DUBLIN, Ireland, Oct. 25, 2016 (GLOBE NEWSWIRE) -- Trinity Biotech plc (Nasdaq:TRIB), a leading developer and manufacturer of diagnostic products for the point-of-care and clinical laboratory markets, today announced results for the quarter ended September 30, 2016.

Quarter 3 Results                                                                                            Total revenues for Q3, 2016 were $26.1m which compares to $25.8m in Q3, 2015, an increase of 1.4%.

Point-of-Care revenues for Q3, 2016 decreased from $5.4m to $4.9m when compared to Q3, 2015, a decline of 9.5%. This is within the normal quarterly fluctuation range of HIV sales in Africa.

Clinical Laboratory revenues increased to $21.2m, which represents an increase of 4.3% compared to Q3, 2015. This increase was primarily attributable to increased Premier and autoimmune revenues.

Unlike in previous quarters, the impact of foreign exchange on revenues was not significant when compared to the equivalent quarter last year.  When calculated, its impact was to reduce this quarter's revenues by less than 0.5% with the weakness in Sterling being the biggest single factor.

Revenues for Q3, 2016 were as follows:
  2015    Quarter 3     2016    Quarter 3        Increase/    (decrease)    
  US$'000 US$'000 %
Point-of-Care 5,418 4,903 (9.5 %)
Clinical Laboratory   20,343 21,224 4.3 %
Total 25,761 26,127 1.4 %
         

Gross profit for Q3, 2016 amounted to $11.7m representing a gross margin of 44.7%, which is lower than the 46.5% achieved in Q3, 2015. This decrease is largely due to lower sales of higher margin point-of-care products and the knock-on impact of past currency movements - primarily the impact of the stronger dollar on distributor pricing.

Research and Development expenses have remained in line with the equivalent quarter last year at $1.3m. Meanwhile, Selling, General and Administrative (SG&A) expenses have remained at $7.5m for the quarter.

Operating profit for the quarter was $2.7m, which is lower than the $3.0m achieved in Q3, 2015, and this is attributable to the impact of higher revenues and lower indirect costs being more than offset by the lower gross margin.

The net financing expense for the quarter was $3.1m versus income of $9.6m in the equivalent quarter of 2015. This financing income/expense can be broken down into its component parts as follows:
Net financing income / (expense)    Q3 2016      Q3 2015  
  US$'000 US$'000
Financial income   212     204  
     
Financial expense - Exchangeable note   (1,150 )   (1,064 )
Other financial expenses   (29 )   (21 )
Financial expense (cash)   (1,179 )   (1,085 )
     
Non-cash financial income / (expense)   (1,940 )   10,720  
Non-cash financial expense - accretion interest   (180 )   (208 )
Non-cash financial income / (expense)   (2,120 )   10,512  
     
Net financial income / (expense)   (3,087 )   9,631  
             

Financial income increased to $212,000 from $204,000 in the equivalent quarter last year. This was primarily due to improved interest rates.

Financial expenses primarily consist of the cash interest payable on the company's Exchangeable Notes, which amounts to $1.15m per quarter.

Non-cash financial income represents adjustments required to the fair value of the derivatives embedded in the exchangeable notes along with an amount to accrete the fair value of the debt liability back to its nominal value ($115 million) over the term of the debt using an effective interest rate methodology. For Q3, 2016, the fair value adjustment to the value of the embedded derivatives was a charge to the income statement of $1.9m.

The loss before tax for the period was $0.4m, though this was largely impacted by non-cash charges related to the Exchangeable Notes.  Excluding these non-cash items, the profit before tax for the quarter was $1.8m.

The tax charge for Q3, 2016 was $0.1m, an effective tax rate of 8.5% on the profit for the quarter excluding non-cash charges.

The loss after tax for the period was $0.5m. However, excluding the non-cash elements of the Exchangeable Notes, this would have been a profit of $1.6m, which equates to an adjusted EPS of 7.0 cents. This compares to $1.8m and an adjusted EPS of 7.5 cents in Q3, 2015. Diluted EPS for the quarter amounted to 9.7 cents, which is consistent with the equivalent quarter in 2015.

The above results do not reflect the impact of the decisions to withdraw the Meritas Troponin submission from the FDA and to close the company's facility in Uppsala, Sweden as both of these events occurred after the quarter end. It is expected that the company will record an impairment charge of in excess of $50m in relation to the costs incurred on the Meritas project as well as a provision for closure costs associated with the Swedish facility. Both of these will be reflected in the company's Q4 income statement.

Cash generated from operations during the quarter was $5.6m, though this was offset by capital expenditure of $5.6m and interest and tax payments of $0.2m, resulting in a net cash outflow for the quarter of under $0.2m. This resulted in a cash balance at the end of the quarter of $84.8m.

Earnings before interest, tax, depreciation, amortisation and share option expense for the quarter was $4.6m.

Meritas - withdrawal of FDA submission

On October 4, 2016 Trinity Biotech announced that it was withdrawing its 510(k) premarket notification submission for the Meritas Troponin-I Test and Meritas Point-of-Care Analyzer. This followed a meeting with the FDA, where they asked Trinity to consider withdrawing its submission due to their concerns about clinical performance. These concerns focussed on the analyzer's operating temperature range and the inconsistency of the test's performance with the most recently cleared laboratory Troponin test.

Given these concerns, the company decided to withdraw the submission and to cease development of its Troponin product for the U.S. market.  It was felt that, even after carrying out additional development work on the product, which would be both lengthy and likely to cost an additional $20-30m, there was insufficient certainty that its performance could ever match a recently approved laboratory Troponin test.  As a consequence of this, the company also decided not to submit its Meritas BNP test for heart failure to the FDA, as this was being developed as a sister product for Troponin.

The Meritas platform has many potential applications in the point-of-care arena, and thus the company has embarked on an internal review process to determine the best future opportunity for this technically excellent platform. This process is expected to take between 9 and 12 months. In conjunction with this, the Company will close its facility in Uppsala, Sweden and transfer the technology to its headquarters in Bray, Ireland.

In its Q4 income statement, the company expects to recognise an impairment charge in excess of $50m reflecting the costs incurred on the Meritas platform to date plus an additional provision for closure costs in relation to the Swedish facility.

Comments

Commenting on the results, Kevin Tansley, Chief Financial Officer, said "Operating profit this quarter was $2.7m, which whilst lower than the equivalent quarter last year, did represent an improvement compared to our more recent quarters.  This was driven by improved top line performance.  Whilst our gross margin remains under pressure, mainly due to product mix and carry over currency factors, higher revenues combined with control over indirect costs has resulted in an operating margin of over 10%. Meanwhile, our diluted EPS for the quarter remained consistent at 9.7 cents per ADR."

Ronan O'Caoimh, CEO of Trinity said "The last few weeks have been difficult for the company.  We had invested considerable time and effort in developing our Troponin test on the Meritas platform and it was extremely frustrating that, even with its clear performance advantages over its competitors, FDA approval was not forthcoming. Following this we have taken decisive action. We are closing our facility in Sweden, resulting in 40 redundancies and transferring the technology to our Bray facility. Once all closure costs have been incurred, this will result in a reduction in expenditure on the platform from $9m p.a. to $1.5m p.a. thus returning the company to a near break-even cash flow position.

We also believe that the excellent technical performance of Meritas still makes this a valuable platform. In the months ahead we will look closely at a wide range of alternatives with a view to maximising this value. This will include looking at alternative menus and/or collaborations with third parties.

In the meantime, we will focus on expanding our core business which has a number of growth drivers. In particular, we will continue to place large numbers of Premier instruments in an ever increasing number of countries, thus building market share. We will also increase our penetration of the haemoglobin variant market with our newly launched Premier Resolution instrument. We will continue to grow our autoimmune business, building on our growth of product sales and reference laboratory services. We are also determined to expand our HIV franchise in Africa.  Having already conquered the confirmatory market, we will now look to enter the higher volume screening market.

Whilst we will continue to look for highly synergistic and earnings accretive acquisitions, I believe that at our current share price, buying back our own shares represents the best deployment of capital at this juncture.  This, coupled with the growth opportunities inherent in our existing business, will enhance our earnings capacity and drive shareholder value."      

Forward-looking statements in this release are made pursuant to the "safe harbor" provision of the Private Securities  Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties including, but not limited to, the results of research and development efforts, the effect of regulation by the United States Food and Drug Administration and other agencies, the impact of competitive products, product development commercialisation and technological difficulties, and other0 risks detailed in the Company's periodic reports filed with the Securities and Exchange Commission.

Trinity Biotech develops, acquires, manufactures and markets diagnostic systems, including both reagents and instrumentation, for the point-of-care and clinical laboratory segments of the diagnostic market. The products are used to detect infectious diseases and to quantify the level of Haemoglobin A1c and other chemistry parameters in serum, plasma and whole blood. Trinity Biotech sells direct in the United States, Germany, France and the U.K. and through a network of international distributors and strategic partners in over 75 countries worldwide. For further information please see the Company's website: www.trinitybiotech.com.
           
Trinity Biotech plc Consolidated Income Statements
           
(US$000's  except share data)   Three Months Ended September 30, 2016 (unaudited)         Three Months Ended September 30, 2015 (unaudited)       Nine Months Ended September 30, 2016 (unaudited)       Nine Months Ended September 30, 2015 (unaudited)  
           
Revenues   26,127         25,761       75,931       75,258  
           
Cost of sales   (14,460 )       (13,776 )     (42,316 )     (39,780 )
           
Gross profit   11,667         11,985       33,615       35,478  
Gross profit %   44.7 %       46.5 %     44.3 %     47.1 %
           
Other operating income   70         73       211       222  
           
Research & development expenses   (1,296 )       (1,293 )     (3,711 )     (3,560 )
Selling, general and administrative expenses   (7,487 )       (7,467 )     (22,245 )     (20,467 )
Indirect share based payments   (236 )       (327 )     (971 )     (1,357 )
           
Operating profit   2,718         2,971       6,899       10,316  
           
Financial income   212         204       657       299  
Financial expenses   (1,179 )       (1,085 )     (3,545 )     (2,279 )
Non-cash financial income / (expense)   (2,120 )       10,512       (3,308 )     11,490  
Net financing income / (expense)   (3,087 )       9,631       (6,196 )     9,510  
           
Profit / (loss) before tax   (369 )       12,602       703       19,826  
           
Income tax expense   (148 )       (339 )     (462 )     (858 )
  Profit / (loss) for the period       (517 )         12,263         241         18,968  
           
Earnings per ADR (US cents)   (2.3 )       52.9       1.0       82.0  
           
Earnings per ADR excluding non-cash financial income (US cents)   7.0         7.5       15.4       32.3  
           
Diluted earnings per ADR (US cents)   9.7*         9.7       24.6*       35.7  
Weighted average no. of ADRs used in computing basic earnings per ADR   22,797,208         23,202,228       23,032,885       23,128,287  
           
Weighted average no. of ADRs used in computing diluted earnings per ADR   28,379,444         28,766,691       28,452,580       27,059,058  
                                 

* Under IAS 33 Earnings per Share, diluted earnings per share cannot be anti-dilutive. Therefore, diluted earnings per ADR in accordance with IFRS would be 1.0 cents for the year to date, and a loss of 2.3 cents for the quarter (i.e. equal to basic earnings per ADR).

The above financial statements have been prepared in accordance with the principles of International Financial Reporting Standards and the Company's accounting policies but do not constitute an interim financial report as defined in IAS 34 (Interim Financial Reporting).

                             
Trinity Biotech plc Consolidated Balance Sheets
                             
  September 30, 2016 US$ '000 (unaudited)       June 30, 2016 US$ '000 (unaudited)       March 31, 2016 US$ '000 (unaudited)       Dec 31, 2015 US$ '000 (audited)  
ASSETS        
Non-current assets        
Property, plant and equipment   21,495         21,760         21,460         20,659  
Goodwill and intangible assets   173,240         169,049         165,157         161,324  
Deferred tax assets   13,531         13,312         13,096         12,792  
Other assets   849         932         860         954  
Total non-current assets   209,115         205,053         200,573         195,729  
         
Current assets        
Inventories   39,989         39,253         35,709         35,125  
Trade and other receivables   25,802         27,832         26,260         25,602  
Income tax receivable   811         712         664         550  
Cash and cash equivalents   84,751         84,920         96,829         101,953  
Total current assets   151,353         152,717         159,462         163,230  
         
TOTAL ASSETS   360,468         357,770         360,035         358,959  
         
EQUITY AND LIABILITIES        
Equity attributable to the equity holders of the parent        
Share capital   1,222         1,221         1,220         1,220  
Share premium   15,801         15,575         15,521         15,526  
Accumulated surplus   197,379         197,588         199,453         201,951  
Other reserves   (4,002 )       (3,721 )       (3,723 )       (4,809 )
Total equity   210,400         210,663         212,471         213,888  
         
Current liabilities        
Income tax payable   772         657         1,026         1,163  
Trade and other payables   19,976         19,384         19,195         18,874  
Provisions   75         75         75         75  
Total current liabilities   20,823         20,116         20,296         20,112  
         
Non-current liabilities        
Exchangeable senior note payable   101,351         99,232         100,073         98,044  
Other payables   1,939         1,986         2,057         2,096  
Deferred tax liabilities   25,955         25,773         25,138         24,819  
Total non-current liabilities   129,245         126,991         127,268         124,959  
         
TOTAL LIABILITIES   150,068         147,107         147,564         145,071  
         
TOTAL EQUITY AND LIABILITIES   360,468         357,770         360,035         358,959  

The above financial statements have been prepared in accordance with the principles of International Financial Reporting Standards and the Company's accounting policies but do not constitute an interim financial report as defined in IAS 34 (Interim Financial Reporting).

         
Trinity Biotech plc Consolidated Statement of Cash Flows
         
(US$000's) Three Months Ended September 30, 2016 (unaudited)       Three Months Ended September 30, 2015 (unaudited)       Nine Months Ended September 30, 2016 (unaudited)       Nine Months Ended September 30, 2015 (unaudited)  
         
Cash and cash equivalents at beginning of period   84,920         110,257         101,953         9,102  
         
Operating cash flows before changes in working capital   5,164         3,851         12,950         14,279  
Changes in working capital   393         (166 )       (3,469 )       (8,504 )
Cash generated from operations   5,557         3,685         9,481         5,775  
         
Net Interest and Income taxes paid   (171 )       (108 )       (263 )       (440 )
         
Capital Expenditure & Financing (net)   (5,555 )       (4,290 )       (16,982 )       (15,623 )
         
Free cash flow   (169 )       (713 )       (7,764 )       (10,288 )
         
Share buyback   -         -         (6,026 )       -  
                                     
Payment of HIV-2 licence fee   -         -         (1,112 )       -  
                                     
30 year Convertible Note interest payment   -         -         (2,300 )       -  
                                     
30 year Convertible Note proceeds, net of fees   -         (156 )       -         110,574  
                                     
Dividend payment   -         (5,099 )       -         (5,099 )
         
Cash and cash equivalents at end of period   84,751         104,289         84,751         104,289  
         

The above financial statements have been prepared in accordance with the principles of International Financial Reporting Standards and the Company's accounting policies but do not constitute an interim financial report as defined in IAS 34 (Interim Financial Reporting).
Contact:Trinity Biotech plc		        		Kevin Tansley				       (353)-1-2769800		                	E-mail: kevin.tansley@trinitybiotech.comLytham Partners LLCJoe Diaz, Joe Dorame & Robert Blum602-889-9700

Primary Logo