Net revenues for the quarter ended June 30, 2010 were $4,394,000 compared with $4,661,000 in the quarter ended June 30, 2009, a decline of $267,000, or 5.7%. The decline in net revenues during the quarter ended June 30, 2010 compared to the same period of 2009 resulted primarily from a decline in European net revenues, which in turn was principally due to a decline in reagent sales. Net revenue results for the quarter ended June 30, 2010 were also negatively impacted by $85,000 as a result of unfavorable exchange rates attributable to currency fluctuations related to the strength of the U.S. dollar compared to the Euro. Net revenues for the first six months of 2010 were $9,049,000, compared with $9,380,000 in the same period of 2009, a decline of $331,000, or 3.5%. Domestic net revenues were $6,140,000 for the first six months of 2010, compared with $6,441,000 for the same period of 2009. European net revenues for the first six months of 2010 were $2,909,000 compared with $2,939,000 for the same period of 2009, with $8,000 of the decrease resulting from currency fluctuations. As measured in Euros, revenues from European operations for the quarter ended June 30, 2010 decreased from 1,117,000 Euros to 987,000 Euros, and for the six months ended June 30, 2010 decreased from 2,203,000 Euros to 2,187,000 Euros, compared to the corresponding periods in the prior year. Both Domestic and European revenues benefited from increased sales of instrumentation in the six months ended June 30, 2010 compared to the same period of 2009, and both Domestic and European sales were affected by a decline in reagent sales.

Gross profit in the three months ended June 30, 2010 decreased by $138,000, or 5.6%, from the comparable period in 2009. Gross profit as a percentage of net revenues increased slightly to 53.1% in the three months ended June 30, 2010 from 53.0% in the same period of 2009. Gross profit in the six months ended June 30, 2010 decreased by $423,000, or 8.1%, from the comparable period in 2009. The decrease in gross profit as a percentage of net revenues to 53.3% in the six months ended June 30, 2010 from 55.9% in the same period of 2009 was primarily the result of reduced production volume, as well as the effect of an increase in the percentage of net revenues attributable to sales of instrumentation, which have a relatively lower gross profit percentage than reagent sales.

Operating expenses for the second quarter of 2010 decreased 11.9% to $3,581,000 from $4,063,000 for the second quarter of 2009. The decrease in operating expenses was primarily the result of a $379,000, or 23.1%, decrease in selling expenses and a $124,000, or 6.1%, decrease in general and administrative expenses. These decreases were partially offset by a $21,000, or 5.3%, increase in research and development expenses. As a percentage of net revenue, selling and marketing expenses decreased to 28.7% in the three months ended June 30, 2010 as compared to 35.2% in the three months ended June 30, 2009, principally due to a temporary decrease in selling and marketing personnel, lower costs and expenses related to services performed by third party consultants and reduced sales commissions resulting from a change in the U.S. commission structure and lower sales. General and administrative expenses decreased during the second quarter of 2010 principally due to a decline in professional fees from those incurred during the second quarter of 2009, offset by higher severance costs in the 2010 period. Total research and development expenses increased due to costs associated with additional clinical testing that was requested by the FDA in connection with our 510(k) premarket submission filing for the Mago?® 4S. For the first six months of 2010, operating expenses were $6,949,000 compared with $7,234,000 in the same period of 2009, a reduction of 3.9%.

Our loss from operations for the second quarter of 2010 was $1,246,000 compared with $1,590,000 in the second quarter of 2009. Net loss for the second quarter of 2010 was $1,311,000, or $0.05 per share, compared with a net loss of $1,510,000, or $0.05 per share, in the second quarter of 2009. For the first six months of 2010, loss from operations was $2,127,000 compared with loss from operations of $1,989,000 in the same period of 2009.

Source : IVAX Diagnostics