Chembio Diagnostics sales drop, loss widens

Chembio Diagnostics Inc. Thursday reported losses that more than quadrupled in the April-June period compared with a year earlier as sales fell and operating expenses rose.

The Medford-based manufacturer of rapid tests for HIV and syphilis said losses totaled $664,000 in the three months ended June 30. That compares with a loss of $146,000 in the same quarter in 2014.

Sales in the period fell more than 9 percent to $6.7 million.

Despite the lower results, Chembio chief executive John J. Sperzel III expressed confidence in the potential for the company's point-of-care testing technology, called DPP. He said it "offers industry-leading sensitivity and specificity, and the ability to test simultaneously for multiple diseases with a single patient sample."

Under Sperzel, Chembio has developed a U.S. sales team and expanded use of its tests beyond HIV to research projects involving an undisclosed form of cancer, Ebola and tropical diseases.

In a teleconference with stock analysts, he said the company will deliver a combination test for Ebola and malaria to the federal Centers for Disease Control and Prevention for evaluation by Sept. 30. He also said clinical trials for a combined HIV and syphilis test will begin before year's end.

Chembio's revenue from research, grants and royalty payments increased in the second quarter, helping to offset a 13 percent drop in sales of the rapid tests.

Chembio's cash on June 30 was $1.6 million compared with $4.6 million at the end of 2014.

The company said the reduction "was primarily due to net cash used in operating activities of $2.17 million, as well as investing activities to fund the purchase of a license and deposits on and the purchase of fixed assets of $880,000."

Chief financial officer Richard J. Larkin said in the conference call that Chembio could borrow up to $2 million from HSBC if need be.

Larkin also said Chembio is working to reduce its accounts receivable balance, which is "double our historical levels."

Sperzel said he had met with an unidentified customer and is confident payments would be forthcoming by year's end.

Chembio shares closed down 8 cents, or 1.6 percent, to $4.92 on the Nasdaq Stock Market Thursday.