By GREGORY ZELLER //
Operating and net losses that more than tripled year-over-year tell only part of the story of Chembio Diagnostic Systems Inc.’s first quarter.
That was the message Tuesday from John Sperzel III, chief executive of the point-of-care diagnostics specialist, who addressed investors in a conference call after the firm shared the results of the first quarter of its fiscal 2017, which ended March 31.
It was another down quarter for the Medford-based biotech, which continues to build its global sales infrastructure and diversify its product portfolio but just hasn’t been able to crack into the black.
Chembio (Nasdaq: CEMI) recorded total quarterly revenues of $6.3 million, slightly off the $6.6 million reported for 1Q FY2016, and sales hovering around $5.4 million – a more significant dip from the $5.9 million in sales registered over the first three months of last year, though still not devastating.
But the near-misses will be little solace to investors: The company recorded a first-quarter operating loss of $1.6 million, nearly quadrupling the 1Q FY2016 operating loss of $470,000, and a net loss of $1.6 million (13 cents per diluted share), more than quadrupling the net loss of $300,000 (just 3 cents per share) reported last year.
In his call to investors, Sperzel accentuated the positive, painting a picture of a transitioning company taking bold forward steps. The CEO noted that the $6.3 million in total revenues, while marking a 4.2 percent year-over-year first-quarter decrease, represented “significant quarter-on-quarter sales growth” compared to the last three quarter of FY2016.
In March, Chembio cited 4Q FY2016 revenues of $4.25 million and sales of $3.23 million.
Sperzel also noted that those chunkier 1Q FY2016 revenues were bolstered by $1.8 million in product purchases by Chembio’s previous U.S. distributor, an advantage the biotech didn’t have this time around.
Meanwhile, the CEO highlighted several “important strategic steps” Chembio took throughout calendar 2016 and early this year, moves he said have “positioned the company for growth.”
Among them: “significant advances to expand and diversify” the company’s product portfolio, Sperzel said, as well as concerted efforts to build domestic and global sales and marketing infrastructures.
In January, the biotech was approved to sell its combination test for HIV and syphilis in most of Europe and the Caribbean. That happy development came on the heels of regulatory approvals by Brazil’s national health-regulatory agency for Chembio’s rapid field test for the Zika virus, a major step toward selling the product in the Zika-ravaged Brazilian market.
Sperzel also noted Chembio’s acquisition of Malaysia-based RVR Diagnostics, a privately-held manufacturer and distributor of point-of-care diagnostic tests for infectious diseases. That deal closed in January and further reinforces the Medford maker’s international sales strategy, the CEO said Tuesday.
After 15 years as a leading provider of FDA-approved assays for point-of-care HIV testing, the company is still acclimating to its 2014 “strategic decision” to expand its product portfolio, according to Sperzel, who predicts brighter financial results ahead – starting with the anticipated commercialization of “new fever and tropical-disease assays during 2017, thanks to significant grant-based product-development funding.”
“The combination of high-quality innovative point-of-care products and global commercial distribution channels are key elements of our growth strategy,” Sperzel said.