Monday, 20 May 2013 11:00 AM
Arrayit Corp. (OTC Markets: ARYC) reported revenues that jumped 66% to $942,916 during the first quarter, with net income that swung from a loss of $1,344,651 to a profit of $235,478 year over year. With rising revenues and sustainable operations, the company’s management team has successfully executed on its promises to unlock long-term value for shareholders.
Click Here: Read Arrayit’s Full 10-Q Filing
Profitability on the Bottom Line
Arrayit’s robust 66% revenue improvement came from fulfilling orders for high-throughput instruments, such as its NanoPrint LM60, SpotBot Titan and InnoScan 710AL. These advanced research tools are used across all microarray applications in genomics, proteomics and diagnostics in both research laboratories and core facilities.
Bottom line improvements came from lower selling, general and administrative expenses (“SG&A”), which fell from $1,344,651 to $250,000 year over year. These gains were further boosted by a one-time $142,071 gain from the extinguishment of certain liabilities, which also helped improve the company’s balance sheet during the quarter.
A Look at Valuation Metrics
Arrayit trades with a forward price-earnings multiple of approximately 6x, assuming it can achieve $1 million in net income with 60 million shares outstanding, earning approximately $0.0166 on a full year basis. While this multiple may be appropriate for a commoditized business, the company’s 51% gross margins suggest greater potential.
Illumina Inc. (NASDAQ: ILMN) trades with a trailing twelve month (ttm) 90.4x price-earnings multiple and PerkinElmer Inc. (NYSE: PKI) trades with a 46x multiple. While these companies have greater revenues and profits, one could argue that Arrayit’s current 27.5x ttm multiple should be higher given the company’s catalyst pipeline.
Upcoming Catalysts & Risks
Arrayit’s full-year profitability in 2012, high double-digit top-line growth and bottom-line profitability in Q1-2013, suggest that the company is well-positioned to manage its negative $7 million in shareholders’ equity and quickly scale its business to generate long-term profits and cash flow.
The company’s risk factors are further outweighed by several catalysts including its OvaDx®, PDx™ and other proprietary molecular diagnostics and its existing backlog that grew from $95,183 in Q1 2012 to $270,549 during Q1 2013. With the increase in backlog, the company is likely to report higher revenues in the future, while its molecular diagnostics business provides additional potential.
More Information
Arrayit develops, manufactures, and markets life science tools and integrated systems for the analysis of genetic variation, biological function, and diagnostics worldwide. These microarray tools and components, custom printing and analysis, and diagnostic microarrays for the early detection of treatable diseases are sold into multiple research end markets.
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Disclosure
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