OpGen, Inc. :OPGN-US: Earnings Analysis: Q3, 2016 By the Numbers : October 25, 2016

OpGen, Inc. reports financial results for the quarter ended September 30, 2016.

We analyze the earnings along side the following peers of OpGen, Inc. – Enzo Biochem, Inc. (ENZ-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 0.76 million, Net Earnings of USD -4.85 million.
  • Gross margins widened from 18.99% to 40.53% compared to the same period last year, operating (EBITDA) margins now -632.60% from -402.04%.
  • Narrowing of operating margins contributed to decline in earnings.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2015-09-30 2015-12-31 2016-03-31 2016-06-30 2016-09-30
Relevant Numbers (Quarterly)
Revenues (mil) 0.98 1.33 1.08 1.18 0.76
Revenue Growth (%YOY) N/A N/A 128 215.3 -22.55
Earnings (mil) -4.67 -4.73 -4.51 -5.05 -4.85
Earnings Growth (%YOY) N/A N/A -73.64 5.7 -3.79
Net Margin (%) -476.21 -355.58 -418.54 -427.19 -638.13
EPS -0.38 -0.38 -0.36 -0.37 -0.23
Return on Equity (%) -179.87 -194.6 -335.48 -384.71 -345.65
Return on Assets (%) -129.76 -122.96 -153.78 -171.79 -165.55

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Market Share Versus Profits

Revenues History
Earnings History

OPGN-US‘s change in revenue this period compared to the same period last year of -22.55% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that OPGN-US is holding onto its market share. Also, for comparison purposes, revenues changed by -35.78% and earnings by 4.06% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus


Earnings Growth Analysis

The company’s earnings declined year-on-year largely because of the increases in operating costs. Its operating margins (EBITDA margins) went from -402.04% to -632.60%. This decline in earnings would have been worse except for the fact that the company showed improvement in gross margins, from 18.99% to 40.53%. For comparison, gross margins were 57.88% and EBITDA margins -410.30% in the immediate last period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost


Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

OPGN-US‘s improvement in gross margin has been accompanied by an improvement in its balance sheet as well. This suggests that gross margin improvements are likely from operating decisions and not accounting gimmicks. Its working capital days have declined to 387.30 days from 844.77 days for the same period last year.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich


Margins

The company’s decline in earnings has been influenced by the following factors: (1) Decline in operating margins (EBIT margins) from -420.92% to -632.60% and (2) one-time items that contributed to a decrease in pretax margins from -476.04% to -638.13%

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

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Company Profile

OpGen, Inc. is a precision medicine company, which engages in developing molecular information solutions to combat infectious disease in global healthcare settings, helping to guide clinicians with more rapid information about life threatening infections, improve patient outcomes, and decrease the spread of infections caused by multidrug-resistant microorganisms. The company was founded on January 22, 2001 and is headquartered in Gaithersburg, MD.

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