Blood Firm Says It Needs Funding
By LAURENCE DARMIENTO
Staff Reporter
Careside Inc., the Culver City-based startup that manufactures blood testing machines for doctor’s offices and clinics, is quickly running out of cash despite a steady rise in sales.
The company recently received a bridge loan for an undisclosed amount from an existing investor and is negotiating for additional financing. “Our earnings right now are not enough,” said Chief Financial Officer Jim Koch.
The company, which has yet to turn a profit, was spun off from SmithKline Beecham in 1996 and went public in 1999 with an IPO that raised about $15 million. Since then it raised another $25 million in private placements.
The company has not disclosed its current cash position but noted in its third quarter filing that it only had enough cash to take it through the first quarter of this year. According to the filings, the company had $2.3 million in cash and cash equivalents as of Sept. 30, down from $5.6 million as of June 30.
It reported losing $3.3 million for the third quarter, compared with a loss of $4.1 million for the like period a year earlier. Revenue in the quarter was $305,000 versus $108,000. Late last month, the company issued a press release that said revenues grew to $344,000 for the fourth quarter ended Dec. 31. Koch said the actual fourth quarter results were being audited and would be released in a few weeks.
Shares were trading at just over 25 cents last week on the American Stock Exchange, down from a 52-week high of $4.25 in August.
Careside markets a machine called the Analyzer and companion equipment that it says can perform the vast majority of blood tests that doctors order for their patients. But it has been harder than expected for the company to penetrate a market in which doctors are accustomed to sending out blood samples to labs, said analyst Ronald Opel of H.C. Wainright & Co. Inc.
“One of the biggest advantages of the Careside system is that these blood tests can be conducted while the patient is still in the doctors’ offices, but that still requires reorganizing the way most practices are conducted,” said Opel, who is the only analyst following the company. While he believes the company will get enough financing to carry it past another year, any purchase of the stock right now would be “speculative.”
The costs associated with manufacturing and ramping up sales and marketing have so far exceeded revenue. The company announced this month it has cut some spending by 20 percent to reduce its burn rate.
