Q1 Guidance 2014

Funny that the 2nd largest was actually pretty small volume.

 

Any other insights for investors looking to time a proper exit in an effort to recoup the triple digit loss this stock has provided since it's IPO?

 

Biggest insight is the sooner you get out the less $ you will lose

 

This thread is dead

 

The company is dead. RIP.
Worst management ever. Don't blame the CEO.

 

CEO & VP of sales are the very reason this place is in the tank! During there tenor here the following has taken place:

1) HDL dropped us despite the trying to spin it that we dropped them
2) We lost another lab which did decent business in Solstas
3) The Vantera we supposedly placed in California with scripps is STILL not placed despite the announcement in November.
4) 2 rounds of layoffs (internal & external)
5) the stock has hit an all time low

Wonder if they'll place that stellar track record on there resumes?!? Only a matter of time till this ship gets sold!

 

LOL sold as scrap heap at best !

 

Its OVER! Read and weep boys and girls. To much debt and not enough rev!



Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion of the financial condition and results of operations of LipoScience, Inc. ("we," "us", "our" or the "Company") should be read in conjunction with our unaudited financial statements and related notes that appear elsewhere in this Quarterly Report on Form 10-Q, and with our audited financial statements and related notes for the fiscal year ended December 31, 2013 appearing in our Annual Report on Form 10-K filed with the SEC on March 28, 2014, (our "2013 Form 10-K".)
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, that are intended to be covered by the "safe harbor" created by those sections. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of forward-looking terms such as "believe," "expect," "may," "will," "should," "could," "seek," "intend," "plan," "estimate," "anticipate" or other comparable terms. Forward-looking statements in this Quarterly Report on Form 10-Q may address the following subjects among others: our industry, business strategy, goals and expectations concerning our future operations, performance or results, profitability, capital expenditures, liquidity and capital resources, timing or anticipated results of our FDA submissions and other financial and operating information. Forward-looking statements involve inherent risks and uncertainties which could cause actual results to differ materially from those in the forward-looking statements, as a result of various factors including those risks and uncertainties described in the Risk Factors and in Management's Discussion and Analysis of Financial Condition and Results of Operations sections of our 2013 Form 10-K and our subsequently filed Quarterly Reports on Form 10-Q. We urge you to consider those risks and uncertainties in evaluating our forward-looking statements. We caution readers not to place undue reliance upon any such forward -looking statements, which speak only as of the date made. Except as otherwise required by the federal securities laws, we disclaim any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Overview
We are a clinical diagnostic company pioneering a new field of personalized diagnostics based on nuclear magnetic resonance, NMR, technology. Our first diagnostic test, the NMR LipoProfile� test, directly measures the number of low density lipoprotein, or LDL, particles, also known as LDL-P, in a blood sample and provides physicians and their patients with actionable information to personalize management of risk for heart disease.
Our strategy is to continue to advance patient care by converting clinicians, and the clinical diagnostic laboratories they use, from traditional cholesterol testing to our NMR LipoProfile test for the management of patients at risk for cardiovascular disease, with the goal of ultimately becoming the preferred choice by physicians for the management of patients with cardiovascular disease. We believe increasing utilization of our test in key markets, increasing market awareness including pursuing inclusion in treatment guidelines, expanding relationships with clinical diagnostic laboratories and our geographic presence, broadening payor coverage of our test, decentralizing our technology where appropriate and expanding our menu of personalized diagnostic tests to address a broad range of cardiovascular, metabolic and other diseases and are key steps toward achieving this goal.
To date, the NMR LipoProfile test has been ordered over 11 million times, including approximately 2.1 million times during 2013 and approximately 0.5 million times during the three months ended March 31, 2014. The NMR LipoProfile test is reimbursed by a number of governmental and private payors, which we believe collectively represent approximately 150 million covered lives.

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We currently perform the vast majority of the NMR LipoProfile tests at our certified and accredited laboratory facilities in Raleigh, North Carolina. We intend to accelerate clinician and clinical diagnostic laboratory adoption of the NMR LipoProfile test and future clinical diagnostic tests by increasing access to our technology platform through strategic placement of our FDA approved automated clinical analyzer, the Vantera system, in third party clinical diagnostic laboratories. The Vantera system requires no previous knowledge of NMR technology to operate and has been designed to significantly simplify complex technology through ease of use and walk-away automation. We started placing the Vantera system on-site with certain selected clinical diagnostic laboratories as well as leading medical centers and hospital outreach laboratories during the second quarter of 2013, which we believe will facilitate their ability to offer our NMR LipoProfile test and other diagnostic tests that we may develop. To date, we have placed the Vantera system in a leading medical center as well as certain selected clinical diagnostic laboratories. We are also in discussions with additional laboratory customers that have indicated a similar interest in the placement of the Vantera system in their laboratories. In addition, we have placed the Vantera system in academic and medical research centers that are collaborating with us to further validate the efficacy of our NMR LipoProfile test, and to develop additional high-value diagnostic assays based on NMR technology. We retain full ownership of any Vantera system placed in third-party clinical diagnostic laboratories and remain responsible for support and maintenance obligations. In general, we expect that the number of Vantera system that will be placed in our clinical diagnostic laboratory customers' facilities will depend on their demonstrated annual production volume for the NMR LipoProfile test and their ability to increase demand for our tests. We believe that the inherent analytical advantages of NMR technology will also allow us to expand our diagnostic test menu. We are currently developing NMR-based diagnostic tests for use in the prediction of diabetes, including the assessment of insulin resistance, and we are investigating opportunities to develop new diagnostic tests for other diseases.
We have incurred significant losses since our inception. As of March 31, 2014, our accumulated deficit was $62.6 million. We expect to incur operating losses for the next few years.
Critical Accounting Policies and Significant Judgments and Estimates Our management's discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. The preparation of these financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reported period. In accordance with U.S. GAAP, we base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could therefore differ materially from these estimates under different assumptions or conditions. A critical accounting policy is one that is both material to the preparation of our financial statements and requires us to make difficult, subjective or complex judgments for uncertain matters that could have a material effect on our financial condition and results of operations. We believe that of our significant accounting policies, the following accounting policies involve a greater degree of judgment and complexity and are the most critical to aid in fully understanding and evaluating our financial condition and results of operations:
� revenue recognition;

� accounts receivable and allowance for uncollectible accounts receivable;

� stock-based compensation expense; and

� income taxes.

See Note 1 to our financial statements included in our 2013 Form 10-K under the heading "Description of Business and Significant Accounting Policies" for additional information regarding our critical accounting policies, as well as a description of our other significant accounting policies. During the three months ended March 31, 2014, there were no significant changes in our critical accounting policies or estimates from those set forth in our 2013 Form 10-K.

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Results of Operations



Comparison of Three Months Ended March 31, 2014 and 2013
The following table sets forth, for the periods indicated, the amounts of
certain components of our statements of comprehensive loss and the percentage of
total revenues represented by these items, showing period-to-period changes.

Three Months Ended March 31, Period-to-period change
% of % of
2014 Revenues 2013 Revenues Amount Percentage
(in thousands, except for percentages)
Revenues $ 12,008 100.0 % $ 13,616 100.0 % $ (1,608 ) (11.8 )%
Cost of revenues 2,614 21.8 2,850 20.9 (236 ) (8.3 )
Gross profit 9,394 78.2 10,766 79.1 (1,372 ) (12.7 )
Operating expenses:
Research and development 2,560 21.3 3,132 23.0 (572 ) (18.3 )
Sales and marketing 5,100 42.5 6,659 48.9 (1,559 ) (23.4 )
General and administrative 3,347 27.9 3,307 24.3 40 1.2
Total operating expenses 11,007 91.7 13,098 96.2 (2,091 ) (16.0 )
Loss from operations (1,613 ) (13.4 ) (2,332 ) (17.1 ) 719 *
Total other expense (430 ) (3.6 ) (516 ) (3.8 ) 86 *
Loss before taxes (2,043 ) (17.0 ) (2,848 ) (20.9 ) 805 *

Net loss $ (2,043 ) (17.0 )% $ (2,848 ) (20.9 )% $ 805 *
* Percentage not meaningful Revenues Substantially all of our revenues are currently derived from sales of our NMR LipoProfile test to clinical diagnostic laboratories, clinicians and other healthcare professionals for use in patient care. For the three months ended March 31, 2014 and 2013, sales of the NMR LipoProfile test represented approximately 97% and 96%, respectively, of our total revenues. The remainder of our revenues is derived from contract research arrangements as well as sales of standard analytical chemistry tests, which we refer to as ancillary tests, requested by clinicians in conjunction with our NMR LipoProfile test. Ancillary tests are FDA-approved blood tests that most clinical laboratories can process but that may be ordered from us at the same time as the NMR LipoProfile test for convenience. These tests are not run on our NMR technology platform, but instead are run on a traditional chemistry analyzer. In mid-March 2014, Health Diagnostic Laboratory, Inc. ("HDL Inc."), which accounted for 33%, 32% and 21% of our revenues for the years ended December 31, 2013, 2012 and 2011, respectively, announced its own LDL-P test and began making the test available to its customers. We believe our NMR LipoProfile test has significant advantages over HDL Inc.'s non-FDA cleared test and that it is critical that physicians are able to differentiate with certainty which test result they are receiving. We plan to aggressively market to physicians the advantages of our NMR LipoProfile test, the only FDA-cleared test that quantifies the number of LDL-P, versus the HDL Inc. laboratory-developed test (LDT) that has not demonstrated clinical efficacy nor undergone the rigor of an FDA-clearance process. Accordingly, on March 28, 2014, we notified HDL Inc. that we were terminating our agreement with HDL Inc. effective June 26, 2014. Over time, we believe that we will be able to mitigate the effects of loss of revenues from HDL Inc. through our relationships with other national, regional and local labs and by alerting physicians to use clinical laboratory customers that offer the FDA-cleared NMR LipoProfile test. However, in the short and medium term, we expect our revenues to be impacted negatively, potentially significantly so. Total revenues decreased by 11.8% to $12.0 million for the three months ended March 31, 2014 from $13.6 million for the three months ended March 31, 2013. Revenues from sales of our NMR LipoProfile test decreased to $11.6 million for the three months ended March 31, 2014 from $13.1 million for the three months ended March 31, 2013, resulting from both a reduction in in the number of NMR LipoProfile tests sold and an overall decline in average selling price.

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The overall number of NMR LipoProfile tests decreased by 6.5% to approximately 485,000 tests for the three months ended March 31, 2014 from approximately 518,000 tests for the three months ended March 31, 2013. This volume reduction is largely attributable to the lingering wintry weather experienced in much of the U.S. coupled with the termination of the HDL Inc. agreement. The overall average selling price of NMR LipoProfile tests decreased 5.4% for the three months ended March 31, 2014 as compared to the three months ended March 31, 2013. This decrease in average selling price was primarily the result of lower contracted pricing for some clinical laboratory customers and the continuing shift in channel mix toward high-volume clinical laboratory customers. The percentage of our total NMR LipoProfile tests sold through direct distribution channels decreased from 3% for the three months ended March 31, 2013 to 2% for the three months ended March 31, 2014.
Revenues from sales of ancillary tests decreased to $0.2 million for the three months ended March 31, 2014 from $0.3 million for the three months ended March 31, 2013. The decrease in revenues from these ancillary tests was due to lower test volumes. Revenues from our clinical research clients were $0.3 million and $0.2 million for the three months ended March 31, 2014 and 2013, respectively. The following table presents our revenues by service offering and source:

Three Months Ended March 31,
2014 2013
(in thousands)
Revenues:
NMR LipoProfile tests $ 11,589 $ 13,090
Ancillary tests 156 308
Research contracts 263 218
Total revenues $ 12,008 $ 13,616

Our revenues are driven by both test volume and the average selling price of our NMR LipoProfile test. For the three months ended March 31, 2014, we generated 92% of our total revenues from clinical diagnostic laboratory customers. We expect to continue to increase the proportion of NMR LipoProfile tests performed through clinical diagnostic laboratories, both under Vantera system placement arrangements and arrangements under which we perform the test for them at our own facility, as compared to our direct distribution channel in which clinicians order the test directly from us. The average selling price of our tests sold to these laboratories is less than that for tests we sell directly to clinicians, and therefore we expect that our overall average selling price will continue to decline in the future. For direct sales, the price we ultimately receive depends upon the level of reimbursement we receive from Medicare or commercial insurance carriers. Clinical diagnostic laboratories purchase our test at prices that we negotiate with them, which will continue to be the case for NMR LipoProfile tests performed using the Vantera system, whether the analyzer is located on-site at the customer's laboratory or at our own facility. Our clinical diagnostic laboratory customers are responsible for obtaining reimbursement from third-party payors or directly from patients. We expect declines in our average selling price to continue if we are successful in placing additional Vantera system in third-party laboratories, as the price we receive for a test performed on-site at third-party laboratories using the Vantera system will generally be less than the price for the same test performed at our own facility. Our business model contemplates that this decline in average selling price will be offset by increases in test volumes, if demand increases through growth with our clinical diagnostic laboratory customers. Over the next 12 to 24 months, we expect that additional Vantera system placements may be with our existing clinical diagnostic laboratory customers. As a result, we may see some decrease in the proportion of NMR LipoProfile tests we performed at our existing laboratory facility for these laboratory customers as compared to tests performed at our customers' facilities using the Vantera system. We expect that any reduced volume in the number of tests performed at our facility for customers with a Vantera clinical analyzer on-site may be partially offset by growth in NMR LipoProfile tests orders from new clinical diagnostic laboratory customers who may not initially meet our test volume criteria for the Vantera system placement or who may choose to continue to send the test to our existing laboratory facility.
Our revenues from ancillary tests, while a diminishing portion of our business, are similarly dependent upon our rates of reimbursement from various payor sources. For example, Medicare reimbursement rates are adjusted annually. Changes in Medicare reimbursement rates are dependent on a number of factors that we cannot predict. Reductions in reimbursement rates for these ancillary tests would reduce our overall revenues from these tests.

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Cost of Revenues and Gross Margin
Cost of revenues consists of direct labor expenses, including employee benefits and stock-based compensation expenses, cost of laboratory supplies, freight costs, depreciation of laboratory equipment, leasehold improvements, royalties paid under license agreements and certain allocated overhead expenses. Since the Vantera system became commercially available in December 2012, our placement costs and associated service and maintenance support have been included in cost of revenues. Cost of revenues decreased by 8.3%, to $2.6 million for the three months ended March 31, 2014 from $2.9 million for the three months ended March 31, 2013. This decrease primarily related to $0.2 million in lower materials and freight costs due to decreased unit volumes sold during the quarter coupled with lower negotiated vendor pricing, and fewer ancillary tests performed. Our cost of revenues represented approximately 22% and 21% during the three months ended March 31, 2014 and 2013, respectively, of our total revenues.
Our gross profit represents total revenues less the cost of revenues, and gross margin is gross profit expressed as a percentage of total revenues. Gross margin decreased to 78.2% for the three months ended March 31, 2014 from 79.1% for the three months ended March 31, 2013. The decrease we experienced in gross margin was primarily attributable to lower revenues for the three month period ended March 31, 2014.
Research and Development Expenses
Our research and development expenses include those costs associated with performing research and development activities, such as personnel-related expenses, including stock-based compensation, fees for contractual and consulting services, travel costs, laboratory supplies, fees associated with collaboration agreements and allocated overhead expenses. We expense all research and development costs as incurred.
Research and development expenses decreased by 18.3% to $2.6 million for the three months ended March 31, 2014 from $3.1 million for the three months ended March 31, 2013. This decrease was primarily the result of $0.4 million lower consulting fees related to conducting external research and development studies in support of our publication efforts and other engineering projects that were completed in 2013. As a percentage of total revenues, research and development expenses decreased to 21.3% for the three months ended March 31, 2014, as compared to 23.0% for the three months ended March 31, 2013. Sales and Marketing Expenses
Our sales and marketing expenses include costs associated with our sales organization, including our direct sales force and sales management, and our marketing and managed care personnel. These expenses consist principally of salaries, commissions, bonuses and employee benefits for these personnel, including stock-based compensation, as well as travel costs related to sales and marketing activities, marketing and medical education activities and allocated overhead expenses. We expense all sales and marketing costs as incurred. Sales and marketing expenses decreased by 23.4%, to $5.1 million for the three months ended March 31, 2014 from $6.7 million for the three months ended March 31, 2013. This decrease was primarily due to a $1.0 million reduction in compensation and benefit costs, training, and travel and entertainment-related expenses as a result of reduced staff levels. We also experienced $0.4 million in lower marketing expenses including consulting services, associated with various marketing programs, medical education and campaign efforts. As a percentage of total revenues, sales and marketing expenses decreased to 42.5% for the three months ended March 31, 2014 from 48.9% for the three months ended March 31, 2013.
General and Administrative Expenses
Our general and administrative expenses include costs for our executive, accounting and finance, legal, and human resources functions. These expenses consist principally of salaries, bonuses and employee benefits for the personnel included in these functions, including stock-based compensation and professional services fees, such as consulting, audit, tax and legal fees, medical device excise tax, general corporate costs and allocated overhead expenses, and bad debt expense. We expense all general and administrative expenses as incurred. General and administrative expenses increased by 1.2%, to $3.3 million for the three months ended March 31, 2014 from $3.3 million for the three months ended March 31, 2013. The general and administrative expenses of $3.3 million for the three months ended March 31, 2014 included approximately $0.4 million in severance payments in connection with the workforce reduction completed in January 2014. As a percentage of total revenues, general and administrative expenses increased to 27.9% for the three months ended March 31, 2014, compared to 24.3% for the three months ended March 31, 2013.

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Other Expense
Other expense consists primarily of interest expense on our loan balances and the amortization of debt discounts and debt issuance costs. We amortize both debt discounts and debt issuance costs over the life of the loan and report them as interest expense in our statements of comprehensive loss.
Other expense decreased to $0.4 million for the three months ended March 31, 2014 from $0.5 million for the three months ended March 31, 2013. The decrease was primarily attributable to a $0.1 million decrease in interest expense compared to the prior year period.
Seasonality
Our financial results may vary significantly from quarter to quarter as a result of many factors, many of which are outside our control. For example, we expect that the volume of the NMR LipoProfile tests ordered will generally decline due to adverse weather conditions, and during the summer months as well as holiday periods, when patients are less likely to visit their healthcare providers. As a result, comparison of our results of operations for successive quarters may not accurately reflect trends or results for the full year. Our historical results should not be considered a reliable indicator of our future results of operations.
Inflation
We do not believe that inflation has had a material effect on our business, financial condition or results of operations. We continue to monitor the impact of inflation in order to minimize its effect through pricing strategies, productivity improvements and cost reductions. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations. Workforce Reduction
In May 2014, we implemented a workforce reduction to reduce approximately 22 positions throughout the Company, impacting positions in operations, research and development and administration. The workforce reduction is related to its plan to improve operational efficiencies and other cost-cutting measures. We expect to record total charges for severance, related benefits and other costs of approximately $1.0 million during the second quarter of 2014. Liquidity and Capital Resources
Sources of Liquidity
On January 30, 2013, we completed our initial public offering (our "IPO"), in which we sold 5,750,000 shares of common stock and received net proceeds of $44.4 million, after deducting underwriting discounts and offering-related expenses paid by us. Prior to our IPO, we funded our operations principally through private placements of our capital stock, bank borrowings and, since 2009, cash flows from operations.
In December 2012, we entered into a credit facility with Square 1 and Oxford Finance and repaid the outstanding balance under a previous facility. The current credit facility provides for term loans from Oxford Finance of $10.0 million, a term loan from Square 1 of $6.0 million and a revolving line of credit with Square 1 of up to $6.0 million. Our borrowing capacity under the line of credit is subject to borrowing base limitations related to our eligible accounts receivable. Interest on the term loans accrues at a fixed annual rate of 9.5%, while advances under the line of credit continue to carry a variable interest rate equal to the greater of 6.25% or the prime rate plus 3.0%. We are required only to make interest payments on the term loans, as amended, through January 2015, and then repayments of principal and interest amounts due under the term loans will continue in monthly installments through July 2017. The revolving line of credit matures in February 2015.
As of March 31, 2014, the term loans from Oxford Finance had an outstanding balance of $9.8 million, net of debt discount in the amount of $0.1 million, and the term loan from Square 1 had an outstanding balance of $6.0 million, net of debt discount in the amount of $47,000. As of March 31, 2014, we did not have . . .

 

My manager told me that scripps was the future you are saying its not up?

 

That box is collecting as much dust as every other box

 

Based off of whats posted....... How can we stay around? We wash our hands of our best client then we tout a big placement 6 months ago and nothing yet? Promises must have been made to get them to just take the box......we just need warehouse space out on the West Coast...

 

Correct, it's not functional and won't be for some time from what I understand. I'm on the west coast and currently spend my work days looking for a new job.

 

1) was in play for a whole lot longer than the current CEO or his sales sidekick have been around. If you need to blame someone for that, point your finger at all the BS middle manager VPs ( there's a lot of those) who know nothing but spend all their time bad mouthing everyone else. They all knew what HDL was doing, in fact,they were informed, but they did nothing about it, because they are worthless gutless shits.
2) your facts are just plain wrong, can't help you here.
4) and 5) follow from 1) .

There's too many damn VPs in that place blocking the information flow to senior leadership, for their own personal benefit.

 

I was in the interview process and due to the last few posts I will withdraw in the AM. I was told if I find an account like Scripps each year I would be gold.....but what would we offer and management inside seems to make it not worth it.......thank you prior posters.......you saved me!

 

Ummm I still work here and all of the following is 100% fact. Most of it can be found in various press releases.

 

Wow, What will become of the NE region?!? RSM fired after 3 more of his reps walk out on him. Will they just close up shop in the NE all together!?!

 

They should close up, yes. You guys suck ass up there.

 

Q2 next week is gonna be ugly

 

It sure is

 

Get a life people! If you put half of your energy into selling vs sitting on café pharma all day perhaps you would move some numbers. Until you walk in the shoes of the people you are criticizing you have zero room to talk and zero room to have an opinion. You all sound ignorant. you are all big boys and girls. If everything is doom and gloom get the F..k out and get a life because you obviously don't have one!