Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - ALERE INC. | d619161d8k.htm |
Exhibit 99.1
| Contact: | Doug Guarino | Director of Corporate Relations | 781-647-3900 | |||||
| Jon Russell | Vice President of Finance |
ALERE INC. ANNOUNCES
THIRD QUARTER 2013 RESULTS
WALTHAM, MA…October 29, 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 September 30, 2013.
Ron Zwanziger, Chairman, Chief Executive Officer and President of Alere said, “We are pleased to report a very strong quarter for Alere. The combination of continued excellent organic growth, coupled with good expense control, demonstrates our continued momentum and commitment to enhancing value for our shareholders and delivering against the three-point strategic plan that we implemented in November 2012.”
Financial results for the third quarter of 2013:
| • | Net revenue of $753.9 million for the third quarter of 2013, compared to $691.4 million for the third quarter of 2012. Non-GAAP adjusted net revenue was $754.4 million for the third quarter of 2013, compared to $692.3 million for the third quarter of 2012. |
| • | Net loss of $24.8 million attributable to common stockholders of Alere Inc., and respective net loss per diluted common share of $0.30, for the third quarter of 2013, compared to net loss of $9.2 million attributable to common stockholders of Alere Inc., and respective net loss per diluted common share of $0.11, for the third quarter of 2012. |
| • | Non-GAAP adjusted net income per diluted common share of $0.59 for the third quarter of 2013, compared to non-GAAP adjusted net income per diluted common share of $0.43 for the third quarter of 2012. |
| • | Net product and services revenue from our Professional Diagnostics segment was $587.3 million in the third quarter of 2013, compared to net product and services revenue of $528.8 million in the third quarter of 2012. Non-GAAP adjusted net product and services revenue from our Professional Diagnostics segment was $587.8 million in the third quarter of 2013, compared to non-GAAP adjusted net product and services revenue of $529.7 million in the third quarter of 2012. Recent professional diagnostics acquisitions contributed $30.6 million of incremental net revenue compared to the third quarter of 2012, offset by a reduction in revenue of $2.3 million related to dispositions in the quarter. |
| • | North American influenza sales increased to $18.3 million for the third quarter of 2013, from $9.9 million for the third quarter of 2012. |
| • | 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 9.1%. |
| • | Net product and services revenue from our Health Information Solutions segment was $134.2 million in the third quarter of 2013, compared to $135.1 million in the third quarter of 2012 and $134.8 million in the second quarter of 2013. |
| • | Included in interest and other income (expense), net is a provision of $5.0 million to reflect an estimate of the settlement or litigation costs which we may incur associated with an ongoing dispute with a customer in our U.S. toxicology business. |
The Company’s GAAP results for the third quarter of 2013 exclude $0.5 million of revenue associated with acquired software license contracts that are not recognized due to business combination accounting rules and include amortization of $82.4 million, $7.8 million of restructuring charges, $5.7 million of stock-based compensation expense, $0.5 million of acquisition-related costs recorded in accordance with ASC 805, Business Combinations, $2.7 million of expense recorded for fair value adjustments to acquisition-related contingent consideration, $0.4 million of interest expense recorded in connection with fees paid for certain debt modifications, $0.8 million in compensation charges and $0.1 million of related interest accretion associated with acquisition-related contingent consideration obligations, a $0.7 million charge associated with the write-up to fair market value of inventory acquired in connection with the acquisition of Epocal Inc., $5.5 million of costs associated with the proxy contest, a $5.9 million loss associated with the disposition of our Spinreact, S.A. subsidiary located in Spain and a $0.04 million adjustment to the bargain purchase gain in connection with our acquisition of the Liberty business. The Company’s GAAP results for the third quarter of 2012 exclude $0.9 million of revenue associated with acquired software license contracts that are not recognized due to business combination accounting rules and include amortization of $83.1 million, $3.3 million of restructuring charges, $3.6 million of stock-based compensation expense, $0.8 million of acquisition-related costs recorded in accordance with ASC 805, Business Combinations, and $1.3 million of interest expense associated with fees paid for modification of certain debt agreements, offset by $15.1 million of income recorded for fair value adjustments to acquisition-related contingent consideration obligations. 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 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.
The Company will host a conference call beginning at 8:30 a.m. (Eastern Time) today, October 29, 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 material 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 website 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 10036058. The replay will also be available via online webcast at http://www.videonewswire.com/event or via the Alere website 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 website (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 website.
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 September 30, | ||||||||
| 2013 | 2012 | |||||||
| Net product sales and services revenue |
$ | 749,698 | $ | 686,228 | ||||
| License and royalty revenue |
4,184 | 5,188 | ||||||
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| Net revenue |
753,882 | 691,416 | ||||||
| Cost of net revenue |
385,236 | 345,641 | ||||||
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| Gross profit |
368,646 | 345,775 | ||||||
| Gross margin |
49 | % | 50 | % | ||||
| Operating expenses: |
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| Research and development |
40,498 | 40,562 | ||||||
| Selling, general and administrative |
301,964 | 266,481 | ||||||
| Loss on disposition |
5,885 | — | ||||||
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| Operating income |
20,299 | 38,732 | ||||||
| Interest and other income (expense), net |
(62,289 | ) | (55,933 | ) | ||||
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| Loss before benefit for income taxes |
(41,990 | ) | (17,201 | ) | ||||
| Benefit for income taxes |
(17,148 | ) | (10,677 | ) | ||||
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| Loss before equity earnings of unconsolidated entities, net of tax |
(24,842 | ) | (6,524 | ) | ||||
| Equity earnings of unconsolidated entities, net of tax |
5,753 | 3,007 | ||||||
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| Net loss |
(19,089 | ) | (3,517 | ) | ||||
| Less: Net income attributable to non-controlling interests |
359 | 286 | ||||||
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| Net loss attributable to Alere Inc. and Subsidiaries |
(19,448 | ) | (3,803 | ) | ||||
| Preferred stock dividends |
(5,367 | ) | (5,352 | ) | ||||
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| Net loss available to common stockholders |
$ | (24,815 | ) | $ | (9,155 | ) | ||
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| Basic and diluted net loss per common share |
$ | (0.30 | ) | $ | (0.11 | ) | ||
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| Weighted-average shares - basic and diluted |
81,735 | 80,792 | ||||||
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Alere Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
| Nine Months Ended September 30, | ||||||||
| 2013 | 2012 | |||||||
| Net product sales and services revenue |
$ | 2,244,003 | $ | 2,051,729 | ||||
| License and royalty revenue |
13,113 | 11,333 | ||||||
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| Net revenue |
2,257,116 | 2,063,062 | ||||||
| Cost of net revenue |
1,139,726 | 1,008,608 | ||||||
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| Gross profit |
1,117,390 | 1,054,454 | ||||||
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| Gross margin |
50 | % | 51 | % | ||||
| Operating expenses: |
||||||||
| Research and development |
122,452 | 120,009 | ||||||
| Selling, general and administrative |
893,861 | 826,301 | ||||||
| Loss on disposition |
5,885 | — | ||||||
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| Operating income |
95,192 | 108,144 | ||||||
| Interest and other income (expense), net |
(211,548 | ) | (146,549 | ) | ||||
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| Loss before benefit for income taxes |
(116,356 | ) | (38,405 | ) | ||||
| Benefit for income taxes |
(36,152 | ) | (12,621 | ) | ||||
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| Loss before equity earnings of unconsolidated entities, net of tax |
(80,204 | ) | (25,784 | ) | ||||
| Equity earnings of unconsolidated entities, net of tax |
13,238 | 10,417 | ||||||
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| Net loss |
(66,966 | ) | (15,367 | ) | ||||
| Less: Net income attributable to non-controlling interests |
601 | 137 | ||||||
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| Net loss attributable to Alere Inc. and Subsidiaries |
(67,567 | ) | (15,504 | ) | ||||
| Preferred stock dividends |
(15,926 | ) | (15,940 | ) | ||||
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| Net loss available to common stockholders |
$ | (83,493 | ) | $ | (31,444 | ) | ||
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| Basic and diluted net loss per common share |
$ | (1.03 | ) | $ | (0.39 | ) | ||
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| Weighted-average shares - basic and diluted |
81,417 | 80,492 | ||||||
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Alere Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
| September 30, | December 31, | |||||||
| 2013 | 2012 | |||||||
| ASSETS |
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| CURRENT ASSETS: |
||||||||
| Cash and cash equivalents |
$ | 353,993 | $ | 328,346 | ||||
| Restricted cash |
7,905 | 3,076 | ||||||
| Marketable securities |
820 | 904 | ||||||
| Accounts receivable, net |
568,873 | 524,332 | ||||||
| Inventories, net |
370,448 | 337,121 | ||||||
| Prepaid expenses and other current assets |
172,778 | 212,958 | ||||||
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| Total current assets |
1,474,817 | 1,406,737 | ||||||
| PROPERTY, PLANT AND EQUIPMENT, NET |
544,271 | 534,469 | ||||||
| GOODWILL AND OTHER INTANGIBLE ASSETS, NET |
4,909,986 | 4,919,081 | ||||||
| RESTRICTED CASH - NON-CURRENT |
29,045 | — | ||||||
| DEFERRED FINANCING COSTS AND OTHER ASSETS, NET |
196,500 | 207,641 | ||||||
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| Total assets |
$ | 7,154,619 | $ | 7,067,928 | ||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY |
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| CURRENT LIABILITIES: |
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| Current portion of long-term debt and capital lease obligations |
$ | 54,259 | $ | 66,916 | ||||
| Other current liabilities |
642,219 | 581,893 | ||||||
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| Total current liabilities |
696,478 | 648,809 | ||||||
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| LONG-TERM LIABILITIES: |
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| Long-term debt and capital lease obligations, net of current portion |
3,805,458 | 3,641,592 | ||||||
| Deferred tax liabilities |
352,859 | 428,188 | ||||||
| Other long-term liabilities |
209,683 | 166,635 | ||||||
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| Total long-term liabilities |
4,368,000 | 4,236,415 | ||||||
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| TOTAL EQUITY |
2,090,141 | 2,182,704 | ||||||
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| Total liabilities and equity |
$ | 7,154,619 | $ | 7,067,928 | ||||
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Alere Inc. and Subsidiaries
Reconciliation to Non-GAAP Adjusted Operating Results
(in thousands, except per share amounts)
| Three Months Ended September 30, | ||||||||
| 2013 | 2012 | |||||||
| Reconciliation to Non-GAAP Adjusted Operating Income (1) |
||||||||
| Operating income |
$ | 20,299 | $ | 38,732 | ||||
| Adjustment related to acquired software license contracts |
535 | 905 | ||||||
| Amortization of acquisition-related intangible assets |
82,248 | 82,867 | ||||||
| Restructuring charges |
7,694 | 3,239 | ||||||
| Stock-based compensation expense |
5,662 | 3,626 | ||||||
| Compensation charges associated with acquisition-related contingent consideration obligations |
762 | — | ||||||
| Acquisition-related costs |
450 | 833 | ||||||
| Fair value adjustments to acquisition-related contingent consideration |
2,719 | (15,145 | ) | |||||
| Non-cash charge associated with acquired inventory |
708 | — | ||||||
| Costs associated with proxy contest |
5,467 | — | ||||||
| Loss on disposition |
5,885 | — | ||||||
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| Non-GAAP adjusted operating income |
$ | 132,429 | $ | 115,057 | ||||
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| Three Months Ended September 30, | ||||||||
| 2013 | 2012 | |||||||
| Reconciliation to Non-GAAP Adjusted Net Income (1) |
||||||||
| Net loss available to common stockholders |
$ | (24,815 | ) | $ | (9,155 | ) | ||
| Adjustment related to acquired software license contracts |
535 | 905 | ||||||
| Amortization of acquisition-related intangible assets |
82,304 | 83,083 | ||||||
| Restructuring charges |
7,805 | 3,287 | ||||||
| Stock-based compensation expense |
5,662 | 3,626 | ||||||
| Compensation charges associated with acquisition-related contingent consideration obligations |
762 | — | ||||||
| Acquisition-related costs |
450 | 833 | ||||||
| Fair value adjustments to acquisition-related contingent consideration |
2,719 | (15,145 | ) | |||||
| Non-cash charge associated with acquired inventory |
708 | — | ||||||
| Costs associated with proxy contest |
5,467 | — | ||||||
| Loss on disposition |
5,885 | — | ||||||
| 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 |
364 | 1,320 | ||||||
| Interest accretion associated with acquisition-related compensation charges |
98 | — | ||||||
| Bargain purchase gain associated with the acquisition of the Liberty business |
39 | — | ||||||
| Income tax effects on items above |
(37,913 | ) | (32,931 | ) | ||||
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| Non-GAAP adjusted net income available to common stockholders |
$ | 50,070 | $ | 35,823 | ||||
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| Net loss per diluted common share |
$ | (0.30 | ) | $ | (0.11 | ) | ||
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| Non-GAAP adjusted net income per diluted common share |
$ | 0.59 | $ | 0.43 | ||||
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| Weighted-average shares - diluted |
81,735 | 80,792 | ||||||
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| Non-GAAP adjusted weighted average shares - diluted |
95,830 | 84,299 | ||||||
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| (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)
| Nine Months Ended September 30, | ||||||||
| 2013 | 2012 | |||||||
| Reconciliation to Non-GAAP Adjusted Operating Income (1) |
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| Operating income |
$ | 95,192 | $ | 108,144 | ||||
| Adjustment related to acquired software license contracts |
1,770 | 3,317 | ||||||
| Amortization of acquisition-related intangible assets |
237,273 | 242,167 | ||||||
| Restructuring charges |
19,630 | 10,132 | ||||||
| Stock-based compensation expense |
14,462 | 11,868 | ||||||
| Compensation charges associated with acquisition-related contingent consideration obligations |
2,032 | — | ||||||
| Acquisition-related costs |
1,772 | 6,094 | ||||||
| Fair value adjustments to acquisition-related contingent consideration |
18,995 | (16,782 | ) | |||||
| Non-cash charge associated with acquired inventory |
1,880 | 4,681 | ||||||
| Costs associated with proxy contest |
5,467 | — | ||||||
| Loss on disposition |
5,885 | — | ||||||
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| Non-GAAP adjusted operating income |
$ | 404,358 | $ | 369,621 | ||||
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| Nine Months Ended September 30, | ||||||||
| 2013 | 2012 | |||||||
| Reconciliation to Non-GAAP Adjusted Net Income (1) |
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| Net loss available to common stockholders |
$ | (83,493 | ) | $ | (31,444 | ) | ||
| Adjustment related to acquired software license contracts |
1,770 | 3,317 | ||||||
| Amortization of acquisition-related intangible assets |
237,533 | 242,849 | ||||||
| Restructuring charges |
19,858 | 10,290 | ||||||
| Stock-based compensation expense |
14,462 | 11,868 | ||||||
| Compensation charges associated with acquisition-related contingent consideration obligations |
2,032 | — | ||||||
| Acquisition-related costs |
1,772 | 6,094 | ||||||
| Fair value adjustments to acquisition-related contingent consideration |
18,995 | (16,782 | ) | |||||
| Non-cash charge associated with acquired inventory |
1,880 | 4,681 | ||||||
| Costs associated with proxy contest |
5,467 | — | ||||||
| Loss on disposition |
5,885 | — | ||||||
| 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 |
2,126 | 3,960 | ||||||
| Interest accretion associated with acquisition-related compensation charges |
258 | — | ||||||
| Non-cash write-off of an investment |
5,110 | — | ||||||
| Bargain purchase gain associated with the acquisition of the Liberty business |
(8,023 | ) | — | |||||
| Expense associated with extinguishment of debt |
35,767 | — | ||||||
| Income tax effects on items above |
(112,736 | ) | (93,028 | ) | ||||
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| Non-GAAP adjusted net income available to common stockholders |
$ | 148,663 | $ | 141,805 | ||||
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| Net loss per diluted common share |
$ | (1.03 | ) | $ | (0.39 | ) | ||
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| Non-GAAP adjusted net income per diluted common share |
$ | 1.75 | $ | 1.70 | ||||
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| Weighted-average shares - diluted |
81,417 | 80,492 | ||||||
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| Non-GAAP adjusted weighted average shares - diluted |
95,244 | 94,327 | ||||||
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| (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
| Q3 2013 | YTD 2013 | Q3 2012 | YTD 2012 | % Change Q3 13 v. Q3 12 |
% Change YTD 13 v. YTD 12 |
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| Cardiology |
$ | 116,281 | $ | 349,650 | $ | 122,372 | $ | 386,795 | -5 | % | -10 | % | ||||||||||||
| Infectious disease |
172,739 | 520,289 | 136,561 | 425,398 | 26 | % | 22 | % | ||||||||||||||||
| Toxicology |
166,536 | 481,469 | 156,074 | 437,736 | 7 | % | 10 | % | ||||||||||||||||
| Diabetes |
53,150 | 178,138 | 35,670 | 100,628 | 49 | % | 77 | % | ||||||||||||||||
| Other (1) |
78,607 | 235,992 | 78,077 | 230,519 | 1 | % | 2 | % | ||||||||||||||||
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| Professional diagnostics net product sales and services revenue (1) |
587,313 | 1,765,538 | 528,754 | 1,581,076 | 11 | % | 12 | % | ||||||||||||||||
| License and royalty revenue |
3,488 | 11,517 | 2,688 | 8,833 | 30 | % | 30 | % | ||||||||||||||||
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| Professional diagnostics net revenue |
$ | 590,801 | $ | 1,777,055 | $ | 531,442 | $ | 1,589,909 | 11 | % | 12 | % | ||||||||||||
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| Health Information Solutions Segment |
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| Q3 2013 | YTD 2013 | Q3 2012 | YTD 2012 | % Change Q3 13 v. Q3 12 |
% Change YTD 13 v. YTD 12 |
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| Disease and case management |
$ | 56,554 | $ | 163,258 | $ | 57,383 | $ | 165,277 | -1 | % | -1 | % | ||||||||||||
| Wellness |
22,223 | 75,753 | 24,290 | 80,881 | -9 | % | -6 | % | ||||||||||||||||
| Women’s & children’s health |
28,431 | 86,767 | 29,136 | 90,220 | -2 | % | -4 | % | ||||||||||||||||
| Patient self-testing services |
27,025 | 77,437 | 24,269 | 68,074 | 11 | % | 14 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Health information solutions net revenue |
$ | 134,233 | $ | 403,215 | $ | 135,078 | $ | 404,452 | -1 | % | 0 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| (1) | Revenues are presented in accordance with Generally Accepted Accounting Principles and exclude an adjustment of $0.5 million and $1.8 million, and $0.9 million and $3.3 million, in revenue related to acquired software license contracts which were not recognized during the three and nine months ended September 30, 2013 and 2012, 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 September 30, 2013 | ||||||||||||||||||||
| Operating Segment | Professional Diagnostics |
Health Information Solutions |
Consumer Diagnostics |
Corporate | Total | |||||||||||||||
| Net revenue |
$ | 590,801 | $ | 134,233 | $ | 28,848 | $ | — | $ | 753,882 | ||||||||||
| Adjustment related to acquired software license contracts (1) |
535 | — | — | — | 535 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Non-GAAP adjusted net revenue |
$ | 591,336 | $ | 134,233 | $ | 28,848 | $ | — | $ | 754,417 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Operating income (loss) |
$ | 53,189 | $ | (7,203 | ) | $ | 3,347 | $ | (29,034 | ) | $ | 20,299 | ||||||||
| Adjustment related to acquired software license contracts (1) |
535 | — | — | — | 535 | |||||||||||||||
| Amortization of acquisition-related intangible assets |
69,556 | 12,233 | 459 | — | 82,248 | |||||||||||||||
| Non-cash charge associated with acquired inventory |
708 | — | — | — | 708 | |||||||||||||||
| Restructuring charges |
6,033 | 1,661 | — | — | 7,694 | |||||||||||||||
| Stock-based compensation expense |
— | — | — | 5,662 | 5,662 | |||||||||||||||
| Compensation charges associated with acquisition-related contingent consideration obligations |
762 | — | — | — | 762 | |||||||||||||||
| Acquisition-related costs |
— | — | — | 450 | 450 | |||||||||||||||
| Fair value adjustments to acquisition-related contingent consideration |
1,516 | 803 | — | 400 | 2,719 | |||||||||||||||
| Costs associated with proxy contest |
— | — | — | 5,467 | 5,467 | |||||||||||||||
| Loss on disposition |
5,885 | — | — | — | 5,885 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Non-GAAP adjusted operating income (loss) |
$ | 138,184 | $ | 7,494 | $ | 3,806 | $ | (17,055 | ) | $ | 132,429 | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Non-GAAP adjusted operating income (loss) as % of Non-GAAP adjusted net revenue |
23.4 | % | 5.6 | % | 13.2 | % | 17.6 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
| (1) | Estimated revenue related to acquired software license contracts that was not recognized during the third quarter of 2013 due to business combination accounting rules |
Reconciliation of Operating Income (Loss) to Non-GAAP Adjusted Operating Income (Loss)
(in thousands)
| For the Three Months Ended September 30, 2012 | ||||||||||||||||||||
| Operating Segment | Professional Diagnostics |
Health Information Solutions |
Consumer Diagnostics |
Corporate | Total | |||||||||||||||
| Net revenue |
$ | 531,442 | $ | 135,078 | $ | 24,896 | $ | — | $ | 691,416 | ||||||||||
| Adjustment related to acquired software license contracts (1) |
905 | — | — | — | 905 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Non-GAAP adjusted net revenue |
$ | 532,347 | $ | 135,078 | $ | 24,896 | $ | — | $ | 692,321 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Operating income (loss) |
$ | 63,298 | $ | (14,357 | ) | $ | 4,615 | $ | (14,824 | ) | $ | 38,732 | ||||||||
| Adjustment related to acquired software license contracts (1) |
905 | — | — | — | 905 | |||||||||||||||
| Amortization of acquisition-related intangible assets |
67,760 | 14,508 | 599 | — | 82,867 | |||||||||||||||
| Restructuring charges |
2,139 | 1,095 | — | 5 | 3,239 | |||||||||||||||
| Stock-based compensation expense |
— | — | — | 3,626 | 3,626 | |||||||||||||||
| Acquisition-related costs |
— | — | — | 833 | 833 | |||||||||||||||
| Fair value adjustments to acquisition-related contingent consideration |
(16,377 | ) | 1,700 | 204 | (672 | ) | (15,145 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Non-GAAP adjusted operating income (loss) |
$ | 117,725 | $ | 2,946 | $ | 5,418 | $ | (11,032 | ) | $ | 115,057 | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Non-GAAP adjusted operating income (loss) as % of Non-GAAP adjusted net revenue |
22.1 | % | 2.2 | % | 21.8 | % | 16.6 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
| (1) | Estimated revenue related to acquired software license contracts that was not recognized during the third quarter of 2012 due to business combination accounting rules |
Comments:
In calculating “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 “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, “adjusted operating income (loss)” presented in this schedule may not be comparable to similar measures used by other companies.
| Alere Inc. and Subsidiaries | ||||||||||||||||||||
| Reconciliation of Operating Income (Loss) to Non-GAAP Adjusted Operating Income (Loss) | ||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| For the Nine Months Ended September 30, 2013 | ||||||||||||||||||||
| Operating Segment | Professional Diagnostics |
Health Information Solutions |
Consumer Diagnostics |
Corporate | Total | |||||||||||||||
| Net revenue |
$ | 1,777,055 | $ | 403,215 | $ | 76,846 | $ | — | $ | 2,257,116 | ||||||||||
| Adjustment related to acquired software license contracts (1) |
1,770 | — | — | — | 1,770 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Non-GAAP adjusted net revenue |
$ | 1,778,825 | $ | 403,215 | $ | 76,846 | $ | — | $ | 2,258,886 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Operating income (loss) |
$ | 185,925 | $ | (32,855 | ) | $ | 9,031 | $ | (66,909 | ) | $ | 95,192 | ||||||||
| Adjustment related to acquired software license contracts (1) |
1,770 | — | — | — | 1,770 | |||||||||||||||
| Amortization of acquisition-related intangible assets |
201,817 | 34,003 | 1,453 | — | 237,273 | |||||||||||||||
| Non-cash charge associated with acquired inventory |
1,880 | — | — | — | 1,880 | |||||||||||||||
| Restructuring charges |
9,162 | 10,468 | — | — | 19,630 | |||||||||||||||
| Stock-based compensation expense |
— | — | — | 14,462 | 14,462 | |||||||||||||||
| Compensation charges associated with acquisition-related contingent consideration obligations |
2,032 | — | — | — | 2,032 | |||||||||||||||
| Acquisition-related costs |
— | — | — | 1,772 | 1,772 | |||||||||||||||
| Fair value adjustments to acquisition-related contingent consideration |
12,909 | 5,186 | — | 900 | 18,995 | |||||||||||||||
| Costs associated with proxy contest |
— | — | — | 5,467 | 5,467 | |||||||||||||||
| Loss on disposition |
5,885 | — | — | — | 5,885 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Non-GAAP adjusted operating income (loss) |
$ | 421,380 | $ | 16,802 | $ | 10,484 | $ | (44,308 | ) | $ | 404,358 | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Non-GAAP adjusted operating income (loss) as % of Non-GAAP adjusted net revenue |
23.7 | % | 4.2 | % | 13.6 | % | 17.9 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
| (1) | Estimated revenue related to acquired software license contracts that was not recognized during the first nine months of 2013 due to business combination accounting rules |
| Reconciliation of Operating Income (Loss) to Non-GAAP Adjusted Operating Income (Loss) | ||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| For the Nine Months Ended September 30, 2012 | ||||||||||||||||||||
| Operating Segment | Professional Diagnostics |
Health Information Solutions |
Consumer Diagnostics |
Corporate | Total | |||||||||||||||
| Net revenue |
$ | 1,589,909 | $ | 404,452 | $ | 68,701 | $ | — | $ | 2,063,062 | ||||||||||
| Adjustment related to acquired software license contracts (1) |
3,317 | — | — | — | 3,317 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Non-GAAP adjusted net revenue |
$ | 1,593,226 | $ | 404,452 | $ | 68,701 | $ | — | $ | 2,066,379 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Operating income (loss) |
$ | 196,728 | $ | (46,379 | ) | $ | 7,679 | $ | (49,884 | ) | $ | 108,144 | ||||||||
| Adjustment related to acquired software license contracts (1) |
3,317 | — | — | — | 3,317 | |||||||||||||||
| Amortization of acquisition-related intangible assets |
197,073 | 43,144 | 1,950 | — | 242,167 | |||||||||||||||
| Restructuring charges |
7,750 | 2,351 | — | 31 | 10,132 | |||||||||||||||
| Stock-based compensation expense |
— | — | — | 11,868 | 11,868 | |||||||||||||||
| Non-cash charge associated with acquired inventory |
4,681 | — | — | — | 4,681 | |||||||||||||||
| Acquisition-related costs |
— | — | — | 6,094 | 6,094 | |||||||||||||||
| Fair value adjustments to acquisition-related contingent consideration |
(22,702 | ) | 4,867 | — | 1,053 | (16,782 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Non-GAAP adjusted operating income (loss) |
$ | 386,847 | $ | 3,983 | $ | 9,629 | $ | (30,838 | ) | $ | 369,621 | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Non-GAAP adjusted operating income (loss) as % of Non-GAAP adjusted net revenue |
24.3 | % | 1.0 | % | 14.0 | % | 17.9 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
| (1) | Estimated revenue related to acquired software license contracts that was not recognized during the first nine months of 2012 due to business combination accounting rules |
Comments:
In calculating “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 “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, “adjusted operating income (loss)” presented in this schedule may not be comparable to similar measures used by other companies.
Alere Inc. and Subsidiaries
Reconciliations to Non-GAAP Adjusted P&L Categories
(in thousands)
| Three Months Ended September 30, 2013 |
Three Months Ended September 30, 2012 |
|||||||
| Net revenue |
$ | 753,882 | $ | 691,416 | ||||
| Adjustment related to acquired software license contracts |
535 | 905 | ||||||
|
|
|
|
|
|||||
| Non-GAAP adjusted net revenue |
$ | 754,417 | $ | 692,321 | ||||
|
|
|
|
|
|||||
| Cost of net revenue |
$ | 385,236 | $ | 345,641 | ||||
| Less adjustments: |
||||||||
| Non-cash charge associated with acquired inventory |
(708 | ) | (269 | ) | ||||
| Amortization of acquisition-related intangible assets |
(18,236 | ) | (18,421 | ) | ||||
| Stock-based compensation expense |
(287 | ) | (1,080 | ) | ||||
| Restructuring charges |
(3,556 | ) | — | |||||
|
|
|
|
|
|||||
| Non-GAAP adjusted cost of net revenue |
$ | 362,449 | $ | 325,871 | ||||
|
|
|
|
|
|||||
| Non-GAAP adjusted gross profit |
$ | 391,968 | $ | 366,450 | ||||
|
|
|
|
|
|||||
| Three Months Ended September 30, 2013 |
Three Months Ended September 30, 2012 |
|||||||
| Research and development |
$ | 40,498 | $ | 40,562 | ||||
| Less adjustments: |
||||||||
| Amortization of acquisition-related intangible assets |
(1,231 | ) | (1,311 | ) | ||||
| Stock-based compensation expense |
(1,111 | ) | (752 | ) | ||||
| Restructuring charges |
(1,100 | ) | — | |||||
|
|
|
|
|
|||||
| Non-GAAP adjusted research and development |
$ | 37,056 | $ | 38,499 | ||||
|
|
|
|
|
|||||
| Three Months Ended September 30, 2013 |
Three Months Ended September 30, 2012 |
|||||||
| Selling, general and administrative |
$ | 301,964 | $ | 266,481 | ||||
| Less adjustments: |
||||||||
| Amortization of acquisition-related intangible assets |
(62,781 | ) | (63,135 | ) | ||||
| Stock-based compensation expense |
(4,264 | ) | (2,605 | ) | ||||
| Compensation charges associated with acquisition-related contingent consideration obligations |
(762 | ) | — | |||||
| Acquisition-related costs |
(450 | ) | (833 | ) | ||||
| Fair value adjustments to acquisition-related contingent consideration |
(2,719 | ) | 15,145 | |||||
| Restructuring charges |
(3,038 | ) | (2,159 | ) | ||||
| Costs associated with proxy contest |
(5,467 | ) | — | |||||
|
|
|
|
|
|||||
| Non-GAAP adjusted selling, general and administrative |
$ | 222,483 | $ | 212,894 | ||||
|
|
|
|
|
|||||
| Three Months Ended September 30, 2013 |
Three Months Ended September 30, 2012 |
|||||||
| Loss on disposition |
$ | 5,885 | $ | — | ||||
| Loss on disposition |
(5,885 | ) | — | |||||
|
|
|
|
|
|||||
| Non-GAAP adjusted loss on disposition |
$ | — | $ | — | ||||
|
|
|
|
|
|||||
| Three Months Ended September 30, 2013 |
Three Months Ended September 30, 2012 |
|||||||
| Interest and other income (expense), net |
$ | (62,289 | ) | $ | (55,933 | ) | ||
| Less adjustments: |
||||||||
| 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 |
364 | 1,320 | ||||||
| Interest accretion associated with acquisition-related compensation charges |
98 | — | ||||||
| Bargain purchase gain associated with the acquisition of the Liberty business |
39 | — | ||||||
| Restructuring charges |
111 | 48 | ||||||
|
|
|
|
|
|||||
| Non-GAAP adjusted interest and other income (expense), net |
$ | (61,677 | ) | $ | (54,565 | ) | ||
|
|
|
|
|
|||||
| Three Months Ended September 30, 2013 |
Three Months Ended September 30, 2012 |
|||||||
| Benefit for income taxes |
$ | (17,148 | ) | $ | (10,677 | ) | ||
| Add: Income tax effects on Non-GAAP adjustments |
37,935 | 32,935 | ||||||
|
|
|
|
|
|||||
| Non-GAAP adjusted provision for income taxes |
$ | 20,787 | $ | 22,258 | ||||
|
|
|
|
|
|||||
| Three Months Ended September 30, 2013 |
Three Months Ended September 30, 2012 |
|||||||
| Equity earnings of unconsolidated entities, net of tax |
$ | 5,753 | $ | 3,007 | ||||
| Less adjustments: |
||||||||
| Amortization of acquisition-related intangible assets |
147 | 243 | ||||||
| Income tax effects on items above |
— | (2 | ) | |||||
|
|
|
|
|
|||||
| Non-GAAP adjusted equity earnings of unconsolidated entities, net of tax |
$ | 5,900 | $ | 3,248 | ||||
|
|
|
|
|
|||||
Alere Inc. and Subsidiaries
Reconciliations to Non-GAAP Adjusted P&L Categories
(in thousands)
| Nine Months Ended September 30, 2013 |
Nine Months Ended September 30, 2012 |
|||||||
| Net revenue |
$ | 2,257,116 | $ | 2,063,062 | ||||
| Adjustment related to acquired software license contracts |
1,770 | 3,317 | ||||||
|
|
|
|
|
|||||
| Non-GAAP adjusted net revenue |
$ | 2,258,886 | $ | 2,066,379 | ||||
|
|
|
|
|
|||||
| Cost of net revenue |
$ | 1,139,726 | $ | 1,008,608 | ||||
| Less adjustments: |
||||||||
| Non-cash charge associated with acquired inventory |
(1,880 | ) | (4,681 | ) | ||||
| Amortization of acquisition-related intangible assets |
(54,508 | ) | (51,618 | ) | ||||
| Stock-based compensation expense |
(797 | ) | (801 | ) | ||||
| Restructuring charges |
(4,908 | ) | (2,069 | ) | ||||
|
|
|
|
|
|||||
| Non-GAAP adjusted cost of net revenue |
$ | 1,077,633 | $ | 949,439 | ||||
|
|
|
|
|
|||||
| Non-GAAP adjusted gross profit |
$ | 1,181,253 | $ | 1,116,940 | ||||
|
|
|
|
|
|||||
| Nine Months Ended September 30, 2013 |
Nine Months Ended September 30, 2012 |
|||||||
| Research and development |
$ | 122,452 | $ | 120,009 | ||||
| Less adjustments: |
||||||||
| Amortization of acquisition-related intangible assets |
(3,729 | ) | (5,215 | ) | ||||
| Stock-based compensation expense |
(2,641 | ) | (2,379 | ) | ||||
| Restructuring charges |
(1,745 | ) | (638 | ) | ||||
|
|
|
|
|
|||||
| Non-GAAP adjusted research and development |
$ | 114,337 | $ | 111,777 | ||||
|
|
|
|
|
|||||
| Nine Months Ended September 30, 2013 |
Nine Months Ended September 30, 2012 |
|||||||
| Selling, general and administrative |
$ | 893,861 | $ | 826,301 | ||||
| Less adjustments: |
||||||||
| Amortization of acquisition-related intangible assets |
(179,036 | ) | (185,334 | ) | ||||
| Stock-based compensation expense |
(11,024 | ) | (8,688 | ) | ||||
| Compensation charges associated with acquisition-related contingent consideration obligations |
(2,032 | ) | — | |||||
| Acquisition-related costs |
(1,772 | ) | (6,094 | ) | ||||
| Fair value adjustments to acquisition-related contingent consideration |
(18,995 | ) | 16,782 | |||||
| Restructuring charges |
(12,977 | ) | (7,425 | ) | ||||
| Costs associated with proxy contest |
(5,467 | ) | — | |||||
|
|
|
|
|
|||||
| Non-GAAP adjusted selling, general and administrative |
$ | 662,558 | $ | 635,542 | ||||
|
|
|
|
|
|||||
| Nine Months Ended September 30, 2013 |
Nine Months Ended September 30, 2012 |
|||||||
| Loss on disposition |
$ | 5,885 | $ | — | ||||
| Loss on disposition |
(5,885 | ) | — | |||||
|
|
|
|
|
|||||
| Non-GAAP adjusted loss on disposition |
$ | — | $ | — | ||||
|
|
|
|
|
|||||
| Nine Months Ended September 30, 2013 |
Nine Months Ended September 30, 2012 |
|||||||
| Interest and other income (expense), net |
$ | (211,548 | ) | $ | (146,549 | ) | ||
| Less adjustments: |
||||||||
| 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 |
2,126 | 3,960 | ||||||
| Interest accretion associated with acquisition-related compensation charges |
258 | — | ||||||
| Non-cash write-off of an investment |
5,110 | — | ||||||
| Bargain purchase gain associated with the acquisition of the Liberty business |
(8,023 | ) | — | |||||
| Expense associated with extinguishment of debt |
35,767 | — | ||||||
| Restructuring charges |
228 | 158 | ||||||
|
|
|
|
|
|||||
| Non-GAAP adjusted interest and other income (expense), net |
$ | (176,082 | ) | $ | (142,431 | ) | ||
|
|
|
|
|
|||||
| Nine Months Ended September 30, 2013 |
Nine Months Ended September 30, 2012 |
|||||||
| Benefit for income taxes |
$ | (36,152 | ) | $ | (12,621 | ) | ||
| Add: Income tax effects on Non-GAAP adjustments |
112,779 | 93,040 | ||||||
|
|
|
|
|
|||||
| Non-GAAP adjusted provision for income taxes |
$ | 76,627 | $ | 80,419 | ||||
|
|
|
|
|
|||||
| Nine Months Ended September 30, 2013 |
Nine Months Ended September 30, 2012 |
|||||||
| Equity earnings of unconsolidated entities, net of tax |
$ | 13,238 | $ | 10,417 | ||||
| Less adjustments: |
||||||||
| Amortization of acquisition-related intangible assets |
448 | 764 | ||||||
| Income tax effects on items above |
— | (7 | ) | |||||
|
|
|
|
|
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| Non-GAAP adjusted equity earnings of unconsolidated entities, net of tax |
$ | 13,686 | $ | 11,174 | ||||
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