SAN DIEGO, Nov. 8, 2012 /PRNewswire/ -- Sequenom, Inc. (SQNM), a life sciences company providing innovative genetic analysis solutions, today reported revenue of $22.9 million for the third quarter of 2012, an increase of 25% from revenue of $18.3 million in the second quarter of 2012 and a 68% increase compared to revenue of $13.6 million for the third quarter of 2011. Revenues from the Sequenom Center for Molecular Medicine (Sequenom CMM) diagnostic testing services operating segment grew to $12.5 million in the third quarter of 2012, while revenues from the genetic analysis operating segment were $10.4 million in the third quarter of 2012.

Also during the third quarter of 2012, Sequenom CMM established a number of new agreements with networks and insurance providers, increasing the number of lives covered with in-network access to the MaterniT21 PLUS laboratory developed test (LDT) from 26 million to 46 million.

"The results from this quarter illustrate the impact of the Company's strategic approach, as we have focused on maintaining our leadership position within our markets," said Harry Hixson, Jr., Ph.D., Chairman and CEO of Sequenom. "Overall, the last year has been an exciting time as Sequenom CMM introduced the MaterniT21 PLUS LDT and dramatically scaled up operations to support the overwhelming response from the obstetrics and maternal-fetal medicine physician community. We are pleased that Sequenom CMM has reached a 90,000 annualized test volume run rate for the MaterniT21 PLUS test. We will also continue to seek new molecular diagnostic growth opportunities as we move into 2013."

Diagnostic services revenue is primarily recognized when cash is received, while costs are recognized in the current period upon completion of the services. The costs associated with increasing test volumes resulted in decreased gross margins as the Company has not yet recognized revenue related to the increased number of laboratory tests performed, which have been billed but not yet collected.

Gross margin in the third quarter of 2012 was 26% of revenues as compared to a gross margin of 60% in the same period one year ago, a difference primarily attributable to current cash accounting for diagnostics revenue and higher test volumes, a result of the growing market adoption of the Sequenom CMM MaterniT21 PLUS LDT. Gross margin is expected to continue to fluctuate quarterly due to changes in sales volumes and the timing of cash receipts until the Company converts to accrual accounting for diagnostic services revenue, which is expected to occur after sufficient reimbursement history has been established.

Total operating expenses for the third quarter of 2012 were $35.7 million, as compared to total expenses of $26.4 million for the third quarter of 2011. This change primarily reflects a 49% increase in selling and marketing expense resulting from higher labor costs associated with additional headcount to increase market penetration and support the continued expansion of the diagnostic services market, including sales force expansion during the third quarter.

General and administrative expenses increased in the third quarter of 2012 to $10.1 million as compared to $5.5 million in the same period one year ago. The increase was due primarily to higher legal costs associated with patent litigation, and higher labor costs associated with additional headcount to support operations. Total stock-based compensation expense was $3.1 million for the third quarter of 2012, flat as compared to the third quarter of 2011.

Net loss for the third quarter of 2012 grew to $30.2 million, or $0.26 per share, resulting from an increase in costs associated primarily with the growth in testing volume of the MaterniT21 PLUS LDT. This compares to a net loss of $18.4 million, or $0.19 per share for the same period in 2011.

"We are pleased with the continuing ramp up of our diagnostic services revenue, driven primarily by the rapid adoption of Sequenom CMM MaterniT21 PLUS LDT. Importantly, we are seeing greater recognition from the payors and networks as 46 million Americans now have network access to the test," said Paul V. Maier, Sequenom's CFO. "Additionally, to support our continued growth, we strengthened our balance sheet significantly with the completion of our $130 million convertible note financing transaction in September of 2012."

Year-To-Date ResultsFor the first nine months of 2012, the Company reported revenue of $56.0 million, an increase of 39% from revenue of $40.4 million for the first nine months of 2011. Revenues in the first nine months of 2012 from the Sequenom CMM diagnostics services operating segment grew to $25.4 million, while revenues from the genetic analysis operating segment were $30.6 million in the first nine months of 2012.

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Sequenom, Inc. Reports Financial Results For The Third Quarter Of 2012 And Announces 90,000 Annualized Run Rate For ...

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