| - Total Revenues Increase 25% From Prior Year, to $86.3 Million - - Product Sales Establish New Quarterly Record of $78.5 Million, Up 32% From Prior Year - - Company Records Non-GAAP Earnings Per Share of $0.33, GAAP EPS of $0.27 - - Company Raises Full-Year Guidance for Total Revenues, GAAP EPS - SAN DIEGO, May 2, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- Gen-Probe Incorporated
(Nasdaq: GPRO) today reported strong financial results for the first quarter
of 2006.
Total revenues for the first quarter of 2006 were $86.3 million, compared
to $68.8 million in the prior year period, an increase of 25%. Product sales
for the first quarter of 2006 established a new record of $78.5 million,
compared to $59.6 million in the prior year period, an increase of 32%.
On a non-GAAP basis, net income for the first quarter of 2006 was
$17.5 million ($0.33 per share), an increase of 27% per share compared to the
prior year period. On a GAAP basis, net income for the first quarter of 2006
was $14.5 million ($0.27 per share), compared to net income of $13.5 million
($0.26 per share) in the prior year period, an increase of 4% per share. GAAP
earnings in the first quarter of 2006 include expenses related to share-based
compensation under SFAS No. 123(R), which reduced after-tax earnings by
$3.0 million ($0.06 per share).
Throughout this press release, all per share amounts are calculated on a
fully diluted basis, and no adjustments have been made to GAAP results except
those related to implementing SFAS No. 123(R). Gen-Probe believes these
non-GAAP financial measures help investors compare current results to those in
prior periods. For more information about Gen-Probe's use of non-GAAP
financial measures, see the section below entitled "About Non-GAAP Financial
Measures."
"Gen-Probe is off to a strong start in 2006," said Henry L. Nordhoff, the
Company's chairman, president and chief executive officer. "Both our clinical
diagnostics and blood screening businesses grew solidly in the first quarter,
driven by continued strength across our major product lines. At the same
time, we made important progress to set the stage for future growth in our
blood screening and oncology businesses."
Detailed Results
Compared to the prior year period, Gen-Probe's sales growth in the first
quarter of 2006 was led by the APTIMA Combo 2(R) and PROCLEIX(R) ULTRIO(R)
assays, by the TIGRIS(R) system for blood screening outside the United States,
and by initial shipments of the PROCLEIX West Nile virus (WNV) assay in the
United States. Gen-Probe's blood screening products are marketed worldwide by
Chiron, a business unit of Novartis Vaccines and Diagnostics.
Sales of the APTIMA Combo 2 assay, Gen-Probe's amplified nucleic acid test
(NAT) for simultaneously detecting Chlamydia trachomatis (CT) and Neisseria
gonorrhoeae (GC), continued to grow strongly in the first quarter. This sales
growth was driven by market share gains on both the semi-automated instrument
platform and on the high-throughput, fully automated TIGRIS system. Revenue
from the PACE(R) product line, the Company's non-amplified tests for the same
microorganisms, declined in the first quarter compared to the prior year
period, in line with Gen-Probe's expectations.
In blood screening, product sales benefited from three main factors:
* Continued growth of the PROCLEIX ULTRIO assay outside the United States.
The PROCLEIX ULTRIO assay simultaneously detects HIV-1, hepatitis C
virus and hepatitis B virus in donated human blood.
* Sales of TIGRIS instruments and spare parts to Chiron, which totaled
$5.3 million.
* Initial shipments of the PROCLEIX West Nile virus (WNV) assay to Chiron.
These shipments, which were made at transfer prices and are a necessary
precursor to commercial testing by blood bank customers, totaled
$3.7 million.
Product sales were, in millions:
Three Months Ended March 31,
2006 2005 Increase
Clinical diagnostics $40.2 $34.2 18%
Blood screening 38.4 25.4 51%
Total product sales $78.5 $59.6 32%
Collaborative research revenues for the first quarter of 2006 were
$6.9 million, compared to $6.3 million in the prior year period, an increase
of 10% that resulted primarily from reimbursement from Millipore for certain
development expenses related to the companies' industrial collaboration.
Royalty and license revenues for the first quarter of 2006 were
$0.8 million, compared to $2.9 million in the prior year period. Royalty and
license revenue declined primarily because Gen-Probe recognized $1.9 million
of revenue in the first quarter of 2005 associated with bioMerieux exercising
an option to develop diagnostic products for certain disease targets using
Gen-Probe's patented ribosomal RNA technologies.
On both a GAAP and non-GAAP basis, gross margin as a percentage of product
sales was 67% in the first quarter of 2006, compared to 74% in the prior year
period. This decrease resulted primarily from sales of TIGRIS instruments and
spare parts to Chiron for blood screening. These sales are made approximately
at cost, and are expected to precede higher margin assay sales. The gross
margin percentage also was negatively affected by initial shipments of the
PROCLEIX WNV assay to Chiron, since Gen-Probe records this revenue at a
contractual transfer price that is less than the ultimate commercial price.
In addition, the gross margin percentage was negatively affected by the
implementation of SFAS No. 123(R), which added $0.1 million to cost of goods
sold. The amount of share-based compensation expense allocated to cost of
goods sold is expected to increase for the rest of 2006 as the related
inventory is sold.
Research and development (R&D) expenses were $19.3 million in the first
quarter of 2006, compared to $18.7 million in the prior year period, an
increase of 3% that resulted primarily from the implementation of SFAS No.
123(R), which added $1.9 million to R&D expenses. On a non-GAAP basis, R&D
expenses were $17.4 million in the first quarter of 2006, a decrease of 7%
compared to the prior year period. R&D expenses are expected to increase
significantly in the second and third quarters of 2006 based on the timing of
development programs, including human papillomavirus (HPV) and PCA3 for
prostate cancer.
Marketing and sales expenses were $8.9 million in the first quarter of
2006, compared to $7.4 million in the prior year period, an increase of 20%
that resulted primarily from the implementation of SFAS No. 123(R), which
added $0.8 million to marketing and sales expenses. On a non-GAAP basis,
marketing and sales expenses were $8.1 million in the first quarter of 2006,
an increase of 9% compared to the prior year period.
General and administrative (G&A) expenses were $10.7 million in the first
quarter of 2006, compared to $7.2 million in the prior year period, an
increase of 49% that resulted primarily from the implementation of SFAS No.
123(R), which added $1.9 million to G&A expenses. On a non-GAAP basis, G&A
expenses were $8.8 million in the first quarter of 2006, an increase of 22%
that resulted primarily from higher legal costs associated with the Company's
two patent infringement lawsuits against Bayer.
Gen-Probe continues to have a strong balance sheet. As of March 31, 2006,
the Company had $243.1 million of cash, cash equivalents and short-term
investments, and no debt. In the first quarter of 2006, Gen-Probe generated
net cash of $28.8 million from its operating activities.
Updated 2006 Financial Guidance
"Based on our strong performance in the first quarter, we are increasing
our full-year 2006 revenue guidance," said Herm Rosenman, the Company's vice
president of finance and chief financial officer. "We are also increasing our
expectations for GAAP earnings per share, based primarily on lower-than-
expected expenses associated with the implementation of SFAS No. 123(R)."
Gen-Probe's non-GAAP 2006 guidance for gross margins, R&D expenses,
marketing and sales expenses, G&A expenses, effective income tax rate and EPS
is computed without the effect of adopting SFAS No. 123(R) and is reconciled
to the corresponding GAAP measure in the bullets and table below and discussed
in the section titled "About Non-GAAP Financial Measures."
The following table describes Gen-Probe's updated guidance for the full
year 2006, on both a GAAP and a non-GAAP basis. The percentages shown are of
total revenues.
Estimated
GAAP Effects of Non-GAAP
Guidance SFAS No. 123(R)(a) Guidance
Total Revenues $335 - $340 million None $335 - $340 million
Product Gross
Margin 68% to 70% Approx. 1-2% 70% to 71%
R&D Expenses 25% to 26% Approx. 2% 23% to 24%
Marketing and
Sales Expenses 10% to 11% Approx. 1% 9% to 10%
G&A Expenses 12% to 13% Approx. 3% 9% to 10%
Effective Income
Tax Rate Approx. 37% Less than 1% Approx. 37%
Diluted EPS $0.98 to $1.08 $0.27 to $0.32 $1.30 to $1.35
(a) These estimated effects reconcile the Company's 2006 GAAP financial
guidance ranges to the Company's non-GAAP financial guidance ranges.
The reconciling item represents the estimated impact of
SFAS No. 123(R), which includes non-cash stock compensation awards,
including stock options and employee stock purchase plan shares.
About Non-GAAP Financial Measures
To supplement Gen-Probe's financial results for the first quarter of 2006
and its 2006 financial guidance, in each case presented in accordance with
GAAP, Gen-Probe uses the following financial measures defined as non-GAAP by
the SEC: non-GAAP net income, non-GAAP product gross margin, non-GAAP R&D
expenses, non-GAAP marketing and sales expenses, non-GAAP G&A expenses,
non-GAAP effective income tax rate, and non-GAAP diluted EPS. Gen-Probe's
management does not itself, nor does it suggest that investors should,
consider such non-GAAP financial measures in isolation from, or as a
substitute for, financial information prepared and presented in accordance
with GAAP. Gen-Probe's management believes that these non-GAAP financial
measures provide meaningful supplemental information regarding the Company's
performance by excluding certain expenses that may not be indicative of core
business results. Gen-Probe believes that both management and investors
benefit from referring to these non-GAAP financial measures in assessing Gen-
Probe's performance and when planning, forecasting and analyzing future
periods. These non-GAAP financial measures also facilitate management's
internal comparisons to Gen-Probe's historical performance and our
competitors' operating results. Gen-Probe believes these non-GAAP financial
measures are useful to investors in allowing for greater transparency with
respect to supplemental information used by management in its financial and
operational decision making.
Recent Events
* 510(k) Application for TIGRIS System / WNV. In April, Gen-Probe
submitted to the FDA a 510(k) application for use of the fully
automated, high-throughput PROCLEIX TIGRIS system to screen donated
human blood, tissue and organs for WNV with the PROCLEIX WNV assay. The
PROCLEIX WNV assay was approved by the U.S. Food and Drug Administration
(FDA) in early December for use on the enhanced semi-automated PROCLEIX
system (eSAS).
* Amended BLA for PROCLEIX ULTRIO Assay. In late March, Gen-Probe
submitted to the FDA an amendment to its Biologics License Application
(BLA) for the PROCLEIX ULTRIO assay on the eSAS.
* University of Michigan Prostate Cancer License. Yesterday, Gen-Probe
announced the Company has licensed from the University of Michigan the
exclusive worldwide rights to develop diagnostic tests for recently
discovered genetic translocations that have been shown in preliminary
studies to be highly specific for prostate cancer tissue.
* Qualigen Option Exercise. In April, Gen-Probe exercised its option to
develop a novel nucleic acid testing (NAT) platform based on Qualigen's
patented, FDA-approved FastPack(R) immunoassay system and purchased
preferred stock convertible into approximately 19.5% of Qualigen's fully
diluted common shares for approximately $7 million. If development is
successful, the new platform would be a closed unit-dose assay (CUDA)
system.
* Alnylam HPA License. In March, Gen-Probe licensed to Alnylam
Pharmaceuticals, Inc., a leading RNAi therapeutics company, non-
exclusive rights to use Gen-Probe's hybridization protection assay (HPA)
technology in the development of therapeutic RNA interfering (RNAi)
molecules.
Webcast Conference Call
A live webcast of Gen-Probe's first quarter 2006 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 (866) 419-2889 for domestic callers and (203)
369-0767 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 20 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 900 people. For more
information, go to www.gen-probe.com.
TIGRIS, APTIMA, APTIMA COMBO 2 and PACE are trademarks of Gen-Probe
Incorporated. ULTRIO and PROCLEIX are trademarks of Chiron. 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 "Updated 2006 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, regulatory approvals, future milestone payments, growth
opportunities, 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 by any forward-looking
statement. Some of these risks, uncertainties and assumptions include but are
not limited to: (i) the risk that we may not achieve our expected 2006 growth,
revenue, earnings or other financial targets, (ii) the risk that Bayer may
successfully appeal the arbitration decision that favored us, (iii) the risk
that we may not earn or receive milestone payments from our collaborators,
including Chiron, (iv) the possibility that the market for the sale of our new
products, such as our TIGRIS system, APTIMA Combo 2 assay and PROCLEIX ULTRIO
assay, may not develop as expected, (v) 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, (vi) the risk that our PROCLEIX ULTRIO assay and our TIGRIS
instrument for blood screening may not be approved by regulatory authorities
or commercially available in the time frame we anticipate, or at all, (vii) we
may not be able to compete effectively, (viii) we may not be able to maintain
our current corporate collaborations and enter into new corporate
collaborations or customer contracts, (ix) we are dependent on Chiron, Bayer
and other third parties for the distribution of some of our products, (x) we
are dependent on a small number of customers, contract manufacturers and
single source suppliers of raw materials, (xi) changes in third-party
reimbursement policies regarding our products could adversely affect sales of
our products, (xii) changes in government regulation affecting our diagnostic
products could harm our sales and increase our development costs, (xiii) the
risk that our intellectual property may be infringed by third parties or
invalidated, and (xiv) our involvement in patent and other intellectual
property and commercial 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 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.
Contact:
Michael Watts
Sr. director, investor relations and
corporate communications
858-410-8673
Gen-Probe Incorporated
Consolidated Balance Sheets - GAAP
(In thousands, except share and per share data)
March 31, December 31,
2006 2005
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $44,590 $32,328
Short-term investments 198,496 187,960
Trade accounts receivable, net of allowance
for doubtful accounts of $790 as of
March 31, 2006 and December 31, 2005 28,569 31,930
Accounts receivable - other 2,742 1,924
Inventories 37,717 36,342
Deferred income taxes 10,574 10,389
Prepaid expenses 7,523 10,768
Other current assets 5,450 4,184
Total current assets 335,661 315,825
Property, plant and equipment, net 118,587 105,190
Capitalized software 20,323 20,952
Goodwill 18,621 18,621
License, manufacturing access fees and
other assets 50,545 49,648
Total assets $543,737 $510,236
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $13,435 $14,029
Accrued salaries and employee benefits 16,624 14,910
Other accrued expenses 4,515 3,264
Income tax payable 12,815 13,192
Deferred revenue 5,429 7,771
Total current liabilities 52,818 53,166
Deferred income taxes 5,124 5,124
Deferred revenue 4,167 4,333
Deferred rent 211 240
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, 51,559,833 and
51,137,541 shares issued and outstanding at
March 31, 2006 and December 31, 2005,
respectively 5 5
Additional paid-in capital 295,607 281,907
Deferred compensation -- (5,951)
Accumulated other comprehensive (loss) income (1,370) (1,231)
Retained earnings 187,175 172,643
Total stockholders' equity 481,417 447,373
Total liabilities and stockholders' equity $543,737 $510,236
Gen-Probe Incorporated
Consolidated Statements of Income - GAAP
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
2006 2005
Revenues:
Product sales $78,528 $59,579
Collaborative research revenue 6,885 6,344
Royalty and license revenue 843 2,905
Total revenues 86,256 68,828
Operating expenses:
Cost of product sales 26,112 15,498
Research and development 19,326 18,683
Marketing and sales 8,862 7,426
General and administrative 10,658 7,191
Total operating expenses 64,958 48,798
Income from operations 21,298 20,030
Total other income, net 1,757 1,081
Income before income taxes 23,055 21,111
Income tax expense 8,523 7,650
Net income $14,532 $13,461
Net income per share:
Basic $0.28 $0.27
Diluted $0.27 $0.26
Weighted average shares outstanding:
Basic 51,248 50,282
Diluted 52,865 52,367
Gen-Probe Incorporated
Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
Three Months Ended Three Months Ended
March 31, 2006 March 31, 2005
Non-GAAP Adjustments GAAP Non-GAAP Adjustments GAAP
Revenues:
Product sales $78,528 $-- $78,528 $59,579 $-- $59,579
Collaborative
research
revenue 6,885 -- 6,885 6,344 -- 6,344
Royalty and
license
revenue 843 -- 843 2,905 -- 2,905
Total revenues 86,256 -- 86,256 68,828 -- 68,828
Operating
expenses:
Cost of
product sales 25,979 133 (a) 26,112 15,498 -- 15,498
Research and
development 17,437 1,889 (a) 19,326 18,683 -- 18,683
Marketing and
sales 8,069 793 (a) 8,862 7,426 -- 7,426
General and
administrative 8,806 1,852 (a) 10,658 7,191 -- 7,191
Total operating
expenses 60,291 4,667 64,958 48,798 -- 48,798
Income from
operations 25,965 (4,667) 21,298 20,030 -- 20,030
Total other
income, net 1,757 -- 1,757 1,081 -- 1,081
Income before
income taxes 27,722 (4,667) 23,055 21,111 -- 21,111
Income tax
expense 10,174 1,651 (a) 8,523 7,650 -- 7,650
Net income $17,548 $(3,016) $14,532 $13,461 $-- $13,461
Net income
per share:
Basic $0.34 $(0.06) $0.28 $0.27 $-- $0.27
Diluted $0.33 $(0.06) $0.27 $0.26 $-- $0.26
Weighted average
shares
outstanding:
Basic 51,248 -- 51,248 50,282 -- 50,282
Diluted 52,865 -- 52,865 52,367 -- 52,367
(a) Adjustments to exclude the impact of stock option and ESPP expense in
accordance with SFAS No.123(R). Net income for the three months ended
March 31, 2006 included stock-based compensation expense that
Gen-Probe recorded as a result of the adoption of SFAS No. 123(R) on
January 1, 2006. For the three months ended March 31, 2006, this
expense totaled $4,667,000 before income taxes (after deducting
$685,000 that has been capitalized to inventory) and $3,016,000 net of
income taxes for the period. The Company did not record this
stock-based compensation expense for the three months ended March 31,
2005. As previously disclosed in the notes to the financial
statements for the three months ended March 31, 2005, net income
including pro forma stock-based compensation expense for this period
was $9,588,000.
Gen-Probe Incorporated
Consolidated Statements of Income - Non-GAAP
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
2006 2005
(Non-GAAP) (GAAP)
Revenues:
Product sales $78,528 $59,579
Collaborative research revenue 6,885 6,344
Royalty and license revenue 843 2,905
Total revenues 86,256 68,828
Operating expenses:
Cost of product sales 25,979 15,498
Research and development 17,437 18,683
Marketing and sales 8,069 7,426
General and administrative 8,806 7,191
Total operating expenses 60,291 48,798
Income from operations 25,965 20,030
Total other income, net 1,757 1,081
Income before income taxes 27,722 21,111
Income tax expense 10,174 7,650
Net income $17,548 $13,461
Net income per share:
Basic $0.34 $0.27
Diluted $0.33 $0.26
Weighted average shares outstanding:
Basic 51,248 50,282
Diluted 52,865 52,367
Gen-Probe Incorporated
Consolidated Statements of Cash Flows - GAAP
(In thousands)
(Unaudited)
Three Months Ended
March 31,
2006 2005
Operating activities
Net income $14,532 $13,461
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 6,061 5,413
Stock-based compensation charges -
restricted stock 456 125
Stock-based compensation charges - all other 4,667 --
Stock option income tax benefits -- 4,692
Excess tax benefit from employee stock options (4,394) --
(Gain)/loss on disposal of property and
equipment (21) 39
Changes in assets and liabilities:
Accounts receivable 2,571 (2,070)
Inventories (688) (822)
Prepaid expenses 3,246 (5,359)
Other current assets (1,320) (439)
Accounts payable (601) 5,963
Accrued salaries and employee benefits 1,715 (253)
Other accrued expenses 1,240 (525)
Income tax payable 4,015 2,827
Deferred revenue (2,507) 2,296
Deferred income taxes (188) (465)
Deferred rent (29) (10)
Minority interest -- (58)
Net cash provided by operating activities 28,755 24,815
Investing activities
Proceeds from sales and maturities of
short-term investments 25,935 20,790
Purchases of short-term investments (36,742) (32,900)
Purchases of property, plant and equipment (17,768) (10,228)
Capitalization of intangible assets, including
license and manufacturing access fees (1,852) (1,643)
Other assets 17 (791)
Net cash used in investing activities (30,410) (24,772)
Financing activities
Excess tax benefit from employee stock options 4,394 --
Proceeds from issuance of common stock 9,449 6,705
Net cash provided by financing activities 13,843 6,705
Effect of exchange rate changes on cash and
cash equivalents 74 86
Net increase in cash and cash equivalents 12,262 6,834
Cash and cash equivalents at the beginning
of period 32,328 25,498
Cash and cash equivalents at the end of period $44,590 $32,332
SOURCE Gen-Probe Incorporated
Michael Watts,
Sr. Director, Investor Relations and Corporate Communications of
Gen-Probe Incorporated,
1-858-410-8673
http://www.prnewswire.com
|
