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28-02-2003, Fri 10:38 PM
Orchid BioSciences, Inc. Reports Fourth Quarter And Year-End 2002 Financial Results
Thursday February 27, 7:01 AM EST
PRINCETON, N.J., Feb 27, 2003 /PRNewswire-FirstCall via COMTEX/ -- Orchid BioSciences, Inc. (ORCH), the leader in profiling genetic uniqueness, today reported financial results for the three months and year ended December 31, 2002.
During the fourth quarter, Orchid sharpened its strategic focus and, as a result, sold its Orchid Life Sciences SNP genotyping instrumentation business in December of 2002. In addition, the company committed to divest its Orchid Diagnostics strategic business unit, for which the results of operations have been reflected as discontinued operations for all periods presented in this announcement.
For the fourth quarter of 2002, revenues were $13.0 million, up from $10.9 million for the same period in 2001, an increase of 19%. For the year ended December 31, 2002, revenues were $50.4 million, up 65% from revenues of $30.6 million for the corresponding period in 2001. The increase in revenues in the fourth quarter and year ended December 31, 2002 resulted primarily from growth in Orchid's forensics, paternity and public health genoprofiling service businesses and from the addition of the Lifecodes business in December, 2001. Fourth quarter and full-year 2002 revenues exclude revenues from the company's discontinued Orchid Diagnostics operations, which were $2.1 million and $14.0 million, respectively. With the exclusion of Orchid Diagnostics, the company's reported fourth quarter and full-year 2002 revenues are in line with prior guidance for its continuing operations. Revenues from forensics, paternity, public health and pharmacogenetic genotyping services were $10.9 million and $44.6 million for the quarter and year ended December 31, 2002, respectively, up from $7.6 million, or 43%, and $20.9 million, or 113%, for the comparable periods in 2001. Product and other revenues were $2.1 million and $5.8 million for the quarter and year ended December 31, 2002, respectively, down from $3.3 million, or 36%, and $9.7 million, or 40%, for the comparable periods in 2001. The decline in product and other revenues was due to the sale of the Orchid Life Sciences product business during the fourth quarter of 2002 and a decline in licensing revenue compared to 2001.
For the quarter and year ended December 31, 2002, Orchid reported a loss from continuing operations of $27.8 million, or $0.50 per share (GAAP basis), and $71.1 million, or $1.32 per share (GAAP basis), respectively. Orchid reported a loss from discontinued operations, which includes the results of operations for Orchid Diagnostics of $7.3 million, or $0.13 per share, for the quarter ended December 31, 2002, and $9.0 million, or $0.17 per share, for the year ended December 31, 2002. The Company reported a net loss of $35.1 million, or $0.63 per share (GAAP basis), for the fourth quarter of 2002, and $80.1 million, or $1.48 per share (GAAP basis) for the year ended December 31, 2002, compared to $17.0 million, or $0.41 per share (GAAP basis), and $84.7 million, or $2.27 per share (GAAP basis), for the comparable periods in 2001, respectively. On an as adjusted basis, which excludes certain non-cash and non-recurring charges such as certain impairments, restructuring costs, amortization of intangibles and non-cash compensation charges and discontinued operations, Orchid reported a loss from continuing operations and a net loss of approximately $8.0 million, or $0.14 per share, for the quarter ended December 31, 2002, and $33.1 million, or $0.61 per share, for the year ended December 31, 2002, as compared to $11.4 million, or $0.27 per share, and $46.5 million, or $1.25 per share for the quarter and year ended December 2001, respectively. For further discussion of the non-cash and non-recurring charges excluded from the as adjusted results of operations for the three months and year ended December 31, 2002, refer to footnote 2 of the as adjusted condensed consolidated statement of operations financial tables for each period.
At December 31, 2002, cash, cash equivalents and short-term investments including the short and long-term portion of restricted cash totaled $13.4 million.
Business Progress
Over the past several months, Orchid has implemented a number of actions designed to enhance its strategic focus, increase its efficiencies, reduce its operating costs and improve its financial position. Orchid has made significant progress in focusing on higher growth, higher margin businesses with stable, recurring revenues and higher barriers to entry. As part of this focused strategy, the company sold its Orchid Life Sciences product business to Beckman Coulter in December. Additionally, Orchid is currently pursuing the disposition of its Orchid Diagnostics business.
The company has continued to make substantial progress in its ongoing efforts to reduce its operating expenses and strengthen its balance sheet, as evidenced in the reduction in the net loss on an as adjusted basis. During 2002, Orchid eliminated numerous staff positions, consolidated facilities and significantly reduced its quarterly net cash burn. Orchid secured a $10 million working capital credit facility with Comerica Bank in the fourth quarter and the company is taking further actions to strengthen its balance sheet. With the accomplishment of the actions in the fourth quarter and the additional activities it seeks to complete during 2003, Orchid believes it will have the resources to achieve profitability in the fourth quarter of 2003. During the fourth quarter, the company also fortified its senior management team with the appointments of George Poste, DVM, Ph.D., as chairman and Andrew P. Savadelis as senior vice president of finance and chief financial officer. Additionally, Dale Pfost, Ph.D. resigned his position as president and chief executive officer and Donald Marvin resigned his position as senior vice president and general manager of Orchid Diagnostics. The company is currently seeking a permanent chief executive officer.
"During 2002, Orchid achieved strong revenue growth in its core strategic businesses in forensics, paternity and public health while implementing a comprehensive series of forceful measures to focus our businesses, improve our financial position and fortify our management team," said Dr. George Poste. "Orchid achieved significant revenue growth in our identity genomics testing services in the forensics, paternity, and public health segments where we have a leading competitive position. With continued strong growth expected in these core areas of our business, we believe that we are well positioned to achieve substantial revenue growth in 2003 and beyond, and to achieve our goal of profitability before the end of the year. In the coming months, we look forward to reporting our progress on augmenting our senior management team with a chief executive officer."
"With the successful implementation of the strategic and financial actions of the past several months, we believe we are on track to 'turn the corner' to cash self-sufficiency and achieve profitability in the fourth quarter of this year," said Mr. Andrew Savadelis. "In 2003, we expect continued robust growth in our genoprofiling service businesses, with $50 million to $55 million projected in top-line revenues, a 20 to 30 percent increase from the $42.9 million revenue base generated by these core businesses in 2002."
Orchid has completed an appeal of its Nasdaq National Market delisting determination and is awaiting a final decision by Nasdaq officials, which is expected in the next few weeks. As part of its efforts to maintain its Nasdaq listing, the company is seeking shareholder approval to effect a reverse stock split of between 1-for-3 to 1-for-7. Orchid's stock will continue to be traded on the Nasdaq National Market pending the final determination.
Conference Call Information
A conference call with Orchid management will be held on Thursday, February 27, 2003 at 10:00 am EST. To listen to the conference call, please dial 1-973-694-6836 and ask for the Orchid Conference Call. To listen to the live or archived webcast via the Internet, please visit the Investors section of Orchid's web site, www.orchid.com.
About Orchid BioSciences
Orchid BioSciences is the leading provider of services and products for profiling genetic uniqueness. Orchid's interlocking strategic business units address distinctive markets that together represent a unique balance of established, predictable growth, such as forensic and paternity DNA testing, and large upside potential, like pharmacogenetics-based personalized healthcare. All leverage Orchid's network of accredited genotyping laboratories, its leading technologies and its expertise in genetic analysis. Orchid provides identity genomics testing for forensics and paternity through Orchid Cellmark and Orchid GeneScreen, and also provides public health genotyping services. Orchid GeneShield is developing pharmacogenetics-based programs designed to accelerate the adoption of personalized healthcare. More information on Orchid can be found at www.orchid.com.
All statements in this press release that are not historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act as amended, including statements regarding: Orchid's intention to divest its Orchid Diagnostics strategic business unit, Orchid's belief that it will achieve profitability in the fourth quarter of 2003, the expected strong growth in Orchid's core areas of business and its ability to achieve substantial revenue growth in 2003 and beyond, Orchid's revenue projections for 2003, and Orchid's ability to remain listed on the Nasdaq National Market. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected, including, but not limited to, uncertainties relating to technologies, product development, manufacturing, market acceptance, cost and pricing of Orchid products and services, dependence on collaborations and partners, regulatory approvals, competition, intellectual property of others, patent protection and litigation, and the possibility that Orchid may receive a negative determination from the Nasdaq listing panel regarding its continued listing on the Nasdaq National Market. These risks and other additional factors affecting Orchid's business are discussed in the "Forward-Looking Statements" section of Orchid's Form 10-Q for the quarterly period ended September 30, 2002 and the "Overview" and "Risk Factors" sections of Orchid's Annual Report on Form 10-K for the year ended December 31, 2001, filed with the Securities and Exchange Commission. Orchid expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Orchid's expectations with regard thereto or any change in events, conditions, or circumstances on which any such statements are based, except as may be required by law.
Orchid BioSciences, Inc.
Condensed Consolidated Statement of Operations
(in thousands, except per share data)
(unaudited)
Three months ended Year ended
December 31, December 31,
2002 2001 2002 2001
Revenue
Product revenue $644 $983 $2,454 $5,003
Service revenue 10,890 7,562 44,597 20,910
Collaboration, license
and other revenue 1,463 2,319 3,374 4,735
Total revenues 12,997 10,864 50,425 30,648
Operating Expenses
Cost of product revenue 269 1,031 1,690 3,822
Cost of service revenue 6,594 5,172 25,957 14,499
Research and development 2,972 8,057 20,194 33,012
Marketing and sales 2,176 1,765 8,701 6,313
General and administrative 7,763 6,438 30,238 21,637
Impairment of assets 14,505 3,396 20,771 30,652
Restructuring 2,876 388 6,880 388
Amortization of deferred
compensation 1,557 1,061 3,541 3,271
Amortization of intangible
assets 821 722 3,039 3,778
Total operating expenses 39,533 28,030 121,011 117,372
Operating loss (26,536) (17,166) (70,586) (86,724)
Other income/(expense)
Interest income 32 449 536 2,898
Interest expense (19) (275) (583) (847)
Other expense (35) 27 (117) 60
Loss on sale of assets (921) -- (921) --
Total other income/(expense) (943) 201 (1,085) 2,111
Loss from continuing operations
before income taxes (27,479) (16,965) (71,671) (84,613)
Income tax benefit/(expense) (317) -- 577 --
Loss from continuing operations: (27,796) (16,965) (71,094) (84,613)
Discontinued operations:
Loss from operations of a business
component held for sale (7,285) (65) (9,003) (65)
Net loss $(35,081) $(17,030) $(80,097) $(84,678)
Weighted average shares
outstanding 55,739 41,537 54,001 37,260
Basic and diluted loss per share
from continuing operations $(0.50) $(0.41) $(1.32) $(2.27)
Basic and diluted loss per share
from discontinued operations $(0.13) $(0.00) $(0.17) $(0.00)
Basic and diluted net loss per
share $(0.63) $(0.41) $(1.48) $(2.27)
Orchid BioSciences, Inc.
As Adjusted Condensed Consolidated Statement of Operations
(in thousands, except per share data)
(unaudited)
Three months ended
December 31, 2002
As As
reported Adjustments Adjusted
(1) (2)
Revenue
Product revenue $644 $-- $644
Service revenue 10,890 -- 10,890
Collaboration, license
and other revenue 1,463 -- 1,463
Total Revenues 12,997 -- 12,997
Operating expenses
Cost of product revenue 269 -- 269
Cost of service revenue 6,594 -- 6,594
Research and development 2,972 -- 2,972
Marketing and sales 2,176 -- 2,176
General and administrative 7,763 -- 7,763
Impairment of assets 14,505 14,505 --
Restructuring 2,876 2,876 --
Amortization of deferred
compensation 1,557 1,557 --
Amortization of intangible assets 821 821 --
Total operating expenses 39,533 19,759 19,774
Operating loss (26,536) (19,759) (6,777)
Other income/(expense)
Interest income 32 -- 32
Interest expense (19) -- (19)
Other expense (35) -- (35)
Loss on sale of assets (921) -- (921)
Total other expense (943) -- (943)
Loss from continuing operations
before income taxes (27,479) (19,759) (7,720)
Income tax expense (317) -- (317)
Loss from continuing operations: (27,796) (19,759) (8,037)
Discontinued operations:
Loss from operations of a business
component held for sale (7,285) (7,285) --
Net loss $(35,081) $(27,044) $(8,037)
Weighted average shares outstanding 55,739 55,739
Basic and diluted loss per
share from continuing operations $(0.50) $(0.14)
Basic and diluted loss per share
from discontinued operations $(0.13) $--
Basic and diluted net loss per share $(0.63) $(0.14)
(1) Reflects the discontinuance of a business component which is currently
held for sale by the Company
(2) The adjustments reflected above include both non-cash and non-
recurring charges incurred by the Company during the three months
ended December 31, 2002. The as adjusted results of operations for
the period are not consistent with generally accepted accounting
principles. Such charges include (i) non-cash amortization of
deferred compensation and amortization of intangible assets (ii)
restructuring costs associated with the Company's ongoing effort to
minimize marketing and selling, general and administrative and
research and development costs, (iii) impairments of certain
intangible assets, lab equipment and other fixed assets and
investments primarily related to the Life Science segment of the
business and (iv) discontinued operations for Orchid Diagnostics.
Orchid BioSciences, Inc.
As Adjusted Condensed Consolidated Statement of Operations
(in thousands, except per share data)
(unaudited)
Year ended
December 31, 2002
As As
reported Adjustments Adjusted
(1) (2)
Revenue
Product revenue $2,454 $-- $2,454
Service revenue 44,597 -- 44,597
Collaboration, license
and other revenue 3,374 -- 3,374
Total revenues 50,425 -- 50,425
Operating expenses
Cost of product revenue (includes
write-down of discontinued
product inventory of $811 during
the year ended December 31, 2002) 1,690 811 879
Cost of service revenue 25,957 -- 25,957
Research and development 20,194 2,926 17,268
Marketing and sales 8,701 -- 8,701
General and administrative 30,238 -- 30,238
Impairment of assets 20,771 20,771 --
Restructuring 6,880 6,880 --
Amortization of deferred
compensation 3,541 3,541 --
Amortization of intangible assets 3,039 3,039 --
Total operating expenses 121,011 37,968 83,043
Operating loss (70,586) (37,968) (32,618)
Other income/(expense)
Interest income 536 -- 536
Interest expense (583) -- (583)
Other expense (117) -- (117)
Loss on sale of assets (921) -- (921)
Total other expense (1,085) -- (1,085)
Loss from continuing operations
before income taxes (71,671) (37,968) (33,703)
Income tax benefit/(expense) 577 -- 577
Loss from continuing operations: (71,094) (37,968) (33,126)
Discontinued operations:
Loss from operations of a business
component held for sale (9,003) (9,003) --
Net loss $(80,097) $(46,971) $(33,126)
Weighted average shares outstanding 54,001 54,001
Basic and diluted loss per
share from continuing operations $(1.32) $(0.61)
Basic and diluted loss per
share from discontinued operations $(0.17) $--
Basic and diluted net loss per share $(1.48) $(0.61)
(1) Reflects the discontinuance of a business component which is currently
held for sale by the Company
(2) The adjustments reflected above include both non-cash and non-
recurring charges incurred by the Company during the year ended
December 31, 2002. The as adjusted results of operations for the
period are not consistent with generally accepted accounting
principles. Such charges include (i) non-cash amortization of
deferred compensation and amortization of intangible assets (ii)
restructuring costs associated with the Company's ongoing effort to
minimize marketing and selling, general and administrative and
research and development costs, (iii) research and development charges
associated with utilizing inventory previously held for sale for
commercialization of a new technology in the Company's service
business and the expensing of certain software development costs, (iv)
impairments of certain intangible assets, lab equipment and other
fixed assets and investments primarily related to the Life Science
segment of the business and (v) discontinued operations for Orchid
Diagnostics.
Orchid BioSciences, Inc.
Condensed Consolidated Balance Sheet (in 000s)
(unaudited)
December 31, December 31,
Assets: 2002 2001
Current Assets
Cash and cash equivalents $9,985 $10,746
Restricted cash 1,522 --
Short term investments -- 17,196
Accounts receivable, net 10,716 11,071
Inventory 944 2,999
Prepaid and other current assets 1,623 1,785
Assets of a business component held
for sale 10,497 3,684
Total current assets 35,287 47,481
Fixed assets (net) 13,244 26,398
Other assets
Goodwill and intangible assets (net) 19,657 30,286
Restricted cash 1,863 --
Other assets 383 3,148
Assets of a business component held
for sale -- 13,603
Total other assets 21,903 47,037
Total assets $70,434 $120,916
Liabilities and Stockholders' Equity:
Current liabilities 25,234 16,664
Liabilities of a business component
held for sale 2,497 3,295
Total current liabilities 27,731 19,959
Long Term Liabilities
Long term debt 2,299 6,267
Other liabilities 1,711 1,392
Liabilities of a business component
held for sale -- 60
Total long term liabilities 4,010 7,719
Total liabilities 31,741 27,678
Total stockholders' equity 38,693 93,238
Total Liabilities and
Stockholders' Equity $70,434 $120,916
SOURCE Orchid BioSciences, Inc.
CONTACT: Andrew P. Savadelis, Chief Financial Officer, or
Tracy J. Henrikson, Director, Corporate Communications, both of Orchid
BioSciences, Inc., +1-609-750-2200
URL: http://www.orchid.com
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