Madison, Wis.-Based Diagnostic Test Maker Reports Flat Revenue

By Kathleen Gallagher, Milwaukee Journal Sentinel

Nov. 3–Third Wave Technologies Inc.’s stock dropped nearly 13 percent Wednesday after the genetic test maker reported flat revenue for the segment of its business it is trying to bulk up.

The Madison company also didn’t give Wall Street guidance regarding future earnings.

Third Wave reported a loss of $7.38 million, or 18 cents a share, compared with net income of $24,000, or break-even per share. Revenue was halved to $5.2 million from $10.5 million.

After the earnings were announced, Third Wave’s stock fell 45 cents to close at $3.10 Wednesday.

Third Wave’s revenue has declined by about $20 million through the first three quarters of this year. Much of that decline has come from an anticipated reduction in non-recurring revenue from a big research customer in Japan.

The business that Third Wave is trying to build up — selling diagnostic tests to clinical customers such as independent labs and health care systems — had a 5 percent increase from a year ago. That business, which the company calls its clinical molecular diagnostic business, had revenue of $4 million for the quarter.

“While we continue to secure customer wins, we had not anticipated that the lag between securing those wins and generating revenue would be as long and as variable from customer to customer as it turned out to be,” said Rod Hise, a company spokesman.

Third Wave still is focused on its long-term vision of being a top company in molecular diagnostics, which it considers a key driver in the emerging area of personalized medicine, which is health care that’s tailored to individuals, Hise said.

The company has genetic tests on the market in three main areas: coagulation and cardiovascular disease, cystic fibrosis, and infectious diseases such as Hepatitis C.

Third Wave said it has a strong pipeline that includes plans to submit other products to the Food and Drug Administration.

For the first nine months of 2005, Third Wave had a loss of $17.3 million, or 42 cents a share, compared with a net income of $2.77 million, or 7 cents a share, a year earlier. Revenue fell to $18.1 million from $38.4 million.

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