SAN DIEGO, Feb. 13, 2012 /PRNewswire/ -- Gen-Probe Incorporated (NASDAQ: GPRO) today reported financial results for the fourth quarter of 2011. Total revenues in the quarter grew 16%, to a new record of $158.2 million, while non-GAAP earnings per share (EPS) increased 18%, to a new high of $0.72.
"Gen-Probe finished 2011 strong, as blood screening sales rebounded in the fourth quarter while clinical diagnostics revenues continued their solid growth," said Carl Hull, the Company's chairman and chief executive officer. "We enter 2012 with excellent momentum based on several new product launches that are off to good starts."Key financial results for the fourth quarter of 2011 were ($ in millions, except EPS):Non-GAAPGAAP2011
-25%Gen-Probe's GAAP results for the fourth quarter of 2011 were negatively affected by impairment charges of $12.7 million related to acquired goodwill and intangible assets.
Revenue DetailIn the fourth quarter of 2011, clinical diagnostics product sales grew by 13% compared to the prior year period. This increase was driven primarily by domestic and international growth of the APTIMA Combo 2® assay for detecting Chlamydia and gonorrhea, and by the inclusion of sales from the former GTI Diagnostics (GTI), which the Company acquired in December of 2010. Foreign currency fluctuations reduced clinical diagnostics sales by an estimated $0.1 million compared to the prior year period.
In blood screening, fourth-quarter sales increased by 30% compared to the prior year period, as expected, mainly due to greater shipments of assays and TIGRIS® instruments to Novartis, the Company's blood screening collaboration partner. Foreign currency fluctuations increased blood screening sales by an estimated $0.2 million compared to the prior year period.
Sales of research products and services in the fourth quarter of 2011 were $2.4 million, down 29% compared to the prior year period. Foreign currency fluctuations had an immaterial effect on sales of research products and services compared to the prior year period.
Fourth quarter product sales were ($ in millions):Three Months Ended Dec. 31,Change2011
-29%Total Product Sales
+18%Collaborative research revenues in the fourth quarter of 2011 were $1.4 million, compared to $3.7 million in the prior year period, a decrease of 62% that resulted primarily from an expected decrease in funding from Novartis associated with the development of the fully automated PANTHER® instrument for the blood screening market. The PANTHER system remains on track to be launched into international blood screening markets this year.
Royalty and license revenues in the fourth quarter of 2011 were $1.6 million, compared to $1.9 million in the prior year period, a decrease of 16%.
GAAP Income Statement DetailsGross margin on product sales was 66.7% in the fourth quarter of 2011, compared to 69.4% in the prior year period. This decrease resulted mainly from higher sales of low-margin instrumentation to Novartis, which are generally a precursor to future assay sales.
Acquisition-related amortization expenses were $2.8 million in the fourth quarter of 2011, compared to $2.2 million in the prior year period, an increase of 27% that resulted mainly from the acquisition of GTI.
Research and development (R&D) expenses were $28.2 million in the fourth quarter of 2011, compared to $26.9 million in the prior year period, an increase of 5% that resulted primarily from the addition of GTI's R&D programs.
Marketing and sales expenses were $17.1 million in the fourth quarter of 2011, compared to $15.0 million in the prior year period, an increase of 14% that resulted primarily from the addition of GTI's cost structure and ongoing European commercial expansion.
General and administrative (G&A) expenses were $16.2 million in the fourth quarter of 2011, compared to $15.6 million in the prior year period, an increase of 4% that resulted mainly from the addition of GTI's cost structure.Goodwill and asset impairment charges totaled $12.7 million in the fourth quarter of 2011. Of this charge, $8.7 million related to goodwill associated with the Company's research products and services business, which was acquired as part of the Tepnel acquisition in April of 2009, and $4.0 million related to in-process research and development intangible assets of GTI.
Total other income, net, was $0.4 million in the fourth quarter of 2011, compared to total other income, net, of $1.2 million in the prior year period, a decrease of 67%. This decrease resulted primarily from a non-cash gain in the prior year period and unfavorable exchange rate effects.
Income tax expense was $10.0 million in the fourth quarter of 2011, corresponding to an effective tax rate of 33%.
Non-GAAP Income Statement DetailsIn the fourth quarter of 2011, non-GAAP gross margin on product sales, R&D expenses, marketing and sales expenses, and total other income, net, were similar to the corresponding GAAP results.
Excluding transaction-related expenses and restructuring costs, non-GAAP G&A expenses were $15.6 million in the fourth quarter of 2011, compared to $14.7 million in the prior year period, an increase of 6%.
Non-GAAP income tax expense was $12.4 million in the fourth quarter of 2011, corresponding to an effective tax rate of 27%. Income tax expense was less than expected in the fourth quarter due to the utilization of foreign losses and higher ex-US sales.
Cash Flows and Balance SheetIn the fourth quarter of 2011, Gen-Probe generated net cash of $53.4 million from operating activities, and spent $7.2 million on property, plant and equipment, leading to free cash flow of $46.2 million, a new quarterly record.
Gen-Probe continues to maintain a strong balance sheet. As of December 31, 2011, the Company had $368.0 million of cash, cash equivalents and marketable securities, and $248.0 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 was recently below 0.3%.
During the fourth quarter of 2011, Gen-Probe repurchased 1.7 million shares of Company stock for $100 million, corresponding to an average purchase price of $58.83 per share. This completed the $100 million repurchase plan that was announced in November of 2011.
2012 Financial Guidance"We anticipate returning to low double-digit organic revenue growth in 2012 based on multiple new product launches that are still in their early stages," said Herm Rosenman, Gen-Probe's senior vice president, finance, and chief financial officer. "We forecast a similar rate of bottom-line growth in 2012 as we invest in these launches and in a series of R&D projects that extend our lead in assay and instrument performance. We believe that these investments position us well for solid, sustainable growth over the next several years."
Gen-Probe's 2012 financial guidance is provided below:Non-GAAP
$630 to $655 million
$630 to $655 millionProduct gross margins
68% to 69.5%
68% to 69.5%Acquisition-related amortization,
restructuring and other transaction
~ $15 millionOperating margin
26.5% to 28%
24.5% to 26%Tax rate
30.5% to 32.5%
30.5% to 32.5%Diluted shares
~ 47 million
~ 47 millionEPS
$2.50 to $2.68
$2.30 to $2.48About Non-GAAP Financial MeasuresGen-Probe's management believes that non-GAAP financial measures provide meaningful supplemental information regarding the Company's performance by excluding certain expenses and other items that may not be indicative of core business results. To supplement the Company's financial results for the fourth quarter of 2011 and its 2012 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 R&D expenses, non-GAAP marketing and sales expenses, non-GAAP G&A expenses, non-GAAP operating profit, 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 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.
Notes on PresentationIn this news release, all per share amounts are calculated on a diluted basis. Some totals may not foot due to rounding. Certain prior year amounts have been reclassified to conform to the current year presentation.
Webcast Conference CallA live webcast of Gen-Probe's fourth quarter 2011 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 also will be available for approximately 24 hours. Call 866-501-7043 (domestic) or 203-369-1846 (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 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 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 "2012 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, market trends, and management plans are 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 2012 financial targets, (ii) the risk that we may not integrate acquisitions, such as Tepnel, Prodesse and GTI, successfully, (iii) the possibility that the market for the sale of our new products, such as our PANTHER 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 or enter into new ones, (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 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 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.
Vice president, investor relations and
Gen-Probe IncorporatedConsolidated Balance Sheets - GAAP(In thousands, except share and per share data)December 31,December 31,20112010Assets(Unaudited)Current assets:Cash and cash equivalents, including restricted cash of $38 and $16 at December 31, 2011 and December 31, 2010, respectively
$ 87,021$ 59,690Marketable securities
218,789170,648Trade accounts receivable, net of allowance for doubtful accounts of $320 and $355 at December 31, 2011 and December 31, 2010, respectively
57,76754,739Accounts receivable — other
77,88666,416Deferred income tax
11,55514,665Other current assets
4,9675,148Total current assets
469,619390,433Marketable securities, net of current portion
62,237259,317Property, plant and equipment, net
176,081160,863Capitalized software, net
140,404150,308Purchased intangibles, net
106,619120,270License, manufacturing access fees and other assets, net
$1,045,448$1,167,797Liabilities and stockholders' equityCurrent liabilities:Accounts payable
$ 12,000$ 14,614Accrued salaries and employee benefits
28,79526,825Other accrued expenses
12,84613,935Income tax payable
1,2381,166Total current liabilities
304,736297,174Non-current income tax payable
10,0198,315Deferred income tax
19,28329,775Deferred revenue, net of current portion
3,2372,500Other long-term liabilities
7,8316,654Commitments 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, 45,008,879 and 47,966,156 shares issued and outstanding at December 31, 2011 and December 31, 2010, respectively
55Additional paid-in capital
23,650195,820Accumulated other comprehensive income (loss)
677,000626,876Total stockholders' equity
700,342823,379Total liabilities and stockholders' equity
$1,045,448$1,167,797Gen-Probe IncorporatedConsolidated Statements of Income - GAAP(In thousands, except per share data)
(Unaudited)Three Months EndedTwelve Months EndedDecember 31,December 31,2011201020112010Revenues:Product sales
$155,162$131,093$562,588$522,709Collaborative research revenue
1,3693,7087,68214,518Royalty and license revenue
158,175136,694576,234543,327Operating expenses:Cost of product sales (excluding acquisition-related intangible amortization)
51,74240,104173,645169,222Acquisition-related intangible amortization
2,7602,23111,0618,847Research and development
28,20226,885112,742111,103Marketing and sales
17,05615,01668,39659,492General and administrative
16,24015,61071,39456,818Goodwill and asset impairment charges
12,746—12,746—Total operating expenses
128,74699,846449,984405,482Income from operations
29,42936,848126,250137,845Other income (expense):Investment and interest income
(546)(535)(2,070)(2,216)Gain on contingent consideration
—399—7,994Other-than-temporary impairment loss on equity investment
——(39,482)—Other income (expense), net
(364)(95)(236)(177)Total other income (expense), net
4071,170(33,093)17,366Income before income tax
29,83638,01893,157155,211Income tax expense
$ 19,859$ 27,238$ 50,124$106,937Net income per share:Basic
$ 0.43$ 0.57$ 1.06$ 2.20Diluted
$ 0.42$ 0.56$ 1.04$ 2.18Weighted average shares outstanding:Basic
46,94448,45548,38749,033Gen-Probe IncorporatedConsolidated Statements of Income – Non-GAAP Reconciliations(In thousands, except per share data)
(Unaudited)Three Months EndedThree Months EndedDecember 31, 2011December 31, 2010Non-GAAPAdjustmentsGAAPNon-GAAPAdjustmentsGAAPRevenues:Product sales
$131,093Collaborative research revenue
3,708Royalty and license revenue
136,694Operating expenses:Cost of product sales (excluding acquisition-related intangible amortization)
40,104Acquisition-related intangible amortization
2,231Research and development
26,885Marketing and sales
15,016General and administrative
15,610Goodwill and asset impairment charges
—Total operating expenses
99,846Income from operations
36,848Other income (expense):Investment and interest income
(535)Gain on contingent consideration
399Other income (expense), net
(95)Total other income, net
1,170Income before income tax
38,018Income tax expense
$ 19,859$ 29,444
$ 27,238Net income per share:Basic
$ 0.43$ 0.61
$ 0.42$ 0.61
$ 0.56Weighted average shares outstanding:Basic
46,94446,94448,45548,455Gen-Probe IncorporatedConsolidated Statements of Income – Non-GAAP Reconciliations(In thousands, except per share data)
(Unaudited)Twelve Months EndedTwelve Months EndedDecember 31, 2011December 31, 2010Non-GAAPAdjustmentsGAAPNon-GAAPAdjustmentsGAAPRevenues:Product sales
$522,709Collaborative research revenue
14,518Royalty and license revenue
543,327Operating expenses:Cost of product sales (excluding acquisition-related intangible amortization)
169,222Acquisition-related intangible amortization
8,847Research and development
111,103Marketing and sales
59,492General and administrative
56,818Goodwill and asset impairment charges
—Total operating expenses
405,482Income from operations
137,845Other income (expense):Investment and interest income
(2,216)Gain on contingent consideration
7,994Other-than-temporary impairment loss on equity investment
—Other income (expense), net
(177)Total other income (expense), net
17,366Income before income tax
155,211Income tax expense
$106,937Net income per share:Basic
$ 1.06$ 2.21
$ 1.04$ 2.19
$ 2.18Weighted average shares outstanding:Basic
48,38748,38749,03349,033Gen-Probe IncorporatedConsolidated Statements of Cash Flows - GAAP(In thousands)
(Unaudited)Twelve Months EndedDecember 31,20112010Operating activities:Net income
$ 50,124$ 106,937Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
46,56944,529Amortization of premiums on investments, net of accretion of discounts
24,74124,075Excess tax benefit from employee stock-based compensation
850(1,808)Deferred income tax
(4,220)(3,745)Other-than-temporary impairment loss on equity investment
39,482—Goodwill and asset impairment charges
12,746—Gain on contingent consideration
—(7,994)Loss on disposal of property and equipment
3641,065Changes in assets and liabilities:Trade and other accounts receivable
4083,055Other current assets
384(360)Other long-term assets
(2,698)(6,265)Accrued salaries and employee benefits
2,981(133)Other accrued expenses
(1,398)(4,417)Income tax payable
10,3137,688Other long-term liabilities
1,211122Net cash provided by operating activities
181,253169,566Investing activities:Proceeds from sales and maturities of marketable securities
489,241427,821Purchases of marketable securities
(395,190)(401,434)Purchases of property, plant and equipment
(41,664)(30,716)Purchase of capitalized software
(6,053)(3,891)Purchases of intangible assets, including licenses and manufacturing access fees
(5,259)(2,513)Net cash paid for business combinations
—(53,000)Cash paid for investment in Roka Bioscience
(3,980)—Cash paid for investment in Pacific Biosciences
(209)(738)Net cash provided by (used in) investing activities
36,886(114,471)Financing activities:Repurchase and retirement of common stock
(250,000)(99,935)Proceeds from issuance of common stock and employee stock purchase plan
49,93231,830Payment of contingent consideration
—(10,000)Repurchase and retirement of restricted stock for payment of taxes
(1,615)(1,257)Excess tax benefit from employee stock-based compensation
8,000(228)Net cash used in financing activities
(188,603)(75,898)Effect of exchange rate changes on cash and cash equivalents
(2,205)(2,123)Net increase (decrease) in cash and cash equivalents
27,331(22,926)Cash and cash equivalents at the beginning of period
59,69082,616Cash and cash equivalents at the end of period
$ 87,021$ 59,690
|SOURCE Gen-Probe Incorporated|
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