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Total revenues were $15.2 million for the second quarter of 2008 comparedto $15.7 million for the second quarter of 2007 and $14.5 million for thefirst quarter of 2008. The decrease in total revenues for the second quarterof 2008 compared to the second quarter of 2007 was largely due to lowerrevenues in the U.K.
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Orchid Cellmark recorded increases in its U.S. business that generates DNAprofiles for the federal CODIS (Combined DNA Index System) and state DNAdatabases and in its U.S. paternity testing business, partially offset bylower revenues from its U.S. forensic casework business. Overall, U.S.revenues increased by 9% over the comparable quarter in 2007, largely as aresult of the ReliaGene acquisition. The decrease in U.K.-based revenues inthe second quarter of 2008, compared to the comparable period in 2007, was dueto lower volumes of animal DNA testing for scrapie susceptibility andimmigration identity testing, as well as reduced forensic revenue. Thedecrease was partially offset by increased revenues in the paternity testingbusiness. Lower revenue for the U.K. forensics business was primarily due tothe loss of revenue from the company's previous arrangement with LGC, whichessentially ended in April 2008, as previously reported.
Excluding cost of service revenue, operating expenses for the quarter were$6.6 million compared to $6.2 million for the second quarter of 2007. Theoperating expense increase was primarily due to general and administrativeexpenses, which were impacted by professional fees, including non-recurringlegal fees related to the successful upholding of Orchid's contract to providestate-wide paternity testing for the State of Florida, which wasunsuccessfully protested by a competitor.
Operating loss for the second quarter of 2008 was $1.6 million compared toa $701 thousand loss for the second quarter of 2007. The operating lossincrease was principally due to increased general and administrative expensesand a decrease in gross margin. Gross margin for the U.S. business increasedfor the second quarter of 2008 compared to the second quarter of 2007 largelyas a result of a 9% increase in U.S. revenues and improvement in the company'sU.S. operations. The company's overall gross margin was negatively impactedby the decrease in gross margin associated with the U.K. operations. U.K.gross margin during the quarter was adversely impacted by lower DNA testingvolumes related to the loss of former LGC business and the buildup of capacityin the U.K. to service the significant business the company won under theNorth West/South West and Wales regional forensics services tender.
Orchid Cellmark reported a net loss of $1.2 million, or $(0.04) per share,for the second quarter of 2008 compared to a net loss of $745 thousand, or$(0.03) per share, for the second quarter of 2007. Net loss for the secondquarter of 2008 and 2007 includes charges of $1.2 million and $1.1 million,respectively, for depreciation and amortization.
At June 30, 2008, cash and cash equivalents were $17.3 million.
Thomas Bologna, president and chief executive officer of Orchid Cellmarkcommented, "The second quarter of this year was quite significant for ourcompany and the results reflect the transition we are undergoing and the corestrengths of our business."
"While we were absorbing the substantial impact of the loss of revenue inthe U.K. from our previous arrangement with LGC, we ramped up DNA testing andother forensics services work for a number of U.K. police forces under the newNorth West/South West and Wales regional forensic tender," Mr. Bolognaexplained. "Due to these new sources of revenue, even though the LGC-relatedbusine
