SAN DIEGO, Feb. 15, 2011 /PRNewswire/ -- Gen-Probe Incorporated (Nasdaq: GPRO) today reported financial results for the fourth quarter and full year 2010, highlighted by record non-GAAP earnings per share (EPS) of $0.61 in the quarter, 17% higher than in the prior year period.
"In the fourth quarter of 2010, Gen-Probe generated record clinical diagnostics sales and an all-time high in earnings per share despite macroeconomic headwinds and unusually strong sales of influenza products a year ago," said Carl Hull, the Company's president and chief executive officer. "At the same time, we took important steps to accelerate our future growth by filing US regulatory applications for the APTIMA® human papillomavirus (HPV) and trichomonas products, and by acquiring GTI Diagnostics."
Key financial results for the fourth quarter of 2010 were ($ in millions, except EPS):Non-GAAPGAAP2010
+17%Key financial results for the full year 2010 were ($ in millions, except EPS):Non-GAAPGAAP2010
+22%Revenue DetailClinical diagnostics product sales established a new record in the fourth quarter of 2010, with growth driven by the APTIMA Combo 2® assay for detecting Chlamydia and gonorrhea. Increased APTIMA sales offset lower sales of PRODESSE influenza assays, which were unusually strong in the prior year period due to the H1N1 pandemic. Foreign exchange fluctuations reduced clinical diagnostics sales by an estimated $0.5 million, or less than 1%, compared to the prior year period.
Blood screening product sales decreased in the fourth quarter of 2010, as expected, due to lower sales of TIGRIS® instruments to Novartis, the Company's blood screening collaboration partner. Sales of blood screening assays were flat compared to the prior year period. Foreign exchange fluctuations reduced blood screening sales by an estimated $0.7 million, or 1%, compared to the prior year period.
Sales of research products and services in the fourth quarter of 2010 declined mainly due to the divestiture of the BioKits food testing business late in 2009, and foreign exchange effects.
Fourth quarter product sales were ($ in millions):Three Months Ended Dec. 31,Change2010
-10%Research Products and Services
-21%Total Product Sales
-2%Product sales for the full year 2010 were ($ in millions):12 Months Ended Dec. 31,Change2010
+3%Research Products and Services
+17%Total Product Sales
+8%Collaborative research revenues in the fourth quarter of 2010 were $3.7 million, compared to $2.0 million in the prior year period, an increase of 85% that resulted primarily from increased funding from Novartis associated with the development of the fully automated PANTHER™ instrument and the PROCLEIX® ULTRIO® Plus assay for the blood screening market.
Royalty and license revenues in the fourth quarter of 2010 were $1.9 million, compared to $1.4 million in the prior year period, an increase of 36% that resulted primarily from higher royalties received from Novartis and Ventana.
GAAP Income Statement DetailsGross margin on product sales was 69.4% in the fourth quarter of 2010, compared to 67.2% in the prior year period. This increase resulted mainly from decreased sales of low-margin instruments.
Acquisition-related amortization expenses were $2.2 million in the fourth quarter of 2010, compared to $1.9 million in the prior year period, an increase of 16% that resulted mainly from the October 2009 acquisition of Prodesse and its related intangible assets.
Research and development (R&D) expenses in the fourth quarter of 2010 were $26.9 million, compared to $27.4 million in the prior year period, a decrease of 2% that resulted primarily from lower clinical trial expenses.
Marketing and sales expenses in the fourth quarter of 2010 were $15.0 million, similar to $15.3 million in the prior year period.
G&A expenses were $15.6 million in the fourth quarter of 2010, compared to $14.9 million in the prior year period, an increase of 5% that resulted mainly from expenses associated with the consolidation of United Kingdom operations and the acquisition of GTI Diagnostics.
Total other income was $1.2 million in the fourth quarter of 2010, compared to $2.3 million in the prior year period. This decrease of 48% resulted primarily from lower realized gains from the sale of marketable securities, lower yields on the Company's municipal bond portfolio, and lower investment balances due to share repurchases, acquisitions and strategic investments.
Income tax expense was $10.8 million in the fourth quarter of 2010, corresponding to a tax rate of 28%. Income tax expense benefited from the reinstatement of the federal R&D tax credit, which was retroactive to the beginning of 2010.
Non-GAAP Income Statement DetailsExcluding $0.1 million of acquisition-related depreciation expense, gross margin on product sales in the fourth quarter of 2010 was 69.5%, compared to 67.3% in the prior year period.
Excluding transaction-related costs, general and administrative (G&A) expenses in the fourth quarter of 2010 were $14.7 million, similar to $14.5 million in the prior year period.
Excluding a $0.4 million non-cash gain on a change in the fair value of contingent consideration, total other income in the fourth quarter of 2010 was $0.8 million, compared to $2.3 million in the prior year period.
Excluding adjustments to contingent consideration that largely are not taxable, income tax expense in the fourth quarter of 2010 was $11.4 million, corresponding to a tax rate of 28%.
Cash Flows and Balance SheetIn the fourth quarter of 2010, Gen-Probe generated net cash of $43.8 million from operating activities, and spent $8.6 million on property, plant and equipment, leading to free cash flow of $35.2 million. The Company repurchased approximately 245,000 shares of its stock in the fourth quarter for $11.9 million, thereby completing its $100 million buyback program. In a separate press release today, Gen-Probe announced a new, $150 million stock repurchase program.
Gen-Probe continues to have a strong balance sheet. As of December 31, 2010, the Company had $489.7 million of cash, cash equivalents and marketable securities, and $240.0 million of short-term debt. The Company pays interest on this debt at a rate 0.6% above the one-month London Interbank Offered Rate (LIBOR), which has been below 0.3%.
2011 Financial Guidance"We anticipate 2011 will be a good year financially for Gen-Probe," said Herm Rosenman, the Company's senior vice president and chief financial officer. "As we said in our recent analyst day, we forecast continued, high-single-digit growth in product sales, even as instrument sales decline. We also expect improving gross and operating margins to drive solid earnings growth, despite increased legal expenses and lower non-operating income." Gen-Probe's 2011 financial guidance is described in the table below:Non-GAAP
$570 to $595 million
$570 to $595 millionProduct gross margins
68% to 69.5%
68% to 69.5%Acquisition-related amortization and other transaction expense
$13 to 14 millionOperating margin
27% to 29%
25% to 27%Tax rate
32% to 33%
32% to 33%Diluted shares
48 to 49 million
48 to 49 millionEPS
$2.28 to $2.40
$2.06 to $2.20Notes on PresentationIn this press release, all per share amounts are calculated on a fully diluted basis. Some totals may not foot due to rounding. Certain prior year amounts have been reclassified to conform to the current year presentation.
About Non-GAAP Financial MeasuresTo supplement Gen-Probe's financial results for the fourth quarter of 2010 and its 2011 financial guidance, in each case presented in accordance with GAAP, Gen-Probe uses the following financial measures defined as non-GAAP by the SEC: non-GAAP net income, non-GAAP gross margin, non-GAAP marketing and sales expenses, non-GAAP G&A expenses, non-GAAP operating margin, non-GAAP income tax rate, and non-GAAP EPS. Gen-Probe's management does not, nor does it suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared and presented in accordance with GAAP. Gen-Probe's management believes that these non-GAAP financial measures provide meaningful supplemental information regarding the Company's performance by excluding certain expenses and adjustments that may not be indicative of core business results. Gen-Probe believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing Gen-Probe's performance and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate management's internal comparisons to Gen-Probe's historical performance and our competitors' operating results. Gen-Probe believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. Further, our reconciliations of non-GAAP to GAAP operating results, which are included on the attached tables, are presented in the format of consolidated statements of income solely to assist a reader in understanding the impact of the various adjustments to our GAAP operating results, individually and in the aggregate, and are not intended to place any undue prominence on our non-GAAP operating results.
Webcast Conference CallA live webcast of Gen-Probe's fourth quarter 2010 conference call for investors can be accessed at http://www.gen-probe.com beginning at 4:30 p.m. Eastern Time today. The webcast will be archived for at least 90 days. A telephone replay of the call will be available for approximately 24 hours. Call 800-294-4406 (US) or 203-369-3231 (international).
About Gen-ProbeGen-Probe is a global leader in the development, manufacture and marketing of rapid, accurate and cost-effective molecular diagnostic products and services that are used primarily to diagnose human diseases, screen donated human blood, and ensure transplant compatibility. Gen-Probe has approximately 28 years of expertise in nucleic acid testing (NAT), and received the 2004 National Medal of Technology, America's highest honor for technological innovation, for developing NAT assays for blood screening. Gen-Probe is headquartered in San Diego and employs approximately 1,400 people. For more information, go to www.gen-probe.com.
TrademarksAPTIMA, APTIMA COMBO 2, PANTHER, PRODESSE and TIGRIS are trademarks of Gen-Probe. All other trademarks are the property of their owners.
Caution Regarding Forward-Looking StatementsAny statements in this news release about our expectations, beliefs, plans, objectives, assumptions or future events or performance, including those under the heading " 2011 Financial Guidance," are not historical facts and are forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as believe, will, expect, anticipate, estimate, intend, plan and would. For example, statements concerning Gen-Probe's financial condition, possible or expected results of operations, the development and commercialization of new products, regulatory approvals, future milestones, growth opportunities, and plans of management are all forward-looking statements. Forward-looking statements are not guarantees of performance. They involve known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to differ materially from those expressed or implied. Some of these risks, uncertainties and assumptions include but are not limited to: (i) the risk that we may not achieve our expected 2011 financial targets, (ii) the risk that we may not integrate acquisitions, such as Tepnel, Prodesse and GTI Diagnostics, successfully, (iii) the possibility that the market for the sale of our new products, such as our PANTHER instrument system and PROGENSA PCA3, APTIMA HPV and APTIMA trichomonas assays, may not develop as expected, (iv) the enhancement of existing products and the development of new products may not proceed as planned, (v) the risk that investigational products, including those now in US clinical trials, may not be approved by regulatory authorities or become commercially available in the time frame we anticipate, or at all, (vi) the risk that we may not be able to compete effectively, (vii) the risk that we may not be able to maintain our current corporate collaborations and enter into new corporate collaborations or customer contracts, (viii) our dependence on Novartis and other third parties for the distribution of some of our products, (ix) our dependence on a small number of customers, contract manufacturers and single source suppliers of raw materials, (x) changes in third-party reimbursement policies regarding our products could adversely affect sales, (xi) changes in government regulation or tax policy affecting our diagnostic products could harm our sales, increase our development costs or increase our taxes, (xii) the risk that our intellectual property may be infringed by third parties or invalidated, and (xiii) our involvement in patent and other intellectual property and commercial litigation could be expensive and could divert management's attention. This list includes some, but not all, of the factors that could affect our ability to achieve results described in any forward-looking statements. For additional information about risks and uncertainties we face and a discussion of our financial statements and footnotes, see documents we file with the SEC, including our most recent annual report on Form 10-K and all subsequent periodic reports. We assume no obligation and expressly disclaim any duty to update forward-looking statements to reflect events or circumstances after the date of this news release or to reflect the occurrence of subsequent events.
Gen-Probe IncorporatedConsolidated Balance Sheets – GAAP(In thousands, except share and per share data)December 31,December 31,20102009(unaudited)AssetsCurrent assets:Cash and cash equivalents, including restricted cash of $16 and $17 at
December 31, 2010 and December 31, 2009, respectively
$ 59,690$ 82,616Marketable securities
170,648402,990Trade accounts receivable, net of allowance for doubtful accounts of $355
and $516 at December 31, 2010 and December 31, 2009, respectively
54,73955,305Accounts receivable — other
66,41661,071Deferred income tax
13,63413,959Prepaid income tax
11,67214,526Other current assets
5,1484,708Total current assets
390,433647,199Marketable securities, net of current portion
259,31715,472Property, plant and equipment, net
160,863157,437Capitalized software, net
150,308122,680Purchased intangibles, net
120,270108,015License, manufacturing access fees and other assets, net
$1,167,797$1,128,185Liabilities and stockholders' equityCurrent liabilities:Accounts payable
$ 14,614$ 20,455Accrued salaries and employee benefits
26,82524,775Other accrued expenses
13,93524,755Income tax payable
1,1663,527Total current liabilities
297,174313,639Non-current income tax payable
8,3155,958Deferred income tax
29,77523,220Deferred revenue, net of current portion
2,5001,978Other long-term liabilities
6,65416,215Commitments and contingenciesStockholders' equity:Preferred stock, $0.0001 par value per share; 20,000,000 shares
authorized, none issued and outstanding
——Common stock, $0.0001 par value per share; 200,000,000 shares
authorized, 47,966,156 and 49,143,798 shares issued and outstanding
at December 31, 2010 and December 31, 2009, respectively
55Additional paid-in capital
195,820242,615Accumulated other comprehensive income
626,876519,939Total stockholders' equity
823,379767,175Total liabilities and stockholders' equity
$1,167,797$1,128,185Gen-Probe Incorporated Consolidated Statements of Income - GAAP(In thousands, except per share data)
(Unaudited)Three Months EndedTwelve Months EndedDecember 31,December 31,2010200920102009Revenues:Product sales
$ 131,093$ 135,470$
522,709$ 483,759Collaborative research revenue
3,7082,04914,5187,911Royalty and license revenue
136,694138,870543,327498,302Operating expenses:Cost of product sales (excluding acquisition-related intangible amortization)
40,10444,454169,222152,393Acquisition-related intangible amortization
2,2311,8948,8474,144Research and development
26,88527,428111,103105,970Marketing and sales
15,01615,30659,49253,853General and administrative
15,61014,92556,81861,828Total operating expenses
99,846104,007405,482378,188Income from operations
36,84834,863137,845120,114Other income/(expense):Investment and interest income
(535)(392)(2,216)(1,857)Gain on contingent consideration
399-7,994-Other income/(expense), net
(95)769(177)(58)Total other income, net
1,1702,30017,36619,688Income before income tax
38,01837,163155,211139,802Income tax expense
91,783Net income per share:Basic
.79Weighted average shares outstanding:Basic
48,45549,45849,03350,965Gen-Probe Incorporated Consolidated Statements of Income – Non-GAAP Reconciliations(In thousands, except per share data)
(Unaudited)Three Months EndedThree Months EndedDecember 31, 2010December 31, 2009Non-GAAPAdjustmentsGAAPNon-GAAPAdjustmentsGAAPRevenues:Product sales
$ 131,093$ 135,470
$ 135,470Collaborative research revenue
2,049Royalty and license revenue
138,870Operating expenses:Cost of product sales (excluding acquisition-related intangible amortization)
44,454Acquisition-related intangible amortization
1,894Research and development
27,428Marketing and sales
15,306General and administrative
14,925Total operating expenses
104,007Income from operations
34,863Other income/(expense):Investment and interest income
(392)Gain on contingent consideration
-Other income/(expense), net
769Total other income, net
2,300Income before income tax
37,163Income tax expense
24,025Net income per share:Basic
.48Weighted average shares outstanding:Basic
48,45548,45549,45849,458Gen-Probe Incorporated Consolidated Statements of Income – Non-GAAP Reconciliations(In thousands, except per share data)
(Unaudited)Twelve Months EndedTwelve Months EndedDecember 31, 2010December 31, 2009Non-GAAPAdjustmentsGAAPNon-GAAPAdjustmentsGAAPRevenues:Product sales
$ 522,709$ 483,759
$ 483,759Collaborative research revenue
7,911Royalty and license revenue
498,302Operating expenses:Cost of product sales (excluding acquisition-related intangible amortization)
152,393Acquisition-related intangible amortization
4,144Research and development
105,970Marketing and sales
53,853General and administrative
61,828Total operating expenses
378,188Income from operations
120,114Other income/(expense):Investment and interest income
(1,857)Gain on contingent consideration
-Other income/(expense), net
(58)Total other income, net
19,688Income before income tax
139,802Income tax expense
91,783Net income per share:Basic
.79Weighted average shares outstanding:Basic
49,03349,03350,96550,965Gen-Probe Incorporated Consolidated Statements of Cash Flows - GAAP(In thousands)
(Unaudited)Twelve Months EndedDecember 31,20102009Operating activities:Net income
$ 106,937$ 91,783Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
44,52940,382Amortization of premiums on investments, net of accretion of discounts
24,07523,420Excess tax benefit from employee stock-based compensation
(1,808)812Deferred income tax
(3,745)(5,786)Gain on contingent consideration
(7,994)-Gain on sale of food safety business
-(291)Loss on disposal of property and equipment
1,065221Changes in assets and liabilities:Trade and other accounts receivable
3,0551,218Other current assets
(360)1,912Other long-term assets
(6,265)3,500Accrued salaries and employee benefits
(133)(676)Other accrued expenses
(4,417)(806)Income tax payable
7,688(2,371)Other long-term liabilities
122961Net cash provided by operating activities
169,566145,031Investing activities:Proceeds from sales and maturities of marketable securities
427,821438,601Purchases of marketable securities
(401,434)(419,019)Proceeds from sale of property, plant and equipment
82-Purchases of property, plant and equipment
(30,716)(32,364)Purchase of capitalized software
(3,891)(1,290)Purchases of intangible assets, including licenses and manufacturing access fees
(2,513)(7,341)Net cash paid for business combinations
(53,000)(183,725)Proceeds from sale of food safety business
-6,357Cash paid for investment in Pacific Biosciences
(820)403Net cash used in investing activities
(114,471)(198,378)Financing activities:Repurchase and retirement of common stock
(99,935)(174,847)Proceeds from issuance of common stock and employee stock purchase plan
31,83010,923Payment of contingent consideration
(10,000)-Repurchase and retirement of restricted stock for payment of taxes
(1,257)(1,716)Excess tax benefit from employee stock-based compensation
(228)238,450Net cash (used in) provided by financing activities
(75,898)74,815Effect of exchange rate changes on cash and cash equivalents
(2,123)1,026Net increase in cash and cash equivalents
(22,926)22,494Cash and cash equivalents at the beginning of period
82,61660,122Cash and cash equivalents at the end of period
$ 59,690$ 82,616Contact:Michael WattsVice president, investor relations and
|SOURCE Gen-Probe Incorporated|
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