NEW YORK – Chembio Diagnostics reported after the close of the market on Thursday that its second-quarter revenues rose 27 percent year over year, slightly above its previously announced preliminary Q2 results.
The Hauppauge, New York-based point-of-care diagnostics firm said that its revenues during the three months ended June 30 did not meet its expectations and were a principal cause of a limited cash and cash-equivalents position as of June 30.
For Q2, Chembio reported revenues of $6.5 million, up from $5.1 million a year ago and well short of analysts' average estimate of $8.5 million.
The company reported Q2 product revenues of $3.9 million, up 3 percent from $3.8 million in Q2 2020; government grant income of $2.3 million compared to no such income in the prior-year quarter; license and royalty revenues of $250,000, an almost twofold increase compared to $125,625 a year ago; and $727 in Q2 R&D revenues compared to $1.2 million in Q2 2020.
"Looking forward, we believe the investments we have made in product development, [and] expanding our commercial infrastructure and our automated manufacturing operations position us for future success," Richard Eberly, Chembio’s president and CEO, said in a statement.
He said that "recently raised capital has strengthened the balance sheet and will support execution of our strategic initiatives."
Chembio's Q2 net loss widened to $9.1 million, or $.45 per share, from $7.8 million, or $.42 per share a year ago, missing analysts' expectations of a loss per share of $.27.
The company's Q2 R&D expenses rose 47 percent to $2.8 million from $1.9 million in the prior-year quarter, while its SG&A expenses rose 36 percent to $6.0 million from $4.4 million a year ago.
Chembio finished the quarter with cash and cash equivalents of $5.6 million.
A decrease in cash and cash-equivalents over the first two quarters of 2021 reflected market, clinical trial, and regulatory complications faced in seeking to develop and commercialize a portfolio of COVID-19 test systems during the pandemic, the firm said.
The decrease was also caused in part by "significant continuing expenses incurred in connection with pending legal matters and delayed achievement of milestones associated with government grant income, investments in inventory, and the continuing automation of US manufacturing," the firm said.
Chembio performed an assessment to determine whether there were conditions or events that, considered in the aggregate, raised substantial doubt about its ability to continue as a going concern within one year after the issue of its current, unaudited financial statements.
It also undertook measures to increase its total revenues and improve its liquidity position.
For example, it recently began shipments of its DPP SARS-CoV-2 Antigen Tests under a $28.3 million purchase order from Bio-Manguinhos, to support the needs of Brazil’s Ministry of Health and for delivery during 2021. It further received a $4.0 million order for HIV tests supported by the Global Fund for shipment to Ethiopia until early 2022.
Chembio also raised gross proceeds of approximately $36.9 million from the issuance of 8,323,242 shares of common stock in an at-the-market offering agreement with Craig Hallum. As part of the agreement, the point-of-care diagnostics company may sell up to an aggregate of $60 million of shares of common stock through Craig Hallum as its sales agent.
These measures, among others, were designed to provide it with adequate liquidity to meet its obligations for at least the 12-month period following the issue of its second quarter results, Chembio said, adding that its second quarter financial statements were prepared assuming it will continue as a going concern.
The company recently disclosed that it is under investigation by the US Securities and Exchange Commission, which is conducting a non-public, fact-finding investigation relating to its public offering of common stock completed in May 2020, and the US Food and Drug Administration's revocation in June 2020 of an Emergency Use Authorization for the firm's DPP COVID-19 IgM/IgG system that was issued in April 2020.
In Friday morning trading on the Nasdaq, Chembio's shares were down more than 13 percent to $3.04.