Gen-Probe Reports Strong Financial Results for Fourth Quarter And Full Year 2003
SAN DIEGO, Feb. 12 /PRNewswire-FirstCall/ -- Gen-Probe Incorporated (Nasdaq: GPRO) today reported strong financial results for the fourth quarter and year ended December 31, 2003. Total revenues for the fourth quarter of 2003 were $58.1 million, compared to $44.2 million for the fourth quarter of 2002, an increase of 31%. Product sales for the fourth quarter of 2003 were $50.8 million, compared to $42.3 million for the fourth quarter of 2002, an increase of 20%. Net income for the fourth quarter was $9.7 million ($0.19 per diluted share), compared to net income of $5.0 million ($0.10 per diluted share), in the fourth quarter of 2002, an increase of 90% per diluted share.
For the full year 2003, the Company's total revenues were $207.2 million, compared to $155.6 million in 2002, an increase of 33%. Product sales in 2003 were $188.6 million, compared to $139.9 million in 2002, an increase of 35%. Net income for 2003 was $35.3 million ($0.72 per diluted share), compared to net income of $13.0 million ($0.27 per diluted share) in 2002, an increase of 167% per diluted share.
"In our first full year as a public company, Gen-Probe achieved strong top- and bottom-line growth through excellent execution in our core clinical diagnostics and blood screening businesses," said Henry L. Nordhoff, chairman, president and chief executive officer of Gen-Probe. "At the same time, we put in place several key building blocks for future growth, so we enter 2004 with excellent momentum. We expect 2004 revenue growth to be driven by the commercial launch of our TIGRIS(R) DTS(TM) System for clinical diagnostic applications, continued international expansion in our blood screening business, and cost-recovery revenue from the West Nile virus (WNV) blood screening assay."
Revenues and net income for the fourth quarter of 2003 benefited from an increase in blood screening sales, including a full quarter of U.S. revenue from our WNV assay shipments. Cost-recovery revenues from our WNV assay are included in collaborative research revenues, as this test is being shipped under an investigational new drug (IND) application.
HIV-1/HCV blood screening product sales (including instruments and ancillaries) represented $21.8 million, or 43% of product sales in the fourth quarter of 2003, compared to $15.2 million, or 36% of product sales, in the fourth quarter of 2002. Gen-Probe's blood screening assay is marketed worldwide by Chiron as the Procleix(R) System. For 2003, HIV-1/HCV blood screening sales were $76.6 million, or 41% of product sales, compared to $38.0 million, or 27% of product sales, in 2002.
For the fourth quarter of 2003, gross margin on product sales was 79%, compared to 66% for the fourth quarter of 2002. This improvement in gross margin was primarily due to manufacturing costs that were absorbed by research and development for the production of pre-commercial development lots. For 2003, gross margin on product sales was 76%, compared to 62% in 2002.
For the fourth quarter of 2003, research and development (R&D) expenses increased to $18.9 million, or 33% of total revenues, compared to $12.7 million, or 29% of total revenues, for the fourth quarter of 2002. This increase resulted primarily from the production of pre-commercial development lots for the Procleix Ultrio(TM) Assay, our combination blood screening test for HIV-1, HCV and HBV, and for the WNV blood screening test. R&D expenses for the fourth quarter of 2003 were less than expected because some development lot production that was scheduled for late 2003 was shifted into early 2004. For 2003, R&D expenses were $63.2 million, or 31% of total revenues, compared to $46.7 million, or 30% of total revenues, in 2002.
For the fourth quarter of 2003, marketing and sales expenses were $6.1 million, or 11% of total revenues, compared to $5.3 million, or 12% of total revenues, in the fourth quarter of 2002. For 2003, marketing and sales expenses were $22.6 million, or 11% of total revenues, compared to $18.2 million, or 12% of total revenues, in 2002.
For the fourth quarter of 2003, general and administrative (G&A) expenses were $7.5 million, or 13% of total revenues, compared to $4.6 million, or 10% of total revenues, in the fourth quarter of 2002. The increase in G&A expenses was due primarily to the consolidation of Molecular Light Technology, higher legal expenses, and investments in the Company's business development and strategic planning functions. For 2003, G&A expenses were $23.2 million, or 11% of total revenues, compared to $21.0 million, or 13% of total revenues, in 2002.
Gen-Probe continues to have a strong balance sheet. As of December 31, 2003, the Company had $156.3 million of cash, cash equivalents and short-term investments, and no debt. In addition, the Company generated net cash of $52.5 million from its operating activities during the year.
2004 Financial Guidance
Gen-Probe's 2004 financial guidance, which was announced in December, is repeated below:
Webcast Conference Call
A live webcast of Gen-Probe's fourth quarter and full year 2003 conference call for investors can be accessed at http://www.gen-probe.com beginning at 4:30 p.m. Eastern Time on February 12, 2004. The webcast will be archived for at least 90 days. A telephone replay of the call also will be available until 11:59 p.m. Eastern Time on February 18, 2004. The replay number is (800) 937-1821 for domestic callers and (402) 220-4880 for international callers.
Gen-Probe Incorporated is a global leader in the development, manufacture and marketing of rapid, accurate and cost-effective nucleic acid testing products used for the clinical diagnosis of human diseases and for screening donated human blood. Using its patented NAT technology, Gen-Probe has received FDA approvals or clearances for more than 60 products that detect a wide variety of infectious microorganisms, including those causing sexually transmitted diseases, tuberculosis, strep throat, pneumonia and fungal infections. Additionally, the Company developed and manufactures the only FDA-approved blood screening assay for the simultaneous detection of HIV-1 and HCV, which is marketed by Chiron Corporation. Gen-Probe has 20 years of nucleic acid detection research and product development experience, and its products are used daily in clinical laboratories and blood collection centers throughout the world. Gen-Probe is headquartered in San Diego, California and has more than 700 employees. Additional information about the Company can be found at www.gen-probe.com.
TIGRIS, DTS, APTIMA and APTIMA COMBO 2 are trademarks of Gen-Probe Incorporated.
ULTRIO and PROCLEIX are trademarks of Chiron Corporation.
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 "2004 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 financial condition, possible or assumed future results of operations, growth opportunities, industry ranking, plans and objectives of management, markets for our common stock and future management and organizational structure 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 by any forward-looking statement. Some of the risks, uncertainties and assumptions that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include but are not limited to: (i) the risk that we may not achieve our expected 2004 growth targets, (ii) the possibility that the market for the sale of our new products, such as our APTIMA Combo 2 assay, may not develop as expected, (iii) the enhancement of existing products and the development of new products may not proceed as planned, (iv) the risk that our Ultrio Assay and West Nile virus clinical trials may not proceed as planned and may not be successful, (v) the risk that our Ultrio Assay and West Nile virus products may not be commercially available in the time frames we anticipate, or at all, (vi) we may not be able to compete effectively, (vii) we may not be able to maintain our current corporate collaborations and enter into new corporate collaborations, (viii) we are dependent on Chiron Corporation, Bayer Corporation and other third parties for the distribution of some of our products, (ix) we are dependent 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, and (xii) our involvement in patent and other intellectual property litigation could be expensive and could divert management's attention.
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 have filed with the SEC, including our Report on Form 10-Q for the quarter ended September 30, 2003 and all our periodic filings made with the SEC. We assume no obligation and expressly disclaim any duty to update any forward-looking statement to reflect events or circumstances after the date of this news release or to reflect the occurrence of subsequent events.
For further information, please contact Michael Watts, Sr. director, investor relations and corporate communications of Gen-Probe Incorporated, +1-858-410-8673.
Gen-Probe Incorporated Consolidated Balance Sheets (In thousands, except share and per share data) December 31, December 31, 2003 2002 Assets Current assets: Cash and cash equivalents $35,973 $43,118 Short-term investments 120,333 64,842 Trade accounts receivable, net of allowance for doubtful accounts of $717 in 2003 and $787 in 2002 15,158 11,891 Accounts receivable - other 2,555 1,024 Inventories 15,096 12,928 Deferred income taxes 11,199 7,178 Prepaid expenses and other current assets 8,783 5,114 Total current assets 209,097 146,095 Property, plant and equipment, net 65,478 65,870 Capitalized software 24,872 22,802 Goodwill 18,621 18,621 Other assets 6,893 4,769 Total assets $324,961 $258,157 Liabilities and stockholders' equity Current liabilities: Accounts payable $9,250 $8,148 Accrued salaries and employee benefits 11,670 8,961 Other accrued expenses 6,085 5,704 Income tax payable 6,191 894 Deferred income taxes 220 -- Deferred revenue 6,681 7,100 Total current liabilities 40,097 30,807 Deferred income taxes 6,850 5,112 Deferred revenue 5,667 6,333 Deferred rent 323 327 Minority interest 1,649 -- Commitments and contingencies Stockholders' equity: Preferred stock, $.0001 par value per share, 20,000,000 shares authorized, none issued and outstanding -- -- Common stock, $.0001 par value per share; 200,000,000 shares authorized, 48,721,560 and 47,599,890 shares issued and outstanding at December 31, 2003 and 2002, respectively 5 5 Additional paid-in capital 212,586 192,624 Deferred compensation (538) -- Accumulated other comprehensive income 343 300 Retained earnings 57,979 22,649 Total stockholders' equity 270,375 215,578 Total liabilities and stockholders' equity $324,961 $258,157 Gen-Probe Incorporated Consolidated Statements of Income (in thousands, except per share data) Three Months Ended Twelve Months Ended December 31, December 31, 2003 2002 2003 2002 (unaudited) Revenues: Product sales $50,799 $42,346 $188,645 $139,932 Collaborative research revenue 5,928 156 15,402 11,032 Royalty and license revenue 1,333 1,664 3,144 4,633 Total revenues 58,060 44,166 207,191 155,597 Operating expenses: Cost of product sales 10,656 14,471 45,458 53,411 Research and development 18,869 12,738 63,193 46,709 Marketing and sales 6,096 5,273 22,586 18,199 General and administrative 7,476 4,601 23,233 20,995 Amortization of intangible assets 120 84 372 336 Total operating expenses 43,217 37,167 154,842 139,650 Income from operations 14,843 6,999 52,349 15,947 Other income (expense) Minority interest (97) -- (97) -- Interest income 968 428 2,415 906 Interest expense (8) (19) (65) (1,868) Other income (expense), net 373 11 494 3,238 Total other income (expense), net 1,236 420 2,747 2,276 Income before income taxes 16,079 7,419 55,096 18,223 Income tax expense 6,402 2,469 19,766 5,216 Net income $9,677 $4,950 $35,330 $13,007 Net income per share: Basic (1) $0.20 $0.10 $0.74 $0.27 Diluted (1) $0.19 $0.10 $0.72 $0.27 Weighted average shares outstanding (1): Basic 48,612 47,600 47,974 47,600 Diluted 50,408 47,610 49,137 47,610 (1) Earnings per share and weighted average shares outstanding have been restated to reflect a two-for-one stock split in September 2003.
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