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Vermillion Q3 2018 Revenues Up 12 Percent

NEW YORK (360Dx) – Vermillion reported after the close of the market on Thursday a 12 percent year-over-year jump in its third quarter revenues.

For the three months ended Sept. 30, the Austin, Texas-based cancer diagnostics firm said that total revenues rose to $774,000 from $699,000 in the year-ago quarter.

Product revenues were $739,000, up 12 percent from $657,000 in Q3 2017. Service revenues from the company's Aspira IVD business were down 17 percent to $35,000 from $42,000 in Q3 2017.

Product revenues for the recently completed quarter were derived from 1,981 OVA1 ovarian cancer tests performed, up slightly from 1,954 OVA1 tests performed in Q3 2017. Revenue per test performed was up 11 percent to $373, compared to $336 in the year-ago period.

This continues the trend evident since Vermillion began transitioning OVA1 sales from its former partner Quest Diagnostics to its subsidiary Aspira Labs in 2014. Since then, OVA1 test volume has dropped from around 4,000 tests per quarter to around 2,000, but Vermillion's revenues have held steady or improved slightly due to increased revenues per test.

On a conference call following release of the earnings report, Vermillion President and CEO Valerie Palmieri provided details on a shift in the company's sales strategy to focus on providing OVA1 and Overa, Vermillion's second-generation ovarian cancer test, on a universal platform that will allow it to be run locally.

She said the company believes this will help drive uptake within large gynecology groups and healthcare systems, which she noted have grown in recent years as the move within healthcare from a fee-for-service to a value-based model has forced consolidation.

"We have been working over the last 12 to 18 months to align the OVA1 distribution platform with this shift and to convert OVA1 and Overa to a universal platform where it can be formed at the local level," Palmieri said. "As of Q4 2018, we are now offering both technologies on the same platform. This not only improves our internal efficiencies but allows us to decentralize our [US Food and Drug Administration]-cleared technologies direct to healthcare systems and [GYN] supergroups."

She also highlighted the launch last month of the company's OVA1+ product, which combines OVA1 with Overa to improve the overall specificity of the test. She said that 30 to 40 percent of OVA1 tests have converted to OVA1+ since the launch.

Vermillion also during the quarter signed a coverage agreement for OVA1 with the Israeli HMO Clalit Heath Services, which has roughly 3.8 million members.

Vermillion had a net loss attributable to its common stockholders for the quarter of $2.7 million, or $.04 per share, compared to a net loss of $3.5 million, or $.06 per share, in Q3 2017.

Its R&D expenses were down 33 percent to $129,000 from $192,000, while its SG&A spending rose 14 percent to $2.5 million from $2.2 million.

The company finished the quarter with $11.8 million in cash and cash equivalents.

In Friday morning trading on Nasdaq, Vermillion shares were up 4 percent to $.56.