DermTech Reports Fourth-Quarter 2023 Financial Results
- 38% increase in test revenue and 31% increase in total revenue for the fourth quarter of 2023.
- 55% year-over-year increase in the average selling price (ASP) for the DermTech Melanoma Test (DMT).
- Cost reductions of approximately $40 million in annualized total operating expenses compared to 2022.
- Focus on revenue growth in 2024 and emphasis on existing customers and reimbursed tests.
- Optimism about the technology's impact on melanoma evaluation, healthcare costs, and patient experience.
- 11% decline in billable sample volume from the fourth quarter of 2022.
- Negative test gross margin of 7% due to increased cost of test revenue.
- Net loss of $19.1 million for the fourth quarter of 2023.
Insights
The reported increase in the average selling price (ASP) for DermTech's Melanoma Test by 55 percent year-over-year is a strong indicator of the company's pricing power and value perception among its customers. Additionally, the 38 percent increase in test revenue compared to the previous quarter signifies a robust demand trajectory despite a decline in billable sample volume. It is noteworthy that the company has strategically focused on maximizing revenue through existing customers and reimbursed tests, which has led to an expansion in their Medicare billable samples.
A critical factor for investors is the company's operational efficiency. The planned $40 million in annualized total operating expense reductions reflects a proactive approach to cost management. This, coupled with a reduced net loss and lower expenses across sales and marketing, research and development and general and administrative categories, suggests improved financial discipline and could signal a positive outlook for operational performance going forward.
The financial stability of the company is underlined by its cash position, with sufficient resources to fund operations into the first quarter of 2025. This provides a cushion for the company to continue its growth strategies without the immediate need for additional capital raising, which is generally reassuring for investors.
DermTech's non-invasive skin genomics technology represents a significant advancement in precision dermatology, particularly for melanoma evaluation. The technology's potential to enhance the standard of care while lowering healthcare costs and improving patient experience aligns with the broader industry trend towards personalized medicine and cost-effective healthcare solutions. The reported increase in ASP suggests that the market is recognizing the value of this technology, which could lead to wider adoption and increased market penetration.
From a research and development perspective, the reported decrease in expenses may raise questions about the company's future innovation pipeline. However, it could also reflect a strategic shift towards commercialization and scaling of existing products rather than early-stage research. It will be crucial for the company to balance cost reductions with the need to invest in ongoing innovation to maintain its competitive edge in the precision dermatology space.
The dermatology diagnostics market is witnessing a growing emphasis on non-invasive testing methods, which are seen as a key area for growth. DermTech's focus on enhancing ASP and revenue growth aligns with market trends where differentiation based on technology and outcomes is increasingly valued. The reported financial results, particularly the expansion of the Medicare proportion of billable samples, reflect the company's strategic alignment with market opportunities in the healthcare reimbursement landscape.
However, the decline in billable sample volume may indicate challenges in market adoption or competitive pressures. It will be important for DermTech to continue to leverage its commercial efforts to not only maintain but also expand its customer base. The company's emphasis on reimbursed tests is a strategic move that may help to mitigate the impact of volume declines and ensure sustainable revenue growth.
- Average selling price (ASP) for the DermTech Melanoma Test (DMT) increased 55 percent year-over-year
- Test revenue increased 38 percent versus the fourth quarter of 2022
- Estimated cash runway into the first quarter of 2025
“We reported sustained improvement in many of our key performance indicators during the second half of last year and will continue emphasizing average selling price (ASP) and revenue growth in 2024,” said Bret Christensen, CEO, DermTech. “We’ve aligned our commercial effort with the aim to maximize revenue by focusing on existing customers and reimbursed tests. We expanded our Medicare proportion of billable samples from 23 percent to an all-time record high of 28 percent in the last three quarters.”
Christensen continued, “We’ve also delivered on our commitment to find additional operating efficiencies and being diligent with the allocation of our resources. We now plan to achieve approximately
Christensen concluded, “We have a great technology that can significantly enhance the standard of care for evaluating melanoma, while also lowering healthcare costs and providing a better patient experience. We continue to be inspired by the patient stories we often hear where we’ve made a significant difference in their lives.”
Fourth-Quarter 2023 Financial Results
- Billable sample volume declined 11 percent from the fourth quarter of 2022 to approximately 15,580.
-
Test revenue was
$3.7 million -
Total revenue was
$3.9 million -
Cost of test revenue was
$3.4 million -
Sales and marketing expenses were
$8.4 million -
Research and development expenses were
$3.3 million -
General and administrative expenses were
$8.4 million -
Net loss was
$19.1 million $0.56 $3.2 million $28.2 million $0.93 $5.3 million -
Cash, cash equivalents, restricted cash and short-term marketable securities were
$59.3 million
Conference Call Information
As previously announced, the Company will host a conference call to discuss its results at 5:00 p.m. ET on Thursday, February 29, 2024. For participants interested in asking questions during the teleconference, please register. After registering for the event, a confirmation e-mail will be sent with a meeting invitation and access information. Registration is open during the live teleconference, but advance registration is advised. For participants interested in listening only, please register for the webcast. For those unable to participate in the live call and webcast, a webcast replay will be available on the Company’s website shortly after the conclusion of the call.
About DermTech
DermTech is a leading genomics company in dermatology and is creating a new category of medicine, precision dermatology, enabled by its non-invasive skin genomics technology. DermTech’s mission is to improve the lives of millions by providing non-invasive precision dermatology solutions that enable individualized care. DermTech provides genomic analysis of skin samples collected using its Smart StickersTM. DermTech develops and markets products that facilitate the assessment of melanoma. For additional information, please visit DermTech.
Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. The expectations, estimates, and projections of DermTech may differ from its actual results and consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” ”aim,” “runway,” "outlook," “anticipate,” “intend,” “plan,” “strive," “may,” “will,” “sustain,” “could,” “should,” “believe,” “predict,” “potential,” “continue,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, expectations and evaluations with respect to: the performance, patient benefits, cost- effectiveness, commercialization and adoption of DermTech’s products and the market opportunity for these products; expectations regarding DermTech’s potential growth, scale, patient reach, financial outlook, including its cash runway and future financial performance DermTech’s ability to increase its test volume, revenue and the proportion of reimbursed billable tests and control or reduce cost, expenses and cash burn, including as a result of DermTech’s recent restructuring actions; and expectations regarding agreements with or reimbursement or cash collection patterns from government payers (including Medicare) or commercial payers and related billing practices or number of covered lives. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Most of these factors are outside of the control of DermTech and are difficult to predict. Factors that may cause such differences include, but are not limited to: (1) the outcome of any legal proceedings that may be instituted against DermTech; (2) DermTech’s ability to obtain additional capital when and as needed or on acceptable terms; (3) the existence of favorable or unfavorable clinical guidelines for DermTech’s tests; (4) the reimbursement of DermTech’s tests by government payers (including Medicare) and commercial payers; (5) the ability of patients or healthcare providers to obtain coverage of or sufficient reimbursement for DermTech’s products; (6) DermTech’s ability to grow, manage growth and retain its key employees and maintain or improve its operating efficiency and reduce operating expenses; (7) changes in applicable laws or regulations; (8) the market adoption and demand for DermTech’s products and services together with the possibility that DermTech may be adversely affected by other economic, business, and/or competitive factors; (9) DermTech’s ability to continue as a going concern and (10) other risks and uncertainties included in the “Risk Factors” section of the most recent Annual Report on Form 10-K filed by DermTech with the Securities and Exchange Commission (the “SEC”), and other documents filed or to be filed by DermTech with the SEC, including subsequently filed reports. DermTech cautions that the foregoing list of factors is not exclusive. You should not place undue reliance upon any forward- looking statements, which speak only as of the date made. DermTech does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions, or circumstances on which any such statement is based.
DERMTECH, INC. |
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Consolidated Statements of Operations (in thousands, except share and per share data) |
||||||||||||||||
|
|
|
|
|
||||||||||||
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Revenues: |
|
|
|
|
|
|
|
|||||||||
Test revenue |
$ |
3,702 |
|
|
$ |
2,692 |
|
|
$ |
14,384 |
|
|
$ |
13,790 |
|
|
Contract revenue |
|
222 |
|
|
|
302 |
|
|
|
912 |
|
|
|
728 |
|
|
Total revenues |
|
3,924 |
|
|
|
2,994 |
|
|
|
15,296 |
|
|
|
14,518 |
|
|
Cost of revenues: |
|
|
|
|
|
|
|
|||||||||
Cost of test revenue |
|
3,431 |
|
|
|
3,292 |
|
|
|
14,792 |
|
|
|
13,702 |
|
|
Cost of contract revenue |
|
53 |
|
|
|
58 |
|
|
|
228 |
|
|
|
169 |
|
|
Total cost of revenues |
|
3,484 |
|
|
|
3,350 |
|
|
|
15,020 |
|
|
|
13,871 |
|
|
Gross (loss) profit |
|
440 |
|
|
|
(356 |
) |
|
|
276 |
|
|
|
647 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|||||||||
Sales and marketing |
|
8,422 |
|
|
|
13,598 |
|
|
|
44,995 |
|
|
|
58,674 |
|
|
Research and development |
|
3,348 |
|
|
|
5,097 |
|
|
|
15,239 |
|
|
|
24,052 |
|
|
General and administrative |
|
8,422 |
|
|
|
9,828 |
|
|
|
43,781 |
|
|
|
36,086 |
|
|
Total operating expenses |
|
20,192 |
|
|
|
28,523 |
|
|
|
104,015 |
|
|
|
118,812 |
|
|
Loss from operations |
|
(19,752 |
) |
|
|
(28,879 |
) |
|
|
(103,739 |
) |
|
|
(118,165 |
) |
|
Other income: |
|
|
|
|
|
|
|
|||||||||
Interest income, net |
|
660 |
|
|
|
641 |
|
|
|
2,846 |
|
|
|
1,341 |
|
|
Change in fair value of warrant liability |
|
1 |
|
|
|
15 |
|
|
|
5 |
|
|
|
141 |
|
|
Total other income |
|
661 |
|
|
|
656 |
|
|
|
2,851 |
|
|
|
1,482 |
|
|
Net loss |
$ |
(19,091 |
) |
|
$ |
(28,223 |
) |
|
$ |
(100,888 |
) |
|
$ |
(116,683 |
) |
|
Weighted average shares outstanding used in computing net loss per share, basic and diluted |
|
34,326,638 |
|
|
|
30,245,264 |
|
|
|
32,641,376 |
|
|
|
30,038,959 |
|
|
Net loss per share of common stock outstanding, basic and diluted |
$ |
(0.56 |
) |
|
$ |
(0.93 |
) |
|
$ |
(3.09 |
) |
|
$ |
(3.88 |
) |
|
DERMTECH, INC. |
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Consolidated Balance Sheets (in thousands, except share and per share data) |
||||||||
|
|
|
|
|||||
|
December 31, 2023 |
|
December 31, 2022 |
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Assets |
|
|
|
|||||
Current assets: |
|
|
|
|||||
Cash and cash equivalents |
$ |
36,741 |
|
|
$ |
77,757 |
|
|
Short-term marketable securities |
|
19,123 |
|
|
|
48,411 |
|
|
Accounts receivable |
|
2,584 |
|
|
|
4,172 |
|
|
Inventory |
|
1,004 |
|
|
|
1,757 |
|
|
Prepaid expenses and other current assets |
|
2,300 |
|
|
|
3,940 |
|
|
Total current assets |
|
61,752 |
|
|
|
136,037 |
|
|
Property and equipment, net |
|
4,988 |
|
|
|
6,375 |
|
|
Operating lease right-of-use assets |
|
51,722 |
|
|
|
56,007 |
|
|
Restricted cash |
|
3,468 |
|
|
|
3,488 |
|
|
Other assets |
|
— |
|
|
|
168 |
|
|
Total assets |
$ |
121,930 |
|
|
$ |
202,075 |
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|||||
Current liabilities: |
|
|
|
|||||
Accounts payable |
$ |
1,484 |
|
|
$ |
2,419 |
|
|
Accrued compensation |
|
6,664 |
|
|
|
7,894 |
|
|
Accrued liabilities |
|
2,017 |
|
|
|
3,464 |
|
|
Short-term deferred revenue |
|
196 |
|
|
|
109 |
|
|
Current portion of operating lease liabilities |
|
3,069 |
|
|
|
1,634 |
|
|
Current portion of finance lease obligations |
|
17 |
|
|
|
116 |
|
|
Total current liabilities |
|
13,447 |
|
|
|
15,636 |
|
|
Warrant liability |
|
— |
|
|
|
5 |
|
|
Long-term finance lease obligations, less current portion |
|
38 |
|
|
|
53 |
|
|
Operating lease liabilities, long-term |
|
51,270 |
|
|
|
54,028 |
|
|
Total liabilities |
|
64,755 |
|
|
|
69,722 |
|
|
Stockholders’ equity: |
|
|
|
|||||
Common stock, |
|
3 |
|
|
|
3 |
|
|
Additional paid-in capital |
|
480,929 |
|
|
|
456,171 |
|
|
Accumulated other comprehensive income/(loss) |
|
178 |
|
|
|
(774 |
) |
|
Accumulated deficit |
|
(423,935 |
) |
|
|
(323,047 |
) |
|
Total stockholders’ equity |
|
57,175 |
|
|
|
132,353 |
|
|
Total liabilities and stockholders’ equity |
$ |
121,930 |
|
|
$ |
202,075 |
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240229006238/en/
Steve Kunszabo
DermTech
(858) 291-1647
steve.kunszabo@dermtech.com
Source: DermTech, Inc.
FAQ
What was the year-over-year increase in the average selling price (ASP) for the DermTech Melanoma Test (DMT)?
What was the percentage increase in test revenue for the fourth quarter of 2023?
What is the ticker symbol for DermTech, Inc.?
What was the net loss for the fourth quarter of 2023?
What is the estimated cash runway for DermTech into the first quarter of 2025?
What is the focus of DermTech for revenue growth in 2024?
