Response Genetics, Inc. (NASDAQ:RGDX) Plummets On Back Of Weak 4Q Results


Response Genetics, Inc. (NASDAQ:RGDX) which is a small capped medical research and laboratory operator reported disappointing results from its 4Q and full year 2013 operations before markets opened on 20th March. The investor community reacted to the results by deserting the stock enmass, which resulted in a close to double digit dip in the stock’s market valuation.

Revenue Dip in 4Q

From its 4Q operations, the company managed to raise revenue of $4.8 million, which indicated a sequential increase of $0.7 million over its 3Q13 achievement and a dip of close to $0.8 million over its 4Q12 revenue numbers. The revenue stream in the fourth quarter was kept afloat by its flag ship drug ResponseDX(R) which grew its revenue contribution to company’s overall revenue pot by a super impressive 25 percent.

Financial Highlights

The gross margins for the 4Q went up to hit 48 percent, where as in sequential 3Q, it had come in at 33 percent. Gross margins for the year went up 3 percentage points to reach 47 percent, as against the 44 percent it had reported during Fy12.Cost of revenue, for the 4Q came in at $5.4 million, which was a 35 percent increase over its 3.5 million spending in 4Q12. The spending went up due to the company setting aside greater reserves to account for some perceived dodgy receivables and the big spending it had embarked on to augment its infrastructure.

For the full year, the annual revenue for 2013 came in at $19.8 million, as against the $18.7 million in 2012. The increase is linked to the revenue stream getting augmented by its pharma client revenue.

Positive Spin

Trying to put a positive spin on the entire year’s efforts, Response Genetics, Inc. (NASDAQ:RGDX) Chairman of the Board and Chief Executive Officer Thomas A. Bologna has been quoted to have said that, “We are pleased with the increase in our ResponseDX(R) fourth quarter revenues growing by more than 25% over the third quarter and our gross margin increasing to 48%, all while we were investing in new marketing and sales initiatives and infrastructure for expected growth”


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