NEW YORK – Chembio Diagnostics reported after the close of the market on Thursday that its third quarter revenues grew 17 percent year over year.
The company also said it has performed an assessment of its ability to continue as a business during the next year. While it has taken steps to address concerns about its financial viability, its future remains unclear, Chembio said.
For the three months ended Sept. 30, the Hauppauge, New York-based company reported revenues of $12.1 million compared to $10.3 million in the prior-year quarter, beating analysts' average estimate of $11.5 million.
The company's Q3 net product revenues rose 12 percent year over year to $9.4 million from $8.4 million. Government grant revenues grew more than elevenfold year over year to $2.4 million from $209,766; license and royalty revenues rose 36 percent year over year to $286,843 from $211,521; and R&D revenues dropped to $441 from $1.4 million in the prior-year quarter.
Chembio said it raised $38.8 million in net proceeds from at-the-market offerings of common stock launched in July. It recently began commercial distribution of the InBios International SCoV-2 Ag Detect Rapid Test, which received US Food and Drug Administration Emergency Use Authorization in May.
The company said revenues for the third quarter did not meet its expectations, and it continued to experience market, clinical trial, and regulatory complications in seeking to develop and commercialize a portfolio of COVID-19 test systems during the pandemic. Further, it continued to incur significant expenses in connection with pending legal matters, delayed achievement of milestones associated with government grant income, investments in inventory, and the continuing automation of manufacturing.
Chembio previously mentioned concerns about its future last quarter. During Q3 as part of its efforts to improve its liquidity, the firm received a $28.3 million purchase order from Bio-Manguinhos for the purchase of DPP SARS-CoV-2 Antigen tests for delivery during 2021. Further, it received a $4 million purchase order from the Partnership for Supply Chain Management, supported by the Global Fund, for the purchase of HIV 1/2 Stat-Pak Assays for shipment to Ethiopia through early 2022.
However, the firm anticipates that at least $11.5 million of the purchase order from Bio-Manguinhos will not be fulfilled by Dec. 31, the end date for shipment under the order, Chembio CEO Richard Eberly said in a statement. That, as well as delays in clinical trials being conducted by the firm, the healthcare and economic impacts of the COVID-19 pandemic, and staffing and supply chain limitations could have a negative impact on the company's financial viability.
It warned that "there can be no assurance that the Company would have sufficient liquidity" to make payments under an existing credit agreement or that it would be able to raise additional funds moving forward. The inability to do so "could have a material adverse effect on its business, prospects, results of operations, liquidity and financial condition."
For the third quarter, the firm's net loss widened to $6.4 million, or $.24 per share, from a loss of $5.4 million, or $.28 per share, in the prior-year quarter, missing analysts' average estimate for a loss of $.22 per share.
Chembio's Q3 R&D spending rose 42 percent to $3.4 million from $2.4 million a year earlier, while SG&A expenses increased 11 percent year over year to $5.9 million from $5.3 million.
At the end of the recently completed quarter, Chembio had $36.0 million in cash and cash equivalents.
The company added it has prepared its third quarter financial statements assuming it will continue as a going concern.
In Friday morning trading on the Nasdaq, Chembio shares were down more than 12 percent to $2.15.