CEPHEID 
By SUNNYVALE, Calif., Jan. 26, 2012 /PRNewswire/ -- Cepheid (Nasdaq: CPHD) today reported revenue for the fourth quarter of 2011 of $80.1 million. Net loss was $1.6 million, or $(0.03) per share, which compares to revenue of $58.7 million and net income of $1.3 million, or $0.02 per diluted share, in the fourth quarter of 2010. As anticipated, the fourth quarter net loss reflected a one-time, non-cash charge to cost of sales of $5.4 million, or $0.08 per share, associated with the termination of a patent license.
Excluding stock compensation expenses, the non-cash charge of $5.4 million associated with the termination of a patent license, and amortization of acquired intangibles, non-GAAP net income for the fourth quarter of 2011 was $9.4 million, or $0.14 per share. This compares to a non-GAAP net income of $6.1 million, or $0.09 per share, in the fourth quarter of 2010.
Fiscal 2011 Overview
For the year ended December 31, 2011, Cepheid reported revenue of $277.6 million which compares to revenue of $212.5 million in 2010. Net income for the year was $2.6 million, or $0.04 per diluted share, which compares to a net loss of $5.9 million, or $(0.10) per share, in 2010. Excluding stock compensation expenses, the non-cash charge of $5.4 million associated with the termination of a patent license, and amortization of acquired intangibles, non-GAAP net income for the year was $29.6 million, or $0.44 per share. This compares to a non-GAAP net income of $12.5 million, or $0.20 per share, for the full year 2010.
"GeneXpert system placements continued at a very strong pace in the fourth quarter contributing to a record number of placements during 2011, in both our commercial and High Burden Developing Country programs," said John Bishop, Cepheid's Chief Executive Officer. "The demand for our GeneXpert systems has continued to grow in spite of continuing tight capital availability in the US and Europe. In 2012, we will continue to invest aggressively in Xpert® test menu expansion to enable the benefits of our system to be realized in broader segments of the market. We expect to further extend our technology leadership and strong growth momentum in the quarters and years ahead."
Operational Overview
-- Fourth quarter of 2011 Clinical sales of $68.9 million grew 39% from
$49.5 million in the fourth quarter of 2010, and total fourth quarter of
2011 product sales of $76.9 million grew 37% from the same quarter a
year ago. For the year ended December 31, 2011, total Clinical sales of
$236.0 million grew 36% from $173.8 million reported for the same period
a year ago.
-- By industry, product sales were, in millions:
Three Months Ended December 31, Full Year Ended December 31,
2011 2010 Change 2011 2010 Change
---- ---- ------ ---- ---- ------
Clinical
Systems $19.9 $12.7 58% $58.6 $42.5 38%
Clinical
Reagents 49.0 36.8 33% 177.4 131.3 35%
---- ---- ----- -----
Total Clinical 68.9 49.5 39% 236.0 173.8 36%
Non-Clinical 8.0 6.7 19% 29.5 33.1 -11%
--- --- ---- ----
Total Product
Sales $76.9 $56.2 37% $265.5 $206.9 28%
----- ----- ------ ------
-- By geography, product sales were, in millions:
Three Months Ended December 31, Full Year Ended December 31,
2011 2010 Change 2011 2010 Change
---- ---- ------ ---- ---- ------
North America
Clinical $46.4 $38.5 21% $167.9 $137.3 22%
Other 7.2 5.4 33% 25.0 27.3 -8%
--- --- ---- ----
Total North
America 53.6 43.9 22% 192.9 164.6 17%
International
Clinical 22.5 11.0 105% 68.1 36.5 87%
Other 0.8 1.3 -38% 4.5 5.8 -22%
--- --- --- ---
Total
International 23.3 12.3 89% 72.6 42.3 72%
Total Product
Sales $76.9 $56.2 37% $265.5 $206.9 28%
===== ===== ====== ======
-- During the fourth quarter of 2011, Cepheid placed a total of 175
GeneXpert systems in its commercial Clinical business. Additionally,
the Company placed a total of 181 GeneXpert systems as part of its High
Burden Developing Country (HBDC) program. For the year ended December
31, 2011, Cepheid placed a total of 565 GeneXpert systems in its
commercial Clinical business and an additional 418 GeneXpert systems as
part of its HBDC program. As of December 31, 2011, a cumulative total
of 2,843 GeneXpert systems have been placed worldwide.
-- Cash and cash equivalents were $115.0 million as of December 31, 2011.
-- DSO was 40 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 in the range of $0.17 to $0.24 per share;
-- Non-GAAP net income in the range of $0.55 to $0.60 per share.
Expected non-GAAP net income excludes approximately $26 million related to stock compensation expense, approximately $2 million related to the amortization of acquired intangibles, and up to a $1.9 million non-cash tax benefit relating to a potential change to our international tax and legal entity structure. The fully diluted share count for the year is expected to be between 70 and 71 million.
Accessing Cepheid's Fourth Quarter and Full Year 2011 Results Conference Call
The Company will host a management presentation at 2:00 p.m. Pacific Time on Thursday, January 26, 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.
Interested participants and investors may also listen to the live teleconference call by dialing (866) 713-8395 or (617) 597-5309, and entering participant code 42214013. A replay will be available for seven days beginning at 4:00 p.m. Pacific Time. Access numbers for this replay are (888) 286-8010 or (617) 801-6888, with passcode 57636855.
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 employee share-based compensation expense, a non-cash charge associated with the termination of a patent license 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 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.
Termination of License. The Company incurred a one-time expense of $5.4 million in the fourth quarter of 2011 related to the acceleration of the remaining amortization of the original up-front license fee related to the Roche license. The Company excludes this item because it is one-time and non-cash in nature and not reflective of ongoing operating results in the period incurred.
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 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 potential growth, future revenues and future net income/loss, including on a non-GAAP basis, and test menu expansion. 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 Years Ended December
December 31, 31,
------------------- ---------------------
2011 2010 2011 2010
---- ---- ---- ----
Revenues:
System
sales $20,371 $13,200 $61,948 $46,416
Reagent and
disposable
sales 56,576 42,969 203,576 160,460
------ ------ ------- -------
Total
product
sales 76,947 56,169 265,524 206,876
Other
revenues 3,167 2,557 12,051 5,592
----- ----- ------ -----
Total
revenues 80,114 58,726 277,575 212,468
------ ------ ------- -------
Costs and operating
expenses:
Cost of
product
sales 38,632 26,570 122,840 105,135
Collaboration
profit
sharing 1,582 1,093 4,863 6,806
Research
and
development 16,650 11,666 59,362 42,503
Sales and
marketing 14,490 10,626 50,691 38,840
General and
administrative 10,153 6,932 36,004 24,528
------ ----- ------ ------
Total costs
and
operating
expenses 81,507 56,887 273,760 217,812
------ ------ ------- -------
Income
(loss)
from
operations (1,393) 1,839 3,815 (5,344)
Other
expense,
net (506) (346) (1,143) (992)
---- ---- ------ ----
Income
(loss)
before
income
taxes (1,899) 1,493 2,672 (6,336)
Benefit
from
(provision
for)
income
taxes 250 (148) (45) 419
--- ---- --- ---
Net income
(loss) $(1,649) $1,345 $2,627 $(5,917)
======= ====== ====== =======
Basic net
income
(loss) per
share $(0.03) $0.02 $0.04 $(0.10)
====== ===== ===== ======
Diluted net
income
(loss) per
share $(0.03) $0.02 $0.04 $(0.10)
====== ===== ===== ======
Shares used
in
computing
basic net
income
(loss) per
share 64,113 60,413 62,735 59,712
====== ====== ====== ======
Shares used
in
computing
diluted
net income
(loss) per
share 64,113 63,372 66,750 59,712
====== ====== ====== ======
CEPHEID
CONDENSED CONSOLIDATED UNAUDITED BALANCE SHEETS
(in thousands)
December December 31,
31, 2011 2010
--------- -------------
ASSETS
Current assets:
Cash and cash equivalents $115,008 $79,538
Accounts receivable, net 35,375 28,010
Inventory 62,239 37,598
Prepaid expenses and other current
assets 5,245 4,138
----- -----
Total current assets 217,867 149,284
Property and equipment, net 35,833 27,438
Other non-current assets 730 607
Intangible assets, net 13,795 24,688
Goodwill 18,445 18,594
------ ------
Total assets $286,670 $220,611
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $32,167 $21,957
Accrued compensation 17,928 12,594
Accrued royalties 8,357 7,994
Accrued and other liabilities 3,086 1,288
Current portion of deferred revenue 8,176 8,207
Current portion of notes payable - 1,679
--- -----
Total current liabilities 69,714 53,719
Long-term portion of deferred
revenue 2,003 4,057
Notes payable, less current portion - 4,991
Other liabilities 3,120 4,182
----- -----
Total liabilities 74,837 66,949
------ ------
Shareholders' equity:
Common stock 324,211 288,387
Additional paid-in capital 93,144 72,731
Accumulated other comprehensive
income 33 726
Accumulated deficit (205,555) (208,182)
-------- --------
Total shareholders' equity 211,833 153,662
------- -------
Total liabilities and shareholders'
equity $286,670 $220,611
======== ========
CEPHEID
CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December
31,
---------------------
2011 2010
---- ----
Cash flows from operating activities:
Net income (loss) $2,627 $(5,917)
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Depreciation and amortization of
property and equipment 10,298 9,326
Amortization of intangible assets 6,523 6,966
Amortization of terminated patent
license 5,372 -
Stock-based compensation related to
employees and consulting services
rendered 19,768 16,615
Write-offs of other intangible assets
acquired in acquisitions - 271
Unrealized gain on auction rate
securities - (1,714)
Unrealized loss on put option - 1,844
Deferred rent 18 85
Changes in operating assets and liabilities:
Accounts receivable (7,830) (4,394)
Inventory (23,982) 124
Prepaid expenses and other current
assets (237) (1,426)
Other non-current assets (122) (113)
Accounts payable and other current
liabilities 11,347 (5,112)
Accrued compensation 5,334 3,726
Deferred revenue (2,084) 7,062
------ -----
Net cash provided by operating
activities 27,032 27,343
Cash flows from investing activities:
Capital expenditures (18,942) (13,047)
Acquisition of leasehold improvements - 125
Payments for technology licenses (1,655) (1,000)
Cost of acquisitions, net (296) (1,300)
Proceeds from the sales of short-term
investments - 24,800
Proceeds from the sale of fixed assets 20 138
--- ---
Net cash provided by (used in)
investing activities (20,873) 9,716
Cash flows from financing activities:
Net proceeds from the issuance of
common shares and exercise of stock
options 35,857 15,334
Proceeds from notes payable - 6,448
Principal payment of bank borrowing - (14,618)
Principal payment of notes payable (6,669) (618)
------ ----
Net cash provided by financing
activities 29,188 6,546
Effect of exchange rate change on cash 123 147
--- ---
Net increase in cash and cash
equivalents 35,470 43,752
Cash and cash equivalents at beginning
of period 79,538 35,786
------ ------
Cash and cash equivalents at end of
period $115,008 $79,538
-------- -------
CEPHEID
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (UNAUDITED)
(in thousands, except per share data)
Three Months Ended Years Ended
December 31, December 31,
------------ ------------
2011 2010 2011 2010
---- ---- ---- ----
Cost of
product
sales $38,632 $26,570 $122,840 $105,135
Stock
compensation
expense (443) (687) (1,684) (2,522)
Amortization of terminated patent
license (5,372) - (5,372) -
Amortization of purchased
intangible assets (347) (394) (1,383) (1,422)
---- ---- ------ ------
Non-GAAP measure of cost of
product sales $32,470 $25,489 $114,401 $101,191
Gross margin on product sales per
GAAP 50% 53% 54% 49%
Gross margin on product sales per
Non-GAAP 58% 55% 57% 51%
Operating
expenses $41,293 $29,224 $146,057 $105,871
Stock
compensation
expense (4,806) (3,614) (18,084) (14,093)
Amortization of purchased
intangible assets (107) (78) (429) (409)
---- --- ---- ----
Non-GAAP measure of operating
expenses $36,380 $25,532 $127,544 $91,369
Income (loss)
from
operations $(1,393) $1,839 $3,815 $(5,344)
Stock
compensation
expense 5,249 4,301 19,768 16,615
Amortization of terminated patent
license 5,372 - 5,372 -
Amortization of purchased
intangible assets 454 472 1,812 1,831
--- --- ----- -----
Non-GAAP measure of income from
operations $9,682 $6,612 $30,767 $13,102
Net
income
(loss) $(1,649) $1,345 $2,627 $(5,917)
Stock
compensation
expense 5,249 4,301 19,768 16,615
Amortization of terminated patent
license 5,372 - 5,372 -
Amortization of purchased
intangible assets 454 472 1,812 1,831
--- --- ----- -----
Non-GAAP
measure of net
income $9,426 $6,118 $29,579 $12,529
Basic net
income (loss)
per share $(0.03) $0.02 $0.04 $(0.10)
Stock
compensation
expense 0.08 0.07 0.32 0.28
Amortization of terminated patent
license 0.09 - 0.08 -
Amortization of purchased
intangible assets 0.01 0.01 0.03 0.03
---- ---- ---- ----
Non-GAAP measure of net income
per share $0.15 $0.10 $0.47 $0.21
Diluted net
income (loss)
per share $(0.03) $0.02 $0.04 $(0.10)
Stock
compensation
expense 0.08 0.06 0.29 0.27
Amortization of terminated patent
license 0.08 - 0.08 -
Amortization of purchased
intangible assets 0.01 0.01 0.03 0.03
---- ---- ---- ----
Non-GAAP measure of net income
per share $0.14 $0.09 $0.44 $0.20
Shares used in computing Non-GAAP
basic net income (loss) per share 64,113 60,413 62,735 59,712
Shares used in computing diluted net
income per share 64,113 63,372 66,750 59,712
Incremental shares from the assumed
conversion of dilutive stock
options 4,480 1,367 878 3,875
----- ----- --- -----
Shares used in computing Non-GAAP
diluted net income per share 68,593 64,739 67,628 63,587
CONTACTS:
For Media Inquiries: For Investor Inquiries:
-------------------- -----------------------
Jared Tipton Jacquie Ross
Cepheid Corporate Cepheid Investor
Communications Relations
Tel: (408) 400 8377 Tel: (408) 400 8329
communications@cepheid.com investor.relations@cepheid.com
SOURCE Cepheid
