Chembio Diagnostics secures $20 million loan
Chembio Diagnostics employees work on a laboratory test at the company's Medford facility, seen on Oct. 31, 2016. Credit: Barry Sloan
Chembio Diagnostics Inc. Wednesday announced it had closed on a four-year, $20 million loan from Perceptive Advisors, an investment firm that specializes in health care.
Shares of the Medford maker of diagnostic tests rallied after the announcement, which came before Wednesday's stock market open. At Thursday's close, shares were up 2 percent to $5.875.75.
"The loan materially strengthens our balance sheet," Chembio chief executive John J. Sperzel said in a phone interview. He said the increased working capital also would "support our growth strategy," which aims for revenue of $100 million in 2023.
Chembio posted a net loss of $7.9 million on revenue of $33.4 million in the year ended Dec. 31 compared to a net loss of $6.4 million on revenue of $24 million the previous year.
The company, which reported having 295 employees at the end of 2018, is moving its Long Island operations to a facility in Hauppauge.
The loan agreement grants Manhattan-based Perceptive Advisors a seven-year warrant to purchase 550,000 shares of Chembio common stock at a $5.22 per share.
"We believe Chembio has a unique point-of-care technology platform, compelling product offering and impressive pipeline," Sam Chawla, portfolio manager at Perceptive Advisors, said in a statement.
Craig-Hallum Capital Group LLC, based in Minneapolis, acted as financial adviser to Chembio on the transaction.
In its annual report filed in March, Chembio had said it believed it had funds "sufficient to meet our anticipated cash needs for at least the next twelve months."
Sperzel said the maker of tests for syphilis, HIV, ebola and other diseases already had moved some Suffolk County operations from facilities in Medford and Holbrook to a 70,000-square-foot leased facility at 555 Wireless Blvd., Hauppauge.
Front-office, warehouse and distribution functions already have been moved, and research and development is expected to relocate by year's end, he said. Plans call for manufacturing operations to move by the middle of 2020.
Ken Schachter covers corporate news, including technology and aerospace, and other business topics for Newsday. He has also worked at The Miami Herald and The Jerusalem Post.
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