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Cepheid Reports 2011 First Quarter Results

SUNNYVALE, Calif., April 20, 2011 /PRNewswire/ -- Cepheid (Nasdaq: CPHD) today reported revenue for the first quarter of 2011 of $60.2 million.  Net income was $0.5 million, or $0.01 per share, which compares to revenue of $48.0 million and a net loss of $4.3 million, or $(0.07) per share, in the first quarter of 2010.

Excluding amortization of purchased intangible assets and employee stock-based compensation expense, non-GAAP net income for the first quarter was $5.4 million, or $0.08 per share.  This compares to a non-GAAP net loss of $0.2 million, or $(0.00) per share, in the first quarter of 2010.

"Growth in our Clinical business continued in the first quarter as our GeneXpert® system continues to gain recognition as the most technologically advanced and innovative molecular platform available," said John Bishop, Cepheid's Chief Executive Officer.  "With more than 2,000 placements globally, the GeneXpert system is proving itself to be a key workhorse in both developed and developing country markets.  The system's unique combination of accuracy, ease-of-use, speed and flexibility is unmatched in the marketplace today."

Operational Overview

  • Total product sales of $57.6 million in the first quarter of 2011 compared to $47.2 million in the first quarter of 2010.  By business, product sales were, in millions:

  • Three Months Ended March 31,20112010ChangeClinical Systems

    $ 11.6$   9.720%Clinical Reagents

    38.629.631%Total Clinical 50.239.328%Non-Clinical

    7.47.9-6%Total Product Sales$ 57.6$ 47.222%

  • By geography, product sales were, in millions:

  • Three Months Ended March 31,20112010ChangeNorth AmericaClinical

    $ 36.3$ 31.017%Non-Clinical

    5.96.1-4%Total North America42.237.114%InternationalClinical


    1.51.8-15%Total International15.410.153%Total Product Sales$ 57.6$ 47.222%

  • During the quarter, Cepheid installed a total of 120 GeneXpert systems in its commercial Clinical business.  Additionally, the company placed a total of 58 GeneXpert systems as part of its High Burden Developing Country (HBDC) program.  Including the HBDC systems, a cumulative total of 2,038 GeneXpert systems have been placed worldwide as of March 31, 2011.
  • GAAP gross margin on product sales was 56% and non-GAAP gross margin on product sales was 58%, which compares to 45% and 46%, respectively, in the first quarter of 2010.
  • Cash and cash equivalents were $80.5 million as of March 31, 2011.
  • DSO was 43 days.

  • Business OutlookFor the fiscal year ending December 31, 2011, the company expects:

  • Total revenue to be in the range of $245 to $255 million;
  • Net income ranging from a net loss of $(0.01) to net income of $0.04 per share;  
  • Non-GAAP net income in the range of $0.31 to $0.36 per share.  

  • Expected non-GAAP net income excludes approximately $19.5 million related to stock compensation expense and approximately $2 million related to the amortization of acquired intangibles.  The fully diluted share count for the year is expected to be approximately 67 million and basic share count is expected to be approximately 62 million.

    Accessing Cepheid's First Quarter Results' Conference CallThe company will host a management presentation at 2:00 p.m. Pacific Time on Wednesday, April 20, 2011 to discuss the results.  To access the live webcast, please visit Cepheid's website at at least 15 minutes before the scheduled start time to download any necessary audio or plug-in software.  A replay of the webcast will be available shortly following the call and will remain available for at least 90 days.

    Interested participants may also listen to the live teleconference call by dialing (800) 659-2056 or (617) 614-2714, and entering participant code 15644634.  A replay will be available for seven days beginning at 4 p.m. Pacific Time.  Access numbers for this replay are (888) 286-8010 or (617) 801-6888, with passcode 25153977.

    About CepheidBased in Sunnyvale, Calif., Cepheid (Nasdaq: CPHD) is a leading molecular diagnostics company that is dedicated to improving healthcare by developing, manufacturing, and marketing accurate yet easy-to-use molecular systems and tests.  By automating highly complex and time-consuming manual procedures, the company's solutions deliver a better way for institutions of any size to perform sophisticated genetic testing for organisms and genetic-based diseases.  Through its strong molecular biology capabilities, the company is focusing on those applications where accurate, rapid, and actionable test results are needed most, such as managing infectious diseases and cancer. For more information, visit

    Use of Non-GAAP MeasuresThe company has supplemented its reported GAAP financial information with non-GAAP measures that do not include employee share-based compensation expense and amortization of purchased intangible assets.  The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with GAAP.   The company's management uses the non-GAAP information internally to evaluate its ongoing business, continuing operational performance and cash requirements, and believes these non-GAAP measures are useful to investors as they provide a basis for evaluating the company's cash requirements and additional insight into the underlying operating results and the company's ongoing performance in the ordinary course of its operations.

    These non-GAAP measures may be different from non-GAAP measures used by other companies.  In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles.  The company believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with its results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate the company's results of operations in conjunction with the corresponding GAAP measures.

    As described above, the company excludes the following items from one or more of its non-GAAP measures when applicable:

    Employee stock-based compensation expense. These expenses consist primarily of expenses for employee stock options and employee restricted stock under ASC 718 (formerly SFAS 123(R)).  The company excludes employee stock-based compensation expenses from its non-GAAP measures primarily because they are non-cash expenses that the company does not believe are reflective of ongoing operating results.  Further, as the company applies ASC 718, it believes that it is useful to investors to understand the impact of the application of ASC 718 on its results of operations.

    Amortization of purchased intangible assets.  The company incurs amortization of purchased intangible assets in connection with acquisitions.  The company excludes these items because these expenses are not reflective of ongoing operating results in the period incurred.  These amounts arise from the company's prior acquisitions and have no direct correlation to the operation of the company's business.

    Forward-Looking StatementsThis press release contains forward-looking statements that are not purely historical regarding Cepheid's or its management's intentions, beliefs, expectations and strategies for the future, including those relating to potential growth, future revenues and future net income/loss, including on a non-GAAP basis. Because such statements deal with future events, they are subject to various risks and uncertainties, and actual results could differ materially from the company's current expectations. Factors that could cause actual results to differ materially include risks and uncertainties such as those relating to: our success in increasing direct sales and the effectiveness of new sales personnel; the performance and market acceptance of new products; sufficient customer demand; our ability to develop and complete clinical trials successfully in a timely manner for new products; uncertainties related to the FDA regulatory and European regulatory processes; the level of testing at clinical customer sites; changes in the protocols or levels of testing for Healthcare Associated Infections (HAIs); the company's ability to successfully introduce and sell products in clinical markets other than HAIs; the rate of environmental biothreat testing conducted by the USPS, which will affect the amount of consumable products sold to the USPS; unforeseen development and manufacturing problems; the potential need for additional intellectual property licenses for tests and other products and the terms of such licenses; lengthy sales cycles in certain markets; the company's reliance on distributors in some regions to market, sell and support its products; the occurrence of unforeseen expenditures, acquisitions or other transactions; the impact of competitive products and pricing; the company's ability to manage geographically-dispersed operations; and underlying market conditions worldwide.  Readers should also refer to the section entitled "Risk Factors" in Cepheid's Annual Report on Form 10-K, its most recent Quarterly Report on Form 10-Q, and its other reports filed with the Securities and Exchange Commission.

    All forward-looking statements and reasons why results might differ included in this release are made as of the date of this press release, based on information currently available to Cepheid, and Cepheid assumes no obligation to update any such forward-looking statement or reasons why results might differ.

    CONTACTS:For Media Inquiries:For Investor Inquiries:Jared Tipton

    Cepheid Corporate Communications

    Tel: (408) 400 8377

    Jacquie Ross

    Cepheid Investor Relations

    Tel: (408) 400 8329

    investor.relations@cepheid.comFINANCIAL TABLES FOLLOWCEPHEIDCONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS(in thousands, except per share data)Three Months Ended
    March 31,20112010Revenues:System sales

    $   12,691$   10,917Reagent and disposable sales

    44,94636,265Total product sales

    57,63747,182Other revenues

    2,582863Total revenues

    60,21948,045Costs and operating expenses:Cost of product sales

    25,31026,071Collaboration profit sharing

    1,0921,655Research and development

    13,5749,701Sales and marketing

    11,4478,985General and administrative

    7,6305,715Total costs and operating expenses

    59,05352,127Income (loss) from operations

    1,166(4,082)Other expense, net

    (199)(276)Income (loss) before income taxes

    967(4,358)Benefit from (provision for) income taxes

    (440)19Net income (loss)

    527$   (4,339)Basic net income (loss) per share

    (0.07)Diluted net income (loss) per share

    (0.07)Shares used in computing basic net income (loss) per share

    61,16158,936Shares used in computing diluted net income (loss) per share

    2011December 31,
    2010ASSETSCurrent assets:Cash and cash equivalents

    79,538Accounts receivable, net


    43,37637,598Prepaid expenses and other current assets

    6,1844,138Total current assets

    158,405149,284Property and equipment, net

    29,09427,438Other non-current assets

    630607Intangible assets


    17,68918,594Total assets

    $   229,558$
    220,611LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent liabilities:Accounts payable

    21,957Accrued compensation

    10,41912,594Accrued royalties

    7,6277,994Accrued other liabilities

    1,3181,288Current portion of deferred revenue

    8,2238,207Current portion of note payable

    1,6931,679Total current liabilities

    49,70553,719Long-term portion of deferred revenue

    4,7184,057Note payable, less current portion

    4,6324,991Other liabilities

    3,4024,182Total liabilities

    62,45766,949Shareholders’ equity:Common stock

    297,098288,387Additional paid-in capital

    76,98072,731Accumulated other comprehensive income

    678726Accumulated deficit

    (207,655)(208,182)Total shareholders’ equity

    167,101153,662Total liabilities and shareholders’ equity

    $   229,558$

    March 31,20112010Cash flows from operating activities:Net income (loss)

    527$ (4,339)Adjustments to reconcile net income (loss) to net cash used in operating activities:Depreciation and amortization

    2,4692,325Amortization of intangible assets

    1,7261,696Stock-based compensation related to employees and consulting services rendered

    4,4003,746Unrealized gain on auction rate securities

    -(1,425)Unrealized loss on put option

    -1,571Deferred rent

    3625Changes in operating assets and liabilities:Accounts receivable


    (5,882)1,500Prepaid expenses and other current assets

    (1,232)(997)Other non-current assets

    (23)36Accounts payable and other current liabilities

    (2,498)(2,254)Accrued compensation

    (2,175)(1,994)Deferred revenue

    677180Net cash used in operating activities

    (2,815)(4,981)Cash flows from investing activities:Capital expenditures

    (3,543)(3,998)Payments for technology licenses

    (1,000)(1,000)Cost of acquisitions, net

    (296)(574)Proceeds from the sales of short-term investments

    -4,125Proceeds from the sale of fixed assets

    2078Net cash used in investing activities

    (4,819)(1,369)Cash flows from financing activities:Net proceeds from the issuance of common shares and exercise of stock options

    8,7113,461Principal payment of bank borrowing

    -(4,020)Principal payment of notes payable

    (345)(82)Net cash provided by (used in) financing activities

    8,366(641)Effect of exchange rate change on cash

    190337Net increase (decrease) in cash and cash equivalents

    922(6,654)Cash and cash equivalents at beginning of period

    79,53835,786Cash and cash equivalents at end of period

    $ 80,460$ 29,132CEPHEIDRECONCILIATION OF GAAP TO NON-GAAP MEASURES (UNAUDITED)(in thousands, except per share data)Three Months EndedMarch 31,20112010Cost of product sales

    26,071Stock compensation expense

    (499)(470)Amortization of purchased intangible assets

    (344)(328)Non-GAAP measure of cost of product sales

    25,273Gross margin on product sales per GAAP

    56%45%Gross margin on product sales per Non-GAAP

    58%46%Operating expenses

    24,401Stock compensation expense

    (3,901)(3,276)Amortization of purchased intangible assets

    (108)(81)Non-GAAP measure of operating expenses

    21,044Income (loss) from operations

    (4,082)Stock compensation expense

    4,4003,746Amortization of purchased intangible assets

    452409Non-GAAP measure of income (loss) from operations

    73Net income (loss)

    (4,339)Stock compensation expense

    4,4003,746Amortization of purchased intangible assets

    452409Non-GAAP measure of net income (loss)

    (184)Basic net income (loss) per share

    (0.07)Stock compensation expense

    0.070.06Amortization of purchased intangible assets

    0.010.01Non-GAAP measure of net income (loss) per share

    (0.00)Diluted net income (loss) per share

    (0.07)Stock compensation expense

    0.060.06Amortization of purchased intangible assets

    0.010.01Non-GAAP measure of net income (loss) per share

    (0.00)Shares used in computing diluted net income (loss) per share

    65,02858,936Incremental shares from the assumed conversion of dilutive stock options

    922-Shares used in computing Non-GAAP diluted net income (loss) per share


    SOURCE Cepheid
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