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8-K - 8-K - ALERE INC.d487795d8k.htm

Exhibit 99.1

 

Contact:   

Doug Guarino

Jon Russell

  

Director of Corporate Relations

Vice President of Finance

   781-647-3900

ALERE INC. ANNOUNCES

FOURTH QUARTER 2012 RESULTS

WALTHAM, MA…February 15, 2013…Alere Inc. (NYSE: ALR), a global leader in enabling individuals to take charge of their health at home through the merger of rapid diagnostics and health information solutions, today announced its financial results for the quarter ended December 31, 2012.

Financial results for the fourth quarter of 2012:

 

   

Net revenue of $755.8 million for the fourth quarter of 2012, compared to $651.1 million for the fourth quarter of 2011. Non-GAAP adjusted net revenue, which includes $0.8 million in estimated revenue related to acquired software license contracts not recognized for GAAP purposes for the fourth quarter of 2012 due to business combination accounting rules, was $756.5 million for the fourth quarter of 2012, compared to $652.6 million for the fourth quarter of 2011.

 

   

Net loss of $62.7 million attributable to common stockholders of Alere Inc., and respective net loss per diluted common share of $0.84, for the fourth quarter of 2012, compared to net loss of $363.9 million attributable to common stockholders of Alere Inc., and respective net loss per diluted common share of $4.67, for the fourth quarter of 2011.

 

   

Non-GAAP adjusted net income per diluted common share of $0.55 for the fourth quarter of 2012, compared to non-GAAP adjusted net income per diluted common share of $0.70 for the fourth quarter of 2011.

 

   

Net product and services revenue from our Professional Diagnostics segment was $584.1 million in the fourth quarter of 2012, compared to net product and services revenue of $495.9 million in the fourth quarter of 2011. Non-GAAP adjusted net product and services revenue from our Professional Diagnostics segment, which includes $0.8 million in estimated revenue related to acquired software license contracts not recognized for GAAP purposes for the fourth quarter of 2012 due to business combination accounting rules, was $584.9 million in the fourth quarter of 2012, compared to non-GAAP adjusted net product and services revenue of $497.4 million in the fourth quarter of 2011. Recent professional diagnostics acquisitions contributed $77.9 million of incremental net revenue compared to the fourth quarter of 2011.

 

   

North American influenza sales increased to $23.0 million for the fourth quarter of 2012, from $8.3 million for the fourth quarter of 2011.


   

Excluding the impact of the change in North American influenza revenues and the impact on revenues from the reduction in our U.S. meter-based Triage product sales, currency adjusted organic growth in our Professional Diagnostics segment was 5%.

 

   

Net product and services revenue from our Health Information Solutions (formerly known as Health Management) segment was $131.0 million in the fourth quarter of 2012, compared to $125.9 million in the fourth quarter of 2011 and $135.1 million in the third quarter of 2012. The increase in revenue from the fourth quarter of 2011 was related primarily to increased revenues from our home coagulation monitoring programs.

 

   

Included in royalty revenues in the fourth quarter of 2012 was $11.0 million associated with the license of certain of our molecular intellectual property. Partially offsetting this, and included in interest and other income (expense), was a charge of a $3.9 million associated with the settlement of a prior year dispute with a former distributor.

The Company’s GAAP results for the fourth quarter of 2012 exclude $0.8 million of revenue associated with acquired software license contracts that are not recognized due to business combination accounting rules and include amortization of $105.1 million, $10.3 million of restructuring charges, $3.8 million of stock-based compensation expense, $3.6 million of acquisition-related costs recorded in accordance with ASC 805, Business Combinations, $10.2 million of expense recorded for fair value adjustments to acquisition-related contingent consideration, $1.0 million of interest expense recorded in connection with fees paid for certain debt modifications, and $23.2 million of expense associated with the extinguishment of debt. The Company’s GAAP results for the fourth quarter of 2011 exclude $1.5 million of revenue associated with acquired software license contracts that are not recognized due to business combination accounting rules and include amortization of $80.9 million, $8.8 million of restructuring charges, $4.9 million of stock-based compensation expense, a $6.0 million non-cash charge associated with acquired inventory in connection with the acquisition of Axis-Shield plc, $5.3 million of acquisition-related costs recorded in accordance with ASC 805, Business Combinations, a $383.6 million non-cash charge associated with the impairment of goodwill in our Health Information Solutions segment and $1.3 million of interest expense recorded in connection with fees paid for certain debt modifications, offset by $4.4 million of income recorded for fair value adjustments to acquisition-related contingent consideration, a realized foreign currency gain of $5.4 million associated with a bank account funded for the acquisition of Axis-Shield plc and a $0.5 million gain associated with previously-owned shares of Axis-Shield plc recorded in connection with the completion of the acquisition during the quarter. These amounts, net of tax, have been excluded from the non-GAAP adjusted net income per diluted common share attributable to Alere Inc. for the respective quarters.


Detailed reconciliations of the Company’s non-GAAP adjusted operating income and non-GAAP adjusted net income available to common shareholders to operating income and net loss available to common shareholders under GAAP, as well as a discussion regarding these non-GAAP financial measures, is included in the schedules to this press release.

The Company will host a conference call beginning at 8:30 a.m. (Eastern Time) today, February 15, 2013, to discuss these results, as well as other corporate matters. During the conference call, the Company may answer questions concerning business and financial developments and trends and other business and financial matters. The Company’s responses to these questions, as well as other matters discussed during the conference call, may contain or constitute information that has not been previously disclosed.

The conference call may be accessed by dialing (877) 270-2148 (domestic) or (412) 902-6510 (international) and asking for Alere Inc. A webcast of the call can also be accessed via the Alere web site at www.alere.com/investors, or directly through the following link: http://www.videonewswire.com/event.

A replay of the call will be available approximately one hour after the conclusion of the call and will remain available for a period of seven days following the call. The replay may be accessed by dialing (877) 344-7529 (domestic) or (412) 317-0088 (international) and entering replay code 10025060. The replay will also be available via online webcast at http://www.videonewswire.com/event or via the Alere web site at www.alere.com/investors for a period of 60 days following the call.

Additionally, reconciliations to non-GAAP financial measures not included in this press release that may be discussed during the call will also be available at the Alere web site (http://www.alere.com/investors) under the Earnings Calls and Releases section shortly before the conference call begins and will continue to be available on this web site.

For more information about Alere, please visit our web site at http://www.alere.com.

By developing new capabilities in near-patient diagnosis, monitoring and health information solutions, Alere enables individuals to take charge of improving their health and quality of life at home. Alere’s global leading products and services, as well as its new product development efforts, focus on cardiology, infectious disease, toxicology and diabetes. Alere is headquartered in Waltham, Massachusetts.

Source: Alere Inc.


Alere Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

 

     Three Months Ended December 31,  
     2012     2011  

Net product sales and services revenue

   $ 738,520      $ 645,359   

License and royalty revenue

     17,243        5,750   
  

 

 

   

 

 

 

Net revenue

     755,763        651,109   

Cost of net revenue

     381,895        310,171   
  

 

 

   

 

 

 

Gross profit

     373,868        340,938   
  

 

 

   

 

 

 

Gross margin

     49     52

Operating expenses:

    

Research and development

     62,992        37,503   

Selling, general and administrative

     309,888        264,656   

Goodwill impairment charge

     —           383,612   
  

 

 

   

 

 

 

Total operating expenses

     372,880        685,771   
  

 

 

   

 

 

 

Operating income (loss)

     988        (344,833

Interest and other income (expense), net

     (84,054     (42,417
  

 

 

   

 

 

 

Loss before benefit for income taxes

     (83,066     (387,250

Benefit for income taxes

     (17,698     (19,800
  

 

 

   

 

 

 

Loss before equity earnings of unconsolidated entities, net of tax

     (65,368     (367,450

Equity earnings of unconsolidated entities, net of tax

     2,828        3,602   
  

 

 

   

 

 

 

Net loss

     (62,540     (363,848

Less: Net income attributable to non-controlling interests

     138        73   
  

 

 

   

 

 

 

Net loss attributable to Alere Inc. and Subsidiaries

     (62,678     (363,921

Preferred stock dividends

     (5,353     (5,367
  

 

 

   

 

 

 

Net loss available to common stockholders

   $ (68,031   $ (369,288
  

 

 

   

 

 

 

Net loss per common share—basic and diluted

   $ (0.84   $ (4.67
  

 

 

   

 

 

 

Weighted average shares—basic and diluted

     80,872        79,034   
  

 

 

   

 

 

 


Alere Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

 

                                     
     Year Ended December 31,  
     2012     2011  

Net product sales and services revenue

   $ 2,790,249      $ 2,363,054   

License and royalty revenue

     28,576        23,473   
  

 

 

   

 

 

 

Net revenue

     2,818,825        2,386,527   

Cost of net revenue

     1,390,503        1,140,692   
  

 

 

   

 

 

 

Gross profit

     1,428,322        1,245,835   
  

 

 

   

 

 

 

Gross margin

     51     52

Operating expenses:

    

Research and development

     183,001        150,165   

Selling, general and administrative

     1,136,189        964,913   

Goodwill impairment charge

     —           383,612   
  

 

 

   

 

 

 

Total operating expenses

     1,319,190        1,498,690   
  

 

 

   

 

 

 

Operating income (loss)

     109,132        (252,855

Interest and other income (expense), net

     (230,603     86,808   
  

 

 

   

 

 

 

Loss before before benefit for income taxes

     (121,471     (166,047

Benefit for income taxes

     (30,319     (24,214
  

 

 

   

 

 

 

Loss before equity earnings of unconsolidated entities, net of tax

     (91,152     (141,833

Equity earnings of unconsolidated entities, net of tax

     13,245        8,524   
  

 

 

   

 

 

 

Net loss

     (77,907     (133,309

Less: Net income attributable to non-controlling interests

     275        233   
  

 

 

   

 

 

 

Net loss attributable to Alere Inc. and Subsidiaries

     (78,182     (133,542

Preferred stock dividends

     (21,293     (22,049

Preferred stock repurchase

     —           23,936   
  

 

 

   

 

 

 

Net loss available to common stockholders

   $ (99,475   $ (131,655
  

 

 

   

 

 

 

Net loss per common share—basic and diluted

   $ (1.23   $ (1.58
  

 

 

   

 

 

 

Weighted average shares—basic and diluted

     80,587        83,128   
  

 

 

   

 

 

 


Alere Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands)

 

                                     
     December 31,
2012
     December 31,
2011
 

ASSETS

     

CURRENT ASSETS:

     

Cash and cash equivalents

   $ 328,346       $ 299,173   

Restricted cash

     3,076         8,987   

Marketable securities

     904         1,086   

Accounts receivable, net

     524,332         475,824   

Inventories, net

     337,121         320,269   

Prepaid expenses and other current assets

     326,209         188,388   
  

 

 

    

 

 

 

Total current assets

     1,519,988         1,293,727   

PROPERTY, PLANT AND EQUIPMENT, NET

     534,469         491,205   

GOODWILL AND OTHER INTANGIBLE ASSETS, NET

     4,919,081         4,676,742   

DEFERRED FINANCING COSTS AND OTHER ASSETS, NET

     207,641         211,027   
  

 

 

    

 

 

 

Total assets

   $ 7,181,179       $ 6,672,701   
  

 

 

    

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

CURRENT LIABILITIES:

     

Short-term debt and current portion of long-term debt

   $ 66,916       $ 73,415   

Other current liabilities

     720,281         551,037   
  

 

 

    

 

 

 

Total current liabilities

     787,197         624,452   
  

 

 

    

 

 

 

LONG-TERM LIABILITIES:

     

Long-term debt, net of current portion

     3,641,592         3,280,080   

Deferred tax liability

     403,051         380,700   

Other long-term liabilities

     166,635         153,398   
  

 

 

    

 

 

 

Total long-term liabilities

     4,211,278         3,814,178   
  

 

 

    

 

 

 

Redeemable non-controlling interest

     —            2,497   
  

 

 

    

 

 

 

TOTAL EQUITY

     2,182,704         2,231,574   
  

 

 

    

 

 

 

Total liabilities and equity

   $ 7,181,179       $ 6,672,701   
  

 

 

    

 

 

 


Alere Inc. and Subsidiaries

Reconciliation to Non-GAAP Adjusted Operating Results

(in thousands, except per share amounts)

 

     Three Months Ended December 31,  
      2012     2011  

Reconciliation to Non-GAAP Adjusted Operating Income (1)

    

Operating income (loss)

   $ 988      $ (344,833

Adjustment related to acquired software license contracts (1)

     783        1,452   

Amortization of acquisition-related intangible assets

     104,941        80,653   

Restructuring charges

     10,193        8,656   

Stock-based compensation expense

     3,796        4,940   

Goodwill impairment charge

     —           383,612   

Acquisition-related costs

     3,575        5,273   

Fair value adjustments to acquisition-related contingent consideration

     10,174        (4,406

Non-cash charge associated with acquired inventory

     —           6,010   
  

 

 

   

 

 

 

Non-GAAP adjusted operating income

   $ 134,450      $ 141,357   
  

 

 

   

 

 

 
     Three Months Ended December 31,  
     2012     2011  

Reconciliation to Non-GAAP Adjusted Net Income (1)

    

Net loss available to common stockholders

   $ (68,031   $ (369,288

Adjustment related to acquired software license contracts (1)

     783        1,452   

Amortization of acquisition-related intangible assets

     105,127        80,932   

Restructuring charges

     10,312        8,731   

Stock-based compensation expense

     3,796        4,940   

Goodwill impairment charge

     —           383,612   

Acquisition-related costs

     3,575        5,273   

Fair value adjustments to acquisition-related contingent consideration

     10,174        (4,406

Realized foreign currency gain associated with a bank account funded for the acquisition of Axis-Shield plc

     —           (5,408

Gain related to previously-owned shares of Axis-Shield plc recorded in connection with the completion of the acquisition during the fourth quarter of 2011.

     —           (465

Non-cash charge associated with acquired inventory

     —           6,010   

Interest expense recorded in connection with fees paid for certain debt modifications and the termination of our senior secured credit facility and related interest rate swap agreement

     991        1,320   

Expense associated with extinguishment of debt

     23,235        —      

Income tax effects on items above

     (43,656     (54,164
  

 

 

   

 

 

 

Non-GAAP adjusted net income available to common stockholders

   $ 46,306      $ 58,539   
  

 

 

   

 

 

 

Net income (loss) per diluted common share

   $ (0.84   $ 0.74   
  

 

 

   

 

 

 

Non-GAAP adjusted net income per diluted common share

   $ 0.55      $ 0.70   
  

 

 

   

 

 

 

Weighted average shares—diluted

     80,872        79,034   
  

 

 

   

 

 

 

Non-GAAP adjusted weighted average shares—diluted

     94,747        92,952   
  

 

 

   

 

 

 

 

(1) 

In calculating “non-GAAP adjusted operating income” and “non-GAAP adjusted net income”, the Company excludes (i) certain non-cash charges, including amortization expense and stock-based compensation expense, (ii) non-recurring charges and income, and (iii) certain other charges and income that have a significant positive or negative impact on results yet do not occur on a consistent or regular basis in its business. In determining whether a particular item meets one of these criteria, management considers facts and circumstances that it believes are relevant. Management believes that excluding such charges and income from operating income and net income or loss allows investors and management to evaluate and compare the Company’s operating results from continuing operations from period to period in a meaningful and consistent manner. Due to the frequency of their occurrence in its business, the Company does not adjust operating income or net income or loss for the costs associated with litigation, including payments made or received through settlements. It should be noted that “non-GAAP adjusted operating income” and “non-GAAP adjusted net income” are not standard financial measurements under accounting principles generally accepted in the United States of America (“GAAP”) and should not be considered as an alternative to operating income and net income or loss or cash flow from operating activities, as a measure of liquidity or as an indicator of operating performance or any measure of performance derived in accordance with GAAP. In addition, all companies do not calculate non-GAAP financial measures in the same manner and, accordingly, “non-GAAP adjusted operating income” and “non-GAAP adjusted net income” presented in this press release may not be comparable to similar measures used by other companies.


Alere Inc. and Subsidiaries

Reconciliation to Non-GAAP Adjusted Operating Results

(in thousands, except per share amounts)

 

     Year Ended December 31,  
     2012     2011  

Reconciliation to Non-GAAP Adjusted Operating Income (1)

    

Operating income (loss)

   $ 109,132      $ (252,855

Adjustment related to acquired software license contracts (1)

     4,100        1,452   

Amortization of acquisition-related intangible assets

     347,108        307,859   

Restructuring charges

     20,325        28,282   

Stock-based compensation expense

     15,665        21,215   

Goodwill impairment charge

     —           383,612   

Acquisition-related costs

     9,669        11,464   

Fair value adjustments to acquisition-related contingent consideration

     (6,608     (14,090

Non-cash charge associated with acquired inventory

     4,681        6,010   

Fair value write-down in connection with an idle facility

     —           596   

Expenses incurred in connection with the sale of our vitamin and nutritional supplements business

     —           23   
  

 

 

   

 

 

 

Non-GAAP adjusted operating income

   $ 504,072      $ 493,568   
  

 

 

   

 

 

 
     Year Ended December 31,  
     2012     2011  

Reconciliation to Non-GAAP Adjusted Net Income (1)

    

Net loss available to common stockholders

   $ (99,475   $ (131,655

Adjustment related to acquired software license contracts

     4,100        1,452   

Amortization of acquisition-related intangible assets

     347,976        309,264   

Restructuring charges

     20,602        28,563   

Stock-based compensation expense

     15,665        21,215   

Goodwill impairment charge

     —           383,612   

Acquisition-related costs

     9,669        11,464   

Fair value adjustments to acquisition-related contingent consideration

     (6,608     (14,090

Interest expense recorded in connection with fees paid for certain debt modifications and the termination of our senior secured credit facility and related interest rate swap agreement

     4,951        32,533   

Expense associated with extinguishment of debt

     23,235        —      

Non-cash charge associated with acquired inventory

     4,681        6,010   

Gain in connection with the formation of a joint venture

     —           (288,896

Realized foreign currency gain associated with a bank account funded for the acquisition of Axis-Shield plc

     —           12,641   

Realized foreign currency loss associated with the settlement of an acquisition-related contingent consideration obligation

     —           1,920   

Fair value write-down in connection with an idle facility

     —           596   

Expenses incurred in connection with the sale of our vitamin and nutritional supplements business

     —           23   

Gain related to previously-owned shares of Axis-Shield plc recorded in connection with the completion of the acquisition during the fourth quarter of 2011.

     —           (465

Non-cash income allocated to net income available to common stockholders as a result of repurchases of preferred shares

     —           (23,936

Income tax effects on items above

     (136,684     (136,347
  

 

 

   

 

 

 

Non-GAAP adjusted net income available to common stockholders

   $ 188,112      $ 213,904   
  

 

 

   

 

 

 

Net income (loss) per diluted common share

   $ (1.23   $ 2.57   
  

 

 

   

 

 

 

Non-GAAP adjusted net income per diluted common share

   $ 2.25      $ 2.44   
  

 

 

   

 

 

 

Weighted average shares—diluted

     80,587        83,128   
  

 

 

   

 

 

 

Non-GAAP adjusted weighted average shares—diluted

     94,572        98,079   
  

 

 

   

 

 

 

 

(1) 

In calculating “non-GAAP adjusted operating income” and “non-GAAP adjusted net income”, the Company excludes (i) certain non-cash charges, including amortization expense and stock-based compensation expense, (ii) non-recurring charges and income, and (iii) certain other charges and income that have a significant positive or negative impact on results yet do not occur on a consistent or regular basis in its business. In determining whether a particular item meets one of these criteria, management considers facts and circumstances that it believes are relevant. Management believes that excluding such charges and income from operating income and net income or loss allows investors and management to evaluate and compare the Company’s operating results from continuing operations from period to period in a meaningful and consistent manner. Due to the frequency of their occurrence in its business, the Company does not adjust operating income or net income or loss for the costs associated with litigation, including payments made or received through settlements. It should be noted that “non-GAAP adjusted operating income” and “non-GAAP adjusted net income” are not standard financial measurements under accounting principles generally accepted in the United States of America (“GAAP”) and should not be considered as an alternative to operating income and net income or loss or cash flow from operating activities, as a measure of liquidity or as an indicator of operating performance or any measure of performance derived in accordance with GAAP. In addition, all companies do not calculate non-GAAP financial measures in the same manner and, accordingly, “non-GAAP adjusted operating income” and “non-GAAP adjusted net income” presented in this press release may not be comparable to similar measures used by other companies.


Alere Inc. and Subsidiaries

Selected Consolidated Revenues by Business Area (1)

(in thousands)

 

Professional Diagnostics Segment

                               % Change   % Change
     Q4 2012      YTD 2012      Q4 2011      YTD 2011      Q4 12 v. Q4 11   YTD 12 v. YTD 11

Cardiology

   $ 116,740       $ 503,534       $ 128,094       $ 518,746       -9%   -3%

Infectious disease

     190,552         615,950         159,424         564,983       20%   9%

Toxicology

     149,525         587,261         119,375         387,209       25%   52%

Diabetes

     43,813         144,441         14,960         14,960       193%   866%

Other (1)

     83,510         314,030         74,068         250,274       13%   25%
  

 

 

    

 

 

    

 

 

    

 

 

      

Professional diagnostics net product sales and services revenue (1)

     584,140         2,165,216         495,921         1,736,172       18%   25%

License and royalty revenue

     15,843         24,676         5,750         20,337       176%   21%
  

 

 

    

 

 

    

 

 

    

 

 

      

Professional diagnostics net revenue

   $ 599,983       $ 2,189,892       $ 501,671       $ 1,756,509       20%   25%
  

 

 

    

 

 

    

 

 

    

 

 

      

Health Information Solutions Segment

                               % Change   % Change
     Q4 2012      YTD 2012      Q4 2011      YTD 2011      Q4 12 v. Q4 11   YTD 12 v. YTD 11

Disease and case management

   $ 53,101       $ 218,378       $ 55,820       $ 237,938       -5%   -8%

Wellness

     23,753         104,634         24,499         104,868       -3%   0%

Women’s & children’s health

     30,039         120,259         28,737         114,287       5%   5%

Patient self-testing services

     24,077         92,151         16,892         77,421       43%   19%
  

 

 

    

 

 

    

 

 

    

 

 

      

Health information solutions net revenue

   $ 130,970       $ 535,422       $ 125,948       $ 534,514       4%   0%
  

 

 

    

 

 

    

 

 

    

 

 

      

 

(1) 

Revenues are presented in accordance with Generally Accepted Accounting Principles and exclude an adjustment of $0.8 and $1.5 in revenue related to acquired software license contracts which were not recognized during the three months ended December 31, 2012 and 2011, respectively, and $4.1 and $1.5 during the year ended December 31, 2012 and 2011, respectively, due to business combination accounting rules.