Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - ALERE INC. | d36696d8k.htm |
Exhibit 99.1
Alere Reports Second Quarter 2015 Financial Results
Organic Growth of 3.5% Driven by New and Existing Product Sales across Core Portfolio
| • | Net revenue of $629.2 million; non-GAAP adjusted net revenue of $629.4 million |
| • | Organic revenue growth was 3.5 percent; excluding North America influenza sales, organic revenue growth was 3.3 percent |
| • | $0.17 income per diluted share available to common stockholders from continuing operations; non-GAAP adjusted income of $0.54 per diluted share available to common stockholders from continuing operations |
WALTHAM, Mass., August 4, 2015 – Alere Inc. (NYSE: ALR), a global leader in rapid diagnostic tests, today announced its financial results for the quarter ended June 30, 2015. Net revenue was $629.2 million, a decrease of 2.8 percent, compared to $647.4 million in the second quarter of 2014. Non-GAAP adjusted net revenue was $629.4 million, a decrease of 2.8 percent, compared to $647.8 million in the second quarter of 2014.
| Net Revenue (in millions) |
Second Quarter 2015 | Second Quarter 2014 (1) | % Change | |||||||||
| Cardiometabolic Disease |
$ | 214 | $ | 209 | 2 | |||||||
| Infectious Disease |
$ | 177 | $ | 175 | 1 | |||||||
| Toxicology |
$ | 157 | $ | 170 | (7 | ) | ||||||
| Other |
$ | 51 | $ | 65 | (22 | ) | ||||||
| Consumer Diagnostics |
$ | 25 | $ | 22 | 13 | |||||||
| License and Royalty |
$ | 5 | $ | 6 | (14 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Total |
$ | 629 | $ | 647 | (3 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| (1) | Revenues, other than License and Royalty, have been reclassified due to a change in segment reporting as a result of the divestiture of our health management business in 2015 and the results of our patient self-testing business are primarily included within Cardiometabolic Disease. |
“Our second quarter 2015 results, with 18.5 percent non-GAAP adjusted operating income growth compared to the prior year period, demonstrate the significant progress we’ve made in transforming Alere. During the first half of 2015, we met our operational targets and achieved 2.9 percent non-GAAP adjusted organic revenue growth with contribution from new products and continued operating expense discipline,” said Namal Nawana, CEO and President of Alere. “We continue to focus on strong execution to accelerate our business during the second half of 2015. Our 2015 guidance includes the recently announced accretive acquisition of US Diagnostics and the BBI divestiture that is expected to close during the fourth quarter.”
Second Quarter Highlights
| • | Announced completion of $425 million of senior subordinated notes offering at 6.375 percent; refinanced senior secured credit facilities |
| • | CEO Namal Nawana participated in the White House Antibiotic Stewardship Forum |
| • | Received FDA clearance for Alere i™ Strep A rapid molecular test |
Second Quarter 2015 Results
Non-GAAP adjusted net revenue of $629.4 million for the second quarter of 2015 included increases of $6.4 million in global HIV product sales, $9.2 million in Alere Home Monitoring and mail-order diabetes, and $2.2 million in epoc® product sales compared to the prior year period, offset by a $33.1 million decrease due to foreign currency exchange, a $13.3 million decrease in our pain management business, and a $1.2 million decrease in North America INRatio® product sales compared to the prior year period. Included in second quarter non-GAAP adjusted net revenue was $8.6 million in global influenza product sales.
Gross profit was $292.6 million in the second quarter of 2015, with 46.5 percent gross margin. On a non-GAAP basis, adjusted gross profit was $307.1 million, with 48.8 percent non-GAAP adjusted gross margin in the second quarter of 2015. Non-GAAP adjusted gross profit excludes amortization of acquisition-related intangibles, restructuring charges, and stock-based compensation.
Operating expenses were $200.7 million, or 31.9 percent of net revenue, in the second quarter of 2015. Included in the second quarter operating expenses was R&D expense of $27.2 million, or 4.3 percent of net revenue, and SG&A expense of $168.0 million, or 26.7 percent of net revenue. Non-GAAP adjusted operating expenses during the second quarter of 2015 were $191.8 million, or 30.5 percent of non-GAAP adjusted net revenue, and were comprised of $25.8 million of non-GAAP adjusted R&D expenses, or 4.1 percent of non-GAAP adjusted net revenue, and non-GAAP adjusted SG&A expenses of $166.0 million, or 26.4 percent of non-GAAP adjusted net revenue. Non-GAAP adjusted operating expenses, non-GAAP adjusted R&D expenses and non-GAAP adjusted SG&A expenses exclude, as applicable, amortization of acquisition-related intangibles, restructuring charges, stock-based compensation, fair value adjustments to contingent consideration, compensation costs associated with contingent consideration and costs associated with potential business dispositions. Also included in operating expenses for the second quarter of 2015 was a $5.1 million loss on the divestiture of our Alere Analytics business and $0.3 million of costs associated with the closure of our Alere Connect operation. Both of these amounts are excluded from non-GAAP adjusted operating expenses.
Operating income was $91.8 million in the second quarter of 2015. On a non-GAAP basis, adjusted operating income was $115.2 million in the second quarter of 2015.
Income from continuing operations available to common stockholders was $14.6 million, or $0.17 per diluted share, in the second quarter of 2015. On a non-GAAP basis, the Company reported adjusted income from continuing operations available to common stockholders of $48.3 million, or $0.54 per diluted share, in the second quarter of 2015.
Page 2 of 5
Detailed reconciliations of the non-GAAP financial measures presented in this release to the most directly comparable financial measures under GAAP, as well as a discussion regarding these non-GAAP financial measures, are included in the schedules to this press release.
2015 Business Outlook
For the year ending December 31, 2015, the Company expects:
| • | Net revenue to be in the range of $2.5 billion to $2.6 billion |
| • | Non-GAAP adjusted net income from continuing operations available to common stockholders in the range of $2.40 to $2.50 per diluted share |
Conference Call
We will host a conference call beginning at 8:30 a.m. (Eastern Time) today, August 4, 2015, to discuss these results, as well as other company matters. During the conference call, we may answer questions concerning business and financial developments and trends and other business and financial matters. Our responses to these questions, as well as other matters discussed during the conference call, may contain or constitute material information that has not been previously disclosed.
The conference call will be webcast live on the Investor Relations section of our website or accessed directly through the following link: https://www.webcaster4.com/Webcast/Page/411/9606
To access the conference call, please use the following dial-in numbers and access code 1496673:
| • | US (toll-free): 1-888-317-6003 |
| • | International: 1-412-317-6061 |
| • | Canada (toll-free): 1-866-284-3684 |
A replay 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. To hear a replay of the conference call, please use the following dial-in numbers and replay code 10069486 (available for seven days):
| • | US (toll-free): 1-877-344-7529 |
| • | International: 1-412-317-0088 |
| • | Canada (toll-free): 1-855-669-9658 |
The replay will also be available via online webcast on the Investor Relations section of the Alere website.
Additionally, reconciliations to non-GAAP financial measures not included in this press release that may be discussed during the call will also be available on the Investor Relations section of the Alere website.
Page 3 of 5
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. For example, forward-looking statements include statements regarding, future revenues, future non-GAAP adjusted net income from continuing operations available to common stockholders per diluted share, future operating results, during the second half of 2015 the Company will focus on strong execution to accelerate the business, a recent acquisition by the Company will be accretive, the BBI divestiture is expected to close during the fourth quarter, the effect of trends in our business, areas of management focus, and future financial goals. In some cases, forward-looking statements can be identified by terms such as “may,” “will,” “intend,” “expect,” “plan,” “believe,” “estimate,” “predict” or the like. These statements involve risks and uncertainties, and actual results could differ materially from the statements made in this press release. Factors that might cause these differences include, but are not limited to, the effect of intense competition, failure to meet closing conditions necessary in order to complete acquisitions and divestitures, ability to execute on business plans to make acquisitions accretive, risks arising from FDA inspections and government subpoenas, delays in product development, international business risks, fluctuations in currency exchange rates, the effects of healthcare reform, risks of clinical trials, potential regulatory burdens and obstacles, litigation and legal compliance risks, government investigations, cybersecurity risks, changes in global economic and political conditions, potential product defects, manufacturing or supply issues, potential intellectual property infringement, risks of acquisitions and divestitures, substantial indebtedness, contractual debt restrictions and requirements, fluctuations in quarterly results, potential future financial restatements, potential reviews, investigations or other proceedings by government authorities, stockholders or other parties; the risk that the Company’s remediation plan related to its material weakness will be unsuccessful to prevent or detect additional misstatements, including a potential inability to prepare financial statements or file periodic reports on a timely basis, which would be a default under the Company’s senior secured credit facility and note indentures as well as a violation of the Securities Exchange Act and the listing rules of the NYSE, and any additional material weaknesses in internal controls. These and other risk factors are discussed in more detail under the heading “Risk Factors” in Item 1A of the Company’s Annual Report on Form 10-K, as amended, filed with the Securities and Exchange Commission on May 28, 2015. Copies are available through the Company’s Investor Relations department and at www.alere.com. The Company does not assume any obligation to update its forward-looking statements to reflect new information and developments.
About Alere
Alere believes that when diagnosing and monitoring health conditions, Knowing now matters.™ Alere delivers reliable and actionable information by providing rapid diagnostic tests, enhancing clinical and economic healthcare outcomes globally. Headquartered in Waltham, Mass., Alere focuses on rapid diagnostics for cardiometabolic disease, infectious disease and toxicology. For more information on Alere, please visit www.alere.com.
# # #
Page 4 of 5
Investor Relations
Juliet Cunningham
Vice President, Investor Relations
ir@alere.com
858.805.2232
Page 5 of 5
Alere Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
| Three Months Ended June 30, | ||||||||
| 2015 | 2014 | |||||||
| Net product sales and services revenue |
$ | 623,462 | $ | 640,794 | ||||
| License and royalty revenue |
5,694 | 6,604 | ||||||
|
|
|
|
|
|||||
| Net revenue |
629,156 | 647,398 | ||||||
| Cost of net revenue |
336,582 | 348,705 | ||||||
|
|
|
|
|
|||||
| Gross profit |
292,574 | 298,693 | ||||||
| Gross margin |
47 | % | 46 | % | ||||
| Operating expenses: |
||||||||
| Research and development |
27,198 | 37,430 | ||||||
| Selling, general and administrative |
167,997 | 266,374 | ||||||
| Impairment and loss on disposition, net |
5,542 | 638 | ||||||
|
|
|
|
|
|||||
| Operating income |
91,837 | (5,749 | ) | |||||
| Interest and other income (expense), net |
(55,234 | ) | (48,815 | ) | ||||
|
|
|
|
|
|||||
| Income (loss) from continuing operations before provision (benefit) for income taxes |
36,603 | (54,564 | ) | |||||
| Provision for income taxes |
17,701 | 5,464 | ||||||
|
|
|
|
|
|||||
| Income (loss) from continuing operations before equity earnings of unconsolidated entities, net of tax |
18,902 | (60,028 | ) | |||||
| Equity earnings of unconsolidated entities, net of tax |
1,361 | 2,087 | ||||||
|
|
|
|
|
|||||
| Income (loss) from continuing operations |
20,263 | (57,941 | ) | |||||
| Income from discontinued operations, net of tax |
— | 12,915 | ||||||
|
|
|
|
|
|||||
| Net income (loss) |
20,263 | (45,026 | ) | |||||
| Less: Net income attributable to non-controlling interests |
359 | 62 | ||||||
|
|
|
|
|
|||||
| Net income (loss) attributable to Alere Inc. and Subsidiaries |
19,904 | (45,088 | ) | |||||
| Preferred stock dividends |
(5,309 | ) | (5,309 | ) | ||||
|
|
|
|
|
|||||
| Net income (loss) available to common stockholders |
$ | 14,595 | $ | (50,397 | ) | |||
|
|
|
|
|
|||||
| Basic net income (loss) per common share: |
||||||||
| Income (loss) from continuing operations |
$ | 0.17 | $ | (0.77 | ) | |||
| Income from discontinued operations |
— | 0.16 | ||||||
|
|
|
|
|
|||||
| Basic net income (loss) per common share |
$ | 0.17 | $ | (0.61 | ) | |||
|
|
|
|
|
|||||
| Diluted net income (loss) per common share: |
||||||||
| Income (loss) from continuing operations |
$ | 0.17 | $ | (0.77 | ) | |||
| Income from discontinued operations |
— | 0.16 | ||||||
|
|
|
|
|
|||||
| Diluted net income (loss) per common share |
$ | 0.17 | $ | (0.61 | ) | |||
|
|
|
|
|
|||||
| Weighted average shares - basic |
85,173 | 82,648 | ||||||
|
|
|
|
|
|||||
| Weighted average shares - diluted |
86,635 | 82,648 | ||||||
|
|
|
|
|
|||||
Alere Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
| Six Months Ended June 30, | ||||||||
| 2015 | 2014 | |||||||
| Net product sales and services revenue |
$ | 1,226,917 | $ | 1,260,821 | ||||
| License and royalty revenue |
10,392 | 11,816 | ||||||
|
|
|
|
|
|||||
| Net revenue |
1,237,309 | 1,272,637 | ||||||
| Cost of net revenue |
652,750 | 663,586 | ||||||
|
|
|
|
|
|||||
| Gross profit |
584,559 | 609,051 | ||||||
| Gross margin |
47 | % | 48 | % | ||||
| Operating expenses: |
||||||||
| Research and development |
55,214 | 76,129 | ||||||
| Selling, general and administrative |
369,767 | 503,037 | ||||||
| Impairment and loss on disposition, net |
40,334 | 638 | ||||||
|
|
|
|
|
|||||
| Operating income |
119,244 | 29,247 | ||||||
| Interest and other income (expense), net |
(102,935 | ) | (93,693 | ) | ||||
|
|
|
|
|
|||||
| Income (loss) from continuing operations before provision (benefit) for income taxes |
16,309 | (64,446 | ) | |||||
| Provision for income taxes |
8,915 | 3,784 | ||||||
|
|
|
|
|
|||||
| Income (loss) from continuing operations before equity earnings of unconsolidated entities, net of tax |
7,394 | (68,230 | ) | |||||
| Equity earnings of unconsolidated entities, net of tax |
5,320 | 7,439 | ||||||
|
|
|
|
|
|||||
| Income (loss) from continuing operations |
12,714 | (60,791 | ) | |||||
| Income from discontinued operations, net of taxes |
216,777 | 10,319 | ||||||
|
|
|
|
|
|||||
| Net income (loss) |
229,491 | (50,472 | ) | |||||
| Less: Net income attributable to non-controlling interests |
447 | 170 | ||||||
|
|
|
|
|
|||||
| Net income (loss) attributable to Alere Inc. and Subsidiaries |
229,044 | (50,642 | ) | |||||
| Preferred stock dividends |
(10,559 | ) | (10,559 | ) | ||||
|
|
|
|
|
|||||
| Net Income (loss) available to common stockholders |
$ | 218,485 | $ | (61,201 | ) | |||
|
|
|
|
|
|||||
| Basic net income (loss) per common share: |
||||||||
| Income (loss) from continuing operations |
$ | 0.02 | $ | (0.87 | ) | |||
| Income from discontinued operations |
2.56 | 0.13 | ||||||
|
|
|
|
|
|||||
| Net income (loss) per common share |
$ | 2.58 | $ | (0.74 | ) | |||
|
|
|
|
|
|||||
| Diluted net income (loss) per common share: |
||||||||
| Income (loss) from continuing operations |
$ | 0.02 | $ | (0.87 | ) | |||
| Income from discontinued operations |
2.52 | 0.13 | ||||||
|
|
|
|
|
|||||
| Diluted net income (loss) per common share |
$ | 2.54 | $ | (0.74 | ) | |||
|
|
|
|
|
|||||
| Weighted average shares - basic |
84,758 | 82,518 | ||||||
|
|
|
|
|
|||||
| Weighted average shares - diluted |
86,070 | 82,518 | ||||||
|
|
|
|
|
|||||
Alere Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
| June 30, | December 31, | |||||||
| 2015 | 2014 | |||||||
| ASSETS |
||||||||
| CURRENT ASSETS: |
||||||||
| Cash and cash equivalents |
$ | 464,871 | $ | 378,461 | ||||
| Restricted cash |
461,636 | 37,571 | ||||||
| Marketable securities |
175 | 259 | ||||||
| Accounts receivable, net |
472,686 | 466,106 | ||||||
| Inventories, net |
366,340 | 365,165 | ||||||
| Prepaid expenses and other current assets |
143,944 | 244,986 | ||||||
| Assets held for sale - current |
28,631 | 315,515 | ||||||
|
|
|
|
|
|||||
| Total current assets |
1,938,283 | 1,808,063 | ||||||
| PROPERTY, PLANT AND EQUIPMENT, NET |
448,302 | 453,570 | ||||||
| GOODWILL AND OTHER INTANGIBLE ASSETS, NET |
3,988,043 | 4,246,761 | ||||||
| RESTRICTED CASH - NON-CURRENT |
— | — | ||||||
| DEFERRED FINANCING COSTS AND OTHER ASSETS, NET |
147,572 | 170,562 | ||||||
| Assets held for sale - non-current |
129,194 | — | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 6,651,394 | $ | 6,678,956 | ||||
|
|
|
|
|
|||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| CURRENT LIABILITIES: |
||||||||
| Short-term debt and current portions of long-term debt and capital lease obligations |
$ | 634,014 | $ | 93,116 | ||||
| Liabilities related to assets held for sale - current |
7,663 | 78,843 | ||||||
| Other current liabilities |
496,335 | 589,086 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
1,138,012 | 761,045 | ||||||
|
|
|
|
|
|||||
| LONG-TERM LIABILITIES: |
||||||||
| Long-term debt and capital lease obligations, net of current portions |
2,964,949 | 3,631,945 | ||||||
| Deferred tax liabilities |
227,491 | 214,639 | ||||||
| Other long-term liabilities |
146,240 | 161,582 | ||||||
| Liabilities related to assets held for sale - non-current |
11,527 | — | ||||||
|
|
|
|
|
|||||
| Total long-term liabilities |
3,350,207 | 4,008,166 | ||||||
|
|
|
|
|
|||||
| TOTAL EQUITY |
2,163,175 | 1,909,745 | ||||||
|
|
|
|
|
|||||
| Total liabilities and equity |
$ | 6,651,394 | $ | 6,678,956 | ||||
|
|
|
|
|
|||||
Alere Inc. and Subsidiaries
Reconciliation to Non-GAAP Adjusted Operating Results
(in thousands, except per share amounts)
| Three Months Ended June 30, | ||||||||
| 2015 | 2014 | |||||||
| Reconciliation to Non-GAAP Adjusted Operating Income (1) |
||||||||
| Operating income (loss) |
$ | 91,837 | $ | (5,749 | ) | |||
| Adjustment related to acquired software license contracts |
200 | 373 | ||||||
| Amortization of acquisition-related intangible assets |
49,246 | 58,835 | ||||||
| Restructuring charges |
4,853 | 15,380 | ||||||
| Stock-based compensation expense |
7,130 | (1,122 | ) | |||||
| Compensation charges associated with acquisition-related contingent consideration obligations |
(3,412 | ) | 581 | |||||
| Acquisition-related costs |
40 | 49 | ||||||
| Fair value adjustments to acquisition-related contingent consideration |
(41,090 | ) | 16,679 | |||||
| Costs associated with potential business dispositions |
879 | 11,600 | ||||||
| Impairment and loss on disposition, net |
5,542 | 638 | ||||||
|
|
|
|
|
|||||
| Non-GAAP adjusted operating income |
$ | 115,225 | $ | 97,264 | ||||
|
|
|
|
|
|||||
| Three Months Ended June 30, | ||||||||
| 2015 | 2014 | |||||||
| Reconciliation to Non-GAAP Adjusted Net Income (1) |
||||||||
| Net income (loss) available to common stockholders |
$ | 14,595 | $ | (50,397 | ) | |||
| Adjustment related to acquired software license contracts |
200 | 373 | ||||||
| Amortization of acquisition-related intangible assets |
49,271 | 58,855 | ||||||
| Restructuring charges |
4,859 | 15,391 | ||||||
| Stock-based compensation expense |
7,130 | (1,122 | ) | |||||
| Compensation charges associated with acquisition-related contingent consideration obligations |
(3,412 | ) | 581 | |||||
| Acquisition-related costs |
40 | 49 | ||||||
| Fair value adjustments to acquisition-related contingent consideration |
(41,090 | ) | 16,679 | |||||
| Costs associated with potential business dispositions |
879 | 11,600 | ||||||
| Impairment and loss on disposition, net |
5,542 | 638 | ||||||
| Interest expense recorded in connection with fees paid for certain debt modifications and the termination of our senior secured credit facility |
11,303 | 364 | ||||||
| Interest accretion associated with acquisition-related compensation charges |
(545 | ) | 98 | |||||
| Expense associated with extinguishment of debt |
3,480 | — | ||||||
| Amortization of acquisition-related intangible assets, restructuring, fair value adjustments to acquisition-related contingent consideration, and impairment, net of gain on divestiture - Discontinued operations, net of tax |
— | (10,041 | ) | |||||
| Income tax effects on items above |
(4,002 | ) | (6,884 | ) | ||||
|
|
|
|
|
|||||
| Non-GAAP adjusted net income available to common stockholders |
$ | 48,250 | $ | 36,184 | ||||
|
|
|
|
|
|||||
| Income (loss) per diluted common share from continuing operations |
$ | 0.17 | $ | (0.77 | ) | |||
| Income per diluted common share from discontinued operations |
— | 0.16 | ||||||
|
|
|
|
|
|||||
| Net Income (loss) per diluted common share |
$ | 0.17 | $ | (0.61 | ) | |||
|
|
|
|
|
|||||
| Weighted average shares - diluted |
86,635 | 82,648 | ||||||
|
|
|
|
|
|||||
| Non-GAAP adjusted income per diluted common share from continuing operations |
$ | 0.54 | $ | 0.39 | ||||
| Non-GAAP adjusted income per diluted common share from discontinued operations |
— | 0.03 | ||||||
|
|
|
|
|
|||||
| Non-GAAP adjusted net income per diluted common share |
$ | 0.54 | $ | 0.42 | ||||
|
|
|
|
|
|||||
| Non-GAAP adjusted weighted average shares - diluted |
100,312 | 87,453 | ||||||
|
|
|
|
|
|||||
| (1) | In calculating “Non-GAAP adjusted operating income” and “Non-GAAP adjusted net income available to common stockholders”, 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 available to common stockholders” 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 available to common stockholders” 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)
| Six Months Ended June 30, | ||||||||
| 2015 | 2014 | |||||||
| Reconciliation to Non-GAAP Adjusted Operating Income (1) |
||||||||
| Operating income |
$ | 119,244 | $ | 29,247 | ||||
| Adjustment related to acquired software license contracts |
447 | 792 | ||||||
| Amortization of acquisition-related intangible assets |
99,939 | 117,795 | ||||||
| Restructuring charges |
9,123 | 19,778 | ||||||
| Stock-based compensation expense |
12,279 | 4,582 | ||||||
| Compensation charges associated with acquisition-related contingent consideration obligations |
(2,806 | ) | 1,003 | |||||
| Acquisition-related costs |
91 | 370 | ||||||
| Fair value adjustments to acquisition-related contingent consideration |
(52,867 | ) | 17,979 | |||||
| Non-cash charge associated with acquired inventory |
— | — | ||||||
| Costs associated with potential business dispositions |
4,219 | 14,560 | ||||||
| Impairment and loss on disposition, net |
40,334 | 638 | ||||||
|
|
|
|
|
|||||
| Non-GAAP adjusted operating income |
$ | 230,003 | $ | 206,744 | ||||
|
|
|
|
|
|||||
| Six Months Ended June 30, | ||||||||
| 2015 | 2014 | |||||||
| Reconciliation to Non-GAAP Adjusted Net Income (1) |
||||||||
| Net income (loss) available to common stockholders |
$ | 218,485 | $ | (61,201 | ) | |||
| Adjustment related to acquired software license contracts |
447 | 792 | ||||||
| Amortization of acquisition-related intangible assets |
99,987 | 117,833 | ||||||
| Restructuring charges |
9,136 | 19,801 | ||||||
| Stock-based compensation expense |
12,279 | 4,582 | ||||||
| Compensation charges associated with acquisition-related contingent consideration obligations |
(2,806 | ) | 1,003 | |||||
| Acquisition-related costs |
91 | 370 | ||||||
| Fair value adjustments to acquisition-related contingent consideration |
(52,867 | ) | 17,979 | |||||
| Costs associated with potential business dispositions |
4,610 | 14,560 | ||||||
| Impairment and loss on disposition, net |
40,334 | 638 | ||||||
| Interest expense recorded in connection with fees paid for certain debt modifications and the termination of our senior secured credit facility |
11,667 | 728 | ||||||
| Interest accretion associated with acquisition-related compensation charges |
(441 | ) | 193 | |||||
| Expense associated with extinguishment of debt |
3,480 | — | ||||||
| Amortization of acquisition-related intangible assets, restructuring, fair value adjustments to acquisition-related contingent consideration, and impairment, net of gain on divestiture - Discontinued operations, net of tax |
(217,589 | ) | (4,837 | ) | ||||
| Income tax effects on items above |
(32,642 | ) | (30,373 | ) | ||||
|
|
|
|
|
|||||
| Non-GAAP adjusted net income available to common stockholders |
$ | 94,171 | $ | 82,068 | ||||
|
|
|
|
|
|||||
| Income (loss) per diluted common share from continuing operations |
$ | 0.02 | $ | (0.87 | ) | |||
| Income per diluted common share from discontinued operations |
2.52 | 0.13 | ||||||
|
|
|
|
|
|||||
| Net income (loss) per diluted common share |
$ | 2.54 | $ | (0.74 | ) | |||
|
|
|
|
|
|||||
| Weighted average shares - diluted |
86,070 | 82,518 | ||||||
|
|
|
|
|
|||||
| Non-GAAP adjusted income per diluted common share from continuing operations |
$ | 1.07 | $ | 0.90 | ||||
| Non-GAAP adjusted income (loss) per diluted common share from discontinued operations |
(0.01 | ) | 0.06 | |||||
|
|
|
|
|
|||||
| Non-GAAP adjusted net income per diluted common share |
$ | 1.06 | $ | 0.96 | ||||
|
|
|
|
|
|||||
| Non-GAAP adjusted weighted average shares - diluted |
99,747 | 87,150 | ||||||
|
|
|
|
|
|||||
| (1) | In calculating “Non-GAAP adjusted operating income” and “Non-GAAP adjusted net income available to common stockholders”, 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 available to common stockholders” 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 available to common stockholders” presented in this press release may not be comparable to similar measures used by other companies. |
Alere Inc. and Subsidiaries
Selected Consolidated Revenues
(in thousands)
| Q2 2015 | YTD 2015 | Q2 2014 | YTD 2014 | % Change Q2 15 v. Q2 14 |
% Change YTD 15 v. YTD 14 |
|||||||||||||||||||
| Professional diagnostics segment (1) |
||||||||||||||||||||||||
| Cardiometabolic |
$ | 213,661 | $ | 416,504 | $ | 209,241 | $ | 423,204 | 2 | % | -2 | % | ||||||||||||
| Infectious disease |
176,630 | 355,386 | 175,001 | 342,614 | 1 | % | 4 | % | ||||||||||||||||
| Toxicology |
157,495 | 306,251 | 169,647 | 325,180 | -7 | % | -6 | % | ||||||||||||||||
| Other (2) |
51,031 | 102,163 | 65,187 | 125,803 | -22 | % | -19 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total professional diagnostics segment(1) (2) |
598,817 | 1,180,304 | 619,076 | 1,216,801 | -3 | % | -3 | % | ||||||||||||||||
| Consumer diagnostics segment (1) |
24,645 | 46,613 | 21,718 | 44,020 | 13 | % | 6 | % | ||||||||||||||||
| License and royalty revenue |
5,694 | 10,392 | 6,604 | 11,816 | -14 | % | -12 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Net revenue |
$ | 629,156 | $ | 1,237,309 | $ | 647,398 | $ | 1,272,637 | -3 | % | -3 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| (1) | Revenues have been restated for the impact of a change in segment reporting due to the divestiture of our health management business. |
| (2) | Revenues are presented in accordance with generally accepted accounting principles and exclude an adjustment of $0.2 million and $0.4 million, and $0.4 million and $0.8 million related to acquired software license contracts which were not recognized during the three and six months ended June 30, 2015 and 2014, respectively, due to business combination accounting rules. |
Alere Inc. and Subsidiaries
Reconciliation of Operating Income (Loss) to Non-GAAP Adjusted Operating Income (Loss)
(in thousands)
| For the Three Months Ended June 30, 2015 | ||||||||||||||||
| Operating Segment | Professional Diagnostics |
Consumer Diagnostics |
Corporate | Total | ||||||||||||
| Net revenue |
$ | 604,511 | $ | 24,645 | $ | — | $ | 629,156 | ||||||||
| Adjustment related to acquired software license contracts (1) |
200 | — | — | 200 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Non-GAAP adjusted net revenue |
$ | 604,711 | $ | 24,645 | $ | — | $ | 629,356 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating income (loss) |
$ | 115,302 | $ | 1,079 | $ | (24,544 | ) | $ | 91,837 | |||||||
| Adjustment related to acquired software license contracts (1) |
200 | — | — | 200 | ||||||||||||
| Amortization of acquisition-related intangible assets |
49,198 | 9 | 39 | 49,246 | ||||||||||||
| Restructuring charges |
4,290 | — | 563 | 4,853 | ||||||||||||
| Stock-based compensation expense |
— | — | 7,130 | 7,130 | ||||||||||||
| Compensation charges associated with acquisition-related contingent consideration obligations |
(3,412 | ) | — | — | (3,412 | ) | ||||||||||
| Acquisition-related costs |
— | — | 40 | 40 | ||||||||||||
| Fair value adjustments to acquisition-related contingent consideration |
(41,090 | ) | — | — | (41,090 | ) | ||||||||||
| Costs associated with potential business dispositions |
879 | — | — | 879 | ||||||||||||
| Impairment and loss on disposition, net |
5,542 | — | — | 5,542 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Non-GAAP adjusted operating income (loss) |
$ | 130,909 | $ | 1,088 | $ | (16,772 | ) | $ | 115,225 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Non-GAAP adjusted operating income (loss) as % of Non-GAAP adjusted net revenue |
21.6 | % | 4.4 | % | 18.3 | % | ||||||||||
|
|
|
|
|
|
|
|||||||||||
| (1) | Estimated revenue related to acquired software license contracts that was not recognized during the second quarter of 2015 due to business combination accounting rules. |
| For the Three Months Ended June 30, 2014 | ||||||||||||||||
| Operating Segment | Professional Diagnostics |
Consumer Diagnostics |
Corporate | Total | ||||||||||||
| Net revenue (1) |
$ | 625,680 | $ | 21,718 | $ | — | $ | 647,398 | ||||||||
| Adjustment related to acquired software license contracts (2) |
373 | — | — | 373 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Non-GAAP adjusted net revenue |
$ | 626,053 | $ | 21,718 | $ | — | $ | 647,771 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating income (loss) |
$ | 14,455 | $ | 702 | $ | (20,906 | ) | $ | (5,749 | ) | ||||||
| Adjustment related to acquired software license contracts (2) |
373 | — | — | 373 | ||||||||||||
| Amortization of acquisition-related intangible assets |
58,661 | 174 | — | 58,835 | ||||||||||||
| Restructuring charges |
11,325 | — | 4,055 | 15,380 | ||||||||||||
| Stock-based compensation expense |
— | — | (1,122 | ) | (1,122 | ) | ||||||||||
| Compensation charges associated with acquisition-related contingent consideration obligations |
581 | — | — | 581 | ||||||||||||
| Acquisition-related costs |
— | — | 49 | 49 | ||||||||||||
| Fair value adjustments to acquisition-related contingent consideration |
16,479 | — | 200 | 16,679 | ||||||||||||
| Costs associated with potential business dispositions |
11,600 | — | — | 11,600 | ||||||||||||
| Loss on disposition |
638 | — | — | 638 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Non-GAAP adjusted operating income (loss) |
$ | 114,112 | $ | 876 | $ | (17,724 | ) | $ | 97,264 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Non-GAAP adjusted operating income (loss) as % of Non-GAAP adjusted net revenue |
18.2 | % | 4.0 | % | 15.0 | % | ||||||||||
|
|
|
|
|
|
|
|||||||||||
| (1) | Net revenue has been restated for the impact of a change in segment reporting due to the divestiture of our health management business. |
| (2) | Estimated revenue related to acquired software license contracts that was not recognized during the second quarter of 2014 due to business combination accounting rules. |
Comments:
In calculating “Non-GAAP adjusted operating income (loss)” in the schedule presented above, the Company excludes from “Operating income (loss)” (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 (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 (loss)” for the costs associated with litigation, including payments made or received through settlements. It should be noted that “Non-GAAP adjusted operating income (loss)” is not a standard financial measurement under accounting principles generally accepted in the United States of America (“GAAP”) and should not be considered as an alternative to “Operating income (loss)” 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 (loss)” presented in this schedule may not be comparable to similar measures used by other companies.
Reference should also be made to the Company’s financial results contained in our earnings press release respective to the periods presented in this schedule, which include a more detailed discussion of the adjustments to the GAAP operating results presented above.
Alere Inc. and Subsidiaries
Reconciliation of Operating Income (Loss) to Non-GAAP Adjusted Operating Income (Loss)
(in thousands)
| For the Six Months Ended June 30, 2015 | ||||||||||||||||
| Operating Segment | Professional Diagnostics | Consumer Diagnostics | Corporate | Total | ||||||||||||
| Net revenue |
$ | 1,190,696 | $ | 46,613 | $ | — | $ | 1,237,309 | ||||||||
| Adjustment related to acquired software license contracts (1) |
447 | — | — | 447 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Non-GAAP adjusted net revenue |
$ | 1,191,143 | $ | 46,613 | $ | — | $ | 1,237,756 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating income (loss) |
$ | 165,090 | $ | 3,283 | $ | (49,129 | ) | $ | 119,244 | |||||||
| Adjustment related to acquired software license contracts (1) |
447 | — | — | 447 | ||||||||||||
| Amortization of acquisition-related intangible assets |
99,920 | 19 | — | 99,939 | ||||||||||||
| Restructuring charges |
8,525 | — | 598 | 9,123 | ||||||||||||
| Stock-based compensation expense |
— | — | 12,279 | 12,279 | ||||||||||||
| Compensation charges associated with acquisition-related contingent consideration obligations |
(2,806 | ) | — | — | (2,806 | ) | ||||||||||
| Acquisition-related costs |
— | — | 91 | 91 | ||||||||||||
| Fair value adjustments to acquisition-related contingent consideration |
— | — | (52,867 | ) | (52,867 | ) | ||||||||||
| Costs associated with potential business dispositions |
4,610 | — | — | 4,610 | ||||||||||||
| Impairment and gain (loss) on dispositions, net |
40,334 | — | — | 40,334 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Non-GAAP adjusted operating income (loss) |
$ | 316,120 | $ | 3,302 | $ | (89,028 | ) | $ | 230,394 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Non-GAAP adjusted operating income (loss) as % of Non-GAAP adjusted net revenue |
26.5 | % | 7.1 | % | 18.6 | % | ||||||||||
|
|
|
|
|
|
|
|||||||||||
| (1) | Estimated revenue related to acquired software license contracts that was not recognized during the six months ended June 30, 2015 due to business combination accounting rules. |
| For the Six Months Ended June 30, 2014 | ||||||||||||||||
| Operating Segment | Professional Diagnostics | Consumer Diagnostics | Corporate | Total | ||||||||||||
| Net revenue (1) |
$ | 1,227,306 | $ | 45,331 | $ | — | $ | 1,272,637 | ||||||||
| Adjustment related to acquired software license contracts (2) |
792 | — | — | 792 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Non-GAAP adjusted net revenue |
$ | 1,228,098 | $ | 45,331 | $ | — | $ | 1,273,429 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating income (loss) |
$ | 68,624 | $ | 2,711 | $ | (42,088 | ) | $ | 29,247 | |||||||
| Adjustment related to acquired software license contracts (2) |
792 | — | — | 792 | ||||||||||||
| Amortization of acquisition-related intangible assets |
117,332 | 463 | — | 117,795 | ||||||||||||
| Restructuring charges |
15,628 | — | 4,150 | 19,778 | ||||||||||||
| Stock-based compensation expense |
— | — | 4,582 | 4,582 | ||||||||||||
| Compensation charges associated with acquisition-related contingent consideration obligations |
1,003 | — | — | 1,003 | ||||||||||||
| Non-cash charge associated with acquired inventory |
— | — | — | — | ||||||||||||
| Acquisition-related costs |
— | — | 370 | 370 | ||||||||||||
| Fair value adjustments to acquisition-related contingent consideration |
17,679 | — | 300 | 17,979 | ||||||||||||
| Costs associated with proxy contest |
— | — | — | — | ||||||||||||
| Costs associated with potential business dispositions |
14,560 | — | — | 14,560 | ||||||||||||
| Loss on disposition |
638 | — | — | 638 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Non-GAAP adjusted operating income (loss) |
$ | 236,256 | $ | 3,174 | $ | (32,686 | ) | $ | 206,744 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Non-GAAP adjusted operating income (loss) as % of Non-GAAP adjusted net revenue |
19.2 | % | 7.0 | % | 16.2 | % | ||||||||||
|
|
|
|
|
|
|
|||||||||||
| (1) | Net revenue has been restated for the impact of a change in segment reporting due to the divestiture of our health management business. |
| (2) | Estimated revenue related to acquired software license contracts that was not recognized during the six months ended June 30, 2014 due to business combination accounting rules. |
Comments:
In calculating “Non-GAAP adjusted operating income (loss)” in the schedule presented above, the Company excludes from “Operating income (loss)” (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 (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 (loss)” for the costs associated with litigation, including payments made or received through settlements. It should be noted that “Non-GAAP adjusted operating income (loss)” is not a standard financial measurement under accounting principles generally accepted in the United States of America (“GAAP”) and should not be considered as an alternative to “Operating income (loss)” 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 (loss)” presented in this schedule may not be comparable to similar measures used by other companies.
Reference should also be made to the Company’s financial results contained in our earnings press release respective to the periods presented in this schedule, which include a more detailed discussion of the adjustments to the GAAP operating results presented above.
Alere Inc. and Subsidiaries
Reconciliations to Non-GAAP Adjusted P&L Categories
(in thousands)
| Three Months Ended June 30, 2015 |
Three Months Ended June 30, 2014 |
|||||||
| Net revenue |
$ | 629,156 | $ | 647,398 | ||||
| Adjustment related to acquired software license contracts |
200 | 373 | ||||||
|
|
|
|
|
|||||
| Non-GAAP adjusted net revenue |
$ | 629,356 | $ | 647,771 | ||||
|
|
|
|
|
|||||
| Cost of net revenue |
$ | 336,582 | $ | 348,705 | ||||
| Less adjustments: |
||||||||
| Amortization of acquisition-related intangible assets |
(13,112 | ) | (15,682 | ) | ||||
| Restructuring charges |
(897 | ) | (220 | ) | ||||
| Costs associated with potential business dispositions |
— | — | ||||||
| Stock-based compensation expense |
(287 | ) | (285 | ) | ||||
|
|
|
|
|
|||||
| Non-GAAP adjusted cost of net revenue |
$ | 322,286 | $ | 332,518 | ||||
|
|
|
|
|
|||||
| Non-GAAP adjusted gross profit |
$ | 307,070 | $ | 315,253 | ||||
|
|
|
|
|
|||||
| Three Months Ended June 30, 2015 |
Three Months Ended June 30, 2014 |
|||||||
| Research and development |
$ | 27,198 | $ | 37,430 | ||||
| Less adjustments: |
||||||||
| Amortization of acquisition-related intangible assets |
(923 | ) | (1,184 | ) | ||||
| Restructuring charges |
(155 | ) | (3,031 | ) | ||||
| Stock-based compensation expense |
(282 | ) | 1,811 | |||||
|
|
|
|
|
|||||
| Non-GAAP adjusted research and development |
$ | 25,838 | $ | 35,026 | ||||
|
|
|
|
|
|||||
| Three Months Ended June 30, 2015 |
Three Months Ended June 30, 2014 |
|||||||
| Selling, general and administrative |
$ | 167,997 | $ | 266,374 | ||||
| Less adjustments: |
||||||||
| Amortization of acquisition-related intangible assets |
(35,211 | ) | (41,969 | ) | ||||
| Restructuring charges |
(3,801 | ) | (12,129 | ) | ||||
| Stock-based compensation expense |
(6,561 | ) | (404 | ) | ||||
| Compensation charges associated with acquisition-related contingent consideration obligations |
3,412 | (581 | ) | |||||
| Acquisition-related costs |
(40 | ) | (49 | ) | ||||
| Fair value adjustments to acquisition-related contingent consideration |
41,090 | (16,679 | ) | |||||
| Costs associated with potential business dispositions |
(879 | ) | (11,600 | ) | ||||
|
|
|
|
|
|||||
| Non-GAAP adjusted selling, general and administrative |
$ | 166,007 | $ | 182,963 | ||||
|
|
|
|
|
|||||
| Three Months Ended June 30, 2015 |
Three Months Ended June 30, 2014 |
|||||||
| Impairment and loss on disposition, net |
$ | 5,542 | $ | 638 | ||||
| Impairment and loss on disposition, net |
(5,542 | ) | (638 | ) | ||||
|
|
|
|
|
|||||
| Non-GAAP adjusted impairment and loss on disposition, net |
$ | — | $ | — | ||||
|
|
|
|
|
|||||
| Three Months Ended June 30, 2015 |
Three Months Ended June 30, 2014 |
|||||||
| Interest and other income (expense), net |
$ | (55,234 | ) | $ | (48,815 | ) | ||
| Less adjustments: |
||||||||
| Restructuring charges |
6 | 11 | ||||||
| Interest expense recorded in connection with fees paid for certain debt modifications and the termination of our senior secured credit facility |
11,303 | 364 | ||||||
| Interest accretion associated with acquisition-related compensation charges |
(545 | ) | 98 | |||||
| Expense associated with extinguishment of debt |
3,480 | — | ||||||
|
|
|
|
|
|||||
| Non-GAAP adjusted interest and other income (expense), net |
$ | (40,990 | ) | $ | (48,342 | ) | ||
|
|
|
|
|
|||||
| Three Months Ended June 30, 2015 |
Three Months Ended June 30, 2014 |
|||||||
| Provision for income taxes |
$ | 17,701 | $ | 5,464 | ||||
| Add: Income tax effects on Non-GAAP adjustments |
4,023 | 6,913 | ||||||
|
|
|
|
|
|||||
| Non-GAAP adjusted provision for income taxes |
$ | 21,724 | $ | 12,377 | ||||
|
|
|
|
|
|||||
| Three Months Ended June 30, 2015 |
Three Months Ended June 30, 2014 |
|||||||
| Equity earnings of unconsolidated entities, net of tax |
$ | 1,361 | $ | 2,087 | ||||
| Less adjustments: |
||||||||
| Amortization of acquisition-related intangible assets |
105 | 150 | ||||||
| Income tax effects on items above |
— | — | ||||||
|
|
|
|
|
|||||
| Non-GAAP adjusted equity earnings of unconsolidated entities, net of tax |
$ | 1,466 | $ | 2,237 | ||||
|
|
|
|
|
|||||
Alere Inc. and Subsidiaries
Reconciliations to Non-GAAP Adjusted P&L Categories
(in thousands)
| Six Months Ended June 30, 2015 |
Six Months Ended June 30, 2014 |
|||||||
| Net revenue |
$ | 1,237,309 | $ | 1,272,637 | ||||
| Adjustment related to acquired software license contracts |
447 | 792 | ||||||
|
|
|
|
|
|||||
| Non-GAAP adjusted net revenue |
$ | 1,237,756 | $ | 1,273,429 | ||||
|
|
|
|
|
|||||
| Cost of net revenue |
$ | 652,750 | $ | 663,586 | ||||
| Less adjustments: |
||||||||
| Amortization of acquisition-related intangible assets |
(27,308 | ) | (31,558 | ) | ||||
| Restructuring charges |
(2,399 | ) | (1,053 | ) | ||||
| Stock-based compensation expense |
(540 | ) | (572 | ) | ||||
| Non-cash charge associated with acquired inventory |
— | — | ||||||
| Costs associated with potential business dispositions |
(391 | ) | — | |||||
|
|
|
|
|
|||||
| Non-GAAP adjusted cost of net revenue |
$ | 622,112 | $ | 630,403 | ||||
|
|
|
|
|
|||||
| Non-GAAP adjusted gross profit |
$ | 615,644 | $ | 643,026 | ||||
|
|
|
|
|
|||||
| Six Months Ended June 30, 2015 |
Six Months Ended June 30, 2014 |
|||||||
| Research and development |
$ | 55,214 | $ | 76,129 | ||||
| Less adjustments: |
||||||||
| Amortization of acquisition-related intangible assets |
(1,784 | ) | (2,349 | ) | ||||
| Restructuring charges |
(648 | ) | (3,031 | ) | ||||
| Stock-based compensation expense |
(606 | ) | 620 | |||||
|
|
|
|
|
|||||
| Non-GAAP adjusted research and development |
$ | 52,176 | $ | 71,369 | ||||
|
|
|
|
|
|||||
| Six Months Ended June 30, 2015 |
Six Months Ended June 30, 2014 |
|||||||
| Selling, general and administrative |
$ | 369,767 | $ | 503,037 | ||||
| Less adjustments: |
||||||||
| Amortization of acquisition-related intangible assets |
(70,847 | ) | (83,888 | ) | ||||
| Restructuring charges |
(6,076 | ) | (15,694 | ) | ||||
| Stock-based compensation expense |
(11,133 | ) | (4,630 | ) | ||||
| Compensation charges associated with acquisition-related contingent consideration obligations |
2,806 | (1,003 | ) | |||||
| Acquisition-related costs |
(91 | ) | (370 | ) | ||||
| Fair value adjustments to acquisition-related contingent consideration |
52,867 | (17,979 | ) | |||||
| Costs associated with potential business dispositions |
(4,219 | ) | (14,560 | ) | ||||
|
|
|
|
|
|||||
| Non-GAAP adjusted selling, general and administrative |
$ | 333,074 | $ | 364,913 | ||||
|
|
|
|
|
|||||
| Six Months Ended June 30, 2015 |
Six Months Ended June 30, 2014 |
|||||||
| Impairment and loss on disposition, net |
$ | 40,334 | $ | 638 | ||||
| Impairment and loss on disposition, net |
(40,334 | ) | (638 | ) | ||||
|
|
|
|
|
|||||
| Non-GAAP adjusted impairment and loss on disposition, net |
$ | — | $ | — | ||||
|
|
|
|
|
|||||
| Six Months Ended June 30, 2015 |
Six Months Ended June 30, 2014 |
|||||||
| Interest and other income (expense), net |
$ | (102,935 | ) | $ | (93,693 | ) | ||
| Less adjustments: |
||||||||
| Restructuring charges |
13 | 23 | ||||||
| Interest expense recorded in connection with fees paid for certain debt modifications and the termination of our senior secured credit facility |
11,667 | 728 | ||||||
| Interest accretion associated with acquisition-related compensation charges |
(441 | ) | 193 | |||||
| Expense associated with extinguishment of debt |
3,480 | — | ||||||
|
|
|
|
|
|||||
| Non-GAAP adjusted interest and other income (expense), net |
$ | (88,216 | ) | $ | (92,749 | ) | ||
|
|
|
|
|
|||||
| Six Months Ended June 30, 2015 |
Six Months Ended June 30, 2014 |
|||||||
| Provision for income taxes |
$ | 8,915 | $ | 3,784 | ||||
| Add: Income tax effects on Non-GAAP adjustments |
32,684 | 30,431 | ||||||
|
|
|
|
|
|||||
| Non-GAAP adjusted provision for income taxes |
$ | 41,599 | $ | 34,215 | ||||
|
|
|
|
|
|||||
| Six Months Ended June 30, 2015 |
Six Months Ended June 30, 2014 |
|||||||
| Equity earnings of unconsolidated entities, net of tax |
$ | 5,320 | $ | 7,439 | ||||
| Less adjustments: |
||||||||
| Amortization of acquisition-related intangible assets |
210 | 298 | ||||||
| Income tax effects on items above |
— | — | ||||||
|
|
|
|
|
|||||
| Non-GAAP adjusted equity earnings of unconsolidated entities, net of tax |
$ | 5,530 | $ | 7,737 | ||||
|
|
|
|
|
|||||
Alere Inc. and Subsidiaries
Reconciliations of Gross Profit/Margin to Non-GAAP Adjusted Gross Profit/Margin
(in thousands)
| Alere Consolidated | Three Months Ended June 30, 2014 (1) |
Three Months Ended March 31, 2015 |
Three Months Ended June 30, 2015 |
|||||||||||||||||||||
| Net revenue |
$ | 647,398 | $ | 608,153 | $ | 629,156 | ||||||||||||||||||
| Adjustment related to acquired software license contracts |
373 | 247 | 200 | |||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||
| Non-GAAP adjusted net revenue |
647,771 | 608,400 | 629,356 | |||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||
| Cost of net revenue |
348,705 | 316,168 | 336,582 | |||||||||||||||||||||
| Less adjustments: |
||||||||||||||||||||||||
| Amortization of acquisition-related intangible assets |
15,682 | 14,196 | 13,112 | |||||||||||||||||||||
| Costs associated with potential business dispositions |
— | 391 | — | |||||||||||||||||||||
| Stock-based compensation expense |
285 | 253 | 287 | |||||||||||||||||||||
| Restructuring charges |
220 | 1,502 | 897 | |||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||
| Non-GAAP adjusted cost of net revenue |
332,518 | 299,826 | 322,286 | |||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||
| Non-GAAP adjusted gross profit/margin |
$ | 315,253 | 48.7 | % | $ | 308,574 | 50.7 | % | $ | 307,070 | 48.8 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Professional Diagnostics Segment | Three Months Ended June 30, 2014 (1) |
Three Months Ended March 31, 2015 |
Three Months Ended June 30, 2015 |
|||||||||||||||||||||
| Net product sales and services revenue |
$ | 619,076 | $ | 581,487 | $ | 598,817 | ||||||||||||||||||
| Adjustment related to acquired software license contracts |
373 | 247 | 200 | |||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||
| Non-GAAP adjusted net product sales and services revenue |
619,449 | 581,734 | 599,017 | |||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||
| Cost of net revenue |
328,318 | 295,416 | 312,068 | |||||||||||||||||||||
| Less adjustments: |
||||||||||||||||||||||||
| Amortization of acquisition-related intangible assets |
15,657 | 14,196 | 13,112 | |||||||||||||||||||||
| Costs associated with potential business dispositions |
— | 391 | — | |||||||||||||||||||||
| Stock-based compensation expense |
285 | 253 | 287 | |||||||||||||||||||||
| Restructuring charges |
220 | 1,502 | 897 | |||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||
| Non-GAAP adjusted cost of net revenue |
312,156 | 279,074 | 297,772 | |||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||
| Non-GAAP adjusted gross profit/margin |
$ | 307,293 | 49.6 | % | $ | 302,660 | 52.0 | % | $ | 301,245 | 50.3 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Note:
| (1) | Restated to reflect the impact of discontinued operations and the impact of a change in segment reporting. |
Alere Inc. and Subsidiaries
Reconciliation of Net Income to Non-GAAP EBITDA
(in thousands)
| Three Months Ended June 30, 2015 |
Six Months Ended June 30, 2015 |
|||||||
| Net income (1) |
$ | 20,263 | $ | 229,491 | ||||
| Less: Income from discontinued operations, net of tax |
— | 216,777 | ||||||
|
|
|
|
|
|||||
| Income from continuing operations |
20,263 | 12,714 | ||||||
| Adjustment related to acquired software license contracts |
200 | 447 | ||||||
| Income tax provision |
17,701 | 8,915 | ||||||
| Depreciation and amortization |
72,749 | 147,222 | ||||||
| Interest, net |
58,765 | 104,597 | ||||||
| Non-cash stock-based compensation expense |
7,130 | 12,279 | ||||||
| Non-cash fair value adjustments to acquisition-related contingent consideration |
(41,090 | ) | (52,867 | ) | ||||
| Impairment and loss on dispositions, net |
5,542 | 40,334 | ||||||
|
|
|
|
|
|||||
| Non-GAAP EBITDA |
$ | 141,260 | $ | 273,641 | ||||
|
|
|
|
|
|||||
| (1) | Net income for the three months and six months ended June 30, 2015 includes non-interest related restructuring charges of $4.8 million and $9.1 million, respectively, and $0.9 million and $4.6 million of costs associated with potential business dispositions, respectively, which have not been added back for purposes of computing Non-GAAP EBITDA. The six months ended June 30, 2015 also includes $0.1 million of acquisition-related costs. |
| (2) | Includes $3.5 million of expense associated with the extinguishment of debt during the three and six months ended June 30, 2015. |
Reconciliation of Cash Flow from Operating Activities to Free Cash Flow
(in thousands)
| Three Months Ended June 30, 2015 |
Six Months Ended June 30, 2015 |
|||||||
| Cash flow from operating activities |
$ | 4,148 | $ | 32,526 | ||||
| Capital expenditures |
(21,637 | ) | (47,284 | ) | ||||
|
|
|
|
|
|||||
| Free cash flow |
$ | (17,489 | ) | $ | (14,758 | ) | ||
|
|
|
|
|
|||||