Nine-month revenue increased 217% to $30 million with $3.1 million in positive cash flow from operations
SALT LAKE CITY, May 21, 2019 (GLOBE NEWSWIRE) — Predictive Technology Group, Inc. (OTC PINK: PRED) (the Company), a leader in the use of data analytics for disease identification and subsequent therapeutic intervention through precision therapeutic treatments, reports financial results for the three and nine months ended March 31, 2019 and provides a business update.
“I’m pleased to report our 10th consecutive quarter of sequential growth in revenue. Third quarter fiscal 2019 revenue of $11.3 million was up 167% over the third quarter of fiscal 2018,” said Bradley Robinson, CEO of Predictive Technology Group. “Revenue for the first nine months of fiscal 2019 exceeded $30 million, up 217% over the year-ago period, and we generated $3.1 million in cash flow from operations.
“We have made exceptional progress in building a strong infrastructure to support the development and commercialization of our proprietary genetic-based diagnostics and therapeutics,” he added. “Predictive Biotech is now operating in our recently opened, state-of-the-art production laboratory and R&D facility that was expanded to meet the production and sales needs of our human cell and tissue products for use in cellular therapies and regenerative medicine. We also finalized the integration of Taueret Laboratories and Inception Dx into Predictive Laboratories, providing us with a CAP/CLIA-accredited laboratory for processing our genetic-based tests. We strengthened our Board with the appointment of independent directors with exceptional industry, public affairs, financial and governance experience. More recently we submitted an application to list Predictive common stock for trading on the NASDAQ, a move that we believe will generate increased visibility and credibility for our Company.”
Third Quarter and Recent Highlights
- Integrated the sales and marketing team from FlagshipHealth Group, previously a consultant contractor, to support commercial activities for Predictive Biotech and Predictive Laboratories through combined domestic direct sales and a nationwide distributor network.
- Named Sen. Orrin G. Hatch, Ronald Barhorst and Jay M. Moyes to its Board of Directors, expanding its Board to six including four independent directors.
- Submitted an application to list its common stock to trade on the NASDAQ.
- Completed the acquisition of Taueret Laboratories, LLC, a provider of genetic testing and DNA analysis services through its CAP/CLIA-certified laboratory, to provide for faster entry into the high-growth women’s health testing market with proprietary commercial products.
- Integrated over $5 million of recently purchased new genomics equipment and supplies into laboratory to expand the technical capabilities and capacities.
- Appointed Christine Seward, MS, CGC as Senior Vice President of Sales and Marketing of Predictive Laboratories, bringing extensive experience commercializing molecular diagnostics including products in the reproductive space from her 16 years at Myriad Genetics.
- Announced former Taueret Laboratories Chief Operations Officer Lesa Nelson and Director of Quality Control Debbie Dyckman joined Predictive Laboratories.
- Launched ARTguide™ genetic test for reproductive endocrinologists into 14 Key Opinion Leader (KOL) clinics to refine the test ordering and reporting processes.
- Presented a poster titled The Genetic Architecture of Endometriosis at the Society for Reproductive Investigation (SRI) meeting, demonstrating the ability of the proprietary genetic test ENDORisk™ to segregate patients with endometriosis from those without in the Caucasian population with a high degree of sensitivity (Area Under the ROC Curve = 0.91). The mean genetic risk score for endometriosis was 1.6 in the general population versus 5.3 in endometriosis patients, determined to be statistically significant with a p-value of less than 0.001.
- Reported 10th consecutive quarter-over-quarter revenue growth.
- Completed buildout of a new 2,000-square-foot production laboratory and R&D facility meeting good manufacturing Practice (GMP) and Good Tissue Practice (GTP) requirements for Predictive Biotech. The lab features an ISO 7 cleanroom and 18 ISO 5 production hoods.
Third Quarter Fiscal 2019 Results
Revenue for the third quarter of fiscal 2019 was $11.3 million, an increase of 167% from $4.2 million for the third quarter of fiscal 2018. The increase was due to continued growth in the sales volume and increasing demand for human cell and tissue products.
Gross profit margin for the third quarter of fiscal 2019 was 57.7%, compared with 57.6% for the prior-year period.
Sales, marketing and administrative (SG&A) expenses for the third quarter of fiscal 2019 were $7.9 million, compared with $5.7 million for the prior-year quarter. The increase was primarily due to higher headcount in accounting, marketing, administrative support and other functions necessary to support growth.
Research and development (R&D) expenses for the third quarter of fiscal 2019 were $1.5 million, compared with $367,000 a year ago, with the increase primarily driven by higher spending to develop improved processing methods for the Company’s human cell and tissue products, as well as continued development of diagnostic products.
Amortization and depreciation expenses for the third quarter of fiscal 2019 were $2.4 million, compared with $1.1 million for the prior-year period, with the increase primarily due to an increase in the intangible asset portfolio arising from the business combinations and asset acquisition.
The net loss attributable to controlling interest for the third quarter of fiscal 2019 was $3.7 million, or $0.01 per share, compared with a net loss attributable to controlling interest for the third quarter of fiscal 2018 of $3.2 million, or $0.01 per share.
Year-to-date Financial Results
Revenue for the first nine months of fiscal 2019 was $30.0 million, a 217% increase from $9.5 million for the first nine months of fiscal 2018. Gross profit margin for first nine months of fiscal 2019 was 63.8%, an improvement from 62.5% from the prior-year period.
SG&A expenses for the nine months ended March 31, 2019 were $19.1 million, compared with $14.7 million for the nine months ended March 31, 2018, with the increase due to higher headcount in sales and general and administrative functions as the Company continues to expand, as well as increasing public company compliance costs.
R&D expenses for the first nine months of fiscal 2019 were $3.8 million, compared with $417,000 for the prior-year period, with the increase due to costs related to internal development of existing products, and an increased focus in developing DNA diagnostics and new methods for processing tissues.
Depreciation and amortization expenses for the nine months ended March 31, 2019 were $6.1 million, compared with $3.4 million for the prior-year period, with the increase primarily due to a laboratory buildout and related laboratory equipment purchases, computer hardware and software purchases, and intangible assets arising from acquisitions.
Other expense, net for the nine months ended March 31, 2019 was $832,000, compared with other income, net of $178,000 for the prior-year period. The change was primarily driven by increased losses from equity method investment caused by increasing ownership in Juneau Biosciences, LLC, partially offset by the bargain purchase gain arising from the acquisition of Taueret Laboratories, LLC.
The net loss attributable to controlling interest for the first nine months of fiscal 2019 was $8.0 million, or $0.03 per share, versus a net loss attributable to controlling interest for the first nine months of fiscal 2018 of $7.5 million, or $0.03 per share.
Cash and cash equivalents as of March 31, 2019 were $1.8 million, compared with $1.2 million as of June 30, 2018. Cash provided by operating activities for or the nine months ended March 31, 2019 was $3.1 million, a $5.7 million improvement from cash used in operating activities of $2.6 million for the nine months ended March 31, 2018.
Revisions of Previously Issued Financial Statements: During the financial close for the third fiscal quarter of 2019 the Company discovered errors in the Company’s accounting for income taxes, primarily with regard to impact of income taxes on the Company’s accounting for business combinations and asset acquisitions. The errors were determined to be material to the Company’s consolidated balance sheets, consolidated statements of operations, consolidated statement of stockholders’ equity, and statements of cash flows for the years ended June 30, 2018 and June 30, 2017. The financial information for prior periods has been restated to reflect these adjustments.
About Predictive Biotech, Inc.
Predictive Biotech, Inc., a Salt Lake City life sciences company formed in 2015, is a leader in human cell and tissue products for use in cellular therapies and regenerative medicine. A growing national network of clinics, health systems, researchers and physicians leverage Predictive’s four main placental-derived and Wharton’s jelly umbilical cord-derived products. Predictive Biotech’s current products are regulated by the FDA under 21 CFR part 1271 section 361 as minimally manipulated allografts intended for homologous use.
About Predictive Laboratories, Inc.
Predictive Laboratories owns significant next-generation sequencing and genotyping assets along with extensive protocols, quality and laboratory management systems and other resources required by a “high complexity” molecular diagnostic laboratory operating under the Clinical Laboratory Improvement Act (CLIA). In 2018 this group launched its novel test for women experiencing infertility, called ARTGuide™, to select beta launch centers. ARTGuide™ is a proprietary gene test panel for women experiencing infertility as a result of endometriosis and other health concerns. The test is expected to change the way that advanced reproductive technologies such as in vitro fertilization (IVF) are used to assist couples having difficulty conceiving a pregnancy.
About Predictive Technology Group, Inc.
Predictive Technology Group aims to revolutionize patient care through predictive data analytics, novel gene-based diagnostics and companion therapeutics through its subsidiaries Predictive Therapeutics, Predictive Biotech, and Predictive Laboratories. These subsidiaries are focused on endometriosis, scoliosis, degenerative disc disease and human cell and tissue products. The subsidiaries use genetic and other information as cornerstones in the development of new diagnostics that assess a person’s risk of illness and therapeutic products designed to identify, prevent and treat diseases more effectively. Additional information is available at Predtechgroup.com; Predrx.com; Predictivebiotech.com; and Predictivelabs.com.
This release contains “forward-looking” statements that are based on present circumstances and on Predictive Technology Group’s predictions with respect to events that have not occurred, that may not occur, or that may occur with different consequences and timing than those now assumed or anticipated. Such forward-looking statements and any statements of the plans and objectives of management for future operations and forecasts of future growth and value, are not guarantees of future performance or results and involve risks and uncertainties that could cause actual events or results to differ materially from the events or results described in the forward-looking statements. Such forward-looking statements are made only as of the date of this release and Predictive Technology Group assumes no obligation to update forward-looking statements to reflect subsequent events or circumstances. Readers should not place undue reliance on these forward-looking statements. The information in this press release should be read in conjunction with, and is modified in its entirety by, the Registration Statement on Form 10 (the “Form 10”) filed by the Predictive Technology Group with the Securities and Exchange Commission (the “SEC”) and all of the Company’s other public filings with the SEC (the “Public Filings”). In particular, the financial information contained herein is subject to and qualified by reference to the financial statements contained in the Form 10 and Public Filings, the footnotes thereto and the limitations set forth therein. Investors may not rely on the press release without reference to the Form 10 and the Public Filings.