NEW YORK (360Dx) – Oxford Immunotec reported today that its third quarter revenues increased 7 percent year over year as growing product revenues offset a decline in service revenues.
For the three months ended Sept. 30, Oxford Immunotec logged $16.1 million in revenues compared to $15.0 million in the year-ago quarter, falling well short of analysts' average estimate for $33.5 million in revenues. On a constant currency basis, year-over-year revenue growth was 8 percent.
Product sales rose 12 percent to $15.1 million from $13.4 million, as the number of T-SPOT.TB tests sold in Q3 exceeded 1 million for the first time. Meanwhile, service revenues decreased 40 percent to $955,000 from $1.6 million due to an unexpected decline in blood donor screening revenue.
Earlier this week, the company closed the sale of its US laboratory business to Quest Diagnostics for $170 million in cash, a deal announced earlier in the quarter. In a conference call recapping the company's Q3 earnings, CEO Peter Wrighton-Smith noted that the gross proceeds from the transaction were $117 million. In parallel with the closing of the transaction, the company used approximately $33 million to pay off its loans with MidCap Financial.
"Coming out of the deal and allowing for transaction expenses we expect to have [cash] approaching $200 million and no debt," Wrighton-Smith said.
As part of the transaction, Oxford Immunotec's T-SPOT.TB tuberculosis and Accutix tick-borne disease testing services are now part of Quest's infectious disease testing services portfolio. In addition, Oxford Immunotec will sell T-SPOT.TB test kits and related accessories to Quest under the terms of a long-term supply agreement. The companies have also entered into a strategic collaboration agreement to drive continued growth of T-SPOT.TB testing in the US.
"The robust continuing growth trends that we saw in this final quarter of our US service business means that we're handing over to Quest a thriving business with a strong growth trajectory that we believe can accelerate under their ownership," Wrighton-Smith said.
Also in parallel with the Quest transaction, Oxford Immunotec has terminated its blood donor screening service which had operated out of its Norwood, Massachusetts facility. Wrighton-Smith said that the firm will keep its C6 Lyme ELISA assay kit and T-SPOT.CMV test in transplantation.
"Though T-SPOT.CMV will continue to be offered as a CE-marked kit in Europe, we have withdrawn T-SPOT.CMV in the US where it was being offered as a laboratory-developed test service offered out of our Memphis, [Tennessee] facility," Wrighton-Smith said. "We will be reevaluating our go-to-market strategy for this assay in the US in the coming months."
The company narrowed its Q3 net loss to $3.5 million, or $.13 per share, from a net loss of $16.8 million, or $.70 per share, in the year-ago period. Analysts had expected a loss per share of $.10.
Net loss from continuing operations, excluding the divested US laboratory services business, was $6.3 million, or $.24 per share, compared to a net loss from continuing operations of $19.5 million, or $.81 per share, in the same quarter last year.
Oxford Immunotec's Q3 R&D expenses were $1.8 million, down 38 percent from $2.9 million a year ago. Its SG&A expenses were $14.6 million, up 2 percent from $14.3 million in Q3 2017.
The company finished the quarter with $70.2 million in cash and cash equivalents.