Cepheid Reports 2012 Second Quarter Results
SUNNYVALE, Calif., July 19, 2012 /PRNewswire/ — Cepheid (Nasdaq: CPHD) today reported revenues for the second quarter of 2012 of $81.0 million, representing growth of 21% from $67.0 million for the second quarter of 2011. Net income was $1.1 million, or $0.02 per share, which compares to net income of $1.8 million, or $0.03 per share, in the second quarter of 2011.
Excluding employee stock-based compensation and amortization of purchased intangible assets, non-GAAP net income for the second quarter was $7.9 million, or $0.11 per share. This compares to non-GAAP net income of $7.2 million, or $0.11 per share, in the second quarter of 2011.
“Growth in our installed base was strong during the second quarter, with a total of 271 GeneXpert system placements. With a cumulative total of 3,350 placements globally, it is clear that benefits of our innovative system and our growing menu of Xpert tests continues to drive broad market adoption of our GeneXpert system,” said John Bishop, Cepheid’s Chief Executive Officer. “We continued to execute well on test menu expansion during the quarter. Our CT/NG test is now under FDA review in the United States, and we have been very encouraged by early customer feedback following the product’s release in Europe.”
“Looking forward, we continue to expect sales of our Xpert MTB/RIF test to grow to volumes in the millions in the next several years. However, we do expect that certain features of the HBDC program could slow our progress on overall profitability goals in the immediate-term,” continued Bishop. “Coupled with a number of macro factors, namely less favorable currency rates and potentially lengthening capital sales cycles as we approach elections here in the United States, we are taking a more cautious view for the remainder of the year.”
Operational Overview
- Total product sales of $78.5 million in the second quarter of 2012 compared to $63.6 million in the second quarter of 2011. By business, product sales were, in millions:
Three Months Ended June 30,
2012 2011 Change
---- ---- ------
Clinical Systems $13.9 $13.2 5%
Clinical Reagents 55.8 44.1 27%
---- ----
Total Clinical 69.7 57.3 22%
Non-Clinical 8.8 6.3 40%
Total Product Sales $78.5 $63.6 23%
===== =====
- By geography, product sales were, in millions:
Three Months Ended June 30,
2012 2011 Change
---- ---- ------
North America
Clinical $47.5 $42.1 13%
Non-Clinical 6.9 5.6 23%
--- ---
Total North America 54.4 47.7 14%
International
Clinical 22.2 15.2 46%
Non-Clinical 1.9 0.7 171%
--- ---
Total International 24.1 15.9 52%
Total Product Sales $78.5 $63.6 23%
===== =====
- During the quarter, Cepheid installed a total of 133 GeneXpert systems in its commercial Clinical business. Additionally, the Company placed a total of 138 GeneXpert systems as part of its High Burden Developing Country (HBDC) program. Including the HBDC systems, a cumulative total of 3,350 GeneXpert systems have been placed worldwide as of June 30, 2012.
- GAAP gross margin on product sales was 55% and non-GAAP gross margin on product sales was 57%, which compares to 54% and 55%, respectively, in the second quarter of 2011.
- Cash and cash equivalents were $97.3 million as of June 30, 2012.
- DSO was 41 days.
Business Outlook
For the fiscal year ending December 31, 2012, the Company expects:
- Total revenue to be in the range of $333 to $347 million;
- Net income per share in the range of $0.00 to $0.04; and
- Non-GAAP net income per share in the range of $0.38 to $0.42.
Expected non-GAAP net income per share excludes the effect of approximately $26 million related to stock-based compensation expense, approximately $2.8 million related to the amortization of acquired intangibles, and a $1.8 million tax benefit related to an intercompany intellectual property transaction. The fully diluted share count for the year is expected to be between 70 and 71 million.
The following table reconciles net income per share to the non-GAAP net income per share range:
Guidance Range for
Year
Ending December
31, 2012
----------------
Low High
--- ----
Net Income Per Share $ - $0.04
Stock Compensation Expense 0.37 0.37
Tax Benefit Related to Intercompany
IP Transaction (0.03) (0.03)
Amortization of Purchased
Intangible Assets 0.04 0.04
Non-GAAP Measure of Net Income Per
Share $0.38 $0.42
Accessing Cepheid’s Second Quarter Results’ Conference Call
The Company will host a management presentation at 2:00 p.m. Pacific Time on Thursday, July 19, 2012 to discuss the results. To access the live webcast, please visit Cepheid’s website at www.cepheid.com/investors 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.
About Cepheid
Based 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 http://www.cepheid.com.
Use of Non-GAAP Measures
The Company has supplemented its reported GAAP financial information with non-GAAP measures that do not include stock-based compensation expense, amortization of acquired intangible assets and a tax benefit related to an intercompany intellectual property transaction. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with U.S. 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 U.S. 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 in the period incurred. 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.
Tax benefit related to an intercompany intellectual property (IP) transaction. The Company excluded a tax benefit related to an intercompany IP transaction from its results for non-GAAP net loss for the first quarter ended March 31, 2012 and for the six months ended June 30, 2012. The Company excluded this item as it believes it is non-recurring in nature, and does not have a direct impact on the operation of the Company’s core business.
Forward-Looking Statements
This 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 future volumes of product sales and future revenues, future net income per share and future non-GAAP net income per share. 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 our sales personnel; the performance and market acceptance of new products; sufficient customer demand; our ability to develop new products 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, including 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; variability in systems placements and reagent pull-through in the Company’s HBDC program; unforeseen supply, 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; costs associated with litigation; 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.
FINANCIAL TABLES FOLLOW
CEPHEID
CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended Six months Ended
June 30, June 30,
-------- --------
2012 2011 2012 2011
---- ---- ---- ----
Revenues:
System
sales $14,539 $14,138 $27,770 $26,829
Reagent
and
disposable
sales 63,915 49,454 125,977 94,400
------ ------ ------- ------
Total
product
sales 78,454 63,592 153,747 121,229
Other
revenues 2,561 3,437 4,560 6,019
Total
revenues 81,015 67,029 158,307 127,248
------ ------ ------- -------
Costs and operating expenses:
Cost
of
product
sales 35,072 29,254 70,680 54,564
Collaboration
profit
sharing 1,645 1,093 3,329 2,185
Research
and
development 16,118 13,915 38,220 27,489
Sales
and
marketing 15,108 11,879 29,620 23,326
General
and
administrative 11,011 8,905 22,062 16,535
Total
costs
and
operating
expenses 78,954 65,046 163,911 124,099
------ ------ ------- -------
Income
(loss)
from
operations 2,061 1,983 (5,604) 3,149
Other
expense,
net (572) (400) (334) (599)
---- ---- ---- ----
Income
(loss)
before
income
taxes 1,489 1,583 (5,938) 2,550
Benefit
from
(provision
for)
income
taxes (354) 244 1,547 (196)
Net
income
(loss) $1,135 $1,827 $(4,391) $2,354
====== ====== ======= ======
Basic
net
income
(loss)
per
share $0.02 $0.03 $(0.07) $0.04
===== ===== ====== =====
Diluted
net
income
(loss)
per
share $0.02 $0.03 $(0.07) $0.04
===== ===== ====== =====
Shares
used
in
computing
basic
net
income
(loss)
per
share 65,695 62,120 65,361 61,638
====== ====== ====== ======
Shares
used
in
computing
diluted
net
income
(loss)
per
share 68,869 66,390 65,361 65,727
====== ====== ====== ======
CEPHEID
CONDENSED CONSOLIDATED UNAUDITED BALANCE SHEETS
(in thousands)
June December
30, 2012 31, 2011
-------- --------
ASSETS
Current assets:
Cash and
cash
equivalents $97,267 $115,008
Accounts
receivable,
net 36,826 35,375
Inventory 70,997 62,239
Prepaid
expenses
and other
current
assets 12,721 5,245
------ -----
Total
current
assets 217,811 217,867
Property
and
equipment,
net 45,795 35,833
Other non-
current
assets 834 730
Intangible
assets,
net 19,089 13,795
Goodwill 26,911 18,445
Total
assets $310,440 $286,670
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts
payable $26,680 $32,167
Accrued
compensation 16,616 17,928
Accrued
royalties 7,878 8,357
Accrued and
other
liabilities 2,335 3,086
Current
portion of
deferred
revenue 8,418 8,176
Current
portion of
notes
payable 161 -
--- ---
Total
current
liabilities 62,088 69,714
Long-term
portion of
deferred
revenue 2,200 2,003
Notes
payable,
less
current
portion 1,623 -
Other
liabilities 4,268 3,120
----- -----
Total
liabilities 70,179 74,837
------ ------
Shareholders' equity:
Common
stock 345,302 324,211
Additional
paid-in
capital 104,732 93,144
Accumulated
other
comprehensive
income 173 33
Accumulated
deficit (209,946) (205,555)
-------- --------
Total
shareholders'
equity 240,261 211,833
Total
liabilities
and
shareholders'
equity $310,440 $286,670
======== ========
CEPHEID
CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS
(in thousands)
Six Months Ended
June 30,
--------
2012 2011
---- ----
Cash flows from operating activities:
Net income (loss) $(4,391) $2,354
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and
amortization of
property and
equipment 6,308 5,031
Amortization of
intangible assets 2,633 3,452
Stock-based
compensation
related to
employees and
consulting services
rendered 11,567 9,343
Changes in operating assets and liabilities:
Accounts receivable 761 (3,527)
Inventory (5,950) (7,650)
Prepaid expenses and
other current
assets (7,475) (1,440)
Other non-current
assets (105) (74)
Accounts payable and
other current
liabilities (12,233) 2,145
Accrued compensation (1,312) 1,069
Deferred revenue 438 13
--- ---
Net cash provided by
(used in) operating
activities (9,759) 10,716
Cash flows from investing activities:
Capital expenditures (11,168) (6,974)
Payments for
technology license - (1,000)
Cost of
acquisitions, net (17,462) (296)
------- ----
Net cash used in
investing
activities (28,630) (8,270)
Cash flows from financing activities:
Net proceeds from
the issuance of
common shares and
exercise of stock
options 21,091 16,962
Principal payment of
notes payable - (757)
--- ----
Net cash provided by
financing
activities 21,091 16,205
Effect of exchange
rate change on cash (443) 63
---- ---
Net increase
(decrease) in cash
and cash
equivalents (17,741) 18,714
Cash and cash
equivalents at
beginning of period 115,008 79,538
Cash and cash
equivalents at end
of period $97,267 $98,252
======= =======
CEPHEID
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (UNAUDITED)
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2012 2011 2012 2011
---- ---- ---- ----
Cost of product sales $35,072 $29,254 $70,680 $54,564
Stock compensation expense (700) (435) (1,335) (934)
Amortization of purchased intangible assets (333) (345) (666) (689)
---- ---- ---- ----
Non-GAAP measure of cost of product sales $34,039 $28,474 $68,679 $52,941
Gross margin on product sales per GAAP 55% 54% 54% 55%
Gross margin on product sales per Non-GAAP 57% 55% 55% 56%
Operating expenses $42,237 $34,699 $89,902 $67,350
Stock compensation expense (5,346) (4,508) (10,209) (8,409)
Amortization of purchased intangible assets (381) (107) (697) (215)
---- ---- ---- ----
Non-GAAP measure of operating expenses $36,510 $30,084 $78,996 $58,726
Income (loss) from operations $2,061 $1,983 $(5,604) $3,149
Stock compensation expense 6,046 4,943 11,544 9,343
Amortization of purchased intangible assets 714 452 1,363 904
--- --- ----- ---
Non-GAAP measure of income from operations $8,821 $7,378 $7,303 $13,396
Net income (loss) $1,135 $1,827 $(4,391) $2,354
Stock compensation expense 6,046 4,943 11,544 9,343
Tax benefit related to intercompany IP transaction - - (1,815) -
Amortization of purchased intangible assets 714 452 1,363 904
--- --- ----- ---
Non-GAAP measure of net income $7,895 $7,222 $6,701 $12,601
Basic net income (loss) per share $0.02 $0.03 $(0.07) $0.04
Stock compensation expense 0.09 0.08 0.18 0.15
Tax benefit related to intercompany IP transaction - - (0.03) -
Amortization of purchased intangible assets 0.01 0.01 0.02 0.01
---- ---- ---- ----
Non-GAAP measure of net income per share $0.12 $0.12 $0.10 $0.20
Diluted net income (loss) per share $0.02 $0.03 $(0.07) $0.04
Stock compensation expense 0.08 0.07 0.18 0.14
Tax benefit related to intercompany IP transaction - - (0.03) -
Amortization of purchased intangible assets 0.01 0.01 0.02 0.01
---- ---- ---- ----
Non-GAAP measure of net income per share $0.11 $0.11 $0.10 $0.19
Shares used in computing basic net income (loss) per share 65,695 62,120 65,361 61,638
Shares used in computing diluted net income (loss) per share 68,869 66,390 65,361 65,727
Impact of dilutive securities in periods of GAAP net loss and Non-GAAP net income - - 3,174 -
--- --- ----- ---
Shares used in computing Non-GAAP diluted net income per share 68,869 66,390 68,535 65,727
For Media Inquiries: For Investor Inquiries:
-------------------- -----------------------
Jared Tipton Jacquie Ross
Cepheid Corporate Communications Cepheid Investor Relations
Tel: (408) 400 8377 Tel: (408) 400 8329
communications@cepheid.com investor.relations@cepheid.com
SOURCE Cepheid
