HemaCare Reports First Half 2019 Results

August 20, 2019

(Los Angeles – August 20, 2019) HemaCare Corporation (OTCMKTS: HEMA), a global leader and trusted brand in the customization of human-derived biological products and services for biomedical research, drug discovery, and cellular process development, today announced operational highlights and financial results for the six months ended June 30, 2019.

First Half 2019 Operational Highlights

  • Product and services revenue growth was primarily due to customized cell isolation, processing and cryopreservation, specialized collection of leukopaks and mobilized peripheral blood. No revenues have been attributed to GMP clean room operations, although ~$500,000 of clean room one-time only startup costs were incurred during the reporting period.
  • Further enabled scalability by launching automated systems to support and streamline Quality Assurance, Purchasing, and Human Resources.
  • In January, at the Phacilitate Cell & Gene Therapy World Conference, HemaCare partnered with Hitachi Chemical Advanced Therapeutics Solutions (HCATS) on a presentation titled, “Improved Stability and Quality of Donor Starting Material”. This was followed up in February with a joint webinar hosted with HCATS titled, “Managing Starting Material Stability to Maximize Manufacturing Flexibility & Downstream Efficiency”.
  • In February, HemaCare executed a strategic collaboration with a long-time global distributor, Tissue Solutions. This strategic collaboration expands the disease state product portfolio for HemaCare clients and leverages Tissue Solutions’ expertise in sourcing these critical materials.
  • On April 4, 2019, HemaCare executed a lease for an additional 13,300 square feet of contiguous space to accommodate GMP project management and Quality Assurance personnel necessary to support GMP project demand.
  • In May, HemaCare executed a distributor agreement with FujiFilm (Wako Pure Chemical Corporation) for distribution of its cryopreserved products in Japan. This agreement will further drive growth in this rapidly expanding research market.
  • In July, HemaCare announced a branding initiative around HemaPrime™(research use) and GMPrime™ (GMP-compliant) cells and tissues, providing clients with access to the premium quality materials needed to support research from bench to commercialization.

Financial Results

  • For the six months ended June 30, 2019, total revenues of $19.5 million, compared to $13.1 million for the six months ended June 30, 2018, representing an increase of $6.4 million, or approximately 49%.
  • Gross profit for the six months ended June 30, 2019 of $10.2 million, or 53% of net revenues, compared to $7.4 million, or 57% of net revenues, for the six months ended June 30, 2018. The decrease in year-over-year margin is attributed to HemaCare’s new facility relocation and resulting increased depreciation and amortization of property and equipment and one-time only GMP related clean room startup costs.
  • EBITDA, a non-GAAP measurement, for the six months ended June 30, 2019 of $4.7 million compared with $3.1 million for the same period in 2018, representing an increase of $1.6 million or 51%.
  • Net income for the six months ended June 30, 2019, increased to $4.5 million, as compared to $2.1 million for the prior-year period, including an income tax net benefit of $353,000 primarily derived from a corporate tax deduction for the exercise of non-qualified stock options which offsets tax expense.
  • Capital expenditures increased by $900,000 for the six months ended June 30, 2019 primarily due to investment in HemaCare’s Donor Center and Biorepository.
  • As of June 30, 2019, HemaCare had $10.9 million in cash and cash equivalents compared to $10.3 million at June 30, 2018.

For complete unaudited First Half 2019 Financial Statements, please click here.

Pete van der Wal, HemaCare’s President and Chief Executive stated: “We continue to strengthen our position as the trusted brand and global leader in the production and customization of the highest quality human-derived cellular products for research, drug discovery, development and commercial production of cell and gene therapies.”

“HemaCare is committed to the highest levels of quality and regulatory compliance in the industry.  We maintain rigorous ongoing training programs for our team, and comprehensive validation programs of our facility, equipment, and processes to ensure customers receive consistent, high-quality products and services.  Our quality system is based on strict regulatory requirements and industry best practices,” said van der Wal.

 

HEMACARE CORPORATION
BALANCE SHEETS
(Unaudited) (Audited)
2019
June 30
2018
December 31
ASSETS
CURRENT ASSETS
Cash and cash equivalents  $10,913,000 $10,274,000
Accounts receivable, net 6,768,000 4,776,000
Product inventories and supplies, net 3,954,000 3,299,000
Prepaid expenses 316,000 239,000
Other current assets 939,000 141,000
      TOTAL CURRENT ASSETS 22,890,000 18,729,000
OTHER ASSETS
Property and equipment, net 9,764,000 9,502,000
Deferred income taxes 116,000
    TOTAL NONCURRENT ASSETS 9,880,000 9,502,000
TOTAL ASSETS $32,770,000 $28,231,000
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable $1,815,000 $2,184,000
Accrued payroll and payroll taxes 1,578,000 1,979,000
Other accrued expenses 127,000 123,000
Current portion of capital lease obligations 185,000 201,000
    TOTAL CURRENT LIABILITIES 3,705,000 4,487,000
LONG-TERM LIABILITIES
Deferred rent 2,534,000 2,409,000
Deferred income taxes 35,000
Long-term portion of capital lease obligations 84,000 176,000
      TOTAL LONG-TERM LIABILITIES 2,618,000 2,620,000
TOTAL LIABILITIES 6,323,000 7,107,000
SHAREHOLDERS’ EQUITY
Common stock, no par, 40,000,000 shares authorized,
13,657,206 and 12,860,956 shares issued and outstanding, respectively
23,909,000 23,060,000
Retained earnings (accumulated deficit) 2,538,000 (1,936,000)
    TOTAL SHAREHOLDERS’ EQUITY 26,447,000 21,124,000
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $32,770,000 $28,231,000

 

HEMACARE CORPORATION
STATEMENTS OF INCOME (unaudited)
Six months ended Six months
ended
June 30, 2019 June 30, 2018
REVENUE $19,454,000 $13,070,000
COST OF REVENUE 9,236,000 5,638,000
      GROSS PROFIT 10,218,000 7,432,000
GENERAL AND ADMINISTRATIVE EXPENSES 6,148,000 4,509,000
OTHER INCOME (EXPENSE) 51,000 (3,000)
INCOME BEFORE INCOME TAX BENEFIT (EXPENSE) 4,121,000 2,920,000
      Income tax benefit (expense) 353,000 (790,000)
           NET INCOME $4,474,000 $2,130,000

 

About HemaCare

HemaCare is a global leader in the customization of human-derived biological products and services for biomedical research, drug discovery, and cellular therapy process development. The company’s network of FDA-registered, GMP/GTP-compliant collection centers ensure fresh donor material is available to customers and for use within HemaCare’s isolation laboratory. Human biological material including peripheral blood, bone marrow, and cord blood is isolated into various primary cells types for fresh and frozen distribution. For over 40 years, HemaCare has developed an extensive registry of repeat donors and provides human-derived primary blood cells and tissues for biomedical and drug discovery research and cell therapy clinical trials, and supports commercialization with apheresis collections, directly enabling customers to advance both autologous and allogeneic cellular therapies.

For more information please visit www.hemacare.com.

Forward Looking Statements

This press release contains forward-looking statements. The words “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “plan,” “expect” and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties which could cause actual results to differ materially from those in the forward-looking statements, including, without limitation, the following:  the ability of our donors to provide sufficient quality source material; our ability and the ability of our suppliers to maintain compliance with cGMP and other regulatory obligations; the results of regulatory inspections; adverse developments in our customer-base or the markets we serve; results of the Company’s collaboration with strategic partners; adverse changes in regulatory, social and political conditions affecting our industry; our ability to timely and effectively implement 2019 staffing, operations, and product menu changes; our ability to manage growth; and general market, economic and business conditions.  Forward-looking statements are made as of the date of this release, and we expressly disclaim any obligation or undertaking to update forward-looking statements.