Signal Genetics, Inc. :SGNL-US: Earnings Analysis: 2015 By the Numbers

Signal Genetics, Inc. reports financial results for the year ended December 31, 2015.

We analyze the earnings along side the following peers of Signal Genetics, Inc. – Trovagene, Inc., Laboratory Corporation of America Holdings, CombiMatrix Corporation, RadNet, Inc., Quest Diagnostics Incorporated and Enzo Biochem, Inc. (TROV-US, LH-US, CBMX-US, RDNT-US, DGX-US and ENZ-US) that have also reported for this period.

Highlights

  • Gross margins narrowed from 24.93% to 2.60% compared to the same period last year, operating (EBITDA) margins now -433.53% from -156.88%.
  • Year-on-year change in operating cash flow of -211.70% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • 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:

N/A 2012 2013 2014 2015
Relevant Numbers (Annual)
Revenues N/A 4.41 4.32 4.32 2.54
Revenue Growth (YOY) N/A N/A N/A N/A N/A
Earnings N/A -5.62 -2.16 -7.89 -11.33
Earnings Growth (YOY) N/A N/A 61.56 -265.33 -43.57
Net Margin N/A -127.51 -50.03 -182.64 -446.34
EPS N/A -86.53 -0.96 -3.5 -1.4
Return on Equity N/A N/A N/A N/A -138.14
Return on Assets N/A -202.05 -66.93 -134.17 -107.93

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Earnings Growth Analysis

The company’s year-on-year decline in earnings was influenced by a weakening in gross margins from 24.93% to 2.60%, as well as issues with cost controls. As a result, operating margins (EBITDA margins) went from -156.88% to -433.53% in this time frame. For comparison, gross margins were 24.93% and EBITDA margins were -156.88% in the previous period.

Gross Margin Versus EBITDA Margin

Cash Versus Earnings – Sustainable Performance?

SGNL-US‘s change in operating cash flow of -211.70% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Margins

The company’s decline in earnings has been influenced by the following factors: (1) Decline in operating margins (EBIT margins) from -160.21% to -440.78% and (2) one-time items that contributed to a decrease in pretax margins from -182.64% to -446.34%

EBIT Margin Versus PreTax Margin

Access our Ratings and Scores for Signal Genetics, Inc.

Company Profile

Signal Genetics, Inc., headquartered in New York, NY, is a commercial stage, molecular diagnostic company focused on providing innovative diagnostic services that help physicians make better-informed decisions concerning the care of their patients suffering from cancer. Its mission is to develop, validate and deliver innovative diagnostic services that enable better patient-care decisions. Signal Genetics was founded in January 2010 and is headquartered in Carlsbad, CA.

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