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Dermtech Q3 Revenues Rise 122 Percent

NEW YORK – Dermtech reported after the close of the market on Tuesday that its third quarter revenues rose 122 percent year over year, thanks to a 140 percent increase in assay revenues for the quarter.

For the three months ended Sept. 30, the molecular dermatology testing company reported revenues of $3.0 million, up from $1.4 million a year earlier. However, it missed the average Wall Street estimate for revenues of $3.4 million.

The company's assay revenues for Q3 rose to nearly $3.0 million from $1.2 million a year earlier. The increase in assay revenues was primarily due to higher billable sample volume and improved average selling price resulting from better cash collections. Dermtech also said that billable sample volume rose 75 percent to approximately 11,720 in Q3 2021 from approximately 6,700 in Q3 2020.

Contract revenues for Q3 fell 41 percent to $76,000 from $129,000.

"I'm proud of how we continued to execute against our growth drivers in the third quarter, despite a challenging macro-environment," Dermtech CEO John Dobak said in a statement. "We have built out our sales force, successfully completed a pilot with one primary care network and expanded a pilot with another, and we are progressing our pipeline products, Carcinome and Luminate. With these building blocks in place, we feel well-positioned to continue moving forward with our initiatives and drive revenues as business environments improve."

Carcinome is a gene expression test to detect the presence of non-melanoma skin cancers, and Luminate is a noninvasive skin test that's meant to identify UV damage in the skin.

The firm's Q3 net loss widened to $20.1 million, or $.68 per share, from $9.3 million, or $.49 per share, a year earlier. Wall Street analysts had estimated a loss per share of $.64 for Q3.

Dermtech's Q3 R&D expenses rose 175 percent to $4.4 million from $1.6 million a year earlier, and its SG&A costs rose 113 percent to $16.0 million from $7.5 million. The increase in R&D was due to higher compensation costs of expanding the research and development team, increased clinical trial costs, and increased spending on laboratory supplies to support new product development. And the increase in SG&A spending was primarily attributable to higher compensation costs related to the expansion of the firm's sales force, marketing, payor access, human resources, billing, information technology, and legal resources teams.

The company had cash and cash equivalents of $204.1 million and short-term marketable securities of $45.4 million at the end of the quarter.

For full-year 2021, Dermtech revised its guidance downwards due to the unforeseen effects of the COVID-19 Delta variant and Hurricane Ida. The company now expects assay revenues of $10.5 million to $12 million for the year, which still represents a 148 percent to 183 percent growth over full-year 2020 assay revenues. The company had previously expected full-year 2021 assay revenues of $11.5 million to $13.5 million. Analysts are expecting revenues of $13.3 million for the year.

Dermtech's shares fell nearly 13 percent to $24.10 in after-hours trading on the Nasdaq.