Enzo Biochem Reports Increased Second Quarter Operating Results

NEW YORK–(BUSINESS WIRE)– Enzo Biochem, Inc. (NYSE:ENZ) today reported continued strong growth in
operating results for the fiscal quarter and six months ended January
31, 2017.

Second Quarter Highlights

• Total revenues were $26.3 million, an increase of 7% over the prior
  year period.
• Clinical Labs revenues grew to $18.8 million, an increase of nearly
  8%, representing the 5th straight quarter of growth. Reflecting the
  increased importance of higher margin molecular diagnostic tests
  (MDx), particularly women’s health, Clinical Labs increased gross
  margins 100 basis points and posted a 53% increase in operating profit
  compared to a year ago, excluding non-recurring items.
• Life Sciences’ product sales were $7.0 million, an increase of 6% over
  a year ago, as the business continues to prepare for introducing
  several key product lines later this year.
• Both operating units continued to be profitable and generated positive
  cash flow that provides capital for investment in the development of
  new products and services.
• GAAP net loss was ($1.1) million or ($0.02) per share compared to a
  GAAP net income of $6.8 million or $0.15 per share in the prior year
  period. Non-GAAP net loss was ($1.1) million or ($0.02) per share
  compared to a Non-GAAP net loss of ($3.3) million or ($0.07) per share
  in the prior year period.
• Cash and cash equivalents and working capital at January 31, 2017
  remain strong at $62.4 million and $69.3 million, respectively.

Barry Weiner, President, Commented

“Our quarterly results were very strong as we continue to build on our
mounting success and importance of our molecular diagnostic related
activities, both on the development side and in clinical usage. We are
progressing on schedule in the development area, with new MDx tests
expected to be introduced later this year. We are gaining recognition as
a disruptive provider of cost efficient molecular diagnostic products.
The pressure on operating margins of clinical laboratories due to high
fixed manufacturer product costs and steadily shrinking reimbursements
has become a mainstay with few viable long-term solutions. Thus we
believe Enzo’s strategy to provide affordable, highly reliable and easy
to use more effective molecular diagnostic products and services to labs
is well timed and is being recognized in the market place as a needed
solution.

“We are focused on making available a full, extensive line of medically
relevant and cost efficient targeted products that address this market
challenge. We have successfully secured New York State Department of
Health approval for several of our diagnostic platforms and products.
Under development are a host of additional assays and reagents aimed at
this market, including a full line of women’s health products, where
Enzo has a specific focus in both products and services.

“We are highly encouraged by the acceptance of our products and their
performance in the marketplace, and we anticipate even greater
penetration in the market as additional test development is completed
and approval is obtained. Meanwhile, we continue to build a
highly-skilled workforce and efficient operation, and are investing
capital to ensure solid sustainability. With enabling technology and
focused marketing efforts, revenues continue to grow, gross margins are
expanding and operating costs, including SG&A, are contained while
supporting our growth objectives. Not least, our strong, highly liquid
balance sheet provides us with the financial flexibility to allocate
capital effectively to maximize return for our shareholders.”

Fiscal 2017 Second Quarter Operating Results

During the quarter, revenues were $26.3 million compared to $24.6
million a year ago, an increase of $1.7 million, or 7%. Gross profit
improved to $11.7 million, from $10.8 million a year ago with
consolidated gross margins of 45%, an increase of 100 basis points
principally due to the growth in the clinical labs. Operating expenses
were $12.7 million down from $15.0 million in the prior year period,
excluding licensing and legal settlements, mainly due to lower legal
expenses due to the timing of work associated with the Company’s patent
litigation.

The Company reported a net loss of ($1.0) million, compared to a year
ago net income of $6.8 million. Fully diluted per share loss equaled
($0.02), compared to per share income of $0.15 in the prior year period,
which included $11.6 million of licensing and legal settlements. On a
Non-GAAP basis, which adjusts for one-time items, the net loss per share
was ($0.02) compared to ($0.07) in the prior year period. Non-GAAP
EBITDA was a loss of ($0.2) million compared to a loss of ($2.1) million
in the prior year period, demonstrating significant operational
improvement towards profitability.

As of January 31, 2017, cash and cash equivalents and working capital
were $62.4 million and $69.3 million, respectively. Approximately $2
million in bank loans were retired in the quarter, leaving the balance
sheet, apart from lease obligations, debt free.

Segment Quarterly Results

As noted, Enzo Clinical Labs posted its 5th straight quarterly
revenue increase. At $18.8 million, revenues increased 8% year over
year. The increase is attributable to molecular diagnostic testing
volume from both new and existing accounts. Gross profit was $7.8
million, with gross margins of 41%, up 100 basis points from the prior
year. Total operating expenses were $6.5 million compared to $6.2
million in the prior year period, excluding licensing and legal
settlements, due to higher selling and related expenses to support
increased revenues. Operating income totaled $1.2 million, compared to
$0.8 million last year, excluding legal settlements that were reported
in prior year results.

Enzo Life Sciences’ product revenues were $7.0 million compared
to $6.6 million in the prior year period, an increase of $0.4 million or
6%. The increase reflected a pickup in orders, both domestically and
internationally, after an extended period of softness, due to reduced
governmental and institutional R&D spending. Gross profit increased to
$3.9 million with gross margins of 53%. Operating income was $0.4
million, unchanged from a year ago, excluding $13.2 million in both
licensing and legal settlements.

Fiscal First Half Results

Year to date revenues were $52.5 million compared to $49.7 million in
the prior year period, an increase of $2.8 million, or 6%. Gross profit
increased roughly 8% to $23.8 million and gross margins increased 100
basis points to 45%. Operating expenses were $26.0 million compared to
$28.4 million, a decrease of $2.4 million, or 8%, principally due to
lower legal fees offset in part by higher SG&A costs.

Year to date net loss was ($2.5) million, compared to a year ago net
income of $11.3 million, which included $18.5 million in licensing and
legal settlements. Basic and fully diluted per share loss equaled
($0.05), versus per share income of $0.24 last year.

Conference Call

The Company will conduct a conference call March 13, 2017 at 4:30 PM ET.
The call can be accessed by dialing 1-888-459-5609. International
callers can dial 1-973-321-1024. Please reference PIN number 82073178.
Interested parties may also listen over the Internet at https://tinyurl.com/zn5vkrr
To listen to the live call on the Internet, please go to the web site at
least fifteen minutes early to register, download and install any
necessary audio software. For those who cannot listen to the live
broadcast, a replay will be available approximately two hours after the
end of the live call, through midnight (ET) on March 27, 2017. The
replay of the conference call can be accessed by dialing 1-800-585-8367,
and when prompted, use PIN number 82073178. International callers can
dial 1-404-537-3406, using the same PIN number.

NON-GAAP Financial Measures

To comply with Regulation G promulgated pursuant to the Sarbanes-Oxley
Act, Enzo Biochem attached to this news release and will post to the
Company’s investor relations web site (www.enzo.com)
any reconciliation of differences between non-GAAP financial information
that may be required in connection with issuing the Company’s quarterly
financial results.

The Company uses EBITDA as a measure of performance to demonstrate
earnings exclusive of interest, taxes, depreciation and amortization.
Adjustments to EBITDA are for items of a non-recurring nature and are
reconciled on the table provided. The Company manages its business based
on its operating cash flows. The Company, in its daily management of its
business affairs and analysis of its monthly, quarterly and annual
performance, makes its decisions based on cash flows, not on the
amortization of assets obtained through historical activities. The
Company, in managing its current and future affairs, cannot affect the
amortization of the intangible assets to any material degree, and
therefore uses EBITDA as its primary management guide. Since an outside
investor may base its evaluation of the Company’s performance based on
the Company’s net loss not its cash flows, there is a limitation to the
EBITDA measurement. EBITDA is not, and should not be considered, an
alternative to net loss, loss from operations, or any other measure for
determining operating performance of liquidity, as determined under
accounting principles generally accepted in the United States (GAAP).
The most directly comparable GAAP reference in the Company’s case is the
removal of interest, taxes, depreciation and amortization.

We refer you to the tables attached to this press release which includes
reconciliation tables of GAAP to Non-GAAP net income (loss) and EBITDA
to Adjusted EBITDA.

About
Enzo Biochem

Enzo Biochem is a pioneer in molecular diagnostics, leading the
convergence of clinical laboratories, life sciences and intellectual
property through the development of unique diagnostic platform
technologies that provide numerous advantages over previous standards. A
global company, Enzo Biochem utilizes cross-functional teams to develop
and deploy products, systems and services that meet the ever-changing
and rapidly growing needs of health care today and into the future.
Underpinning Enzo Biochem’s products and technologies is a broad and
deep intellectual property portfolio, with patent coverage across a
number of key enabling technologies.

Except for historical information, the matters discussed in this news
release may be considered « forward-looking » statements within the
meaning of Section 27A of the Securities Act of 1933, as amended and
Section 21E of the Securities Exchange Act of 1934, as amended. Such
statements include declarations regarding the intent, belief or current
expectations of the Company and its management, including those related
to cash flow, gross margins, revenues, and expenses which are dependent
on a number of factors outside of the control of the Company including,
inter alia, the markets for the Company’s products and services, costs
of goods and services, other expenses, government regulations,
litigation, and general business conditions. See Risk Factors in the
Company’s Form 10-K for the fiscal year ended July 31, 2016. Investors
are cautioned that any such forward-looking statements are not
guarantees of future performance and involve a number of risks and
uncertainties that could materially affect actual results. The Company
disclaims any obligations to update any forward-looking statement as a
result of developments occurring after the date of this press release.

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