- Company Posts Quarterly EPS of $0.39, Total Revenues of $109.1 Million -
- For Full Year 2008, EPS Increase by 23%, Total Revenues by 17% -
- Company Generates $178.3 Million of Operating Cash in 2008 -
SAN DIEGO, Feb. 17 /PRNewswire-FirstCall/ -- Gen-Probe Incorporated
(Nasdaq: GPRO) today reported strong financial results for the fourth quarter
and full year ended December 31, 2008, including quarterly earnings per share
(EPS) of $0.39(1) and total revenues of $109.1 million.
"Gen-Probe posted strong financial results in the fourth quarter of 2008,
driven by healthy growth in both clinical diagnostics and blood screening
sales," said Hank Nordhoff, the Company's chairman and chief executive
officer. "In addition, our fourth quarter performance completed an excellent
2008 that saw top- and bottom-line growth rates exceed our long-term goals."
In the fourth quarter of 2008, product sales were $105.8 million, compared
to $92.4 million in the prior year period, an increase of 15%. Total revenues
for the fourth quarter of 2008 were $109.1 million, compared to $98.9 million
in the prior year period, an increase of 10%. Net income in the fourth
quarter of 2008 was $21.1 million ($0.39 per share), compared to $20.4 million
($0.37 per share) in the prior year period, an increase of 3% (5% per share).
In the prior year period, both net income and EPS benefited from an income tax
rate of approximately 22% that resulted mainly from the completion of an audit
of the Company's 2003 and 2004 California state income tax returns.
For the full year 2008, product sales were $429.2 million, compared to
$370.9 million in the prior year, an increase of 16%. Total revenues for 2008
were $472.7 million, compared to $403.0 million in the prior year, an increase
of 17%. Net income for 2008 was $107.0 million ($1.95 per share), compared to
$86.1 million ($1.58 per share) in the prior year, an increase of 24% (23% per
share). In the prior year, both net income and EPS benefited from an income
tax rate of approximately 23% that resulted mainly from the item noted above
and the completion of an audit of the Company's 2003 and 2004 federal income
tax returns, the benefit from which was recorded in the second quarter of
2007.
Detailed Results
Gen-Probe's clinical diagnostics sales in the fourth quarter of 2008
reflected the continued growth of the APTIMA Combo 2(R) assay, an amplified
nucleic acid test (NAT) for simultaneously detecting Chlamydia trachomatis
(CT) and Neisseria gonorrhoeae (GC). Sales of this assay increased based on
market share gains on both the Company's semi-automated instrument platform
and on the high-throughput, fully automated TIGRIS(R) system. Revenue from
the PACE(R) product line, the Company's non-amplified tests for the same
microorganisms, declined in the fourth quarter compared to the prior year
period, in line with Gen-Probe's expectations.
In blood screening, product sales in the fourth quarter of 2008 benefited
mainly from increased sales of the PROCLEIX(R) ULTRIO(R) assay. In contrast
to the first three quarters of 2008, foreign exchange fluctuations had a
negative effect of $0.1 million on blood screening growth in the fourth
quarter compared to the prior year period. Chiron, a business unit of
Novartis Vaccines and Diagnostics, markets the Company's blood screening
products worldwide.
Product sales were, in millions:
Three Months Ended Dec. 31, Year Ended Dec. 31,
2008 2007 Increase 2008 2007 Increase
Clinical
diagnostics $57.7 $49.7 16% $222.9 $199.2 12%
Blood screening $48.1 $42.7 13% $206.3 $171.7 20%
Total product
sales $105.8 $92.4 15% $429.2 $370.9 16%
Collaborative research revenues in the fourth quarter of 2008 were $2.1
million, compared to $5.4 million in the prior year period, a decrease of 61%
that resulted primarily from the June 2008 termination of the Company's
collaboration with 3M to develop rapid tests for healthcare-associated
infections. For the full year 2008, collaborative research revenues were
$20.6 million, compared to $16.6 million in the prior year, an increase of 24%
that resulted primarily from a $10 million milestone the Company earned from
Chiron in the third quarter based on the full approval by the US Food and Drug
Administration (FDA) of the PROCLEIX ULTRIO assay on the TIGRIS system.
Royalty and license revenues for the fourth quarter of 2008 were $1.3
million, compared to $1.1 million in the prior year period, an increase of
18%. For the full year 2008, royalty and license revenues were $22.9 million,
compared to $15.5 million in the prior year, an increase of 48% that resulted
primarily from revenue that was recorded in the first quarters of 2007 and
2008 associated with the settlement of Gen-Probe's patent infringement
litigation against Bayer (now Siemens Medical Solutions Diagnostics).
Specifically, Gen-Probe recorded $10.3 million of revenue from this settlement
in the first quarter of 2007, and a final payment of $16.4 million in the
first quarter of 2008.
Gross margin on product sales in the fourth quarter of 2008 was 69.6%,
compared to 69.2% in the prior year period. This increase resulted primarily
from increased sales of blood screening products and APTIMA(R) assays. In the
fourth quarter of 2008, gross margin on product sales was negatively affected
by costs associated with the voluntary recall of certain AccuProbe(R) culture
identification kits, which increased cost of product sales by $0.9 million and
reduced gross margin on product sales by approximately 0.9%. For the full
year 2008, gross margin on product sales was 70.2%, compared to 67.7% in the
prior year. This increase resulted primarily from the factors discussed
above.
Research and development (R&D) expenses in the fourth quarter of 2008 were
$24.2 million, essentially unchanged from $24.3 million in the prior year
period. For the full year 2008, R&D expenses were $101.1 million, compared to
$97.1 million in the prior year, an increase of 4% that resulted primarily
from costs associated with key development programs such as the post-marketing
studies of the PROCLEIX ULTRIO assay in the United States, the investigational
APTIMA human papillomavirus (HPV) assay, and Gen-Probe's fully automated
instrument system for low- and mid-volume labs, known as PANTHER.
Marketing and sales expenses in the fourth quarter of 2008 were $11.8
million, compared to $11.3 million in the prior year period, an increase of 4%
that resulted primarily from European market development efforts related to
the Company's APTIMA Combo 2, APTIMA HPV and PROGENSA(TM) PCA3 assays. For
the full year 2008, marketing and sales expenses were $45.9 million, compared
to $39.9 million in the prior year, an increase of 15% that also resulted from
European market development efforts.
General and administrative (G&A) expenses in the fourth quarter of 2008
were $13.8 million, compared to $12.3 million in the prior year period, an
increase of 12% that resulted primarily from increased business development,
legal and compensation costs. For the full year 2008, G&A expenses were $52.3
million, compared to $47.0 million in the prior year, an increase of 11% that
resulted primarily from the factors described above.
Total other income in the fourth quarter of 2008 was $3.8 million,
compared to $3.7 million in the prior year period, an increase of 3% that
resulted primarily from higher short-term investment balances. For the full
year 2008, total other income was $15.5 million, compared to $12.3 million in
the prior year period, an increase of 26% that also resulted from higher
short-term investment balances.
Gen-Probe continues to have a strong balance sheet. As of December 31,
2008, the Company had $505.2 million of cash, cash equivalents and short-term
investments, and no debt. In the fourth quarter of 2008, the Company
repurchased approximately 1.5 million shares of its common stock for $65
million. For the full year 2008, Gen-Probe generated net cash of $178.3
million from its operating activities, compared to the Company's net income of
$107.0 million.
2009 Financial Guidance
Gen-Probe provided its initial 2009 financial guidance via a press release
issued on January 27, 2009.
"We expect 2009 to be another year of solid underlying earnings growth for
Gen-Probe, although previously disclosed non-recurring items that added
approximately $32 million of revenue and $0.34 of EPS will make comparisons to
2008 difficult," said Herm Rosenman, the Company's senior vice president of
finance and chief financial officer.
Gen-Probe's 2009 guidance excludes revenue and expense associated with the
pending Tepnel acquisition, which is expected to close in the second quarter,
as well as any incremental revenue from the PROCLEIX ULTRIO assay in the
United States. For the full year 2009, the Company expects the following on a
GAAP basis:
2009 Guidance
Total revenues $460 million to $490 million
Product gross margins 69-72%
R&D expenses 20-22%
Marketing and sales expenses 10-11%
G&A expenses 10-11%
Tax rate 34%
Diluted shares outstanding 52-54 million
EPS $1.80 to $2.05
This guidance incorporates foreign exchange rate fluctuations
approximately 10% higher and lower than recent levels. The Company recorded
approximately $90 million of non-U.S.-dollar-denominated revenue in 2008.
Recent Events
-- Tepnel Acquisition. On January 30, 2009, Gen-Probe announced an offer
to acquire all the outstanding and to-be-issued shares of Tepnel Life
Sciences, PLC (AIM: TED), a rapidly growing molecular diagnostics and
research services company based in the United Kingdom, for 27.1 pence
per share in cash, or approximately 92.8 million pounds in total.
-- New Novartis Agreement. On January 27, 2009, Gen-Probe announced an
agreement to extend and expand its blood screening collaboration with
Chiron, a Novartis (NYSE: NVS) business, ensuring the companies will
work together to develop and commercialize molecular technologies that
safeguard the world's donated blood supply until the year 2025.
-- New R&D Leader. On February 3, 2009, Gen-Probe announced that Eric
Lai, Ph.D., had joined the Company as senior vice president, research
and development. Dr. Lai was most recently vice president,
pharmacogenetics experimental project coordination and analysis, at
GlaxoSmithKline.
-- New Strategy Executive. On January 13, 2009, Gen-Probe announced that
Eric Tardif had joined the Company as senior vice president, corporate
strategy. Mr. Tardif was formerly a managing director in Morgan
Stanley's healthcare investment banking group.
-- APTIMA HPV Data. On November 21, 2008, Gen-Probe announced that
promising data on the Company's CE-marked APTIMA HPV assay was
presented in nine oral presentations and two scientific posters at the
international conference of the European Research Organization on
Genital Infection and Neoplasia in Nice, France.
Webcast Conference Call
A live webcast of Gen-Probe's fourth quarter 2008 conference call for
investors can be accessed at http://www.gen-probe.com beginning at 4:30 p.m.
Eastern Time today. The webcast will be archived for at least 90 days. A
telephone replay of the call also will be available for approximately 24
hours. The replay number is 800-873-5860 for domestic callers and
203-369-3996 for international callers.
About Gen-Probe
Gen-Probe Incorporated is a global leader in the development, manufacture
and marketing of rapid, accurate and cost-effective nucleic acid tests (NATs)
that are used primarily to diagnose human diseases and screen donated human
blood. Gen-Probe has more than 25 years of NAT expertise, and received the
2004 National Medal of Technology, America's highest honor for technological
innovation, for developing NAT assays for blood screening. Gen-Probe is
headquartered in San Diego and employs approximately 1,000 people. For more
information, go to www.gen-probe.com.
Trademarks
AccuProbe, APTIMA, APTIMA COMBO 2, PACE and TIGRIS are trademarks of
Gen-Probe. ULTRIO and PROCLEIX are trademarks of Novartis. All other
trademarks are the property of their owners.
Caution Regarding Forward-Looking Statements
Any statements in this press release about our expectations, beliefs,
plans, objectives, assumptions or future events or performance, including
those under the heading "2009 Financial Guidance," are not historical facts
and are forward-looking statements. These statements are often, but not
always, made through the use of words or phrases such as believe, will,
expect, anticipate, estimate, intend, plan and would. For example, statements
concerning Gen-Probe's financial condition, possible or expected results of
operations, financial guidance, regulatory approvals, future milestone
payments, growth opportunities, proposed acquisition of Tepnel Life Sciences,
PLC, and plans and objectives of management are all forward-looking
statements. Forward-looking statements are not guarantees of performance.
They involve known and unknown risks, uncertainties and assumptions that may
cause actual results, levels of activity, performance or achievements to
differ materially from those expressed or implied. Some of these risks,
uncertainties and assumptions include but are not limited to: (i) the risk
that we may not achieve our expected 2009 growth, revenue, earnings or other
financial targets, (ii) the possibility that the market for the sale of our
new products, such as our TIGRIS system, APTIMA Combo 2 assay, PROCLEIX ULTRIO
assay and PROGENSA PCA3 assay, may not develop as expected, (iii) the
enhancement of existing products and the development of new products,
including products, if any, to be developed under our recent industrial
collaborations, may not proceed as planned, (iv) the risk that new products or
indications may not be approved by regulatory authorities or become
commercially available in the time frame we anticipate, or at all, (v) the
risk that we may not be able to compete effectively, (vi) the risk that we may
not be able to maintain our current corporate collaborations and enter into
new corporate collaborations or customer contracts, (vii) the risk that our
proposed acquisition of Tepnel may not be completed on the expected timeline,
or at all, (viii) our dependence on Novartis, Siemens (as assignee of Bayer)
and other third parties for the distribution of some of our products, (ix) our
dependence on a small number of customers, contract manufacturers and single
source suppliers of raw materials, (x) changes in third-party reimbursement
policies regarding our products could adversely affect sales of our products,
(xi) changes in government regulation affecting our diagnostic products could
harm our sales and increase our development costs, (xii) the risk that our
intellectual property may be infringed by third parties or invalidated, and
(xiii) our involvement in patent and other intellectual property and
commercial litigation could be expensive, could divert management's attention,
and could interfere with our ability to develop and distribute products. The
foregoing list sets forth some, but not all, of the factors that could affect
our ability to achieve results described in any forward-looking statements.
For additional information about risks and uncertainties we face and a
discussion of our financial statements and footnotes, see documents we file
with the SEC, including our most recent annual report on Form 10-K and all
subsequent periodic reports. We assume no obligation and expressly disclaim
any duty to update forward-looking statements to reflect events or
circumstances after the date of this news release or to reflect the occurrence
of subsequent events.
(1) In this press release, all per share amounts are calculated on a fully
diluted basis, and all results are presented in US GAAP. Some totals may not
foot due to rounding.
Contact:
Michael Watts
Vice president, investor relations and
corporate communications
858-410-8673
Gen-Probe Incorporated
Consolidated Balance Sheets
(In thousands, except share and per share data)
December 31, December 31,
2008 2007
Assets
Current assets:
Cash and cash equivalents $60,122 $75,963
Short-term investments 445,056 357,531
Trade accounts receivable, net of
allowance for doubtful accounts of $700
and $719 at December 31, 2008 and
December 31, 2007, respectively 33,397 32,678
Accounts receivable - other 2,900 11,044
Inventories 54,406 48,540
Deferred income tax - short term 7,269 8,825
Prepaid income tax 2,306 2,390
Prepaid expenses 15,094 17,505
Other current assets 6,135 4,402
Total current assets 626,685 558,878
Property, plant and equipment, net 141,922 129,493
Capitalized software, net 13,409 15,923
Goodwill 18,621 18,621
Deferred income tax - long term 12,286 7,942
License, manufacturing access fees and
other assets, net 56,608 58,196
Total assets $869,531 $789,053
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $16,050 $11,777
Accrued salaries and employee benefits 25,093 20,997
Other accrued expenses 4,027 4,024
Income tax payable - 846
Deferred revenue - short term 1,278 2,836
Total current liabilities 46,448 40,470
Non-current income tax payable 4,773 3,958
Deferred income tax - long term 55 75
Deferred revenue - long term 2,333 4,607
Deferred compensation plan liabilities 2,162 1,893
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.0001 par value per
share, 20,000,000 shares authorized,
none issued and outstanding - -
Common stock, $0.0001 par value per
share; 200,000,000 shares authorized,
52,920,971 and 53,916,298 shares issued
and outstanding at December 31, 2008 and
December 31, 2007, respectively 5 5
Additional paid-in capital 382,544 415,229
Accumulated other comprehensive income 3,055 1,604
Retained earnings 428,156 321,202
Total stockholders' equity 813,760 738,040
Total liabilities and stockholders' equity $869,531 $789,053
Gen-Probe Incorporated
Consolidated Statements of Income
(In thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
2008 2007 2008 2007
Revenues:
Product sales $105,759 $92,426 $429,220 $370,877
Collaborative research
revenue 2,128 5,380 20,581 16,619
Royalty and license revenue 1,254 1,143 22,894 15,518
Total revenues 109,141 98,949 472,695 403,014
Operating expenses:
Cost of product sales 32,202 28,493 128,029 119,641
Research and development 24,158 24,331 101,099 97,144
Marketing and sales 11,780 11,348 45,850 39,928
General and administrative 13,806 12,265 52,322 47,007
Total operating expenses 81,946 76,437 327,300 303,720
Income from operations 27,195 22,512 145,395 99,294
Interest income 4,527 3,837 16,801 12,772
Other income/(expense) (683) (144) (1,333) (469)
Total other income, net 3,844 3,693 15,468 12,303
Income before income tax 31,039 26,205 160,863 111,597
Income tax expense 9,899 5,793 53,909 25,457
Net income $21,140 $20,412 $106,954 $86,140
Net income per share:
Basic $0.40 $0.38 $1.99 $1.63
Diluted $0.39 $0.37 $1.95 $1.58
Weighted average shares
outstanding:
Basic 53,159 53,769 53,708 52,975
Diluted 53,808 55,310 54,796 54,522
Gen-Probe Incorporated
Consolidated Statements of Cash Flows
(In thousands)
Twelve Months Ended
December 31,
2008 2007
Operating activities:
Net income $106,954 $86,140
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 34,715 34,159
Amortization of premiums on investments,
net of accretion of discounts 6,908 4,576
Stock-based compensation charges 20,663 19,651
Stock option income tax benefits 3,276 2,596
Excess tax benefit from employee stock
options (2,493) (14,606)
Gain on sale of investment in Molecular
Profiling Institute, Inc. (1,600) -
Loss on property and equipment dispositions
and other 55 703
Impairment of long-lived assets 5,086 -
Changes in assets and liabilities:
Trade and other accounts receivable 7,421 (16,180)
Inventories (5,367) 3,588
Prepaid expenses 2,325 (6,141)
Other current assets (1,260) (2,307)
Other long term assets (173) (1,131)
Accounts payable 4,377 (1,818)
Accrued salaries and employee benefits 4,125 4,273
Other accrued expenses 101 679
Income tax payable (499) (397)
Deferred revenue (3,831) 2,855
Deferred income tax (2,788) (7,621)
Deferred rent (10) (118)
Deferred compensation plan liabilities 268 683
Net cash provided by operating activities 178,253 109,584
Investing activities:
Proceeds from sales and maturities of
short-term investments 105,994 140,988
Purchases of short-term investments (198,691) (298,824)
Purchases of property, plant and equipment (39,348) (23,096)
Capitalization of intangible assets,
including license and manufacturing access
fees (11,970) (2,213)
Proceeds from sale of investment in
Molecular Profiling Institute, Inc. 4,100 -
Other assets 27 (279)
Net cash used in investing activities (139,888) (183,424)
Financing activities:
Excess tax benefit from employee stock
options 2,493 14,606
Repurchase and retirement of restricted
stock for payment of taxes (1,529) (1,474)
Buyback of common stock (74,970) -
Proceeds from issuance of common stock 20,472 48,680
Net cash (used in) / provided by financing
activities (53,534) 61,812
Effect of exchange rate changes on cash and
cash equivalents (672) 86
Net decrease in cash and cash equivalents (15,841) (11,942)
Cash and cash equivalents at the beginning
of period 75,963 87,905
Cash and cash equivalents at the end of
period $60,122 $75,963
SOURCE Gen-Probe Incorporated
02/17/2009
CONTACT: Michael Watts, Vice president, investor relations and corporate
communications of Gen-Probe Incorporated, +1-858-410-8673
Web Site: http://www.gen-probe.com
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