Enzo Biochem, Inc. (NYSE:ENZ)

NEW YORK--(BUSINESS WIRE)--Enzo Biochem Inc. (NYSE: ENZ) today reported results for the fourth quarter and year ended July 31, 2012, and announced a Company-wide realignment program to improve profitability and reduce operating expenses. This program will begin to favorably impact financial results in the current quarter. Highlights of the program and fourth quarter results include:

• Integration and streamlining of manufacturing and sales facilities and staff to reduce annualized operating expenses in excess of $6 million; improved product mix at Enzo Life Sciences to increase margins; additional benefits from realignment program to occur over balance of 2013 fiscal year.
• Operating improvements to begin in fiscal 2013 first quarter for period ending October 31, 2012, as the Company expects at least a 70% improvement in EBITDA over prior year to $1.2 million at Enzo Life Sciences. Enzo Clinical Labs also expected to generate revenue growth and improved EBITDA in fiscal first quarter compared to previous year; reduction in corporate SG&A to enhance results.
• Fourth quarter one-time non-cash charge involving goodwill, as a result of a decline in Enzo’s market capitalization, lower Life Sciences revenues and other intangibles, including trademarks, in the amount of $24.5 million (excluding a $2.1 million tax benefit).
• Fourth quarter results reflected double digit revenue growth at Enzo Clinical Labs, and improved gross margins at Enzo Life Sciences, despite reduced revenues stemming from product rationalization.
• For the final three months of fiscal 2012, revenues and the net operating loss, before one-time charges, approximated those in the corresponding year-ago period.

“The actions we announced today, which commenced over the previous three months, are designed to deliver significantly improved operating results and to generate cash flow this fiscal year,” said Barry Weiner, Enzo President. “The realignment is expected to result in a Life Sciences division that is more profitable, as it selectively delivers higher-margin products to its customers and positions itself to better capitalize on its synergies with Enzo Clinical Labs. We have right sized and refocused Life Sciences for the current trends in the market. Enzo Clinical Labs continues to expand its menu of novel molecular and esoteric tests, and is well positioned to continue its double-digit revenue growth, which exceeds industry norms. In addition to reductions at Enzo Life Sciences, annual corporate expenses have also been reduced, further benefitting the Company’s results.”

Among the changes involved in the realignment has been an extensive repositioning of Enzo Life Sciences manufacturing facilities, which has resulted in centering production in Ann Arbor, Michigan and developmental activities in New York. Also involved was a consolidation of Life Sciences sales offices. Division-wide staff levels since the last acquisition in 2009 have been materially reduced, and now stand at approximately 50% below the level of three years ago. Marginally profitable life science products have been eliminated, resulting in enhanced margins, despite reduced revenue levels, and the division’s ability to refocus its products and efforts on the pharmaceutical and diagnostic markets. Company-wide, the investments and realignments that we have made are expected, to enhance operating results through the year.

The results of this realignment are expected to yield the following results, among others:

• Generate increased opportunities in molecular and esoteric testing areas.
• A fully consolidated Life Science division that will provide synergies that fit in with the growth of Enzo Clinical Labs capabilities as a premier provider and distributor of diagnostic services in one of the leading healthcare markets geographically, and with an increasing ability to reach out nationally.
• Improved development capabilities of Life Sciences due to a more efficient organization and centralized laboratory and manufacturing.
• Enable Clinical Labs to continue its rapid growth and offerings of advanced diagnostic products and technology.

“The aggressive steps we have taken are designed to improve cash utilization and reposition Enzo to capitalize on the current market opportunities. While it may take several quarters to see the full impact of the realignment, we expect that it will begin to affect our results immediately, and will also position Enzo for the longer term by enhancing our ability to produce results that will reflect the Company’s proprietary development of molecular diagnostic tests and complementary products.”