Attached files
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| 8-K - FORM 8-K - ALERE INC. | d812428d8k.htm |
Exhibit 99.1
ALERE INC. ANNOUNCES
THIRD QUARTER 2014 RESULTS
WALTHAM, MA…October 28, 2014…Alere Inc. (NYSE: ALR), a global leader in rapid diagnostics and health information solutions, today announced its financial results for the quarter ended September 30, 2014.
Namal Nawana, Chief Executive Officer and President of Alere said, “We made great progress during the third quarter to reset our strategic direction to focus on our strengths as the Global Leader in Rapid Diagnostics. Doing so has allowed us to begin to execute a significant cost reduction program and to clearly identify non-core assets for disposition. As we announced earlier today, the agreement that we reached with Optum for the disposition of our Alere Health organization is a great step towards simplifying and focusing our organization and achieving our strategic goals.”
Financial results for the third quarter of 2014:
| • | Net revenue of $736.2 million for the third quarter of 2014, compared to $753.3 million for the third quarter of 2013. Non-GAAP adjusted net revenue was $736.6 million for the third quarter of 2014, compared to $753.9 million for the third quarter of 2013. |
| • | Loss from continuing operations of $98.6 million attributable to common shareholders of Alere Inc., and respective net loss per diluted common share of $1.19 for the third quarter of 2014, compared to net loss from continuing operations of $21.7 million attributable to common shareholders of Alere Inc., and respective net loss per diluted common share of $0.27 for the third quarter of 2013. |
| • | Non-GAAP adjusted net income from continuing operations attributable to common shareholders of Alere Inc. per diluted common share of $0.48 for the third quarter of 2014, compared to non-GAAP adjusted net income from continuing operations attributable to common shareholders per diluted common share of $0.61 for the third quarter of 2013. |
| • | Net product and services revenue from our Professional Diagnostics segment was |
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| $581.8 million in the third quarter of 2014, compared to net product and services revenue of $587.3 million in the third quarter of 2013. Non-GAAP adjusted net product and services revenue from our Professional Diagnostics segment was $582.1 million in the third quarter of 2014, compared to non-GAAP adjusted net product and services revenue of $587.8 million in the third quarter of 2013. |
| • | U.S. influenza and meter-based Triage product revenues were $15.0 million and $15.8 million, respectively, for the third quarter of 2014, compared to $18.3 million and $17.7 million, respectively, for the third quarter of 2013. |
| • | Excluding the impact of the change in U.S. influenza revenues and the impact on revenues from the U.S. meter-based Triage product sales, currency-adjusted organic growth in our Professional Diagnostics segment was negative 1.2%. This decrease reflects a 5.4% decrease in adjusted U.S. revenues, compared to the third quarter of 2013, offset by a 3.3% increase in our international business. The decrease in the U.S. business principally relates to lower revenues from sales of Beckman Coulter BNP tests due to supply constraints and to lower pain management revenues in our Toxicology business. New products contributed favorably to our overall adjusted growth rate, with sales of CD4 products increasing from $5.0 million in Q3 2013 to $7.6 million in Q3 2014 and Epoc sales increasing from $5.7 million to $6.7 million for the same periods. |
| • | Net product and services revenue from our Health Information Solutions segment was $123.9 million in the third quarter of 2014, compared to $133.7 million in the third quarter of 2013, reflecting growth in our patient self-testing business from $27.0 million in the third quarter of 2013 to $30.2 million in the third quarter of 2014. |
| • | Gross margin was 46.6% of net revenue in the third quarter of 2014, compared to 49.0% in the third quarter of 2013. Non-GAAP adjusted gross margins, which exclude from cost of net revenue amortization of acquisition-related intangibles, stock-based compensation expense, restructuring charges, and non-cash charges associated with acquired inventory, was 49.6% of non-GAAP adjusted net revenue in the third quarter of 2014, compared to 52.1% in the third quarter of 2013 and 48.4% in the second quarter of 2014. |
| • | Non-GAAP adjusted selling, general and administrative expenses were $207.1 million or 28.1% of adjusted net revenue in the third quarter of 2014, compared to $218.8 million or 29.0% of adjusted net revenue in the third quarter of 2014. Non-GAAP adjusted research and development expense was $31.6 million, or 4.3% of adjusted net revenue, compared to $37.1 million, or 4.9% of adjusted net revenues, in Q3 2013 |
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| • | Free cash flow for the third quarter of 2014 was a $62.9 million, reflecting cash flow from operations of $91.7 million, offset by capital expenditures of $28.8 million. Of the $91.7 million of operating cash flows during the third quarter, $96.4 million was cash flows from continuing operations. |
| • | Non-GAAP EBITDA for the third quarter of 2014 was $129.4 million, which reflects adjustments to add back non-interest related restructuring charges of $17.9 million, $0.3 million of acquisition-related costs and $6.2 million of costs associated with potential business dispositions. On a last-twelve-months basis, our non-GAAP adjusted EBITDA, with restructuring, acquisition and other costs added back, was $630.3 million, resulting in a net debt to non-GAAP adjusted EBITDA ratio of 5.3 times. |
The Company’s GAAP results for the third quarter of 2014 exclude $0.3 million of revenue associated with acquired software license contracts that are not recognized due to business combination accounting rules and include $66.1 million of amortization, $17.9 million of restructuring charges, $3.2 million of stock-based compensation expense, $0.3 million of acquisition-related costs recorded in accordance with ASC 805, Business Combinations, $6.2 million of costs associated with potential business dispositions, $0.4 million of interest expense recorded in connection with fees paid for certain debt modifications, $0.7 million in compensation charges and $0.1 million of related interest accretion associated with acquisition-related contingent consideration obligations, $0.4 million loss on the sale of our equity investment in Vedalab S.A., offset by the reversal of $5.5 million of expense recorded for fair value adjustments to acquisition-related contingent consideration. 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
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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.
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 28, 2014, 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) 443-4809 (domestic) or (412) 902-6615 (international) and asking for Alere Inc. A webcast of the call can also be accessed via the Alere website at http://www.alere.com/us/en/about/investor-relations/events.html, or directly through the following link: http://www.videonewswire.com/event.asp?id=100809.
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 10054917. The replay will also be available via online webcast at http://www.videonewswire.com/event.asp?id=100809 or via the Alere website at http://www.alere.com/us/en/about/investor-relations/events.html 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/us/en/about/investor-relations/events.html) under the Earnings Calls and Releases section shortly before the conference call begins and will continue to be available on this website.
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For more information about Alere, please visit our web site at http://www.alere.com.
About Alere
Because Knowing now matters™, Alere delivers reliable and actionable information through rapid diagnostic tests, resulting in better clinical and economic healthcare outcomes globally. Headquartered in Waltham, Mass., Alere focuses on rapid diagnostics for infectious disease, cardiometabolic disease and toxicology. For more information on Alere, please visit www.alere.com.
Contact
Jon Russell
VP, Finance
InvestorRelations@alere.com
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Alere Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
| Three Months Ended September 30, | ||||||||
| 2014 | 2013 | |||||||
| Net product sales and services revenue |
$ | 732,064 | $ | 749,136 | ||||
| License and royalty revenue |
4,182 | 4,184 | ||||||
|
|
|
|
|
|||||
| Net revenue |
736,246 | 753,320 | ||||||
| Cost of net revenue |
393,387 | 384,003 | ||||||
|
|
|
|
|
|||||
| Gross profit |
342,859 | 369,317 | ||||||
| Gross margin |
47 | % | 49 | % | ||||
| Operating expenses: |
||||||||
| Research and development |
38,726 | 40,498 | ||||||
| Selling, general and administrative |
266,521 | 297,350 | ||||||
| Loss on disposition |
— | 5,885 | ||||||
|
|
|
|
|
|||||
| Operating income |
37,612 | 25,584 | ||||||
| Interest and other income (expense), net |
(60,741 | ) | (62,288 | ) | ||||
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|
|
|
|
|||||
| Loss from continuing operations before provision (benefit) for income taxes |
(23,129 | ) | (36,704 | ) | ||||
| Provision (benefit) for income taxes |
76,648 | (14,980 | ) | |||||
|
|
|
|
|
|||||
| Loss from continuing operations before equity earnings of unconsolidated entities, net of tax |
(99,777 | ) | (21,724 | ) | ||||
| Equity earnings of unconsolidated entities, net of tax |
6,277 | 5,753 | ||||||
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|
|
|
|
|||||
| Loss from continuing operations |
(93,500 | ) | (15,971 | ) | ||||
| Income (loss) from discontinued operations, net of tax |
7,045 | (3,118 | ) | |||||
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|
|
|
|
|||||
| Net loss |
(86,455 | ) | (19,089 | ) | ||||
| Less: Net income (loss) attributable to non-controlling interests |
(306 | ) | 359 | |||||
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|
|
|
|
|||||
| Net loss attributable to Alere Inc. and Subsidiaries |
(86,149 | ) | (19,448 | ) | ||||
| Preferred stock dividends |
(5,367 | ) | (5,367 | ) | ||||
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|
|
|
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| Net loss available to common stockholders |
$ | (91,516 | ) | $ | (24,815 | ) | ||
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|
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| Basic and diluted net loss per common share attributable to Alere Inc. and Subsidiaries: |
||||||||
| Loss from continuing operations |
$ | (1.19 | ) | $ | (0.27 | ) | ||
| Income (loss) from discontinued operations |
0.09 | (0.03 | ) | |||||
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|
|
|
|
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| Net loss per common share |
$ | (1.10 | ) | $ | (0.30 | ) | ||
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|
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| Weighted average shares - basic and diluted |
83,115 | 81,735 | ||||||
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Alere Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
| Nine Months Ended September 30, | ||||||||
| 2014 | 2013 | |||||||
| Net product sales and services revenue |
$ | 2,173,825 | $ | 2,242,220 | ||||
| License and royalty revenue |
15,999 | 13,113 | ||||||
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|
|
|
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| Net revenue |
2,189,824 | 2,255,333 | ||||||
| Cost of net revenue |
1,154,057 | 1,136,846 | ||||||
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|
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|
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| Gross profit |
1,035,767 | 1,118,487 | ||||||
| Gross margin |
47 | % | 50 | % | ||||
| Operating expenses: |
||||||||
| Research and development |
114,855 | 120,860 | ||||||
| Selling, general and administrative |
857,525 | 882,527 | ||||||
| Loss on disposition |
638 | 5,885 | ||||||
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|
|
|
|
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| Operating income |
62,749 | 109,215 | ||||||
| Interest and other income (expense), net |
(157,564 | ) | (211,532 | ) | ||||
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|
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|
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| Loss from continuing operations before provision (benefit) for income taxes |
(94,815 | ) | (102,317 | ) | ||||
| Provision (benefit) for income taxes |
63,109 | (30,359 | ) | |||||
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|
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| Loss from continuing operations before equity earnings of unconsolidated entities, net of tax |
(157,924 | ) | (71,958 | ) | ||||
| Equity earnings of unconsolidated entities, net of tax |
13,716 | 13,238 | ||||||
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|
|
|
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| Loss from continuing operations |
(144,208 | ) | (58,720 | ) | ||||
| Income (loss) from discontinued operations, net of taxes |
2,047 | (8,246 | ) | |||||
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|
|
|
|
|||||
| Net loss |
(142,161 | ) | (66,966 | ) | ||||
| Less: Net income (loss) attributable to non-controlling interests |
(136 | ) | 601 | |||||
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|
|
|
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| Net loss attributable to Alere Inc. and Subsidiaries |
(142,025 | ) | (67,567 | ) | ||||
| Preferred stock dividends |
(15,926 | ) | (15,926 | ) | ||||
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| Net loss available to common stockholders |
$ | (157,951 | ) | $ | (83,493 | ) | ||
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| Basic and diluted net loss per common share attributable to Alere Inc. and Subsidiaries: |
||||||||
| Loss from continuing operations |
$ | (1.93 | ) | $ | (0.92 | ) | ||
| Income (loss) from discontinued operations |
0.02 | (0.11 | ) | |||||
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| Net loss per common share |
$ | (1.91 | ) | $ | (1.03 | ) | ||
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|
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| Weighted average shares - basic and diluted |
82,719 | 81,417 | ||||||
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Alere Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
| September 30, 2014 |
December 31, 2013 |
|||||||
| ASSETS |
||||||||
| CURRENT ASSETS: |
||||||||
| Cash and cash equivalents |
$ | 444,853 | $ | 361,626 | ||||
| Restricted cash |
38,156 | 6,273 | ||||||
| Marketable securities |
794 | 858 | ||||||
| Accounts receivable, net |
517,434 | 547,860 | ||||||
| Inventories, net |
362,102 | 364,185 | ||||||
| Prepaid expenses and other current assets |
161,677 | 190,015 | ||||||
| Assets held for sale |
2,143 | 19,052 | ||||||
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|
|
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|
|||||
| Total current assets |
1,527,159 | 1,489,869 | ||||||
| PROPERTY, PLANT AND EQUIPMENT, NET |
526,922 | 543,877 | ||||||
| GOODWILL AND OTHER INTANGIBLE ASSETS, NET |
4,579,501 | 4,818,836 | ||||||
| RESTRICTED CASH - NON-CURRENT |
— | 29,370 | ||||||
| DEFERRED FINANCING COSTS AND OTHER ASSETS, NET |
175,039 | 178,862 | ||||||
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| Total assets |
$ | 6,808,621 | $ | 7,060,814 | ||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| CURRENT LIABILITIES: |
||||||||
| Short-term debt and current portions of long-term debt and capital lease obligations |
$ | 93,037 | $ | 55,967 | ||||
| Liabilities related to assets held for sale |
2,186 | 28,327 | ||||||
| Other current liabilities |
621,663 | 614,627 | ||||||
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|
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| Total current liabilities |
716,886 | 698,921 | ||||||
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| LONG-TERM LIABILITIES: |
||||||||
| Long-term debt and capital lease obligations, net of current portions |
3,696,438 | 3,787,195 | ||||||
| Deferred tax liabilities |
310,330 | 329,249 | ||||||
| Other long-term liabilities |
192,686 | 162,601 | ||||||
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|
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| Total long-term liabilities |
4,199,454 | 4,279,045 | ||||||
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| TOTAL EQUITY |
1,892,281 | 2,082,848 | ||||||
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| Total liabilities and equity |
$ | 6,808,621 | $ | 7,060,814 | ||||
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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, | ||||||||
| 2014 | 2013 | |||||||
| Reconciliation to Non-GAAP Adjusted Operating Income (1) |
||||||||
| Operating income |
$ | 37,612 | $ | 25,584 | ||||
| Adjustment related to acquired software license contracts |
324 | 535 | ||||||
| Amortization of acquisition-related intangible assets |
65,853 | 81,963 | ||||||
| Restructuring charges |
17,726 | 7,694 | ||||||
| Stock-based compensation expense |
3,167 | 5,662 | ||||||
| Compensation charges associated with acquisition-related contingent consideration obligations |
670 | 762 | ||||||
| Acquisition-related costs |
325 | 450 | ||||||
| Fair value adjustments to acquisition-related contingent consideration |
(5,537 | ) | 1,819 | |||||
| Non-cash charge associated with acquired inventory |
— | 708 | ||||||
| Costs associated with potential business dispositions |
6,203 | — | ||||||
| Costs associated with proxy contest |
— | 5,467 | ||||||
| Loss on disposition |
— | 5,885 | ||||||
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| Non-GAAP adjusted operating income |
$ | 126,343 | $ | 136,529 | ||||
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| Three Months Ended September 30, | ||||||||
| 2014 | 2013 | |||||||
| Reconciliation to Non-GAAP Adjusted Net Income (1) |
||||||||
| Net loss available to common stockholders |
$ | (91,516 | ) | $ | (24,815 | ) | ||
| Adjustment related to acquired software license contracts |
324 | 535 | ||||||
| Amortization of acquisition-related intangible assets |
65,858 | 82,019 | ||||||
| Restructuring charges |
17,869 | 7,805 | ||||||
| Stock-based compensation expense |
3,167 | 5,662 | ||||||
| Compensation charges associated with acquisition-related contingent consideration obligations |
670 | 762 | ||||||
| Acquisition-related costs |
325 | 450 | ||||||
| Fair value adjustments to acquisition-related contingent consideration |
(5,537 | ) | 1,819 | |||||
| Non-cash charge associated with acquired inventory |
— | 708 | ||||||
| Costs associated with potential business dispositions |
6,203 | — | ||||||
| Costs associated with proxy contest |
— | 5,467 | ||||||
| Loss on disposition |
— | 5,885 | ||||||
| Loss on sale of equity investment |
457 | — | ||||||
| Interest expense recorded in connection with fees paid for certain debt modifications and the termination of our senior secured credit facility |
363 | 364 | ||||||
| Interest accretion associated with acquisition-related compensation charges |
102 | 98 | ||||||
| Bargain purchase gain associated with the acquisition of the Liberty business |
— | 39 | ||||||
| Amortization of acquisition-related intangible assets and fair value adjustments to acquisition-related contingent consideration-discontinued operations |
(10,903 | ) | 727 | |||||
| Income tax effects on items above |
50,527 | (37,455 | ) | |||||
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| Non-GAAP adjusted net income available to common stockholders |
$ | 37,909 | $ | 50,070 | ||||
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| Net loss per diluted common share from continuing operations |
$ | (1.19 | ) | $ | (0.27 | ) | ||
| Net income (loss) per diluted common share from discontinued operations |
0.09 | (0.03 | ) | |||||
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| Net loss per diluted common share |
$ | (1.10 | ) | $ | (0.30 | ) | ||
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| Non-GAAP adjusted net income per diluted common share from continuing operations |
$ | 0.48 | $ | 0.61 | ||||
| Non-GAAP adjusted net income (loss) per diluted common share from discontinued operations |
(0.04 | ) | (0.02 | ) | ||||
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| Non-GAAP adjusted net income per diluted common share |
$ | 0.44 | $ | 0.59 | ||||
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| Weighted average shares - diluted |
83,115 | 81,735 | ||||||
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| Non-GAAP adjusted weighted average shares - diluted |
87,930 | 95,830 | ||||||
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| (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. |
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Alere Inc. and Subsidiaries
Reconciliation to Non-GAAP Adjusted Operating Results
(in thousands, except per share amounts)
| Nine Months Ended September 30, | ||||||||
| 2014 | 2013 | |||||||
| Reconciliation to Non-GAAP Adjusted Operating Income (1) |
||||||||
| Operating income |
$ | 62,749 | $ | 109,215 | ||||
| Adjustment related to acquired software license contracts |
1,116 | 1,770 | ||||||
| Amortization of acquisition-related intangible assets |
197,726 | 236,418 | ||||||
| Restructuring charges |
40,771 | 19,630 | ||||||
| Stock-based compensation expense |
7,751 | 14,462 | ||||||
| Compensation charges associated with acquisition-related contingent consideration obligations |
1,673 | 2,032 | ||||||
| Acquisition-related costs |
695 | 1,772 | ||||||
| Fair value adjustments to acquisition-related contingent consideration |
17,042 | 16,295 | ||||||
| Non-cash charge associated with acquired inventory |
— | 1,880 | ||||||
| Costs associated with potential business dispositions |
20,763 | — | ||||||
| Costs associated with proxy contest |
— | 5,467 | ||||||
| Loss on disposition |
638 | 5,885 | ||||||
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|
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| Non-GAAP adjusted operating income |
$ | 350,924 | $ | 414,826 | ||||
|
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| Nine Months Ended September 30, | ||||||||
| 2014 | 2013 | |||||||
| Reconciliation to Non-GAAP Adjusted Net Income (1) |
||||||||
| Net loss available to common stockholders |
$ | (157,951 | ) | $ | (83,493 | ) | ||
| Adjustment related to acquired software license contracts |
1,116 | 1,770 | ||||||
| Amortization of acquisition-related intangible assets |
197,769 | 236,678 | ||||||
| Restructuring charges |
41,147 | 19,858 | ||||||
| Stock-based compensation expense |
7,751 | 14,462 | ||||||
| Compensation charges associated with acquisition-related contingent consideration obligations |
1,673 | 2,032 | ||||||
| Acquisition-related costs |
695 | 1,772 | ||||||
| Fair value adjustments to acquisition-related contingent consideration |
17,042 | 16,295 | ||||||
| Non-cash charge associated with acquired inventory |
— | 1,880 | ||||||
| Costs associated with potential business dispositions |
20,763 | — | ||||||
| Costs associated with proxy contest |
— | 5,467 | ||||||
| Loss on disposition |
638 | 5,885 | ||||||
| Loss on sale of equity investment |
457 | — | ||||||
| Interest expense recorded in connection with fees paid for certain debt modifications and the termination of our senior secured credit facility |
1,091 | 2,126 | ||||||
| Interest accretion associated with acquisition-related compensation charges |
295 | 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 | ||||||
| Amortization of acquisition-related intangible assets and fair value adjustments to acquisition-related contingent consideration - discontinued operations |
(11,073 | ) | 2,181 | |||||
| Income tax effects on items above |
(2,605 | ) | (111,362 | ) | ||||
|
|
|
|
|
|||||
| Non-GAAP adjusted net income available to common stockholders |
$ | 118,808 | $ | 148,663 | ||||
|
|
|
|
|
|||||
| Net loss per diluted common share from continuing operations |
$ | (1.93 | ) | $ | (0.92 | ) | ||
| Net income (loss) per diluted common share from discontinued operations |
0.02 | (0.11 | ) | |||||
|
|
|
|
|
|||||
| Net loss per diluted common share |
$ | (1.91 | ) | $ | (1.03 | ) | ||
|
|
|
|
|
|||||
| Non-GAAP adjusted net income per diluted common share from continuing operations |
$ | 1.49 | $ | 1.81 | ||||
| Non-GAAP adjusted net income (loss) per diluted common share from discontinued operations |
0.10 | (0.06 | ) | |||||
|
|
|
|
|
|||||
| Non-GAAP adjusted net income per diluted common share |
$ | 1.39 | $ | 1.75 | ||||
|
|
|
|
|
|||||
| Weighted average shares - diluted |
82,719 | 81,417 | ||||||
|
|
|
|
|
|||||
| Non-GAAP adjusted weighted average shares - diluted |
87,312 | 95,244 | ||||||
|
|
|
|
|
|||||
| (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. |
10
Alere Inc. and Subsidiaries
Selected Consolidated Revenues by Business Area (1)
(in thousands)
| Professional Diagnostics Segment |
% Change | % Change | ||||||||||||||||||||||
| Q3 2014 | YTD 2014 | Q3 2013 | YTD 2013 | Q3 14 v. Q3 13 | YTD 14 v. YTD 13 | |||||||||||||||||||
| Infectious disease |
$ | 177,339 | $ | 507,010 | $ | 172,739 | $ | 520,289 | 3 | % | -3 | % | ||||||||||||
| Toxicology |
161,940 | 478,514 | 166,536 | 481,469 | -3 | % | -1 | % | ||||||||||||||||
| Cardiology |
108,501 | 331,917 | 116,281 | 349,650 | -7 | % | -5 | % | ||||||||||||||||
| Diabetes |
49,477 | 151,425 | 53,150 | 178,138 | -7 | % | -15 | % | ||||||||||||||||
| Other (1) |
84,501 | 252,303 | 78,607 | 235,992 | 7 | % | 7 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Professional diagnostics net product sales and services revenue (1) |
581,758 | 1,721,169 | 587,313 | 1,765,538 | -1 | % | -3 | % | ||||||||||||||||
| License and royalty revenue |
4,183 | 14,687 | 3,488 | 11,517 | 20 | % | 28 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Professional diagnostics net revenue |
$ | 585,941 | $ | 1,735,856 | $ | 590,801 | $ | 1,777,055 | -1 | % | -2 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Health Information Solutions Segment |
% Change | % Change | ||||||||||||||||||||||
| Q3 2014 | YTD 2014 | Q3 2013 | YTD 2013 | Q3 14 v. Q3 13 | YTD 14 v. YTD 13 | |||||||||||||||||||
| Condition and case management |
$ | 48,356 | $ | 145,215 | $ | 55,992 | $ | 161,475 | -14 | % | -10 | % | ||||||||||||
| Wellness |
21,546 | 70,030 | 22,223 | 75,753 | -3 | % | -8 | % | ||||||||||||||||
| Women’s & children’s health |
23,769 | 70,308 | 28,431 | 86,767 | -16 | % | -19 | % | ||||||||||||||||
| Patient self-testing services |
30,185 | 86,799 | 27,025 | 77,437 | 12 | % | 12 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Health information solutions net revenue |
$ | 123,856 | $ | 372,352 | $ | 133,671 | $ | 401,432 | -7 | % | -7 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| (1) | Revenues are presented in accordance with generally accepted accounting principles and exclude an adjustment of $0.3 million and $1.1 million, and $0.5 million and $1.8 million related to acquired software license contracts which were not recognized during the three and nine months ended September 30, 2014 and 2013, respectively, due to business combination accounting rules. |
11
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, 2014 | ||||||||||||||||||||
| Operating Segment | Professional Diagnostics |
Health Information Solutions |
Consumer Diagnostics |
Corporate | Total | |||||||||||||||
| Net revenue |
$ | 585,941 | $ | 123,856 | $ | 26,449 | $ | — | $ | 736,246 | ||||||||||
| Adjustment related to acquired software license contracts (1) |
324 | — | — | — | 324 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Non-GAAP adjusted net revenue |
$ | 586,265 | $ | 123,856 | $ | 26,449 | $ | — | $ | 736,570 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Operating income (loss) |
$ | 56,499 | $ | 9,824 | $ | 3,743 | $ | (32,454 | ) | $ | 37,612 | |||||||||
| Adjustment related to acquired software license contracts (1) |
324 | — | — | — | 324 | |||||||||||||||
| Amortization of acquisition-related intangible assets |
56,063 | 8,282 | 175 | 1,333 | 65,853 | |||||||||||||||
| Restructuring charges |
14,124 | 424 | — | 3,178 | 17,726 | |||||||||||||||
| Stock-based compensation expense |
— | — | — | 3,167 | 3,167 | |||||||||||||||
| Compensation charges associated with acquisition-related contingent consideration obligations |
670 | — | — | — | 670 | |||||||||||||||
| Acquisition-related costs |
— | — | — | 325 | 325 | |||||||||||||||
| Fair value adjustments to acquisition-related contingent consideration |
(4,237 | ) | (4,400 | ) | — | 3,100 | (5,537 | ) | ||||||||||||
| Costs associated with potential business dispositions |
5,885 | 318 | — | — | 6,203 | |||||||||||||||
| Loss on disposition |
— | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Non-GAAP adjusted operating income (loss) |
$ | 129,328 | $ | 14,448 | $ | 3,918 | $ | (21,351 | ) | $ | 126,343 | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Non-GAAP adjusted operating income (loss) as % of Non-GAAP adjusted net revenue |
22.1 | % | 11.7 | % | 14.8 | % | 17.2 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
| (1) | Estimated revenue related to acquired software license contracts that was not recognized during the third quarter of 2014 due to business combination accounting rules. |
| For the Three Months Ended September 30, 2013 | ||||||||||||||||||||
| Operating Segment | Professional Diagnostics |
Health Information Solutions |
Consumer Diagnostics |
Corporate | Total | |||||||||||||||
| Net revenue |
$ | 590,801 | $ | 133,671 | $ | 28,848 | $ | — | $ | 753,320 | ||||||||||
| Adjustment related to acquired software license contracts (1) |
535 | — | — | — | 535 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Non-GAAP adjusted net revenue |
$ | 591,336 | $ | 133,671 | $ | 28,848 | $ | — | $ | 753,855 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Operating income (loss) |
$ | 53,189 | $ | (1,918 | ) | $ | 3,347 | $ | (29,034 | ) | $ | 25,584 | ||||||||
| Adjustment related to acquired software license contracts (1) |
535 | — | — | — | 535 | |||||||||||||||
| Amortization of acquisition-related intangible assets |
69,556 | 11,948 | 459 | — | 81,963 | |||||||||||||||
| 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 | (97 | ) | — | 400 | 1,819 | ||||||||||||||
| Costs associated with proxy contest |
— | — | — | 5,467 | 5,467 | |||||||||||||||
| Loss on disposition |
5,885 | — | — | — | 5,885 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Non-GAAP adjusted operating income (loss) |
$ | 138,184 | $ | 11,594 | $ | 3,806 | $ | (17,055 | ) | $ | 136,529 | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Non-GAAP adjusted operating income (loss) as % of Non-GAAP adjusted net revenue |
23.4 | % | 8.7 | % | 13.2 | % | 18.1 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
| (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. |
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.
12
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, 2014 | ||||||||||||||||||||
| Operating Segment | Professional Diagnostics |
Health Information Solutions |
Consumer Diagnostics |
Corporate | Total | |||||||||||||||
| Net revenue |
$ | 1,735,856 | $ | 372,352 | $ | 81,616 | $ | — | $ | 2,189,824 | ||||||||||
| Adjustment related to acquired software license contracts (1) |
1,116 | — | — | — | 1,116 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Non-GAAP adjusted net revenue |
$ | 1,736,972 | $ | 372,352 | $ | 81,616 | $ | — | $ | 2,190,940 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Operating income (loss) |
$ | 119,341 | $ | 6,813 | $ | 10,618 | $ | (74,023 | ) | $ | 62,749 | |||||||||
| Adjustment related to acquired software license contracts (1) |
1,116 | — | — | — | 1,116 | |||||||||||||||
| Amortization of acquisition-related intangible assets |
170,687 | 25,068 | 638 | 1,333 | 197,726 | |||||||||||||||
| Restructuring charges |
29,571 | 3,872 | — | 7,328 | 40,771 | |||||||||||||||
| Stock-based compensation expense |
— | — | — | 7,751 | 7,751 | |||||||||||||||
| Compensation charges associated with acquisition-related contingent consideration obligations |
1,673 | — | — | — | 1,673 | |||||||||||||||
| Acquisition-related costs |
— | — | — | 695 | 695 | |||||||||||||||
| Fair value adjustments to acquisition-related contingent consideration |
16,803 | (3,161 | ) | — | 3,400 | 17,042 | ||||||||||||||
| Costs associated with potential business dispositions |
20,445 | 318 | — | — | 20,763 | |||||||||||||||
| Loss on disposition |
638 | — | — | — | 638 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Non-GAAP adjusted operating income (loss) |
$ | 360,274 | $ | 32,910 | $ | 11,256 | $ | (53,516 | ) | $ | 350,924 | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Non-GAAP adjusted operating income (loss) as % of Non-GAAP adjusted net revenue |
20.7 | % | 8.8 | % | 13.8 | % | 16.0 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
| (1) | Estimated revenue related to acquired software license contracts that was not recognized during the nine months of 2014 due to business combination accounting rules. |
| For the Nine Months Ended September 30, 2013 | ||||||||||||||||||||
| Operating Segment | Professional Diagnostics |
Health Information Solutions |
Consumer Diagnostics |
Corporate | Total | |||||||||||||||
| Net revenue |
$ | 1,777,055 | $ | 401,432 | $ | 76,846 | $ | — | $ | 2,255,333 | ||||||||||
| Adjustment related to acquired software license contracts (1) |
1,770 | — | — | — | 1,770 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Non-GAAP adjusted net revenue |
$ | 1,778,825 | $ | 401,432 | $ | 76,846 | $ | — | $ | 2,257,103 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Operating income (loss) |
$ | 185,925 | $ | (18,832 | ) | $ | 9,031 | $ | (66,909 | ) | $ | 109,215 | ||||||||
| Adjustment related to acquired software license contracts (1) |
1,770 | — | — | — | 1,770 | |||||||||||||||
| Amortization of acquisition-related intangible assets |
201,817 | 33,148 | 1,453 | — | 236,418 | |||||||||||||||
| 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 | |||||||||||||||
| Non-cash charge associated with acquired inventory |
1,880 | — | — | — | 1,880 | |||||||||||||||
| Acquisition-related costs |
— | — | — | 1,772 | 1,772 | |||||||||||||||
| Fair value adjustments to acquisition-related contingent consideration |
12,909 | 2,486 | — | 900 | 16,295 | |||||||||||||||
| Costs associated with proxy contest |
— | — | — | 5,467 | 5,467 | |||||||||||||||
| Loss on disposition |
5,885 | — | — | — | 5,885 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Non-GAAP adjusted operating income (loss) |
$ | 421,380 | $ | 27,270 | $ | 10,484 | $ | (44,308 | ) | $ | 414,826 | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Non-GAAP adjusted operating income (loss) as % of Non-GAAP adjusted net revenue |
23.7 | % | 6.8 | % | 13.6 | % | 18.4 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
| (1) | Estimated revenue related to acquired software license contracts that was not recognized during the nine months of 2013 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.
13
Alere Inc. and Subsidiaries
Reconciliations to Non-GAAP Adjusted P&L Categories
(in thousands)
| Three Months Ended September 30, 2014 |
Three Months Ended September 30, 2013 |
|||||||
| Net revenue |
$ | 736,246 | $ | 753,320 | ||||
| Adjustment related to acquired software license contracts |
324 | 535 | ||||||
|
|
|
|
|
|||||
| Non-GAAP adjusted net revenue |
$ | 736,570 | $ | 753,855 | ||||
|
|
|
|
|
|||||
| Cost of net revenue |
$ | 393,387 | $ | 384,003 | ||||
| Less adjustments: |
||||||||
| Amortization of acquisition-related intangible assets |
(15,973 | ) | (17,979 | ) | ||||
| Restructuring charges |
(5,654 | ) | (3,556 | ) | ||||
| Stock-based compensation expense |
(291 | ) | (287 | ) | ||||
| Non-cash charge associated with acquired inventory |
— | (708 | ) | |||||
|
|
|
|
|
|||||
| Non-GAAP adjusted cost of net revenue |
$ | 371,469 | $ | 361,473 | ||||
|
|
|
|
|
|||||
| Non-GAAP adjusted gross profit |
$ | 365,101 | $ | 392,382 | ||||
|
|
|
|
|
|||||
| Three Months Ended September 30, 2014 |
Three Months Ended September 30, 2013 |
|||||||
| Research and development |
$ | 38,726 | $ | 40,498 | ||||
| Less adjustments: |
||||||||
| Amortization of acquisition-related intangible assets |
(1,372 | ) | (1,231 | ) | ||||
| Restructuring charges |
(5,457 | ) | (1,100 | ) | ||||
| Stock-based compensation expense |
(279 | ) | (1,111 | ) | ||||
|
|
|
|
|
|||||
| Non-GAAP adjusted research and development |
$ | 31,618 | $ | 37,056 | ||||
|
|
|
|
|
|||||
| Three Months Ended September 30, 2014 |
Three Months Ended September 30, 2013 |
|||||||
| Selling, general and administrative |
$ | 266,521 | $ | 297,350 | ||||
| Less adjustments: |
||||||||
| Amortization of acquisition-related intangible assets |
(48,508 | ) | (62,753 | ) | ||||
| Restructuring charges |
(6,615 | ) | (3,038 | ) | ||||
| Stock-based compensation expense |
(2,597 | ) | (4,264 | ) | ||||
| Compensation charges associated with acquisition-related contingent consideration obligations |
(670 | ) | (762 | ) | ||||
| Acquisition-related costs |
(325 | ) | (450 | ) | ||||
| Fair value adjustments to acquisition-related contingent consideration |
5,537 | (1,819 | ) | |||||
| Costs associated with potential business dispositions |
(6,203 | ) | — | |||||
| Costs associated with proxy contest |
— | (5,467 | ) | |||||
|
|
|
|
|
|||||
| Non-GAAP adjusted selling, general and administrative |
$ | 207,140 | $ | 218,797 | ||||
|
|
|
|
|
|||||
| Three Months Ended September 30, 2014 |
Three Months Ended September 30, 2013 |
|||||||
| Loss on disposition |
$ | — | $ | 5,885 | ||||
| Loss on disposition |
— | (5,885 | ) | |||||
|
|
|
|
|
|||||
| Non-GAAP adjusted loss on disposition |
$ | — | $ | — | ||||
|
|
|
|
|
|||||
| Three Months Ended September 30, 2014 |
Three Months Ended September 30, 2013 |
|||||||
| Interest and other income (expense), net |
$ | (60,741 | ) | $ | (62,288 | ) | ||
| Less adjustments: |
||||||||
| Restructuring charges |
143 | 111 | ||||||
| Interest expense recorded in connection with fees paid for certain debt modifications and the termination of our senior secured credit facility |
363 | 364 | ||||||
| Interest accretion associated with acquisition-related compensation charges |
102 | 98 | ||||||
| Bargain purchase gain associated with the acquisition of the Liberty business |
— | 39 | ||||||
|
|
|
|
|
|||||
| Non-GAAP adjusted interest and other income (expense), net |
$ | (60,133 | ) | $ | (61,676 | ) | ||
|
|
|
|
|
|||||
| Three Months Ended September 30, 2014 |
Three Months Ended September 30, 2013 |
|||||||
| Provision (benefit) for income taxes |
$ | 76,648 | $ | (14,980 | ) | |||
| Add: Income tax effects on Non-GAAP adjustments |
(50,497 | ) | 37,477 | |||||
|
|
|
|
|
|||||
| Non-GAAP adjusted provision for income taxes |
$ | 26,151 | $ | 22,497 | ||||
|
|
|
|
|
|||||
| Three Months Ended September 30, 2014 |
Three Months Ended September 30, 2013 |
|||||||
| Equity earnings of unconsolidated entities, net of tax |
$ | 6,277 | $ | 5,753 | ||||
| Less adjustments: |
||||||||
| Amortization of acquisition-related intangible assets |
132 | 147 | ||||||
| Loss on sale of equity investment |
457 | — | ||||||
| Income tax effects on items above |
— | — | ||||||
|
|
|
|
|
|||||
| Non-GAAP adjusted equity earnings of unconsolidated entities, net of tax |
$ | 6,866 | $ | 5,900 | ||||
|
|
|
|
|
|||||
14
Alere Inc. and Subsidiaries
Reconciliations to Non-GAAP Adjusted P&L Categories
(in thousands)
| Nine Months Ended September 30, 2014 |
Nine Months Ended September 30, 2013 |
|||||||
| Net revenue |
$ | 2,189,824 | $ | 2,255,333 | ||||
| Adjustment related to acquired software license contracts |
1,116 | 1,770 | ||||||
|
|
|
|
|
|||||
| Non-GAAP adjusted net revenue |
$ | 2,190,940 | $ | 2,257,103 | ||||
|
|
|
|
|
|||||
| Cost of net revenue |
$ | 1,154,057 | $ | 1,136,846 | ||||
| Less adjustments: |
||||||||
| Amortization of acquisition-related intangible assets |
(48,109 | ) | (53,737 | ) | ||||
| Restructuring charges |
(6,821 | ) | (4,908 | ) | ||||
| Stock-based compensation expense |
(863 | ) | (797 | ) | ||||
| Non-cash charge associated with acquired inventory |
— | (1,880 | ) | |||||
|
|
|
|
|
|||||
| Non-GAAP adjusted cost of net revenue |
$ | 1,098,264 | $ | 1,075,524 | ||||
|
|
|
|
|
|||||
| Non-GAAP adjusted gross profit |
$ | 1,092,676 | $ | 1,181,579 | ||||
|
|
|
|
|
|||||
| Nine Months Ended September 30, 2014 |
Nine Months Ended September 30, 2013 |
|||||||
| Research and development |
$ | 114,855 | $ | 120,860 | ||||
| Less adjustments: |
||||||||
| Amortization of acquisition-related intangible assets |
(3,721 | ) | (3,729 | ) | ||||
| Restructuring charges |
(8,488 | ) | (1,745 | ) | ||||
| Stock-based compensation expense |
340 | (2,641 | ) | |||||
|
|
|
|
|
|||||
| Non-GAAP adjusted research and development |
$ | 102,986 | $ | 112,745 | ||||
|
|
|
|
|
|||||
| Nine Months Ended September 30, 2014 |
Nine Months Ended September 30, 2013 |
|||||||
| Selling, general and administrative |
$ | 857,525 | $ | 882,527 | ||||
| Less adjustments: |
||||||||
| Amortization of acquisition-related intangible assets |
(145,896 | ) | (178,952 | ) | ||||
| Restructuring charges |
(25,462 | ) | (12,977 | ) | ||||
| Stock-based compensation expense |
(7,228 | ) | (11,024 | ) | ||||
| Compensation charges associated with acquisition-related contingent consideration obligations |
(1,673 | ) | (2,032 | ) | ||||
| Acquisition-related costs |
(695 | ) | (1,772 | ) | ||||
| Fair value adjustments to acquisition-related contingent consideration |
(17,042 | ) | (16,295 | ) | ||||
| Costs associated with potential business dispositions |
(20,763 | ) | — | |||||
| Costs associated with proxy contest |
— | (5,467 | ) | |||||
|
|
|
|
|
|||||
| Non-GAAP adjusted selling, general and administrative |
$ | 638,766 | $ | 654,008 | ||||
|
|
|
|
|
|||||
| Nine Months Ended September 30, 2014 |
Nine Months Ended September 30, 2013 |
|||||||
| Loss on disposition |
$ | 638 | $ | 5,885 | ||||
| Loss on disposition |
(638 | ) | (5,885 | ) | ||||
|
|
|
|
|
|||||
| Non-GAAP adjusted loss on disposition |
$ | — | $ | — | ||||
|
|
|
|
|
|||||
| Nine Months Ended September 30, 2014 |
Nine Months Ended September 30, 2013 |
|||||||
| Interest and other income (expense), net |
$ | (157,564 | ) | $ | (211,532 | ) | ||
| Less adjustments: |
||||||||
| Restructuring charges |
376 | 228 | ||||||
| Interest expense recorded in connection with fees paid for certain debt modifications and the termination of our senior secured credit facility |
1,091 | 2,126 | ||||||
| Interest accretion associated with acquisition-related compensation charges |
295 | 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 | ||||||
|
|
|
|
|
|||||
| Non-GAAP adjusted interest and other income (expense), net |
$ | (155,802 | ) | $ | (176,066 | ) | ||
|
|
|
|
|
|||||
| Nine Months Ended September 30, 2014 |
Nine Months Ended September 30, 2013 |
|||||||
| Provision (benefit) for income taxes |
$ | 63,109 | $ | (30,359 | ) | |||
| Add: Income tax effects on Non-GAAP adjustments |
2,693 | 111,405 | ||||||
|
|
|
|
|
|||||
| Non-GAAP adjusted provision for income taxes |
$ | 65,802 | $ | 81,046 | ||||
|
|
|
|
|
|||||
| Nine Months Ended September 30, 2014 |
Nine Months Ended September 30, 2013 |
|||||||
| Equity earnings of unconsolidated entities, net of tax |
$ | 13,716 | $ | 13,238 | ||||
| Less adjustments: |
||||||||
| Amortization of acquisition-related intangible assets |
430 | 448 | ||||||
| Loss on sale of equity investment |
457 | — | ||||||
| Income tax effects on items above |
— | — | ||||||
|
|
|
|
|
|||||
| Non-GAAP adjusted equity earnings of unconsolidated entities, net of tax |
$ | 14,603 | $ | 13,686 | ||||
|
|
|
|
|
|||||
15
Alere Inc. and Subsidiaries
Reconciliations of Gross Profit/Margin to Non-GAAP Adjusted Gross Profit/Margin
(in thousands)
| Three Months Ended | Three Months Ended | Three Months Ended | ||||||||||||||||||||||
| Alere Consolidated | September 30, 2013 (1) | June 30, 2014 (1) | September 30, 2014 | |||||||||||||||||||||
| Net revenue |
$ | 753,320 | $ | 737,416 | $ | 736,246 | ||||||||||||||||||
| Adjustment related to acquired software license contracts |
535 | 373 | 324 | |||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||
| Non-GAAP adjusted net revenue |
753,855 | 737,789 | 736,570 | |||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||
| Cost of net revenue |
384,003 | 396,594 | 393,387 | |||||||||||||||||||||
| Less adjustments: |
||||||||||||||||||||||||
| Amortization of acquisition-related intangible assets |
17,979 | 15,972 | 15,972 | |||||||||||||||||||||
| Stock-based compensation expense |
287 | 285 | 291 | |||||||||||||||||||||
| Non-cash charge associated with acquired inventory |
708 | — | — | |||||||||||||||||||||
| Restructuring charges |
3,556 | 292 | 5,654 | |||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||
| Non-GAAP adjusted cost of net revenue |
361,473 | 380,045 | 371,470 | |||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||
| Non-GAAP adjusted gross profit/margin |
$ | 392,382 | 52.1 | % | $ | 357,744 | 48.5 | % | $ | 365,100 | 49.6 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Three Months Ended | Three Months Ended | Three Months Ended | ||||||||||||||||||||||
| Professional Diagnostics Segment | September 30, 2013 | June 30, 2014 | September 30, 2014 | |||||||||||||||||||||
| Net product sales and services revenue |
$ | 587,313 | $ | 578,077 | $ | 581,759 | ||||||||||||||||||
| Adjustment related to acquired software license contracts |
535 | 373 | 324 | |||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||
| Non-GAAP adjusted net product sales and services revenue |
587,848 | 578,450 | 582,083 | |||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||
| Cost of net revenue |
286,481 | 307,001 | 308,467 | |||||||||||||||||||||
| Less adjustments: |
||||||||||||||||||||||||
| Amortization of acquisition-related intangible assets |
15,245 | 15,053 | 15,081 | |||||||||||||||||||||
| Stock-based compensation expense |
287 | 285 | 291 | |||||||||||||||||||||
| Non-cash charge associated with acquired inventory |
708 | — | — | |||||||||||||||||||||
| Restructuring charges |
3,422 | 220 | 5,654 | |||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||
| Non-GAAP adjusted cost of net revenue |
266,819 | 291,443 | 287,441 | |||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||
| Non-GAAP adjusted gross profit/margin |
$ | 321,029 | 54.6 | % | $ | 287,007 | 49.6 | % | $ | 294,642 | 50.6 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Three Months Ended | Three Months Ended | Three Months Ended | ||||||||||||||||||||||
| Health Information Solutions Segment | September 30, 2013 (1) | June 30, 2014 (1) | September 30, 2014 | |||||||||||||||||||||
| Net product sales and services revenue |
$ | 133,671 | $ | 125,288 | $ | 123,857 | ||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||
| Cost of net revenue |
72,764 | 67,145 | 63,470 | |||||||||||||||||||||
| Less adjustments: |
||||||||||||||||||||||||
| Amortization of acquisition-related intangible assets |
2,522 | 894 | 866 | |||||||||||||||||||||
| Restructuring charges |
134 | 72 | — | |||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||
| Non-GAAP adjusted cost of net revenue |
70,108 | 66,179 | 62,604 | |||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||
| Non-GAAP adjusted gross profit/margin |
$ | 63,563 | 47.6 | % | $ | 59,109 | 47.2 | % | $ | 61,253 | 49.5 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Note:
| (1) | Restated to reflect the impact of discontinued operations |
16
Alere Inc. and Subsidiaries
Reconciliation of Net Loss to Non-GAAP EBITDA
(in thousands)
| Three Months Ended | Nine Months Ended | |||||||
| September 30, 2014 | September 30, 2014 | |||||||
| Net Loss (1) |
$ | (86,455 | ) | (142,161 | ) | |||
| Less: Income from discontinued operations, net of tax |
7,045 | 2,047 | ||||||
|
|
|
|
|
|||||
| Loss from continuing operations |
(93,500 | ) | (144,208 | ) | ||||
| Adjustment related to acquired software license contracts |
324 | 1,116 | ||||||
| Income tax provision (benefit) |
76,648 | 63,109 | ||||||
| Depreciation and amortization |
96,048 | 291,190 | ||||||
| Interest, net |
51,765 | 155,104 | ||||||
| Non-cash stock-based compensation expense |
3,169 | 7,751 | ||||||
| Non-cash fair value adjustments to acquisition-related contingent consideration |
(5,537 | ) | 17,042 | |||||
| Loss on sale of equity investment |
457 | 457 | ||||||
| Loss on disposition |
— | 638 | ||||||
|
|
|
|
|
|||||
| Non-GAAP EBITDA |
$ | 129,374 | $ | 392,199 | ||||
|
|
|
|
|
|||||
| (1) | Net loss for the three months and nine months ended September 30, 2014 includes non-interest related restructuring charges of $17.7 million and $40.7 million, $0.3 million and $0.7 million of acquisition costs and $6.2 million and $20.8 million of costs associated with potential business dispositions, respectively, which have not been added back for purposes of computing Non-GAAP EBITDA. |
17
Alere Inc. and Subsidiaries
Reconciliation of Net Cash Provided by Operating Activities to Non-GAAP Free Cash Flow
(in thousands)
| Three Months Ended | Nine Months Ended | |||||||
| September 30, 2014 | September 30, 2014 | |||||||
| Net cash provided by operating activities |
$ | 91,720 | $ | 216,887 | ||||
| Capital expenditures |
(28,807 | ) | (80,456 | ) | ||||
|
|
|
|
|
|||||
| Non-GAAP free cash flow |
$ | 62,913 | $ | 136,431 | ||||
|
|
|
|
|
|||||
18
Alere Inc. and Subsidiaries
Discontinued Operations
(in thousands)
| Three Months Ended |
Three Months Ended |
Three Months Ended |
Three Months Ended |
Three Months Ended |
Three Months Ended |
Three Months Ended |
||||||||||||||||||||||
| March 31, 2013 |
June 30, 2013 |
September 30, 2013 |
December 31, 2013 |
March 31, 2014 |
June 30, 2014 |
September 30, 2014 |
||||||||||||||||||||||
| Net product sales and services revenue |
$ | 596 | $ | 625 | $ | 562 | $ | 582 | $ | 461 | $ | 527 | $ | 690 | ||||||||||||||
| License and royalty revenue |
— | — | — | — | — | — | — | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net revenue |
596 | 625 | 562 | 582 | 461 | 527 | 690 | |||||||||||||||||||||
| Cost of net revenue |
427 | 1,221 | 1,233 | 2,925 | 1,307 | 1,431 | 7,440 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Gross profit (loss) |
169 | (596 | ) | (671 | ) | (2,343 | ) | (846 | ) | (904 | ) | (6,750 | ) | |||||||||||||||
| Operating expenses: |
||||||||||||||||||||||||||||
| Research and development |
892 | 700 | — | — | — | — | — | |||||||||||||||||||||
| Sales and marketing |
804 | 831 | 909 | 837 | 829 | 706 | 694 | |||||||||||||||||||||
| General and administrative |
2,693 | 2,392 | 3,705 | 2,847 | 1,429 | 3,241 | (7,913 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Operating loss |
(4,220 | ) | (4,519 | ) | (5,285 | ) | (6,027 | ) | (3,104 | ) | (4,851 | ) | 469 | |||||||||||||||
| Interest and other income (expense), net |
(15 | ) | (0 | ) | (1 | ) | (2 | ) | (1 | ) | (31 | ) | (29 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Loss before benefit for income taxes |
(4,235 | ) | (4,519 | ) | (5,286 | ) | (6,029 | ) | (3,105 | ) | (4,882 | ) | 440 | |||||||||||||||
| Benefit for income taxes |
(1,684 | ) | (1,733 | ) | (2,063 | ) | (2,402 | ) | (1,210 | ) | (1,779 | ) | (6,605 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Income (loss) from discontinued operations, net of taxes |
$ | (2,551 | ) | $ | (2,786 | ) | $ | (3,223 | ) | $ | (3,627 | ) | $ | (1,894 | ) | $ | (3,103 | ) | $ | 7,045 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Certain items included above: |
||||||||||||||||||||||||||||
| Amortization of intangible assets: |
||||||||||||||||||||||||||||
| Cost of net revenue |
$ | — | $ | 514 | $ | 257 | $ | 2,022 | $ | 471 | $ | 471 | $ | 18,430 | ||||||||||||||
| Sales and marketing |
— | 50 | 25 | 19 | — | — | — | |||||||||||||||||||||
| General and administrative |
— | 6 | 3 | 3 | 3 | 3 | 29 | |||||||||||||||||||||
| Change in fair value of contingent consideration: |
||||||||||||||||||||||||||||
| General and administrative |
1,700 | 100 | 900 | 600 | (1,350 | ) | 100 | (25,071 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 1,700 | 670 | 1,185 | 2,644 | (876 | ) | 574 | (6,612 | ) | ||||||||||||||||||||
| Provision (benefit) for income taxes |
(663 | ) | (253 | ) | (458 | ) | (1,002 | ) | 348 | (217 | ) | (4,291 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
$ | 1,037 | $ | 417 | $ | 727 | $ | 1,642 | $ | (528 | ) | $ | 357 | $ | (10,903 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
19