New Molecular Tests and Increasing Case Volumes Drive 78 Percent
Revenue Growth in the Fourth Quarter of 2008 as Compared to the
Prior Year Period ALISO VIEJO, Calif., March 11
/PRNewswire-FirstCall/ -- Clarient, Inc. (NASDAQ:CLRT), a premier
anatomic pathology and molecular testing services resource for
pathologists, oncologists, and the pharmaceutical industry, today
reported preliminary financial results for its fourth quarter and
year ended December 31, 2008. Financial results included a 78%
increase in revenue for the fourth quarter of 2008 versus the
fourth quarter of 2007, and a 72% increase in revenue for the year
ended December 31, 2008 versus 2007. Fourth quarter 2008 revenue
from continuing operations was $21.9 million, compared to $12.4
million for the same period in 2007, and $19.0 million for the
third quarter 2008. Clarient has posted 18 consecutive quarters of
sequential revenue growth. Revenue in 2008 was $73.7 million versus
$43.0 million in 2007. Case volume in the fourth quarter increased
39% from the same period in 2007 to 29,845 cases. For the year
ended December 31, 2008, testing volume totaled 108,610 cases, up
46% from the same period in 2007, indicating continued success of
the Company's new customer acquisition and depth of menu
strategies. The Company's client base of oncology and pathology
practices in the U.S. increased to approximately 900 active clients
at December 31, 2008 from approximately 675 active clients at
December 31, 2007. "Clarient's top-line growth continues to be
driven by newer, higher value diagnostic services for a broad range
of cancers, coupled with favorable reimbursement rates," said Ron
Andrews, Clarient Vice Chairman and Chief Executive Officer. "We
believe these drivers differentiate Clarient from traditional
diagnostic labs and are propelling us to sustainable, positive
adjusted EBITDA and operating earnings in 2009." The Company also
stated that the expansion of the Clarient sales force,
commercialization of new biomarkers and the introduction of other
new technologies and services will be key milestones in 2009.
Andrews continued, "Our growth strategy continues to focus on three
components: increasing our sales reach into underserved
territories; expanding the depth and breadth of our molecular
pathology service offering; and launching new, proprietary
biomarkers. We expect to complete the full market launch of
Clarient Insight(TM) Dx Breast Cancer Profile, an important
addition to our menu of cancer diagnostic services, by the end of
the first quarter of 2009. In addition, we are currently in the
process of expanding our sales organization to 40 representatives
by mid-year, up from 22 this time last year, and we continue to
look for complementary opportunities to develop an East Coast
presence. We believe this combination of new tests, services and
sales talent should continue the trend of strong revenue growth in
2009. We reiterate our full year 2009 revenue guidance of between
$93 million and $98 million." Operating expenses were $12.9 million
for the fourth quarter of 2008, up 54.6% from $8.3 million in the
same quarter of 2007. For the full year 2008, operating expenses
totaled $42.3 million, versus $28.0 million in 2007. Increased
operating expenses reflect, in part, the Company's additions to
staff to support business growth, higher accounting and legal fees
related to the transition to internally managed in-house billing
and collection operations, and increased bad debt expense related
to aged receivables that were previously administered by the
Company's former external billing agent. The Company's operating
income for the fourth quarter of 2008 was $0.1 million, compared
with an operating loss of $3.2 million for the same period of 2007.
For the year ended December 31, 2008, operating loss was $1.5
million versus $11.8 million in 2007. Adjusted EBITDA (defined
below) for the fourth quarter of 2008 was $0.9 million, compared to
an adjusted EBITDA loss of $1.8 million for the same quarter of
2007. For the year ended December 31, 2008, adjusted EBITDA was
$3.5 million, versus adjusted EBITDA loss of $6.6 million in 2007.
The Company reported net losses of $2.3 million and $9.6 million
for the fourth quarter and year ended December 31, 2008,
respectively, compared to net losses of $3.9 million and $8.8
million in the respective periods of 2007. Net losses per share
were $0.03 and $0.13 for the fourth quarter of 2008 and year ended
December 31, 2008, respectively. Clarient's net losses per share
were $0.05 and $0.12 for the fourth quarter of 2007 and year ended
December 31, 2007, respectively. The full year 2007 loss from
continuing operations was $0.20 per share. At December 31, 2008,
the Company's cash and cash equivalents totaled $1.8 million
compared to $1.5 million at December 31, 2007. At December 31,
2008, the Company had $7.6 million available under existing lines
of credit, versus $4.0 million available at December 31, 2007. As
previously reported, the Company recently amended its credit
facility with an affiliate of Safeguard Scientifics, Inc.,
providing the Company with a total of $30 million in debt financing
via a revolving credit facility expiring April 2010, an increase of
$9.0 million from its previous facility. In addition, the existing
$12.0 million Comerica facility and $8.0 million Gemino facility
were extended to March 2010 and January 2010, respectively. The
Company has been advised by its independent registered public
accounting firm that, with respect to its audit of the Company's
consolidated financial statements for the year ended December 31,
2008, its audit opinion will contain an explanatory paragraph
stating that substantial doubt exists with respect to the Company's
ability to continue as a "going concern". Clarient completed an
initiative in the fourth quarter of 2008 to enhance the
transparency of its financial statements, according to Raymond J.
Land, Senior Vice President and Chief Financial Officer. "We will
now report more line items within the Operating Expenses section of
our Income Statement," Mr. Land said. "We believe this expanded
presentation will improve the understanding and comparability of
our performance in an increasingly competitive market. We also will
be adjusting certain expenses between cost of services and
operating expenses for all periods presented within our December
31, 2008 Form 10-K to correct an income statement classification
error discovered during the fourth quarter of 2008. Our investors
will now have an improved view of our total cost mix." Commenting
further, Mr. Land stated, "The recent extension of our financing
facilities through fiscal year 2009 gives us access to liquidity
sources which should enable us to achieve our 2009 goals. We
believe our ability to extend our credit facilities in these
turbulent financial markets is a validation by our lenders of the
growing financial strength of Clarient." Conference Call Clarient
will hold a conference call to discuss fourth-quarter and 2008
results and the Company's outlook for 2009. The call will include a
period for questions and answers. Date: Wednesday, March 11, 2009
Time: 5:00 p.m. Eastern Call-in Number: 1-800-762-8779 (domestic)
+480-248-5081 (international) Conference ID Number: 3992520
Webcast: http://www.clarientinc.com/investor Web Replay: For those
unable to participate during the live broadcast, the webcast replay
will be archived at http://www.clarientinc.com/investor shortly
after the call and will be available for one year. About Clarient
Clarient combines innovative diagnostic technologies with world
class pathology expertise to assess and characterize cancer.
Clarient's mission is to become the leader in cancer diagnostics by
dedicating itself to collaborative relationships with the
healthcare community to translate cancer discovery and research
into better patient care. The Company's principal customers include
pathologists, oncologists, hospitals and biopharmaceutical
companies. The rise of individualized medicine as the new direction
in oncology has created the need for a centralized resource
providing leading diagnostic technologies, such as flow cytometry
and molecular testing. Clarient is that resource, having created a
state-of-the-art commercial cancer laboratory providing the most
advanced oncology testing and diagnostic services available both
onsite and over the web. The Company is also developing new,
proprietary "companion" diagnostic markers for therapeutics in
breast, prostate, lung and colon cancers, and leukemia/lymphoma.
Clarient is a Safeguard Scientifics, Inc. partner company.
http://www.clarientinc.com/ About Safeguard Scientifics Founded in
1953 and based in Wayne, PA, Safeguard Scientifics, Inc. (NYSE:
SFE) provides growth capital for entrepreneurial and innovative
technology and life sciences companies. Safeguard targets
technology companies in Software as a Service (SaaS) /
Internet-based Businesses, Technology-Enabled Services and Vertical
Software Solutions, and life sciences companies in Molecular and
Point-of-Care Diagnostics, Medical Devices and Specialty
Pharmaceuticals with capital requirements between $5 million and
$50 million. Safeguard participates in expansion financings,
corporate spin-outs, management buyouts, recapitalizations,
industry consolidations and early-stage financings.
http://www.safeguard.com/ Forward Looking Statements Certain
statements herein regarding Clarient, Inc. contain forward-looking
statements that involve risks and uncertainty. Future events and
the Company's actual results could differ materially from the
results reflected in these forward-looking statements. Factors that
might cause such a difference include, but are not limited to: the
Company's ability to continue to develop and expand its diagnostic
services business, the Company's ability to expand and maintain a
successful sales and marketing organization, the Company's ability
to maintain compliance with financial and other covenants under the
Company's credit facilities, limitations on the Company's ability
to borrow funds under its credit facilities based on the Company's
qualified accounts receivable and other liquidity factors, the
Company's ability to obtain annual renewals of or replacements for
its credit facilities, the effects of a going concern audit opinion
on the Company's operations, the Company's ability to successfully
transition its billing function in-house from a third party vendor,
whether the conditions to payment of all or any portion of the
contingent consideration from the Company's prior sale of its
instrument systems business to Zeiss are satisfied, the Company's
ability to remediate the material weaknesses in the Company's
internal control over financial reporting, the continuation of
favorable third party payer reimbursement for laboratory tests, the
Company's ability to obtain additional financing on acceptable
terms or at all, unanticipated expenses or liabilities or other
adverse events affecting cash flow, uncertainty of success in
identifying and developing new diagnostic tests or novel markers,
the Company's ability to fund development of new diagnostic tests
and novel markers and the amount of resources the Company
determines to apply to novel marker development and
commercialization, failure to obtain FDA clearance or approval for
particular applications, the Company's ability to compete with
other technologies and with emerging competitors in novel cancer
diagnostics and dependence on third parties for collaboration in
developing new tests, and risks detailed from time to time in the
Company's SEC reports, including quarterly reports on Form 10-Q,
reports on Form 8-K and annual reports on Form 10-K. Recent
experience with respect to laboratory services, revenues and
results of operations may not be indicative of future results for
the reasons set forth above. The 2008 financial results described
above are preliminary. Final financial results will be reported in
the financial statements to be included within the Company's
December 31, 2008 Form 10-K. The Company does not assume any
obligation to update any forward-looking statements or other
information contained in this document. Adjusted EBITDA Definition
"Adjusted EBITDA" is defined by the Company as income or loss from
continuing operations before (i) interest expense, (ii) tax
expense, (iii) depreciation and amortization expense and (iv)
stock-based compensation expense. Adjusted EBITDA as defined by the
Company may differ from non-GAAP measures used by other companies
and is not a measurement under GAAP. Management believes that using
Adjusted EBITDA as a metric can enhance an overall understanding of
the Company's expected financial performance from ongoing
operations, and Adjusted EBITDA is used by management for that
purpose. We believe that Adjusted EBITDA is frequently used by
analysts, investors and other interested parties in evaluating
companies such as ours and that it provides a useful measure of our
financial performance since its use eliminates the effects of
period to period changes in costs associated with impairment of
assets related to capital investments, interest on our debt,
capital lease obligations and non-cash stock based compensation
charges. In addition, under our credit facilities with Gemino
Healthcare Finance LLC and Comerica Bank we are required to
maintain minimum levels of Adjusted EBITDA. There are limitations
inherent in non-GAAP financial measures such as Adjusted EBITDA in
that they exclude a variety of charges and credits that are
required to be included in a GAAP presentation, and do not
therefore present the full measure of the Company's recorded costs
against its revenue. Management compensates for these limitations
in non-GAAP measures by also evaluating our performance based on
traditional GAAP financial measures. Accordingly, in analyzing our
future financial performance, investors should consider these
non-GAAP results together with GAAP results, rather than as an
alternative to GAAP basis financial measures. Contact: Matt Clawson
949.474.4300 TABLES FOLLOW Clarient, Inc. Condensed Consolidated
Statements of Operations (in thousands, except share and per share
amounts) (unaudited) Three Months Ended Twelve Months Ended
December 31, December 31, 2008 2007* 2008 2007* ---- ----- ----
----- Revenue $21,937 $12,357 $73,735 $42,995 Cost of services
8,885 7,257 32,941 26,807 ----- ----- ------ ------ Gross profit
13,052 5,100 40,794 16,188 Operating expenses: Sales and marketing
3,292 2,306 10,957 8,630 General and administrative 5,093 4,121
18,722 15,278 Bad debt 4,432 1,793 12,199 3,558 Research and
Development 88 128 407 519 -- --- --- --- Total operating Expenses
12,905 8,348 42,285 27,985 ------ ----- ------ ------ Operating
income (loss) 146 (3,248) (1,491) (11,797) Other expense and taxes,
net 2,401 549 8,154 2,372 ----- --- ----- ----- Loss from
continuing operations (2,255) (3,797) (9,645) (14,169) Income
(loss) from discontinued operations, net of tax - (102) - 5,412
---- ----- ---- ----- Net loss $(2,255) $(3,899) $(9,645) $(8,757)
======== ======== ======== ======== Basic and diluted income (loss)
per common share: Continuing operations $(0.03) $(0.05) $(0.13)
$(0.20) Discontinued operations - - - $ 0.08 Net Income (loss)
$(0.03) $(0.05) $(0.13) $(0.12) Weighted average number of common
shares outstanding 74,659,240 71,842,274 72,917,817 71,573,121 *
Adjusted for certain reclassifications between cost of services and
operating expenses as a result of an income statement
classification error discovered during the fourth quarter of 2008.
Reconciliation of "Loss from Continuing Operations to Adjusted
EBITDA" Three Months Ended Twelve Months Ended December 31,
December 31, 2008 2007 2008 2007 ---- ---- ---- ---- Loss from
Continuing Operations $(2,255) $(3,797) $(9,645) $(14,169) Interest
Expense, Net 2,401 549 8,148 2,349 Depreciation 459 842 3,275 3,342
Stock Compensation Expense 287 625 1,711 1,820 Taxes - - 6 23 ----
---- ---- ---- Adjusted EBITDA $892 $(1,781) $3,495 $(6,635) ====
======== ====== ======== Clarient, Inc. Condensed Consolidated
Balance Sheets (in thousands) December 31, December 31, 2008 2007
------------- ------------ Cash and cash equivalents $1,838 $ 1,516
Accounts receivable, net 20,314 12,020 Property and equipment, net
11,911 10,997 Other assets 1,445 2,348 ------------- ------------
Total assets $35,508 $26,881 ============= ============ Total
liabilities $40,248 $31,670 Stockholders' deficit (4,677) (4,789)
------------- ------------ Total liabilities and stockholders'
deficit $35,508 $26,881 ============= ============ DATASOURCE:
Clarient, Inc. CONTACT: Matt Clawson, +1-949-474-4300, , for
Clarient, Inc. Web Site: http://www.clarientinc.com/
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