SUNNYVALE, Calif., Jan. 30, 2014 /PRNewswire/ -- Cepheid (Nasdaq: CPHD) today reported revenue for the fourth quarter of 2013 of $113.3 million. Net loss was $10.3 million, or $(0.15) per share, which compares to revenue of $92.4 million and net income of $5.6 million, or $0.08 per share, in the fourth quarter of 2012. Fourth quarter results for 2013 included a $4.4 million, or $0.06 per share, charge primarily associated with a small, non-core restructuring and impairment of certain assets resulting from a realignment of operations.
Excluding stock compensation expenses, the restructuring expense (which includes an impairment of certain assets), and amortization of acquired purchased intangible assets, non-GAAP net income for the fourth quarter of 2013 was $2.3 million, or $0.03 per share. This compares to a non-GAAP net income of $14.2 million, or $0.20 per share, in the fourth quarter of 2012.
Fiscal 2013 Overview
For the year ended December 31, 2013, Cepheid reported revenue of $401.3 million which compares to revenue of $331.2 million in 2012. Net loss for the year was $18.0 million, or $(0.27) per share, which compares to net loss of $20.0 million, or $(0.30) per share, in 2012 which included a charge of $15.1 million, or $0.23 per share, associated with a litigation settlement.
Excluding stock compensation expenses, the restructuring expense (which includes impairment of certain assets), and amortization of acquired purchased intangible assets, non-GAAP net income for the year was $17.9 million, or $0.26 per share. This compares to a non-GAAP net income of $21.8 million, or $0.31 per share, for the full year 2012, which excluded stock compensation expenses, the amortization of purchased intangible assets, a litigation settlement and a tax benefit related to an intercompany intellectual property transaction.
"Clinical test revenue grew 25% in 2013, with notable strength in our Commercial Clinical Xpert reagents which grew 22%," said John Bishop, Cepheid's Chairman and Chief Executive Officer. "We also placed a record number of GeneXpert systems in 2013, with strength in both our commercial and HBDC businesses, demonstrating the impact of our rapidly expanding Xpert test menu and global sales footprint."
Continued Bishop, "Adoption of our high throughput Infinity system increased with a record 52 shipments in 2013, including 23 in the fourth quarter, further highlighting Cepheid's position as a platform consolidator within the molecular diagnostics market. With a menu of 14 tests and growing, we believe the innovative GeneXpert system is the most compelling choice for labs of all sizes looking to leverage accurate and fast diagnostics without the costs and complexities traditionally associated with molecular technologies."
Operational Overview
-- Fourth quarter of 2013 total Clinical sales of $101.0 million grew 23% from $82.2 million in the fourth quarter of 2012. For the year ended December 31, 2013, total Clinical sales of $359.9 million grew 26% from $286.3 million in 2012.
-- By industry, sales were, in millions:
Three Months Ended Full Year Ended December 31, December 31, 2013 2012 Change 2013 2012 Change ---- ---- ------ ---- ---- ------ Clinical Systems $20.2 $13.4 51% $67.0 $52.8 27% Clinical Reagents 80.8 68.8 17% 292.9 233.5 25% ---- ---- ----- ----- Total Clinical 101.0 82.2 23% 359.9 286.3 26% Non-Clinical 12.3 10.2 20% 41.4 44.9 -8% Total Sales $113.3 $92.4 23% $401.3 $331.2 21% ====== ===== ====== ======
-- By geography, sales were, in millions:
Three Months Ended Full Year Ended December 31, December 31, 2013 2012 Change 2013 2012 Change ---- ---- ------ ---- ---- ------ North America Clinical $58.6 $54.3 8% $212.4 $190.0 12% Other 11.1 8.8 26% 37.0 38.6 -4% ---- --- ---- ---- Total North America 69.7 63.1 10% 249.4 228.6 9% International Clinical 42.4 27.8 52% 147.5 96.3 53% Other 1.2 1.5 -21% 4.4 6.3 -30% --- --- --- --- Total International 43.6 29.3 49% 151.9 102.6 48% Total Sales $113.3 $92.4 23% $401.3 $331.2 21% ====== ===== ====== ======
-- Commercial sales, including Clinical and Non-Clinical & Other, were $95.5 million in the fourth quarter of 2013 and $335.6 million for the full year 2013. Sales to High Burden Developing Countries (HBDC) in the fourth quarter of 2013 were $17.8 million and $65.7 million for the full year 2013. -- During the fourth quarter of 2013, Cepheid placed a record total of 205 GeneXpert systems in its commercial Clinical business. Additionally, Cepheid placed a total of 178 GeneXpert systems as part of its High Burden Developing Country (HBDC) program. For the year ended December 31, 2013, Cepheid placed a total of 619 GeneXpert systems in its commercial Clinical business and an additional 1,055 GeneXpert systems as part of its HBDC program. As of December 31, 2013, a cumulative total of 5,509 GeneXpert systems have been placed worldwide. -- GAAP gross margin on sales was 47% and non-GAAP gross margin on sales was 50% in the fourth quarter of 2013, which compares to 54% and 56%, respectively, in the fourth quarter of 2012. GAAP gross margin on sales was 48% and non-GAAP gross margin on sales was 50% for the full year 2013, which compares to 54% and 55%, respectively, for the full year 2012. -- Cash, cash equivalents and investments were $84.7 million as of December 31, 2013. -- DSO was 42 days.
Business Outlook
For the fiscal year ending December 31, 2014, the Company expects:
-- Total revenue to be in the range of $446 to $461 million; -- Net loss in the range of $(0.26) to $(0.21) per share; -- Non-GAAP net income in the range of $0.24 to $0.29 per share.Expected non-GAAP net income excludes approximately $33 million related to stock compensation expense and approximately $3 million related to the amortization of purchased intangible assets. The fully diluted share count for the year is expected to be approximately 69 million in the case of a net loss, and approximately 73 million shares in the case of net income.
The following table reconciles net income (loss) per share to the non-GAAP net income per share range:
Guidance Range for Year Ending December 31, 2014 --------- Low High --- ---- Net Income (Loss) Per Share $(0.26) $(0.21) Stock Compensation Expense (0.46) (0.46) Amortization of Purchased Intangible Assets (0.04) (0.04) Non-GAAP Measure of Net Income Per Share $0.24 $0.29
Accessing Cepheid's Fourth Quarter and Full Year 2013 Results Conference Call
The Company will host a management presentation at 2 p.m. Pacific Time on Thursday, January 30, 2014, to discuss the results. To access the live webcast, please visit Cepheid's website at http://ir.cepheid.com at least 15 minutes before the scheduled start time to download any necessary audio or plug-in software. A replay of the webcast will be available shortly following the call and will remain available for at least 90 days.
About Cepheid
Based in Sunnyvale, Calif., Cepheid (Nasdaq: CPHD) is a leading molecular diagnostics company that is dedicated to improving healthcare by developing, manufacturing, and marketing accurate yet easy-to-use molecular systems and tests. By automating highly complex and time-consuming manual procedures, the Company's solutions deliver a better way for institutions of any size to perform sophisticated genetic testing for organisms and genetic-based diseases. Through its strong molecular biology capabilities, the Company is focusing on those applications where accurate, rapid, and actionable test results are needed most, such as managing infectious diseases and cancer. For more information, visit http://www.cepheid.com.
Use of Non-GAAP Measures
The Company has supplemented its reported GAAP financial information with non-GAAP measures that do not include employee stock-based compensation expense, amortization of purchased intangible assets, a restructuring in the quarter ended December 31, 2013, a tax benefit related to an intercompany intellectual property transaction in the quarter ended March 31, 2012, and litigation settlement expenses in the quarter ended September 30, 2012. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with U.S. GAAP. The Company's management uses the non-GAAP information internally to evaluate its ongoing business, continuing operational performance and cash requirements, and believes these non-GAAP measures are useful to investors as they provide a basis for evaluating the Company's cash requirements and additional insight into the underlying operating results and the Company's ongoing performance in the ordinary course of its operations.
These non-GAAP measures may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. The Company believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with its results of operations as determined in accordance with U.S. GAAP and that these measures should only be used to evaluate the Company's results of operations in conjunction with the corresponding GAAP measures.
As described above, the Company excludes the following items from one or more of its non-GAAP measures when applicable:
Employee Stock-based Compensation Expense. These expenses consist primarily of expenses for employee stock options and employee restricted stock under ASC 718 (formerly SFAS 123(R)). The Company excludes employee stock-based compensation expenses from its non-GAAP measures primarily because they are non-cash expenses that the Company does not believe are reflective of ongoing operating results in the period incurred. Further, as the Company applies ASC 718, it believes that it is useful to investors to understand the impact of the application of ASC 718 on its results of operations.
Amortization of Purchased Intangible Assets. The Company incurs amortization of purchased intangible assets in connection with acquisitions. The Company excludes these items because these expenses are not reflective of ongoing operating results in the period incurred. These amounts arise from the Company's prior acquisitions and have no direct correlation to the operation of the Company's business.
Restructuring. The Company excluded a restructuring charge and impairment of certain assets totaling $4.4 million in the fourth quarter of 2013. In connection with the Company's preparation of its annual operating plan, whereby the Company routinely assesses its investments to align its operations with its highest potential opportunities, the Company terminated a small international research team, eliminated a non-GeneXpert clinical product line acquired in a 2007 acquisition, including the impairment of an intangible asset of approximately $1.1 million and the write-down of approximately $0.2 million of inventory, and wrote-off certain manufacturing capital assets totaling approximately $1.3 million that management concluded will not be utilized and therefore have no future realizable value. The Company excluded this item as it believes it was non-recurring in nature, and does not have a direct impact on the operation of the Company's core business.
Tax Benefit Related to Intercompany Intellectual Property (IP) Transaction. The Company excluded a tax benefit related to an intercompany IP transaction from its results for non-GAAP net loss for the quarter ended March 31, 2012. The Company excluded this item as it believes it was non-recurring in nature, and does not have a direct impact on the operation of the Company's core business.
Litigation Settlement Expenses. These expenses consisted primarily of expenses related to the settlement of the Company's litigation with Abaxis. This allocation was determined in accordance with ASC 450, Accounting for Contingencies (formerly SFAS No. 5), and ASC 605-25 (formerly EITF 00-21) using the concepts of fair value based on the past and estimated future revenue streams related to the products covered by the patents previously under dispute. Specifically, the amount recorded in the consolidated income statement as Litigation settlement in the quarter ended September 30, 2012 represented the fair value of the royalty paid on past revenue streams and the residual amount after allocating value to the future revenue streams. The Company excluded this item as it believes it was non-recurring in nature, and does not have a direct impact on the operation of the Company's core business.
Forward-Looking Statements
This press release contains forward-looking statements that are not purely historical regarding Cepheid's or its management's intentions, beliefs, expectations and strategies for the future, including those relating to potential growth, future revenues and future net loss/income and profitability, including on a non-GAAP basis, and the breadth and speed of test menu expansion. Because such statements deal with future events, they are subject to various risks and uncertainties, and actual results could differ materially from the Company's current expectations. Factors that could cause actual results to differ materially include risks and uncertainties such as those relating to: long sales cycles and variability in systems placements and reagent pull-through in the Company's HBDC program; our success in increasing commercial and HBDC sales and the effectiveness of our sales personnel; the relative mix of commercial and HBDC sales; the performance and market acceptance of new products; sufficient customer demand, customer confidence in product availability and available customer budgets for our customers; our ability to develop new products and complete clinical trials successfully in a timely manner for new products; uncertainties related to the FDA regulatory and international regulatory processes; the level of testing at clinical customer sites, including for Healthcare Associated Infections (HAIs); the Company's ability to successfully introduce and sell products in clinical markets other than HAIs; the rate of environmental biothreat testing conducted by the USPS, which will affect the amount of consumable products sold to the USPS; unforeseen supply, development and manufacturing problems; our ability to manage our inventory levels; our ability to successfully complete and bring on additional manufacturing lines; the potential need for additional intellectual property licenses for tests and other products and the terms of such licenses; the Company's reliance on distributors in some regions to market, sell and support its products; the occurrence of unforeseen expenditures, acquisitions or other transactions; costs associated with litigation; the impact of competitive products and pricing; the Company's ability to manage geographically-dispersed operations; and underlying market conditions worldwide. Readers should also refer to the section entitled "Risk Factors" in Cepheid's Annual Report on Form 10-K, its most recent Quarterly Report on Form 10-Q, and its other reports filed with the Securities and Exchange Commission.
All forward-looking statements and reasons why results might differ included in this release are made as of the date of this press release, based on information currently available to Cepheid, and Cepheid assumes no obligation to update any such forward-looking statement or reasons why results might differ.
CONTACTS: For Investor Inquiries: For Media Inquiries: -------------------- Jacquie Ross, CFA Cepheid Investor Relations Jared Tipton Tel: (408) 400 8329 Cepheid Corporate Communications investor.relations@cepheid.com Tel: (408) 400 8377 communications@cepheid.com
FINANCIAL TABLES FOLLOW
CEPHEID CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS (in thousands, except per share data) Three Months Years Ended Ended December 31, December 31, ------------- ------------ 2013 2012 2013 2012 ---- ---- ---- ---- Sales: System and other sales $22,263 $16,876 $76,763 $65,111 Reagent and disposable sales 90,998 75,557 324,529 266,101 ------ ------ ------- ------- Total sales 113,261 92,433 401,292 331,212 Costs and operating expenses: Cost of product sales 60,483 42,896 207,933 153,365 Collaboration profit sharing 2,567 1,416 7,512 7,183 Research and development 25,340 17,299 80,197 71,673 Sales and marketing 21,922 16,294 79,941 61,907 General and administrative 12,854 9,470 41,719 43,298 Litigation Settlement - - - 15,110 Total costs and operating expenses 123,166 87,375 417,302 352,536 ------- ------ ------- ------- Income (loss) from operations (9,905) 5,058 (16,010) (21,324) Other income (expense), net (264) 241 (807) (4) ---- --- ---- --- Income (loss) before income taxes (10,169) 5,299 (16,817) (21,328) Benefit from (provision for) income taxes (148) 345 (1,148) 1,285 Net income (loss) $(10,317) $5,644 $(17,965) $(20,043) ======== ====== ======== ======== Basic net income (loss) per share $(0.15) $0.09 $(0.27) $(0.30) ====== ===== ====== ====== Diluted net income (loss) per share $(0.15) $0.08 $(0.27) $(0.30) ====== ===== ====== ====== Shares used in computing basic net income (loss) per share 68,230 66,370 67,485 65,812 ====== ====== ====== ====== Shares used in computing diluted net income (loss) per share 68,230 68,787 67,485 65,812 ====== ====== ====== ======
CEPHEID CONDENSED CONSOLIDATED UNAUDITED BALANCE SHEETS (in thousands) December 31, December 31, 2013 2012 ---- ---- ASSETS Current assets: Cash and cash equivalents $66,072 $95,779 Short-term investments 8,837 - Accounts receivable, net 52,202 43,999 Inventory 103,866 70,114 Prepaid expenses and other current assets 13,037 9,448 ------ ----- Total current assets 244,014 219,340 Property and equipment, net 84,886 54,830 Investments 9,820 - Other non- current assets 958 913 Intangible assets, net 15,245 18,767 Goodwill 39,681 37,694 Total assets $394,604 $331,544 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $52,609 $33,701 Accrued compensation 22,009 16,540 Accrued royalties 5,245 7,992 Accrued and other liabilities 7,246 4,235 Current portion of deferred revenue 8,183 9,599 Current portion of notes payable 194 183 --- --- Total current liabilities 95,486 72,250 Long-term portion of deferred revenue 3,424 1,156 Notes payable, less current portion 1,479 1,685 Other liabilities 8,975 8,911 ----- ----- Total liabilities 109,364 84,002 ------- ------ Shareholders' equity: Common stock 383,379 355,867 Additional paid- in capital 145,900 117,217 Accumulated other comprehensive income (loss) (476) 56 Accumulated deficit (243,563) (225,598) -------- -------- Total shareholders' equity 285,240 247,542 Total liabilities and shareholders' equity $394,604 $331,544 ======== ========
CEPHEID CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS (in thousands) Years Ended December 31, ------------ 2013 2012 ---- ---- Cash flows from operating activities: Net loss $(17,965) $(20,043) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization of property and equipment 17,769 13,446 Amortization of intangible assets 5,418 4,965 Impairment of terminated patent license, acquired intangible assets and property and equipment 2,855 1,399 Unrealized exchange differences 419 - Stock-based compensation related to employees and consulting services rendered 27,635 24,496 Changes in operating assets and liabilities: Accounts receivable (6,960) (6,443) Inventory (32,638) (5,105) Prepaid expenses and other current assets (5,263) (2,714) Other non-current assets 150 (172) Accounts payable and other current liabilities 17,334 (5,740) Accrued compensation 5,421 (1,736) Deferred revenue 837 575 --- --- Net cash provided by operating activities 15,012 2,928 Cash flows from investing activities: Capital expenditures (47,526) (23,150) Cash paid for intangible asset - (2,140) Cash paid for technology licenses (1,125) - Cost of acquisitions, net (3,669) (24,021) Proceeds from maturities and sales of marketable securities and investments 3,850 - Purchases of marketable securities and investments (22,511) - ------- --- Net cash used in investing activities (70,981) (49,311) Cash flows from financing activities: Net proceeds from the issuance of common shares and exercise of stock options 27,512 27,079 Proceeds from notes payable - 156 Principal payment of notes payable (874) (72) ---- --- Net cash provided by financing activities 26,638 27,163 Effect of exchange rate change on cash (376) (9) ---- --- Net increase (decrease) in cash and cash equivalents (29,707) (19,229) Cash and cash equivalents at beginning of period 95,779 115,008 Cash and cash equivalents at end of period $66,072 $95,779 ======= =======
CEPHEID RECONCILIATION OF GAAP TO NON-GAAP MEASURES (UNAUDITED) (in thousands, except per share data) Three Months Ended Years Ended December 31, December 31, ------------ ------------ 2013 2012 2013 2012 ---- ---- ---- ---- Cost of sales $60,483 $42,896 $207,933 $153,365 Stock compensation expense (1,084) (808) (2,927) (3,037) Restructuring charge including impairment of intangibles (2,651) (1,038) (2,651) (1,038) Amortization of purchased intangible assets (345) (527) (2,349) (1,525) ---- ---- ------ Non-GAAP measure of cost of sales $56,403 $40,523 $200,006 $147,765 Gross margin on sales per GAAP 47% 54% 48% 54% Gross margin on sales per Non-GAAP 50% 56% 50% 55% Operating expenses $60,116 $43,063 $201,857 $176,878 Stock compensation expense (6,534) (5,756) (24,708) (21,415) Restructuring charge including impairment of intangibles (1,783) (328) (1,783) (328) Amortization of purchased intangible assets (458) (376) (1,715) (1,452) ---- ---- ------ ------ Non-GAAP measure of operating expenses $51,341 $36,603 $173,651 $153,683 Income (loss) from operations $(9,905) $5,058 $(16,010) $(21,324) Stock compensation expense 7,618 6,564 27,635 24,452 Amortization of purchased intangible assets 803 903 4,064 2,977 Restructuring charge including impairment of intangibles 4,434 1,366 4,434 1,366 Litigation settlement - - - 15,110 --- --- --- ------ Non-GAAP measure of income from operations $2,950 $13,891 $20,123 $22,581 Net income (loss) $(10,317) $5,644 $(17,965) $(20,043) Stock compensation expense 7,618 6,564 27,635 24,452 Amortization of purchased intangible assets 803 903 4,064 2,977 Restructuring charge including impairment of intangibles 4,201 1,093 4,201 1,093 Litigation settlement - - - 15,110 Tax benefit related to intercompany IP transaction - - - (1,815) --- --- --- ------ Non-GAAP measure of net income $2,305 $14,204 $17,935 $21,774 Basic net income (loss) per share $(0.15) $0.09 $(0.27) $(0.30) Stock compensation expense 0.11 0.09 0.41 0.37 Amortization of purchased intangible assets 0.01 0.01 0.06 0.04 Restructuring charge including impairment of intangibles 0.06 0.02 0.07 0.02 Litigation settlement - - - 0.23 Tax benefit related to intercompany IP transaction - - - (0.03) --- --- --- ----- Non-GAAP measure of net income per share $0.03 $0.21 $0.27 $0.33 Diluted net income (loss) per share $(0.15) $0.08 $(0.27) $(0.30) Stock compensation expense 0.11 0.09 0.41 0.35 Amortization of purchased intangible assets 0.01 0.01 0.06 0.04 Restructuring charge including impairment of intangibles 0.06 0.02 0.06 0.02 Litigation settlement - - - 0.23 Tax benefit related to intercompany IP transaction - - - (0.03) --- --- --- ----- Non-GAAP measure of net income per share $0.03 $0.20 $0.26 $0.31 Shares used in computing basic net income (loss) per share 68,230 66,370 67,485 65,812 Shares used in computing diluted net income (loss) per share 70,644 69,376 69,928 69,700
SOURCE Cepheid