interest-only payments for the first 24 months, with the ability to extend to 48 months subject to certain conditions, before the loan begins to amortize. The agreement also provides the Company with a revolving line of credit of up to $10 million upon closing. The revolving line of credit matures five years from closing and accrues interest at LIBOR plus 4.45%. Based on certain conditions, both the term loan and the revolving line of credit may be increased by an additional $10 million to support the Company's future growth.

Business Outlook

We expect to report revenue of between$20.8and$21.3 million for the first quarter of 2017.

We expect to report full year 2017 revenue of between$102and$105 million, representing 19% - 22% year-over-year growth. We expect revenue to increase 21% to 24% for the year using constant exchange rates.

Conference Call

Oxford Immunotecwill host a conference call onTuesday, February 28, 2016at5:00 p.m. Eastern Timeto discuss its fourth quarter and full year 2016 financial results. The call will be concurrently webcast. To listen to the conference call on your telephone, please dial (855) 363-5047 for United Statescallers and +1 (484) 365-2897 for international callers and reference confirmation code 59419141 approximately ten minutes prior to start time. To access the live audio webcast or subsequent archived recording, visit the Investor Relations section ofOxford Immunotec'swebsite atwww.oxfordimmunotec.com. The replay will be available on the Company's website for approximately 60 days.

AboutOxford Immunotec

Oxford Immunotec Global PLC is a global, high-growth diagnostics company focused on developing and commercializing proprietary tests for the management of underserved immune-regulated conditions. The Company’s first product is the TSPOT®.TBtest, which is used to test for tuberculosis infection. The T-SPOT.TBtest has been approved for sale in over 50 countries, including the United States, where it has received pre-market approval from the Food and Drug Administration, Europe, where it has obtained a CE mark, as well as Japan and China. The Company’s second product line is a range of assays for tick-borne diseases, such as Lyme disease, obtained through the acquisitions of Imugen and Immunetics. Also obtained through the acquisitions is the Company’s third product line focused on screening for Babesia in donated blood, for which the Company is currently seeking FDA clearance. The T-SPOT.CMVtest and the T-SPOT.PRTtest are pipeline products as part of the Company’s fourth intended product line focused on the transplantation market. In addition to these four product lines, the Company has additional active development programs in other immune-regulated conditions. The Company is headquartered near Oxford, U.K. and in Marlborough, Mass. Additional information can be found atwww.oxfordimmunotec.com.

T-SPOT and the Oxford Immunotec logo are trademarks of Oxford Immunotec Ltd. Immunetics is a trademark of Immunetics, Inc.

Forward-Looking Statements

This release contains forward-looking statements that involve risks and uncertainties, including statements about our anticipated plans, objectives, intentions, the anticipated benefits of the transaction, the effects of the transaction, including effects on future financial and operating results, prospects for sales of our products and other statements that are not historical facts. The forward-looking statements in this release are based on current expectations, assumptions and data available as of the date of this release and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements, including but not limited to: risks related to disruption of management time from ongoing business operations due to the integration of Imugen and Immunetics into the Company; the risk that the Company may fail to realize the benefits expected from the acquisitions; the risk that the integration of Imugen and Immunetics into the Company may not progress as anticipated; decisions by regulatory authorities, hospitals and other health care institutions, laboratories, physicians, patients and third party payers that could affect the Company's business and prospects; as well as our ability to expeditiously and successfully expand our sales and distribution networks. The risks included above are not exhaustive. Other factors that could adversely affect our business and prospects are described under the "Risk Factors" section in our filings with the Securities and Exchange Commission ("SEC"). Our filings are available for free by visiting the investor section of our website,www.oxfordimmunotec.com, or the SEC's website,www.sec.gov.

Investors should give careful consideration to these risks and uncertainties. Forward-looking statements contained herein are based on current expectations and assumptions and currently available data and are neither predictions nor guarantees of future events or performance. You should not place undue reliance on forward-looking statements contained herein, which speak only as of the date of this release. We do not undertake to update or revise any forward-looking statements after they are made, whether as a result of new information, future events, or otherwise, except as required by applicable law.

CONTACTS:

For Media Inquiries:
Caroline Crawley
Oxford Immunotec
Tel: +44 1235 442796
ccrawley@oxfordimmunotec.com

For Investor Inquiries:
Rick Altieri
Chief Financial Officer
Oxford Immunotec
Tel: +1 (508) 573-9953
raltieri@oxfordimmunotec.com

Mark Klausner
Westwicke Partners
Tel: +1 (443) 213-0501
oxfordimmunotec@westwicke.com

Oxford Immunotec Global PLC
Condensed consolidated statements of operations
(unaudited)
Three months endedDecember 31, Year endedDecember 31,
(in thousands, except share and per share data) 2016 2015 2016 2015
Revenue
Product $ 9,286 $ 8,162 $ 36,430 $ 30,207
Service 14,419 8,623 49,648 32,575
Total revenue 23,705 16,785 86,078 62,782
Cost of revenue
Product 3,535 3,585 13,956 13,297
Service 7,663 4,733 25,516 16,247
Total cost of revenue 11,198 8,318 39,472 29,544
Gross profit 12,507 8,467 46,606 33,238
Operating expenses:
Research and development 4,044 2,522 13,881 10,381
Sales and marketing 8,299 7,853 34,964 30,402
General and administrative 6,981 4,222 23,181 16,010
Change in fair value of contingent purchase price consideration (1,380 ) 54 (1,208 ) 202
Intangible assets impairment charges 1,765 34 1,765 419
Total operating expenses 19,709 14,685 72,583 57,414
Loss from operations (7,202 ) (6,218 ) (25,977 ) (24,176 )
Other (expense) income:
Interest expense, net (776 ) (14 ) (864 ) (67 )
Foreign exchange gains (losses) (343 ) (110 ) 1,364 (143 )
Other (expense) income (403 ) 4 (646 ) 54
Loss before income taxes (8,724 ) (6,338 ) (26,123 ) (24,332 )
Income tax benefit (expense) 3,866 (52 ) 3,774 (146 )
Net loss $ (4,858 ) $ (6,390 ) $ (22,349 ) $ (24,478 )
Net loss per share attributable to ordinary shareholders—basic and diluted $ (0.22 ) $ (0.29 ) $ (1.00 ) $ (1.12 )
Weighted-average shares used to compute net loss attributable to ordinary shareholders—basic and diluted 22,412,691 22,264,307 22,353,713 21,781,933

Reconciliation of net loss to Adjusted EBITDA(1)
(unaudited)
Three months endedDecember 31, Year endedDecember 31,
(in thousands) 2016 2015 2016 2015
Net loss $ (4,858 ) $ (6,390 ) $ (22,349 ) $ (24,478 )
Income tax (benefit) expense (3,866 ) 52 (3,774 ) 146
Interest expense, net 776 14 864 67
Depreciation and amortization 1,027 609 3,094 2,142
EBITDA (6,921 ) (5,715 ) (22,165 ) (22,123 )
Reconciling items:
Share-based compensation expense 1,192 903 5,019 3,485
Unrealized exchange (gains) losses 110 43 (1,880 ) (150 )
Change in fair value of contingent purchase price consideration (1,380 ) 54 (1,208 ) 202
Intangible asset impairment charge 1,765 34 1,765 419
Adjusted EBITDA $ (5,234 ) $ (4,681 ) $ (18,469 ) $ (18,167 )

(1)EBITDA and Adjusted EBITDA are non-GAAP measures that we calculate as net loss, adjusted for the impact of earnings or charges resulting from matters that we consider not to be indicative of our ongoing operations. We believe that these measures provide useful information to investors in understanding and evaluating our operating results in the same manner as our management and Board of Directors. Our presentation of these measures is not made in accordance with U.S. GAAP, and our computation of these measures may vary from others in the industry. Our use of these measures has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under U.S. GAAP.

The above table presents a reconciliation of net loss, the most comparable U.S. GAAP measure, to EBITDA and Adjusted EBITDA for each of the periods indicated.

Oxford Immunotec Global PLC
Condensed consolidated balance sheets
(unaudited)
December31, December31,
(in thousands, except share and per share data) 2016 2015
Assets
Current assets:
Cash and cash equivalents $ 59,110 $ 83,715
Accounts receivable, net 13,265 7,058
Inventory, net 7,437 7,099
Prepaid expenses and other assets 2,390 3,592
Total current assets 82,202 101,464
Restricted cash, non-current 200 80
Property and equipment, net 7,793 6,284
In-process research and development 16,170 1,782
Goodwill 3,822 45
Other intangible assets, net 11,017 179
Other assets 2,808 18
Total assets $ 124,012 $ 109,852
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable $ 3,201 $ 3,799
Accrued liabilities 14,282 9,949
Contingent purchase price consideration 882
Deferred income 41 1,654
Current portion of loans payable 84 79
Total current liabilities 18,490 15,481
Long-term portion of loans payable 29,601 386
Contingent purchase price consideration 2,593 1,293
Other liabilities 364
Total liabilities 51,048 17,160
Shareholders’ equity:
Ordinary shares, £0.006705 nominal value; 36,183,293 shares authorized at December 31, 2016 and 2015, 22,635,431 and 22,549,488 shares issued and outstanding at December 31, 2016 and 2015, respectively 243 243
Additional paid-in capital 249,128 244,033
Accumulated deficit (168,656 ) (146,307 )
Accumulated other comprehensive loss (7,751 ) (5,277 )
Total shareholders’ equity 72,964 92,692
Total liabilities and shareholders’ equity $ 124,012 $ 109,852

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