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Exhibit 99.01

 

LOGO

 

CONTACTS:

 

 
 

For Media Inquiries:

 

 

For Investor Inquiries:

 

 

Jared Tipton

Cepheid Corporate Communications

Tel: (408) 400 8377

communications@cepheid.com

 

Jacquie Ross

Cepheid Investor Relations

Tel: (408) 400 8329

investor.relations@cepheid.com

Cepheid

904 Caribbean Drive

Sunnyvale, CA 94089

Telephone: (408) 541 4191

Fax: (408) 541 4192

   

CEPHEID REPORTS FOURTH QUARTER AND FULL YEAR 2011 RESULTS

Record GeneXpert® System Placements Contribute to 39% Growth in Clinical Business

SUNNYVALE, California, January 26, 2012 – 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
December 31,
    Years Ended December 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 31,
2011
    December 31,
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
December 31,
    Years Ended
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