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Vermillion Q4 Revenues Up 42 Percent

NEW YORK – Vermillion reported after the close of the market on Thursday that its fourth quarter revenues were up 42 percent year over year.

For the three months ended Dec. 31, 2019, the company reported total revenues of $1.31 million, up from $922,000 in Q4 2018.

Vermillion posted $1.3 million in product revenues from sales of its OVA1 ovarian cancer test, up 62 percent from $793,000 in the prior-year quarter. Revenues from its genetic testing business were $22,000 compared to no revenues the year before. Service revenues from its Aspira IVD business was down 98 percent to $2,000 from $129,000 in Q4 2018.

The company performed 3,854 OVA1 tests in Q4 2019, up 93 percent from 1,996 in Q4 2018, and generated $333 per test, down 16 percent from $398 per test in the year-ago period.

On a conference call following the release of the results, Vermillion President and CEO Valerie Palmieri highlighted the rapid revenue and test volume growth the company saw in the second half of 2019, attributing it largely to uptake of the company's second-generation test Overa, which addresses some of the specificity issues associated with OVA1.

Palmieri also noted that the company had received preferred in-network status from insurer Cigna for OVA1, Overa, and its genetic testing panel. She said that new pricing established under this agreement will be effective April 1. She declined to say to provide the price established for OVA1 under the agreement but said that it was above $500. According to the company the contract expands Aspira's contracted coverage by an additional 16 million lives. 

Chris Goulart, the company's senior vice president of commercial operations, said on the call that Vermillion continued to pursue a combination of direct sales and a decentralized strategy it launched in Q4 2018 through which hospitals and large doctors groups are able to perform the test locally and send the data to Vermillion for analysis.

He noted that deals done using the decentralized model typically had a long lead time and could lose momentum during the COVID-19 pandemic.

With respect to direct sales, Goulart said the company's sales reps drove 93 percent year-over-year volume growth in Q4 2019.

Vermillion CFO Robert Beechey added on the call that the Q4 drop in revenues per test was driven mainly by a change in payor mix and specifically an increase in self-pay tests during the quarter. He also noted that Nasdaq has granted the firm an extension to regain compliance with the listing requirement that its stock close above $1 per share for 10 consecutive days. Vermillion has until July 27, 2020 to regain compliance. Beechey said it intended to regain compliance by using "significant strategic partnership announcements" to drive its stock price above the necessary threshold.

The firm's Q4 net loss attributable to common shareholders was $3.4 million, or $.03 per share, compared to $2.8 million, or $.04 per share, a year ago.

Vermillion's R&D spending rose 95 percent in Q4 2019 to $244,000 from $125,000 in Q4 2018 while its SG&A spending was $3.7 million, up 28 percent from $2.9 million in Q4 2018.

For full-year 2019, the company posted revenues of $4.5 million, up 45 percent from 3.1 million in 2018.

Product revenues were $4.4 million, up 57 percent from 2.8 million in 2018, while service revenues were $112,000 in 2019, down 60 percent from $281,000 in 2018. Revenues from genetic testing  were $22,000 compared to no revenues the year before.

The company performed 12,898 OVA1 tests in 2019, up 68 percent from 7,679 tests in 2018.

For full-year 2018, Vermillion's net loss attributable to common shareholders was $15.2 million, or $.18 per share, compared to a net loss attributable to common shareholders of $11.4 million, or $.16 per share, in 2018.

The company's R&D costs in 2019 were up 85 percent year over year to $1.0 million from $550,000, while its SG&A costs were up 45 percent to $15.5 million from $10.7 million.

Vermillion finished 2018 with $11.7 million in cash and cash equivalents.