- Company Posts Quarterly EPS of $0.39, Total Revenues of $109.1 Million -
- For Full Year 2008, EPS Increase by 23%, Total Revenues by 17% -
- Company Generates $178.3 Million of Operating Cash in 2008 -
SAN DIEGO, Feb. 17 /PRNewswire-FirstCall/ -- Gen-Probe Incorporated (Nasdaq: GPRO) today reported strong financial results for the fourth quarter and full year ended December 31, 2008, including quarterly earnings per share (EPS) of $0.39(1) and total revenues of $109.1 million.
"Gen-Probe posted strong financial results in the fourth quarter of 2008, driven by healthy growth in both clinical diagnostics and blood screening sales," said Hank Nordhoff, the Company's chairman and chief executive officer. "In addition, our fourth quarter performance completed an excellent 2008 that saw top- and bottom-line growth rates exceed our long-term goals."
In the fourth quarter of 2008, product sales were $105.8 million, compared to $92.4 million in the prior year period, an increase of 15%. Total revenues for the fourth quarter of 2008 were $109.1 million, compared to $98.9 million in the prior year period, an increase of 10%. Net income in the fourth quarter of 2008 was $21.1 million ($0.39 per share), compared to $20.4 million ($0.37 per share) in the prior year period, an increase of 3% (5% per share). In the prior year period, both net income and EPS benefited from an income tax rate of approximately 22% that resulted mainly from the completion of an audit of the Company's 2003 and 2004 California state income tax returns.
For the full year 2008, product sales were $429.2 million, compared to $370.9 million in the prior year, an increase of 16%. Total revenues for 2008 were $472.7 million, compared to $403.0 million in the prior year, an increase of 17%. Net income for 2008 was $107.0 million ($1.95 per share), compared to $86.1 million ($1.58 per share) in the prior year, an increase of 24% (23% per share). In the prior year, both net income and EPS benefited from an income tax rate of approximately 23% that resulted mainly from the item noted above and the completion of an audit of the Company's 2003 and 2004 federal income tax returns, the benefit from which was recorded in the second quarter of 2007.
Gen-Probe's clinical diagnostics sales in the fourth quarter of 2008 reflected the continued growth of the APTIMA Combo 2(R) assay, an amplified nucleic acid test (NAT) for simultaneously detecting Chlamydia trachomatis (CT) and Neisseria gonorrhoeae (GC). Sales of this 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 fourth quarter compared to the prior year period, in line with Gen-Probe's expectations.
In blood screening, product sales in the fourth quarter of 2008 benefited mainly from increased sales of the PROCLEIX(R) ULTRIO(R) assay. In contrast to the first three quarters of 2008, foreign exchange fluctuations had a negative effect of $0.1 million on blood screening growth in the fourth quarter compared to the prior year period. Chiron, a business unit of Novartis Vaccines and Diagnostics, markets the Company's blood screening products worldwide.
Product sales were, in millions: Three Months Ended Dec. 31, Year Ended Dec. 31, 2008 2007 Increase 2008 2007 Increase Clinical diagnostics $57.7 $49.7 16% $222.9 $199.2 12% Blood screening $48.1 $42.7 13% $206.3 $171.7 20% Total product sales $105.8 $92.4 15% $429.2 $370.9 16%
Collaborative research revenues in the fourth quarter of 2008 were $2.1 million, compared to $5.4 million in the prior year period, a decrease of 61% that resulted primarily from the June 2008 termination of the Company's collaboration with 3M to develop rapid tests for healthcare-associated infections. For the full year 2008, collaborative research revenues were $20.6 million, compared to $16.6 million in the prior year, an increase of 24% that resulted primarily from a $10 million milestone the Company earned from Chiron in the third quarter based on the full approval by the US Food and Drug Administration (FDA) of the PROCLEIX ULTRIO assay on the TIGRIS system.
Royalty and license revenues for the fourth quarter of 2008 were $1.3 million, compared to $1.1 million in the prior year period, an increase of 18%. For the full year 2008, royalty and license revenues were $22.9 million, compared to $15.5 million in the prior year, an increase of 48% that resulted primarily from revenue that was recorded in the first quarters of 2007 and 2008 associated with the settlement of Gen-Probe's patent infringement litigation against Bayer (now Siemens Medical Solutions Diagnostics). Specifically, Gen-Probe recorded $10.3 million of revenue from this settlement in the first quarter of 2007, and a final payment of $16.4 million in the first quarter of 2008.
Gross margin on product sales in the fourth quarter of 2008 was 69.6%, compared to 69.2% in the prior year period. This increase resulted primarily from increased sales of blood screening products and APTIMA(R) assays. In the fourth quarter of 2008, gross margin on product sales was negatively affected by costs associated with the voluntary recall of certain AccuProbe(R) culture identification kits, which increased cost of product sales by $0.9 million and reduced gross margin on product sales by approximately 0.9%. For the full year 2008, gross margin on product sales was 70.2%, compared to 67.7% in the prior year. This increase resulted primarily from the factors discussed above.
Research and development (R&D) expenses in the fourth quarter of 2008 were $24.2 million, essentially unchanged from $24.3 million in the prior year period. For the full year 2008, R&D expenses were $101.1 million, compared to $97.1 million in the prior year, an increase of 4% that resulted primarily from costs associated with key development programs such as the post-marketing studies of the PROCLEIX ULTRIO assay in the United States, the investigational APTIMA human papillomavirus (HPV) assay, and Gen-Probe's fully automated instrument system for low- and mid-volume labs, known as PANTHER.
Marketing and sales expenses in the fourth quarter of 2008 were $11.8 million, compared to $11.3 million in the prior year period, an increase of 4% that resulted primarily from European market development efforts related to the Company's APTIMA Combo 2, APTIMA HPV and PROGENSA(TM) PCA3 assays. For the full year 2008, marketing and sales expenses were $45.9 million, compared to $39.9 million in the prior year, an increase of 15% that also resulted from European market development efforts.
General and administrative (G&A) expenses in the fourth quarter of 2008 were $13.8 million, compared to $12.3 million in the prior year period, an increase of 12% that resulted primarily from increased business development, legal and compensation costs. For the full year 2008, G&A expenses were $52.3 million, compared to $47.0 million in the prior year, an increase of 11% that resulted primarily from the factors described above.
Total other income in the fourth quarter of 2008 was $3.8 million, compared to $3.7 million in the prior year period, an increase of 3% that resulted primarily from higher short-term investment balances. For the full year 2008, total other income was $15.5 million, compared to $12.3 million in the prior year period, an increase of 26% that also resulted from higher short-term investment balances.
Gen-Probe continues to have a strong balance sheet. As of December 31, 2008, the Company had $505.2 million of cash, cash equivalents and short-term investments, and no debt. In the fourth quarter of 2008, the Company repurchased approximately 1.5 million shares of its common stock for $65 million. For the full year 2008, Gen-Probe generated net cash of $178.3 million from its operating activities, compared to the Company's net income of $107.0 million.
2009 Financial Guidance
Gen-Probe provided its initial 2009 financial guidance via a press release issued on January 27, 2009.
"We expect 2009 to be another year of solid underlying earnings growth for Gen-Probe, although previously disclosed non-recurring items that added approximately $32 million of revenue and $0.34 of EPS will make comparisons to 2008 difficult," said Herm Rosenman, the Company's senior vice president of finance and chief financial officer.
Gen-Probe's 2009 guidance excludes revenue and expense associated with the pending Tepnel acquisition, which is expected to close in the second quarter, as well as any incremental revenue from the PROCLEIX ULTRIO assay in the United States. For the full year 2009, the Company expects the following on a GAAP basis:
2009 Guidance Total revenues $460 million to $490 million Product gross margins 69-72% R&D expenses 20-22% Marketing and sales expenses 10-11% G&A expenses 10-11% Tax rate 34% Diluted shares outstanding 52-54 million EPS $1.80 to $2.05
This guidance incorporates foreign exchange rate fluctuations approximately 10% higher and lower than recent levels. The Company recorded approximately $90 million of non-U.S.-dollar-denominated revenue in 2008.
Webcast Conference Call
A live webcast of Gen-Probe's fourth quarter 2008 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. The replay number is 800-873-5860 for domestic callers and 203-369-3996 for international callers.
Gen-Probe Incorporated is a global leader in the development, manufacture and marketing of rapid, accurate and cost-effective nucleic acid tests (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 1,000 people. For more information, go to www.gen-probe.com.
AccuProbe, APTIMA, APTIMA COMBO 2, PACE and TIGRIS are trademarks of Gen-Probe. ULTRIO and PROCLEIX are trademarks of Novartis. All other trademarks are the property of their owners.
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 the heading "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, financial guidance, regulatory approvals, future milestone payments, growth opportunities, proposed acquisition of Tepnel Life Sciences, PLC, 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 growth, revenue, earnings or other financial targets, (ii) the possibility that the market for the sale of our new products, such as our TIGRIS system, APTIMA Combo 2 assay, PROCLEIX ULTRIO assay and PROGENSA PCA3 assay, may not develop as expected, (iii) the enhancement of existing products and the development of new products, including products, if any, to be developed under our recent industrial collaborations, may not proceed as planned, (iv) the risk that new products or indications may not be approved by regulatory authorities or become commercially available in the time frame we anticipate, or at all, (v) the risk that we may not be able to compete effectively, (vi) the risk that we may not be able to maintain our current corporate collaborations and enter into new corporate collaborations or customer contracts, (vii) the risk that our proposed acquisition of Tepnel may not be completed on the expected timeline, or at all, (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, could divert management's attention, and could interfere with our ability to develop and distribute products. The foregoing list sets forth 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, and all results are presented in US GAAP. Some totals may not foot due to rounding.
Contact: Michael Watts Vice president, investor relations and corporate communications 858-410-8673 Gen-Probe Incorporated Consolidated Balance Sheets (In thousands, except share and per share data) December 31, December 31, 2008 2007 Assets Current assets: Cash and cash equivalents $60,122 $75,963 Short-term investments 445,056 357,531 Trade accounts receivable, net of allowance for doubtful accounts of $700 and $719 at December 31, 2008 and December 31, 2007, respectively 33,397 32,678 Accounts receivable - other 2,900 11,044 Inventories 54,406 48,540 Deferred income tax - short term 7,269 8,825 Prepaid income tax 2,306 2,390 Prepaid expenses 15,094 17,505 Other current assets 6,135 4,402 Total current assets 626,685 558,878 Property, plant and equipment, net 141,922 129,493 Capitalized software, net 13,409 15,923 Goodwill 18,621 18,621 Deferred income tax - long term 12,286 7,942 License, manufacturing access fees and other assets, net 56,608 58,196 Total assets $869,531 $789,053 Liabilities and stockholders' equity Current liabilities: Accounts payable $16,050 $11,777 Accrued salaries and employee benefits 25,093 20,997 Other accrued expenses 4,027 4,024 Income tax payable - 846 Deferred revenue - short term 1,278 2,836 Total current liabilities 46,448 40,470 Non-current income tax payable 4,773 3,958 Deferred income tax - long term 55 75 Deferred revenue - long term 2,333 4,607 Deferred compensation plan liabilities 2,162 1,893 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, 52,920,971 and 53,916,298 shares issued and outstanding at December 31, 2008 and December 31, 2007, respectively 5 5 Additional paid-in capital 382,544 415,229 Accumulated other comprehensive income 3,055 1,604 Retained earnings 428,156 321,202 Total stockholders' equity 813,760 738,040 Total liabilities and stockholders' equity $869,531 $789,053 Gen-Probe Incorporated Consolidated Statements of Income (In thousands, except per share data) Three Months Ended Twelve Months Ended December 31, December 31, 2008 2007 2008 2007 Revenues: Product sales $105,759 $92,426 $429,220 $370,877 Collaborative research revenue 2,128 5,380 20,581 16,619 Royalty and license revenue 1,254 1,143 22,894 15,518 Total revenues 109,141 98,949 472,695 403,014 Operating expenses: Cost of product sales 32,202 28,493 128,029 119,641 Research and development 24,158 24,331 101,099 97,144 Marketing and sales 11,780 11,348 45,850 39,928 General and administrative 13,806 12,265 52,322 47,007 Total operating expenses 81,946 76,437 327,300 303,720 Income from operations 27,195 22,512 145,395 99,294 Interest income 4,527 3,837 16,801 12,772 Other income/(expense) (683) (144) (1,333) (469) Total other income, net 3,844 3,693 15,468 12,303 Income before income tax 31,039 26,205 160,863 111,597 Income tax expense 9,899 5,793 53,909 25,457 Net income $21,140 $20,412 $106,954 $86,140 Net income per share: Basic $0.40 $0.38 $1.99 $1.63 Diluted $0.39 $0.37 $1.95 $1.58 Weighted average shares outstanding: Basic 53,159 53,769 53,708 52,975 Diluted 53,808 55,310 54,796 54,522 Gen-Probe Incorporated Consolidated Statements of Cash Flows (In thousands) Twelve Months Ended December 31, 2008 2007 Operating activities: Net income $106,954 $86,140 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 34,715 34,159 Amortization of premiums on investments, net of accretion of discounts 6,908 4,576 Stock-based compensation charges 20,663 19,651 Stock option income tax benefits 3,276 2,596 Excess tax benefit from employee stock options (2,493) (14,606) Gain on sale of investment in Molecular Profiling Institute, Inc. (1,600) - Loss on property and equipment dispositions and other 55 703 Impairment of long-lived assets 5,086 - Changes in assets and liabilities: Trade and other accounts receivable 7,421 (16,180) Inventories (5,367) 3,588 Prepaid expenses 2,325 (6,141) Other current assets (1,260) (2,307) Other long term assets (173) (1,131) Accounts payable 4,377 (1,818) Accrued salaries and employee benefits 4,125 4,273 Other accrued expenses 101 679 Income tax payable (499) (397) Deferred revenue (3,831) 2,855 Deferred income tax (2,788) (7,621) Deferred rent (10) (118) Deferred compensation plan liabilities 268 683 Net cash provided by operating activities 178,253 109,584 Investing activities: Proceeds from sales and maturities of short-term investments 105,994 140,988 Purchases of short-term investments (198,691) (298,824) Purchases of property, plant and equipment (39,348) (23,096) Capitalization of intangible assets, including license and manufacturing access fees (11,970) (2,213) Proceeds from sale of investment in Molecular Profiling Institute, Inc. 4,100 - Other assets 27 (279) Net cash used in investing activities (139,888) (183,424) Financing activities: Excess tax benefit from employee stock options 2,493 14,606 Repurchase and retirement of restricted stock for payment of taxes (1,529) (1,474) Buyback of common stock (74,970) - Proceeds from issuance of common stock 20,472 48,680 Net cash (used in) / provided by financing activities (53,534) 61,812 Effect of exchange rate changes on cash and cash equivalents (672) 86 Net decrease in cash and cash equivalents (15,841) (11,942) Cash and cash equivalents at the beginning of period 75,963 87,905 Cash and cash equivalents at the end of period $60,122 $75,963
|SOURCE Gen-Probe Incorporated|
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