May 09, 2013 at 07:30 AM EDT
Alere Inc. Announces First Quarter 2013 Results

WALTHAM, Mass., May 9, 2013 /PRNewswire/ -- Alere Inc. (NYSE: ALR), a global leader in enabling individuals to take charge of their health at home through the merger of rapid diagnostics and health information solutions, today announced its financial results for the quarter ended March 31, 2013.

Ron Zwanziger, Chairman, Chief Executive Officer and President of Alere said, "I'm pleased to report another quarter of progress across the organization.  With our company formation substantially complete, and the areas of pressure with Triage and Health Information Solutions showing signs of stability, we were able to take key steps to drive improved operating expense leverage in the first quarter."

Zwanziger added, "Broad changes to healthcare systems in most major markets are driving increasing opportunities for Alere's integrated offering.  As we continue to combine new diagnostic platforms and services into an integrated, technology-based solution focused on the most expensive chronic conditions, we expect to benefit from these persistent and predictable global trends.  Our unique position to capitalize on the evolution of global healthcare, combined with a sustained focus on organic revenue growth, operating expense leverage and debt reduction over the next several years, should continue to engender increasing shareholder confidence in our company and our prospects for future success."

Financial results for the first quarter of 2013:

  • Net revenue of $739.2 million for the first quarter of 2013, compared to $671.1 million for the first quarter of 2012.  Non-GAAP adjusted net revenue, which includes approximately $0.6 million in estimated revenue related to acquired software license contracts not recognized for GAAP purposes for the first quarter of 2013 due to business combination accounting rules, was $739.9 million for the first quarter of 2013, compared to $672.4 million for the first quarter of 2012, which included $1.3 million in estimated revenue related to acquired software license contracts not recognized for GAAP purposes.
  • Net income of $7.2 million attributable to common stockholders of Alere Inc., and respective net income per diluted common share of $0.09, for the first quarter of 2013, compared to net loss of $4.1 million attributable to common stockholders of Alere Inc., and respective net loss per diluted common share of $0.05, for the first quarter of 2012.
  • Non-GAAP adjusted net income per diluted common share of $0.53 for the first quarter of 2013, compared to non-GAAP adjusted net income per diluted common share of $0.77 for the first quarter of 2012.
  • Net product and services revenue from our Professional Diagnostics segment was $578.6 million in the first quarter of 2013, compared to net product and services revenue of $515.4 million in the first quarter of 2012. Non-GAAP adjusted net product and services revenue from our Professional Diagnostics segment, which includes approximately $0.6 million in estimated revenue related to acquired software license contracts not recognized for GAAP purposes for the first quarter of 2013 due to business combination accounting rules, was $579.3 million in the first quarter of 2013, compared to non-GAAP adjusted net product and services revenue of $516.7 million in the first quarter of 2012, which included $1.3 million in estimated revenue related to acquired software license contracts not recognized for GAAP purposes.  Recent professional diagnostics acquisitions contributed $62.0 million of incremental net revenue compared to the first quarter of 2012.
  • North American influenza sales increased to $34.3 million for the first quarter of 2013, from $6.6 million for the first quarter of 2012.
  • Excluding the impact of the change in North American influenza revenues and the impact on revenues from the reduction in our U.S. meter-based Triage product sales, currency adjusted organic growth in our Professional Diagnostics segment was 1.1%.
  • Net product and services revenue from our Health Information Solutions segment was $134.2 million in the first quarter of 2013, compared to $130.8 million in the first quarter of 2012 and $131.0 million in the fourth quarter of 2012.  The increase in revenue from the first quarter of 2012 was related primarily to increased revenues from our home coagulation monitoring programs.
  • Other income for the first quarter of 2012 includes $13.5 million of a final royalty termination payment received from Quidel during the quarter, offset by $2.3 million of other charges.  Together, and net of tax, these other income items added approximately $0.12 to our non-GAAP adjusted net income per diluted common share for the quarter.

The Company's GAAP results for the first quarter of 2013 exclude $0.6 million of revenue associated with acquired software license contracts that are not recognized due to business combination accounting rules and include amortization of $76.0 million, $3.9 million of restructuring charges, $4.1 million of stock-based compensation expense, $0.9 million of acquisition-related costs recorded in accordance with ASC 805, Business Combinations, $11.0 million of expense recorded for fair value adjustments to acquisition-related contingent consideration, $1.0 million of interest expense recorded in connection with fees paid for certain debt modifications, $0.7 million in compensation charges associated with acquisition-related contingent consideration obligations, a $0.5 million charge associated with the write-up to fair market value of inventory acquired in connection with the acquisition of Epocal Inc. and $0.2 million of expense associated with the extinguishment of debt.  The Company's GAAP results for the first quarter of 2012 exclude $1.3 million of revenue associated with acquired software license contracts that are not recognized due to business combination accounting rules and include amortization of $78.1 million, $5.6 million of restructuring charges, $3.9 million of stock-based compensation expense, $1.5 million of acquisition-related costs recorded in accordance with ASC 805, Business Combinations, $5.0 million of income recorded for fair value adjustments to acquisition-related contingent consideration obligations, $1.3 million of interest expense associated with fees paid for modification of certain debt agreements and a $4.7 million charge associated with the write-up to fair market value of inventory acquired in connection with the acquisition of Axis-Shield plc.  These amounts, net of tax, have been excluded from the non-GAAP adjusted net income per diluted common share attributable to Alere Inc. for the respective quarters.

Detailed reconciliations of the Company's non-GAAP adjusted operating income and non-GAAP adjusted net income available to common shareholders to operating income and net loss available to common shareholders under GAAP, as well as a discussion regarding these non-GAAP financial measures, is included in the schedules to this press release.

The Company will host a conference call beginning at 8:30 a.m. (Eastern Time) today, May 9, 2013, to discuss these results, as well as other corporate matters.  During the conference call, the Company may answer questions concerning business and financial developments and trends and other business and financial matters.  The Company's responses to these questions, as well as other matters discussed during the conference call, may contain or constitute information that has not been previously disclosed.

The conference call may be accessed by dialing (877) 270-2148 (domestic) or (412) 902-6510 (international) and asking for Alere Inc.  A webcast of the call can also be accessed via the Alere website at www.alere.com/investors, or directly through the following link: http://www.videonewswire.com/event.

A replay of the call will be available approximately one hour after the conclusion of the call and will remain available for a period of seven days following the call.  The replay may be accessed by dialing (877) 344-7529 (domestic) or (412) 317-0088 (international) and entering replay code 10028513.  The replay will also be available via online webcast at http://www.videonewswire.com/event or via the Alere website at www.alere.com/investors for a period of 60 days following the call.

Additionally, reconciliations to non-GAAP financial measures not included in this press release that may be discussed during the call will also be available at the Alere website (http://www.alere.com/investors) under the Earnings Calls and Releases section shortly before the conference call begins and will continue to be available on this website.

For more information about Alere, please visit our web site at http://www.alere.com.

By developing new capabilities in near-patient diagnosis, monitoring and health information solutions, Alere enables individuals to take charge of improving their health and quality of life at home.  Alere's global leading products and services, as well as its new product development efforts, focus on cardiology, infectious disease, toxicology and diabetes.  Alere is headquartered in Waltham, Massachusetts.

Alere Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)










Three Months Ended March 31, 




2013


2012







Net product sales and services revenue


$               735,185


$               668,221

License and royalty revenue


4,064


2,908


Net revenue


739,249


671,129

Cost of net revenue


374,992


318,058


      Gross profit


364,257


353,071


      Gross margin


49%


53%







Operating expenses:






Research and development


41,454


39,000


Selling, general and administrative


292,314


279,013


   Total operating expenses


333,768


318,013


      Operating income


30,489


35,058

Interest and other income (expense), net


(57,869)


(38,896)


 Loss before benefit for income taxes 


(27,380)


(3,838)

Benefit for income taxes


(36,871)


(1,455)


 Income (loss) before equity earnings of unconsolidated entities, net of tax 

9,491


(2,383)

Equity earnings of unconsolidated entities, net of tax


2,934


3,412

Net income


12,425


1,029


Less: Net loss attributable to non-controlling interests


(25)


(185)

Net income attributable to Alere Inc. and Subsidiaries


12,450


1,214








Preferred stock dividends


(5,250)


(5,309)







Net income (loss) available to common stockholders


$                   7,200


$                 (4,095)








Basic net income (loss) per common share


$                     0.09


$                   (0.05)


Diluted net income (loss) per common share


$                     0.09


$                   (0.05)







Weighted-average shares - basic


81,199


80,240

Weighted-average shares - diluted


81,300


80,240













Alere Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands)






March 31,


December 31,


2013


2012

ASSETS




CURRENT ASSETS:




Cash and cash equivalents

$            327,233


$            328,346

Restricted cash

11,649


3,076

Marketable securities

884


904

Accounts receivable, net

540,093


524,332

Inventories, net

336,442


337,121

Prepaid expenses and other current assets

250,876


212,958

Total current assets

1,467,177


1,406,737





PROPERTY, PLANT AND EQUIPMENT, NET

529,164


534,469

GOODWILL AND OTHER INTANGIBLE ASSETS, NET

5,049,886


4,919,081

DEFERRED FINANCING COSTS AND OTHER ASSETS, NET

202,248


207,641

Total assets

$        7,248,475


$         7,067,928





LIABILITIES AND STOCKHOLDERS' EQUITY




CURRENT LIABILITIES:




Current portion of long-term debt and capital lease obligations

$              58,356


$               66,916

Other current liabilities

636,931


581,893

Total current liabilities

695,287


648,809





LONG-TERM LIABILITIES:




Long-term debt and capital lease obligations, net of current portion

3,800,457


3,641,592

Deferred tax liabilities

415,452


428,188

Other long-term liabilities

212,376


166,635

Total long-term liabilities

4,428,285


4,236,415





TOTAL EQUITY

2,124,903


2,182,704

Total liabilities and equity

$        7,248,475


$         7,067,928





  

Alere Inc. and Subsidiaries

Reconciliation to Non-GAAP Adjusted Operating Results

(in thousands, except per share amounts)






Three Months Ended March 31,


2013


2012

Reconciliation to Non-GAAP Adjusted Operating Income (1)




Operating income

$                  30,489


$                  35,058





Adjustment related to acquired software license contracts 

643


1,286

Amortization of acquisition-related intangible assets

75,867


77,929

Restructuring charges 

3,892


5,528

Stock-based compensation expense

4,123


3,874

Compensation charges associated with acquisition-related contingent consideration obligations

690


-

Acquisition-related costs

896


1,461

Fair value adjustments to acquisition-related contingent consideration

11,018


5,044

Non-cash charge associated with acquired inventory

461


4,681





Non-GAAP adjusted operating income

$                128,079


$                134,861






Three Months Ended March 31,


2013


2012

Reconciliation to Non-GAAP Adjusted Net Income(1)




Net income (loss) available to common stockholders

$                    7,200


$                  (4,095)





Adjustment related to acquired software license contracts 

643


1,286

Amortization of acquisition-related intangible assets

75,989


78,122

Restructuring charges 

3,947


5,588

Stock-based compensation expense

4,123


3,874

Compensation charges associated with acquisition-related contingent consideration obligations

690


-

Acquisition-related costs

896


1,461

Fair value adjustments to acquisition-related contingent consideration

11,018


5,044

Non-cash charge associated with acquired inventory

461


4,681

Interest expense recorded in connection with fees paid for certain debt

modifications and the termination of our senior secured credit facility and

related interest rate swap agreement

952


1,320

Expense associated with extinguishment of debt

163


-

Income tax effects on items above

(62,055)


(30,779)





Non-GAAP adjusted net income available to common stockholders

$                  44,027


$                  66,502









Net income (loss) per diluted common share

$                       0.09


$                    (0.05)

Non-GAAP adjusted net income per diluted common share

$                       0.53


$                      0.77





Weighted-average shares - diluted

81,300


80,240

Non-GAAP adjusted weighted average shares - diluted

94,977


94,206





(1)In calculating "non-GAAP adjusted operating income" and "non-GAAP adjusted net income", the Company excludes (i) certain non-cash charges, including amortization expense and stock-based compensation expense, (ii) non-recurring charges and income, and (iii) certain other charges and income that have a significant positive or negative impact on results yet do not occur on a consistent or regular basis in its business.  In determining whether a particular item meets one of these criteria, management considers facts and circumstances that it believes are relevant.  Management believes that excluding such charges and income from operating income and net income or loss allows investors and management to evaluate and compare the Company's operating results from continuing operations from period to period in a meaningful and consistent manner.  Due to the frequency of their occurrence in its business, the Company does not adjust operating income or net income or loss for the costs associated with litigation, including payments made or received through settlements.  It should be noted that "non-GAAP adjusted operating income" and "non-GAAP adjusted net income" are not standard financial measurements under accounting principles generally accepted in the United States of America ("GAAP") and should not be considered as an alternative to operating income and net income or loss or cash flow from operating activities, as a measure of liquidity or as an indicator of operating performance or any measure of performance derived in accordance with GAAP. In addition, all companies do not calculate non-GAAP financial measures in the same manner and, accordingly, "non-GAAP adjusted operating income" and "non-GAAP adjusted net income" presented in this press release may not be comparable to similar measures used by other companies.

 

 

Alere Inc. and Subsidiaries

Selected Consolidated Revenues by Business Area (1)

(in thousands)








Professional Diagnostics Segment





% Change



Q1 2013


Q1 2012


Q1 13 v. Q1 12

Cardiology

$       114,933


$        138,826


-17%

Infectious disease

189,844


151,016


26%

Toxicology

149,049


121,740


22%

Diabetes

50,083


28,161


78%

Other (1)

74,719


75,706


-1%


Professional diagnostics net product sales and services revenue (1)

578,628


515,449


12%

License and royalty revenue

3,864


2,908


33%


Professional diagnostics net revenue

$       582,492


$        518,357


12%








Health Information Solutions Segment





% Change



Q1 2013


Q1 2012


Q1 13 v. Q1 12

Disease and case management

$          54,126


$          53,380


1%

Wellness

26,300


27,026


-3%

Women's & children's health

29,080


29,771


-2%

Patient self-testing services

24,701


20,607


20%


Health information solutions net revenue

$        134,207


$        130,784


3%






(1)Revenues are presented in accordance with Generally Accepted Accounting Principles and exclude an adjustment of $0.6 million and $1.3 million in revenue related to acquired software license contracts which were not recognized during the three months ended March 31, 2013 and 2012, respectively, due to business combination accounting rules.

 

 

SOURCE Alere Inc.

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