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Chembio Q1 Revenues More Than Double

NEW YORK — Chembio Diagnostics on Thursday reported that its revenues for the first quarter more than doubled from the same period last year as it completed a large order for its SARS-CoV-2 antigen tests to Brazil's Bio-Manguinhos.

The Medford, New York-based company, however, said that it continues to face market, clinical trial, and regulatory complications as it works to develop and commercialize a portfolio of COVID-19 test systems, as well as significant costs associated with legal matters. As a result, there is substantial doubt about its ability to continue operations into 2023.

For the three-month period ended March 31, Chembio's revenues jumped to $18.8 million from $8.7 million in the same period last year. Driving the revenue growth were shipments of its DPP SARS-CoV-2 Antigen Test to Bio-Manguinhos under a now-fulfilled $28.3 million purchase order. Chembio said that it also continued shipments on a $4 million HIV test purchase order supported by The Global Fund, which are expected to be completed in the second quarter.

Chembio's Q1 net loss grew to $8.8 million, or $.29 per share, from a year-ago loss of $4.5 million, or $.22 per share. Contributing to the loss was a $3.0 million expense resulting from the impairment of goodwill due to the substantial decrease in the firm's share price at the end of the quarter. Chembio said in a filing with the US Securities and Exchange Commission that the low price per share caused its book value to exceed its fair value.

Its R&D spending in the quarter fell 41 percent to $1.7 million from $2.9 million, while its SG&A costs edged up 13 percent to $6.9 million from $6.1 million.

At the end of March, Chembio had cash and cash equivalents totaling $24.4 million. 

Chembio said that despite its revenue gains, profitability has not been at expected levels, and it may not have the cash needed to meet credit obligations. It was also sued in 2020 by four groups of shareholders who allege that the company made false and misleading statements about its COVID-19 tests, and in 2021 by former CEO John Sperzel over a stock incentive plan. All the lawsuits are ongoing.

As a result of these issues, the company said it may not be able to continue as a going concern over the next 12 months.

To address this, Chembio said that it has kicked off an effort to improve its financial position by focusing on higher-margin business in growth markets, lowering manufacturing costs, and reducing infrastructure costs. It is also implementing a strategic review of noncore businesses and assets.

Key goals for Chembio include regulatory approvals for the DPP SARS-CoV-2 Antigen test system, as well as the DPP Respiratory Antigen Panel and DPP HIV-Syphilis test system.

"Going forward, we will continue to prioritize use of our resources to drive more profitable growth and operational efficiency," Chembio President and CEO Richard Eberly said in a statement.