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Gen-Probe Reports Financial Results for Second Quarter 2009
Date:7/30/2009

SAN DIEGO, July 30 /PRNewswire-FirstCall/ -- Gen-Probe Incorporated (Nasdaq: GPRO) today reported financial results for the second quarter of 2009, including non-GAAP earnings per share (EPS) of $0.45 and record sexually transmitted disease (STD), clinical diagnostics and total product sales.

"Gen-Probe posted solid earnings in the second quarter of 2009 as a good performance from our core STD franchise, the inclusion of initial revenues from our Tepnel acquisition, and portfolio gains outweighed lower-than-expected blood screening sales," said Carl Hull, the Company's president and chief executive officer. "In addition, the key R&D projects that we expect to boost future growth - including our PANTHER instrument and new tests for human papillomavirus (HPV), prostate cancer and trichomonas - remain on track."

In the second quarter of 2009, product sales were $116.8 million, compared to $113.7 million in the prior year period, an increase of 3%. Compared to the second quarter of 2008, the stronger U.S. dollar reduced product sales growth by an estimated 4%(2). Total revenues for the second quarter of 2009 were $120.5 million, compared to $119.8 million in the prior year period, an increase of 1%.

Net income was $23.2 million ($0.45 per share) on a non-GAAP basis in the second quarter of 2009, compared to $24.8 million ($0.45 per share) in the prior year period, a decrease of 6%. Including $4.4 million ($0.07 per share) of expenses related to the Company's acquisition of Tepnel, which closed on April 8, 2009, net income in the second quarter of 2009 was $19.8 million ($0.38 per share) on a GAAP basis.

For the first six months of 2009, product sales were $229.3 million, compared to $215.2 million in the prior year period, an increase of 7%. Compared to the first half of 2008, the stronger U.S. dollar reduced product sales growth by an estimated 4%. Total revenues for the first six months of 2009 were $236.7 million, compared to $242.4 million in the prior year period, a decrease of 2%.

Net income was $50.2 million ($0.96 per share) on a non-GAAP basis in the first six months of 2009, compared to $56.7 million ($1.03 per share) in the prior year period, a decrease of 11% (7% per share). Including $6.0 million ($0.09 per share) of expenses related to the Company's acquisition of Tepnel, net income in the first six months of 2009 was $45.6 million ($0.87 per share) on a GAAP basis.

As previously disclosed, Gen-Probe's total revenues, net income and EPS in the first six months of 2008 benefited from a number of non-recurring items, most notably $16.4 million of royalty and license revenue ($0.20 of EPS) that was recorded in the first quarter associated with the settlement of Gen-Probe's patent infringement litigation against Bayer (now Siemens Healthcare Diagnostics). By comparison, the Company's product sales, total revenues, net income and EPS in the first six months of 2009 benefited from $8.2 million of one-time revenue ($0.10 of EPS) recorded in the first quarter associated with the previously announced renegotiation of the Company's collaboration agreement with Novartis Diagnostics.

Detailed Results

Gen-Probe's clinical diagnostics sales in the second quarter of 2009 benefited from revenue associated with Tepnel's transplant diagnostics and genetic testing products, and continued growth of the APTIMA Combo 2(R) assay, an amplified nucleic acid test (NAT) for simultaneously detecting Chlamydia trachomatis and Neisseria gonorrhoeae. Sales of our market-leading assay increased based on market share gains on both the Company's semi-automated instrument platform and on the high-throughput, fully automated TIGRIS(R) system. Revenue from the PACE(R) product line, the Company's non-amplified tests for the same microorganisms, declined in the second quarter compared to the prior year period, in line with Gen-Probe's expectations. Clinical diagnostics sales were negatively affected by the stronger U.S. dollar, which reduced growth by an estimated 2% compared to the prior year period.

In blood screening, product sales in the second quarter of 2009 were negatively affected by $8.8 million of lower product shipments to the Company's commercial partner, Novartis Diagnostics. This reduction resulted primarily from: lower West Nile virus assay shipments due to previously discussed ordering patterns; lower U.S. shipments of the PROCLEIX ULTRIO assay due to the post-marketing study that was underway in the prior year period; and lower U.S. shipments of the PROCLEIX HIV-1/HCV assay as customers prepared to adopt the PROCLEIX ULTRIO assay. Blood screening sales growth also was negatively affected by the stronger U.S. dollar, which reduced growth by an estimated 6%, and by a one-time payment of $2.6 million in the prior year period related to historical revenue adjustments made in the Novartis collaboration.

"Blood screening sales were lower than expected in the second quarter, as ordering patterns that were more negative than forecast outweighed a low-single-digit percentage increase in underlying donations tested and stable market shares," Mr. Hull said.

Sales of research products and services in the second quarter of 2009 were $3.2 million. These sales, which were associated with the Tepnel acquisition, were not included in Gen-Probe's prior year results.

Second quarter product sales were, in millions:

                   Three Months Ended June 30,        Change
                   -------------------------          ------
                                                  As         Constant
                        2009(3)    2008(4)     Reported      Currency
                        -------    -------     --------      --------
    Clinical
     Diagnostics         $67.8      $57.2         19%            21%
    Blood Screening      $45.8      $56.5        -19%           -13%
    Research Products
     and Services         $3.2        N/A         N/A            N/A
    -----------------    -----        ---         ---            ---
    Total Product
     Sales              $116.8     $113.7          3%             7%



First half product sales were, in millions:

                        Six Months Ended June 30,           Change
                        ------------------------            ------
                                                       As        Constant
                            2009         2008        Reported    Currency
                            ----         ----        --------    --------
    Clinical
     Diagnostics          $127.4       $109.7           16%          19%
    Blood Screening        $98.7       $105.5           -6%          -1%
    Research Products
       and Services         $3.2          N/A           N/A          N/A
    -----------------       ----          ---           ---          ---
    Total Product
     Sales                $229.3       $215.2            7%          11%


Collaborative research revenues for the second quarter of 2009 were $2.2 million, compared to $4.7 million in the prior year period, a decrease of 53%. This decrease resulted mainly from $2.7 million of previously deferred milestone revenue that the Company recognized in the prior year period based on the termination of its collaboration with 3M regarding healthcare-associated infections. For the first six months of 2009, collaborative research revenues were $3.9 million, compared to $7.1 million in the prior year period, a decrease of 45%.

Royalty and license revenues for the second quarter of 2009 were $1.5 million, compared to $1.5 million in the prior year period. For the first six months of 2009, royalty and license revenues were $3.5 million, compared to $20.1 million in the prior year period. As previously discussed, this significant decrease resulted primarily from $16.4 million of royalty and license revenue that was recorded in the first quarter of 2008 associated with the settlement of Gen-Probe's patent infringement litigation against Bayer. This revenue represented the third and final payment due in connection with the 2006 settlement of the companies' litigation.

Gross margin on product sales in the second quarter of 2009 was 67.3% on a non-GAAP basis that excludes $0.1 million of acquisition-related depreciation expense, compared to 71.4% in the prior year period. This decrease resulted primarily from the stronger U.S. dollar, the addition of Tepnel's generally lower-margin revenues, and the previously discussed $2.6 million payment in the prior year period related to historical revenue adjustments in the Novartis collaboration. For the first six months of 2009, gross margin on product sales was 68.8% on a non-GAAP basis that excludes $0.1 million of acquisition-related depreciation expense, compared to 69.7% in the prior year period. On a GAAP basis, gross margin on product sales was 67.2% in the second quarter of 2009, and 68.8% for the first six months of the year.

Acquisition-related intangible amortization expenses in each of the second quarter and first six months of 2009 were $1.1 million, compared to $0 in the comparable prior year periods.

Research and development (R&D) expenses in the second quarter of 2009 were $26.1 million, compared to $29.4 million in the prior year period, a decrease of 11%. This decrease resulted primarily from a non-recurring charge in the prior year period, namely a $3.5 million write-off of previously capitalized expenses associated with intellectual property acquired in 2005 from Corixa. For the first six months of 2009, R&D expenses were $51.1 million, compared to $52.4 million in the prior year period, a decrease of 2%. R&D expenses are expected to increase significantly in the third quarter of 2009, to approximately $30 million, based on clinical trials of the Company's HPV, PCA3 and trichomonas assays.

Marketing and sales expenses in the second quarter of 2009 were $14.0 million, compared to $11.5 million in the prior year period, an increase of 22% that resulted primarily from the addition of Tepnel's cost structure, and European sales force expansion and market development efforts. For the first six months of 2009, marketing and sales expenses were $25.1 million, compared to $23.4 million in the prior year period, an increase of 7%.

General and administrative (G&A) expenses in the second quarter of 2009 were $14.6 million on a non-GAAP basis that excludes $3.2 million of acquisition-related expense, compared to $13.7 million in the prior year period, an increase of 7% that resulted primarily from the addition of Tepnel's cost structure. For the first six months of 2009, G&A expenses were $26.9 million on a non-GAAP basis that excludes $4.8 million of acquisition-related expense, compared to $25.6 million in the prior year period, an increase of 5%. On a GAAP basis, G&A expenses were $17.8 million in the second quarter of 2009, up 30% compared to the prior year period, and $31.7 million for the first six months of the year, up 24% compared to the prior year period.

Total other income in the second quarter of 2009 was $8.5 million, compared to $3.7 million in the prior year period, an increase of 130% that resulted primarily from the Company's previously communicated decision to sell portions of its municipal bond portfolio, and to use the proceeds to repurchase stock. For the first six months of 2009, total other income was $13.1 million, compared to $9.4 million in the prior year period, an increase of 39%.

In the second quarter of 2009, Gen-Probe generated net cash of $22.8 million from its operating activities, and repurchased approximately 1.6 million shares of its stock for approximately $70 million.

Gen-Probe continues to have a strong balance sheet. As of June 30, 2009, the Company had $569.2 million of cash, cash equivalents and marketable securities, and $240.9 million of short-term debt. The Company currently pays interest on funds borrowed under its credit facility at a rate 0.6 percent above the one-month London Interbank Offered Rate (LIBOR), which was recently 0.3 percent.

Updated 2009 Financial Guidance

"We continue to expect solid growth in our clinical diagnostics business in 2009 as well as industry-leading profitability on the bottom line," said Herm Rosenman, Gen-Probe's senior vice president, finance, and chief financial officer. "However, we are lowering the top end of our full-year revenue and EPS guidance slightly to account for lower-than-expected blood screening revenues in the second quarter and slower anticipated blood screening growth going forward."

In the table below, Gen-Probe's non-GAAP guidance excludes certain expenses related to the Tepnel acquisition, namely transaction costs and the amortization of purchased intangibles. These expenses are forecast to total between $8 million and $9 million in 2009, equating to between ($0.10) and ($0.12) of EPS on a GAAP basis.

                      Current        Previous       Current        Previous
                      Guidance       Guidance       Guidance       Guidance
                     (non-GAAP)     (non-GAAP)       (GAAP)         (GAAP)
                     ----------      --------         -----          -----
    Total revenues  $490 to $503   $490 to $510   $490 to $503   $490 to $510
                       million        million        million       million
    Product gross
     margins         68% to 69%      68% to 70%     68% to 69%    68% to 70%
    Acquisition-related
     intangibles
     amortization        N/A             N/A       $3-4 million       N/A
    R&D expenses       ~ 22%         21% to 23%       ~ 22%       21% to 23%
    Marketing and
     sales expenses  10% to 11%      10% to 11%     10% to 11%    11% to 12%
    G&A expenses     10% to 11%      10% to 11%     11% to 12%    11% to 12%
    Tax rate           ~ 34%         33% to 34%        ~ 34%      33% to 34%
    Diluted shares ~ 52 million    ~ 52 million   ~ 52 million   ~ 52 million
    EPS           $1.85 to $1.95  $1.85 to $2.00 $1.73 to $1.85 $1.72 to $1.90



Webcast Conference Call

A live webcast of Gen-Probe's second quarter 2009 conference call for investors can be accessed athttp://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. The replay number is 800-879-6754 for domestic callers or 402-220-5334 for international callers.

About Gen-Probe

Gen-Probe Incorporated is a global leader in the development, manufacture and marketing of rapid, accurate and cost-effective NATs that are used primarily to diagnose human diseases and screen donated human blood. Gen-Probe has more than 25 years of NAT expertise, 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 1,200 people. For more information, go to www.gen-probe.com.

Trademarks

APTIMA, APTIMA COMBO 2, PACE, PROGENSA and TIGRIS are trademarks of Gen-Probe Incorporated. ULTRIO and PROCLEIX are trademarks of Novartis Diagnostics. All other trademarks are the property of their owners.

About Non-GAAP Financial Measures

To supplement Gen-Probe's financial results for the second quarter of 2009 and its updated 2009 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, gross margin, G&A expenses, effective income tax rate, and EPS. Gen-Probe's management does not itself, 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 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.

Caution Regarding Forward-Looking Statements

Any statements in this press release about our expectations, beliefs, plans, objectives, assumptions or future events or performance, including those under "Updated 2009 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, regulatory approvals, future milestone payments, growth opportunities, and plans and objectives 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 2009 financial targets, (ii) the risk that we may not integrate acquisitions, such as Tepnel, successfully, (iii) the possibility that the market for the sale of our new products, such as our TIGRIS system, PROCLEIX ULTRIO assay and PROGENSA PCA3 assay, may not develop as expected, (iv) the enhancement of existing products and the development of new products, including products, if any, to be developed under our industrial collaborations, may not proceed as planned, (v) the risk that products, including the investigational PROGENSA PCA3 assay for which we expect to begin clinical trials shortly, may not be approved by regulatory authorities or 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, Siemens (as assignee of Bayer) 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 of our products, (xi) changes in government regulation affecting our diagnostic products could harm our sales and increase our development costs, (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.

(1) In this press release, all per share amounts are calculated on a fully diluted basis. Non-GAAP EPS for the second quarter of 2009 excludes $4.4 million ($0.07 per share) of expenses related to the Company's acquisition of Tepnel, which closed on April 8, 2009. Some totals may not foot due to rounding.

(2) Throughout this press release, all estimates of "constant currency" growth exclude foreign currency fluctuations associated with acquired Tepnel revenues, since Tepnel was not part of Gen-Probe in the prior year period.

(3) 2009 and percentage changes include transplant diagnostics and genetic testing product sales associated with the Tepnel acquisition.

(4) 2008 figures exclude revenues associated with the Tepnel acquisition, since Tepnel was not part of Gen-Probe in the prior year period.

                              Gen-Probe Incorporated
                         Consolidated Balance Sheets - GAAP
                    (In thousands, except share and per share data)

                                                        June 30,  December 31,
                                                           2009         2008
                                                           ----         ----
                                                       (unaudited)
    Assets
    Current assets:
       Cash and cash equivalents                       $233,506      $60,122
       Marketable securities                            230,698      371,276
       Trade accounts receivable, net of allowance
        for doubtful accounts of $691 and $700 at
        June 30, 2009 and December 31, 2008,
        respectively                                     39,946       33,397
       Accounts receivable - other                        2,852        2,900
       Inventories                                       56,455       54,406
       Deferred income tax                                9,136        7,269
       Prepaid income tax                                 6,863        2,306
       Prepaid expenses                                  13,388       15,094
       Other current assets                               4,322        6,135
                                                          -----        -----
    Total current assets                                597,166      552,905

    Marketable securities, net of current
     portion                                            105,037       73,780
    Property, plant and equipment, net                  153,767      141,922
    Capitalized software, net                            12,858       13,409
    Goodwill                                             90,682       18,621
    Deferred income tax, net of current portion          11,837       12,286
    Purchased intangibles, net                           57,930          298
    Licenses, manufacturing access fees and
     other assets, net                                   62,451       56,310
                                                         ------       ------
    Total assets                                     $1,091,728     $869,531
                                                     ==========     ========

    Liabilities and stockholders' equity
    Current liabilities:
      Accounts payable                                  $19,477      $16,050
      Accrued salaries and employee benefits             20,534       25,093
      Other accrued expenses                             10,983        4,027
      Income tax payable                                  1,187            -
      Short-term borrowings                             240,872            -
      Deferred income tax                                 1,406            -
      Deferred revenue                                    2,204        1,278
                                                          -----        -----
    Total current liabilities                           296,663       46,448

    Non-current income tax payable                        4,864        4,773
    Deferred income tax, net of current portion          14,120           55
    Deferred revenue, net of current portion              2,306        2,333
    Other long-term liabilities                           2,997        2,162

    Commitments and contingencies

    Stockholders' 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, 50,581,177
        and 52,920,971 shares issued and
        outstanding at June 30, 2009 and December
        31, 2008, respectively                                5            5
      Additional paid-in capital                        292,828      382,544
      Accumulated other comprehensive income              4,227        3,055
      Retained earnings                                 473,718      428,156
                                                        -------      -------
    Total stockholders' equity                          770,778      813,760
                                                        -------      -------
    Total liabilities and stockholders' equity       $1,091,728     $869,531
                                                     ==========     ========


                                Gen-Probe Incorporated
                        Consolidated Statements of Income - GAAP
                       (In thousands, except per share data)
                                      (Unaudited)

                                   Three Months Ended     Six Months Ended
                                         June 30,            June 30,
                                         --------            --------
                                     2009      2008      2009      2008
                                     ----      ----      ----      ----
     Revenues:
     Product sales               $116,816  $113,701  $229,338  $215,208
     Collaborative research
      revenue                       2,187     4,651     3,862     7,110
     Royalty and license
      revenue                       1,542     1,462     3,528    20,059
                                    -----     -----     -----    ------
     Total revenues               120,545   119,814   236,728   242,377

     Operating expenses:
     Cost of product sales
      (excluding acquisition-
      related intangibles
      amortization)                38,280    32,510    71,594    65,146
     Acquisition-related
      intangibles amortization      1,114         -     1,114         -
     Research and development      26,069    29,368    51,067    52,434
     Marketing and sales           14,015    11,453    25,070    23,361
     General and administrative    17,823    13,671    31,670    25,608
                                   ------    ------    ------    ------
     Total operating expenses      97,301    87,002   180,515   166,549
                                   ------    ------   -------   -------
     Income from operations        23,244    32,812    56,213    75,828

     Other income/(expense):
     Interest income               10,122     3,900    15,004     8,107
     Interest expense                (726)       (2)     (877)       (2)
     Other income/(expense)          (895)     (191)   (1,037)    1,282
                                     ----      ----    ------     -----
     Total other income, net        8,501     3,707    13,090     9,387
                                    -----     -----    ------     -----
     Income before income tax      31,745    36,519    69,303    85,215

     Income tax expense            11,930    11,728    23,741    28,479
                                   ------    ------    ------    ------
     Net income                   $19,815   $24,791   $45,562   $56,736
                                  =======   =======   =======   =======

     Net income per share:
     Basic                          $0.39     $0.46     $0.88     $1.05
                                    =====     =====     =====     =====
     Diluted                        $0.38     $0.45     $0.87     $1.03
                                    =====     =====     =====     =====

     Weighted average shares
      outstanding:
     Basic                         51,285    53,907    51,851    53,859
                                   ======    ======    ======    ======
     Diluted                       52,061    55,147    52,598    55,093
                                   ======    ======    ======    ======


                               Gen-Probe Incorporated
                   Consolidated Statements of Income - Non-GAAP
                        (In thousands, except per share data)
                                     (Unaudited)

                                                Three Months Ended
                                                   June 30, 2009
                                                   -------------
                                       Non-GAAP     Adjustments        GAAP
                                       --------     -----------        ----
    Revenues:
      Product sales                    $116,816          $-        $116,816
      Collaborative research
       revenue                            2,187           -           2,187
      Royalty and license revenue         1,542           -           1,542
                                          -----        -----          -----
    Total revenues                      120,545           -         120,545

    Operating expenses:
      Cost of product sales
       (excluding acquisition-
       related intangibles
       amortization)                     38,190          90          38,280
      Acquisition-related
       intangibles amortization               -       1,114           1,114
      Research and development           26,069           -          26,069
      Marketing and sales                14,015           -          14,015
      General and administrative         14,619       3,204          17,823
                                         ------       -----          ------
    Total operating expenses             92,893       4,408          97,301
                                         ------       -----          ------
    Income from operations               27,652      (4,408)         23,244

    Other income/(expense):
      Interest income                    10,122           -          10,122
      Interest expense                     (726)          -            (726)
      Other income/(expense)               (895)          -            (895)
                                           ----        ----            ----
    Total other income, net               8,501           -           8,501
                                          -----       -----           -----
    Income before income tax             36,153      (4,408)         31,745

    Income tax expense                   12,951      (1,021)         11,930
                                         ------      ------          ------
    Net income                          $23,202     $(3,387)        $19,815
                                        =======     =======         =======

    Net income per share:
      Basic                               $0.45      $(0.07)          $0.39
                                          =====      ======           =====
      Diluted                             $0.45      $(0.07)          $0.38
                                          =====      ======           =====

    Weighted average shares
     outstanding:
      Basic                              51,285      51,285          51,285
                                         ======      ======          ======
      Diluted                            52,061      52,061          52,061
                                         ======      ======          ======


                              Gen-Probe Incorporated
                    Consolidated Statements of Income - Non-GAAP
                       (In thousands, except per share data)
                                    (Unaudited)

                                                Six Months Ended
                                                  June 30, 2009
                                                  -------------
                                      Non-GAAP     Adjustments    GAAP
                                      --------     -----------    ----
    Revenues:
      Product sales                   $229,338           $-   $229,338
      Collaborative research
       revenue                           3,862            -      3,862
      Royalty and license revenue        3,528            -      3,528
                                         -----        -----      -----
    Total revenues                     236,728            -    236,728

    Operating expenses:
      Cost of product sales
       (excluding acquisition-
       related intangibles
       amortization)                    71,504           90     71,594
      Acquisition-related
       intangibles amortization              -        1,114      1,114
      Research and development          51,067            -     51,067
      Marketing and sales               25,070            -     25,070
      General and administrative        26,864        4,806     31,670
                                        ------        -----     ------
    Total operating expenses           174,505        6,010    180,515
                                       -------        -----    -------
    Income from operations              62,223       (6,010)    56,213

    Other income/(expense):
      Interest income                   15,004            -     15,004
      Interest expense                    (877)           -       (877)
      Other income/(expense)            (1,037)           -     (1,037)
                                        ------        -----     ------
    Total other income, net             13,090            -     13,090
                                        ------        -----     ------
    Income before income tax            75,313       (6,010)    69,303

    Income tax expense                  25,069       (1,328)    23,741
                                        ------       ------     ------
    Net income                         $50,244      $(4,682)   $45,562
                                       =======      =======    =======

    Net income per share:
      Basic                              $0.97       $(0.09)     $0.88
                                         =====       ======      =====
      Diluted                            $0.96       $(0.09)     $0.87
                                         =====       ======      =====

    Weighted average shares
     outstanding:
      Basic                             51,851       51,851     51,851
                                        ======       ======     ======
      Diluted                           52,598       52,598     52,598
                                        ======       ======     ======


                               Gen-Probe Incorporated
                    Consolidated Statements of Cash Flows - GAAP
                                  (In thousands)
                                    (Unaudited)

                                                       Six Months Ended
                                                            June 30,
                                                            --------
                                                    2009              2008
                                                    ----              ----
    Operating activities:
       Net income                                $45,562           $56,736
       Adjustments to reconcile net income to
        net cash provided by operating
        activities:
         Depreciation and amortization            19,463            17,233
         Amortization of premiums on investments,
          net of accretion of discounts            2,720             3,504
         Stock-based compensation                 11,405             9,228
         Stock-based compensation income tax
          benefits                                   310             1,294
         Excess tax benefit from stock-based
          compensation                              (702)             (614)
         Deferred revenue                           (255)           (3,165)
         Deferred income tax                      (1,041)             (821)
         Gain on sale of investment in MPI             -            (1,600)
         Impairment of intangible assets               -             3,496
         Loss / (gain) on disposal of property
          and equipment                               69                (1)
         Changes in assets and liabilities:
           Trade and other accounts receivable     1,372             3,290
           Inventories                             3,890            (2,749)
           Prepaid expenses                        3,137             5,333
           Other current assets                    2,081            (1,322)
           Goodwill                                  856                 -
           Other long-term assets                 (2,486)             (909)
           Accounts payable                       (2,218)            3,992
           Accrued salaries and employee benefits (7,272)           (1,732)
           Other accrued expenses                  1,337                (9)
           Income tax payable                     (3,704)              (72)
           Other long-term liabilities               335               603
                                                     ---               ---
    Net cash provided by operating
     activities                                   74,859            91,715
                                                  ------            ------

    Investing activities:
    Proceeds from sales and maturities of
     marketable securities                       293,504           205,283
    Purchases of marketable securities          (189,091)         (318,558)
    Purchases of property, plant and
     equipment                                   (14,666)          (25,717)
    Capitalization of software development
     costs                                          (288)                -
      Purchases of intangible assets,
       including licenses and manufacturing
       access fees                                  (811)             (315)
    Net cash paid for business combinations     (123,816)                -
    Proceeds from sale of investment in MPI            -             4,100
    Cash paid for investment in DiagnoCure
     and related license fees                     (5,250)                -
    Cash paid for Roche manufacturing access
     fees                                              -           (10,000)
    Other assets                                    (289)               28
                                                    ----                --
    Net cash used in investing activities        (40,707)         (145,179)
                                                 -------          --------

    Financing activities:
    Excess tax benefit from stock-based
     compensation                                    702               614
    Repurchase and retirement of restricted
     stock for payment of taxes                      (38)             (479)
    Repurchases of common stock                 (105,577)                -
    Proceeds from issuance of common stock         3,777            10,814
    Borrowings under short-term borrowings,
     net                                         238,450                 -
                                                 -------             -----
    Net cash provided by financing
     activities                                  137,314            10,949
                                                 -------            ------
    Effect of exchange rate changes on cash
     and cash equivalents                          1,918                14
                                                   -----                --
    Net increase (decrease) in cash and cash
     equivalents                                 173,384           (42,501)
    Cash and cash equivalents at the
     beginning of period                          60,122            75,963
                                                  ------            ------
    Cash and cash equivalents at the end of
     period                                     $233,506           $33,462
                                                ========           =======


    Contact:

    Michael Watts
    Vice president, investor relations and
    corporate communications
    858-410-8673


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SOURCE Gen-Probe Incorporated
Copyright©2009 PR Newswire.
All rights reserved


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