For the fourth quarter ended December 31, 2008, revenue from continuing operations was $21.9 million, against $12.4 million for the same period in 2007, and $19.0 million for the third quarter 2008. Clarient has posted 18 consecutive quarters of sequential revenue growth. Revenue in 2008 was $73.7 million versus $43.0 million in 2007.
Case volume in the fourth quarter increased 39% from the same period in 2007 to 29,845 cases. For the year 2008, testing volume totaled 108,610 cases, up 46% from the same period in 2007, indicating continued success of the company’s new customer acquisition and depth of menu strategies. The company’s client base of oncology and pathology practices in the U.S. increased to about 900 active clients at December 31, 2008 from about 675 active clients at December 31, 2007.
“Clarient’s top-line growth continues to be driven by newer, higher value diagnostic services for a broad range of cancers, coupled with favorable reimbursement rates,” said Ron Andrews, Clarient vice chairman and chief executive officer. “We believe these drivers differentiate Clarient from traditional diagnostic labs and are propelling us to sustainable, positive adjusted EBITDA and operating earnings in 2009.”
The company also stated that the expansion of the Clarient sales force, commercialization of new biomarkers and the introduction of other new technologies and services will be key milestones in 2009.
Andrews continued, “Our growth strategy continues to focus on three components: increasing our sales reach into underserved territories; expanding the depth and breadth of our molecular pathology service offering; and launching new, proprietary biomarkers. We expect to complete the full market launch of Clarient Insight(TM) Dx Breast Cancer Profile, an important addition to our menu of cancer diagnostic services, by the end of the first quarter of 2009. In addition, we are currently in the process of expanding our sales organization to 40 representatives by mid-year, up from 22 this time last year, and we continue to look for complementary opportunities to develop an East Coast presence. We believe this combination of new tests, services and sales talent should continue the trend of strong revenue growth in 2009. We reiterate our full year 2009 revenue guidance of between $93 million and $98 million.”
For the fourth quarter ended December 31, 2008, operating expenses were $12.9 million, up 54.6% from $8.3 million in the same quarter of 2007. For the full year ended December 31, 2008, operating expenses totaled $42.3 million, versus $28.0 million in 2007. Increased operating expenses reflect, in part, the company’s additions to staff to support business growth, higher accounting and legal fees related to the transition to internally managed in-house billing and collection operations, and increased bad debt expense related to aged receivables that were previously administered by the company’s former external billing agent.
The company’s operating income for the fourth quarter of 2008 was $0.1 million, compared with an operating loss of $3.2 million for the same period of 2007. For the year 2008, operating loss was $1.5 million versus $11.8 million in 2007.
Adjusted EBITDA (defined below) for the fourth quarter of 2008 was $0.9 million, against an adjusted EBITDA loss of $1.8 million for the same quarter of 2007. For the year ended December 31, 2008, adjusted EBITDA was $3.5 million, versus adjusted EBITDA loss of $6.6 million in 2007.
For the fourth quarter ended December 31, 2008, the company reported net losses of $2.3 million, against net losses of $3.9 million for the fourth quarter of 2007. Net losses per share were $0.03 against net losses per share of $0.05, for the fourth quarter of 2007. The full year 2007 loss from continuing operations was $0.20 per share.
At December 31, 2008, the company’s cash and cash equivalents totaled $1.8 million against $1.5 million at December 31, 2007. At December 31, 2008, the company had $7.6 million available under existing lines of credit, versus $4.0 million available at December 31, 2007. As earlier reported, the company recently amended its credit facility with an affiliate of Safeguard Scientifics, Inc., providing the company with a total of $30 million in debt financing via a revolving credit facility expiring April 2010, an increase of $9.0 million from its previous facility. In addition, the existing $12.0 million Comerica facility and $8.0 million Gemino facility were extended to March 2010 and January 2010, respectively.
The company has been advised by its independent registered public accounting firm that, with respect to its audit of the company’s consolidated financial statements for the year ended December 31, 2008, its audit opinion will contain an explanatory paragraph stating that substantial doubt exists with respect to the company’s ability to continue as a “going concern”.
Clarient completed an initiative in the fourth quarter of 2008 to enhance the transparency of its financial statements, according to Raymond J. Land, senior vice president and chief financial officer. “We will now report more line items within the Operating Expenses section of our Income Statement,” Mr. Land said. “We believe this expanded presentation will improve the understanding and comparability of our performance in an increasingly competitive market. We also will be adjusting certain expenses between cost of services and operating expenses for all periods presented within our December 31, 2008 Form 10-K to correct an income statement classification error discovered during the fourth quarter of 2008. Our investors will now have an improved view of our total cost mix.”
Commenting further, Land stated, “The recent extension of our financing facilities through fiscal year 2009 gives us access to liquidity sources which should enable us to achieve our 2009 goals. We believe our ability to extend our credit facilities in these turbulent financial markets is a validation by our lenders of the growing financial strength of Clarient.”