- Company Establishes New Quarterly Records for Product Sales ($93.9 Million, Up 21% Versus Prior Year) and Total Revenues ($101.3 Million, Up 19%) -
- Including Tax Benefit of $0.16, Company Reports EPS of $0.50, New All-Time High and 100% Above Prior Year -
- Company Expects Full-Year EPS of $1.46 to $1.50, Revenues of $392 Million to $400 Million -
SAN DIEGO, Aug 01, 2007 /PRNewswire-FirstCall via COMTEX News Network/ -- Gen-Probe Incorporated
(Nasdaq: GPRO) today reported strong financial results for the second quarter
of 2007 and raised its full-year guidance for earnings per share (EPS) and
total revenues.
"Gen-Probe posted excellent financial results in the second quarter of
2007, as both our clinical diagnostics and blood screening businesses
established new sales records and grew at a brisk pace," said Henry L.
Nordhoff, the Company's chairman, president and chief executive officer.
In the second quarter of 2007, net income was $27.0 million ($0.50 per
share), compared to $13.3 million ($0.25 per share) in the prior year period,
an increase of 103% (100% per share). In this press release, all per share
amounts are calculated on a fully diluted basis, and all results are presented
on a GAAP basis that includes the effect of SFAS No. 123(R), which Gen-Probe
implemented in 2006.
Gen-Probe's net income and EPS in the second quarter and first six months
of 2007 benefited from a reduction in income tax expense of approximately
$8.7 million ($0.16 per share). As previously disclosed, this benefit
resulted from the completion in April of an Internal Revenue Service audit of
the Company's 2003 and 2004 federal income tax returns. Based on the results
of this audit, the Company released reserves primarily associated with federal
research and development tax credits generated from 1999 to 2004.
Product sales in the second quarter of 2007 were $93.9 million, compared
to $77.8 million in the prior year period, an increase of 21%. Total revenues
for the second quarter of 2007 were $101.3 million, compared to $85.2 million
in the prior year period, an increase of 19%.
For the first six months of 2007, net income was $48.5 million ($0.90 per
share), compared to $27.6 million ($0.52 per share) in the prior year period,
an increase of 76% (73% per share). Product sales for the first six months of
2007 were $181.0 million, compared to $156.3 million in the prior year period,
an increase of 16%. Total revenues for the first six months of 2007 were
$202.3 million, compared to $171.5 million in the prior year period, an
increase of 18%.
Detailed Results
Gen-Probe's clinical diagnostics sales in the second quarter of 2007 were
again led by 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 continued to grow strongly, driven by
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 second quarter compared to the prior year
period, in line with Gen-Probe's expectations.
In blood screening, product sales in the second quarter of 2007 benefited
from continued international expansion, and from higher pricing associated
with U.S. commercial sales of the PROCLEIX(R) WNV (West Nile virus) assay on
both the semi-automated instrument platform and the TIGRIS system.
Gen-Probe's blood screening products are marketed worldwide by Chiron, a
business unit of Novartis Vaccines and Diagnostics. Gen-Probe's blood
screening sales in the second quarter of 2007 also included $1.8 million in
sales of TIGRIS instruments to Novartis, and nearly $1.7 million in sales of
TIGRIS spare parts to Novartis. Going forward, Gen-Probe does not expect to
record sales of TIGRIS spare parts, as the Company's contract manufacturer
will begin selling them directly to Novartis.
Product sales were, in millions:
Three Months Ended June 30, Six Months Ended June 30,
2007 2006 Increase 2007 2006 Increase
Clinical diagnostics $50.1 $42.3 18% $97.6 $82.5 18%
Blood screening $43.8 $35.5 23% $83.4 $73.9 13%
Total product sales $93.9 $77.8 21% $181.0 $156.3 16%
Collaborative research revenues in the second quarter of 2007 were $5.8
million, compared to $6.4 million in the prior year period, a decrease of 9%
that resulted primarily from the reclassification of revenue associated with
investigational use of the PROCLEIX WNV assay. Beginning in the third quarter
of 2006, the Company began recording all revenue associated with this assay in
product sales, rather than in collaborative research revenues. The assay was
approved by the US Food and Drug Administration (FDA) for use on Gen-Probe's
enhanced semi-automated instrument system (eSAS) in December of 2005, and for
use on the TIGRIS system in March of 2006. Collaborative research revenues in
the second quarter of 2007 included $2.4 million of reimbursement from
Novartis associated with previously incurred development expenses in the
companies' blood screening collaboration. For the first six months of 2007,
collaborative research revenues were $8.1 million, compared to $13.3 million
in the prior year period, a decrease of 39%.
Royalty and license revenues for the second quarter of 2007 were $1.6
million, compared to $1.0 million in the prior year period, an increase of 60%
that resulted primarily from higher royalties from Novartis associated with
sales of Gen-Probe's products in the plasma screening market. For the first
six months of 2007, royalty and license revenues were $13.2 million, compared
to $1.9 million in the prior year period. This significant increase resulted
primarily from $10.3 million of royalty revenue that was recorded in the first
quarter of 2007 associated with the settlement of Gen-Probe's patent
infringement litigation against Bayer (now Siemens Medical Solutions
Diagnostics).
Gross margin on product sales in the second quarter of 2007 was 67.9%,
compared to 67.5% in the prior year period. This increase resulted primarily
from a favorable product sales mix, namely increased sales of APTIMA(R) assays
and commercial pricing of the PROCLEIX WNV assay in the United States. For
the first six months of 2007, gross margin on product sales was 67.2%,
compared to 66.8% in the prior year period.
Research and development (R&D) expenses in the second quarter of 2007 were
$25.0 million, compared to $20.3 million in the prior year period, an increase
of 23%. This increase, which was expected, resulted primarily from increased
labor costs and the timing of major R&D projects. These projects include
human papillomavirus (HPV), food testing, hospital-acquired infections, a
fully automated instrument system for low- and mid-volume labs, and the
post-marketing studies for the PROCLEIX ULTRIO(R) assay in the United States.
For the first six months of 2007, R&D expenses were $45.2 million, compared to
$39.7 million in the prior year period, an increase of 14%.
Marketing and sales expenses in the second quarter of 2007 were $9.4
million, compared to $9.1 million in the prior year period, an increase of 3%.
For the first six months of 2007, marketing and sales expenses were $18.9
million, compared to $18.0 million in the prior year period, an increase of
5%.
General and administrative (G&A) expenses in the second quarter of 2007
were $12.1 million, compared to $10.7 million in the prior year period, an
increase of 13% that resulted primarily from higher labor costs, including
executive recruiting and relocation expenses. For the first six months of
2007, G&A expenses were $23.4 million, compared to $21.4 million in the prior
year period, an increase of 9%.
Gen-Probe continues to have a strong balance sheet. As of June 30, 2007,
the Company had $343.0 million of cash, cash equivalents and short-term
investments, and no debt. In the first six months of 2007, Gen-Probe
generated net cash of $44.1 million from its operating activities.
Updated 2007 Financial Guidance
"Based on our strong performance in the second quarter, we are raising our
full-year 2007 revenue and EPS guidance," said Herm Rosenman, the Company's
senior vice president of finance and chief financial officer. "At the same
time, we intend to continue pursuing long-term shareholder value by investing
R&D resources into our key programs."
For the full year 2007, Gen-Probe now expects:
-- Total revenues of $392 million to $400 million.
-- Product gross margins approximating 68% to 69% of product sales.
-- R&D expenses approximating 24% to 25% of total revenues. R&D expenses
are expected to increase to approximately $28 million in the third
quarter of 2007 based on the purchase of HPV oligonucleotides from
Roche and the timing of other key R&D projects.
-- Marketing and sales expenses approximating 9% to 10% of total revenues.
-- G&A expenses approximating 11% to 12% of total revenues.
-- An underlying tax rate of approximately 35%, excluding benefits
associated with the completion of tax audits.
-- EPS of between $1.46 and $1.50, based on approximately 54 million fully
diluted shares outstanding for the year.
Recent Events
-- TIGRIS System Approved to Test Donated Blood with PROCLEIX ULTRIO
Assay. On May 24, Gen-Probe announced that the FDA had approved the
Company's PROCLEIX TIGRIS system for use with the PROCLEIX ULTRIO
assay. The PROCLEIX TIGRIS system was approved with the PROCLEIX
ULTRIO assay to screen donated blood, plasma, organs and tissue for
HIV-1 and hepatitis C virus (HCV) in individual blood donations or in
pools of up to 16 blood samples. The system and assay also detect
hepatitis B virus (HBV) in blood donations that are HBV-positive based
on traditional serology tests for HBV surface antigen and core
antibodies. As expected, the system and assay were not approved to
screen donated blood for HBV, as the initial clinical studies were not
designed to, and did not, demonstrate HBV "yield." Yield is defined as
HBV-infected blood donations that were intercepted by the PROCLEIX
ULTRIO assay, but that were initially negative based on serology tests.
Gen-Probe and Novartis have initiated a post-marketing study to
demonstrate HBV yield and gain the associated donor screening claim.
The companies have not yet identified HBV yield at this early stage of
the study.
-- Collaboration with Millipore Expanded. On May 7, Gen-Probe and
Millipore announced that Millipore will market and sell Gen-Probe's
Mycoplasma Tissue Culture Non-Isotopic (MTC-NI) test to its
biopharmaceutical customers. This new agreement expands on the
companies' existing collaboration to create a new generation of nucleic
acid tests for the biopharmaceutical market. The MTC-NI test was
developed by Gen-Probe prior to its collaboration with Millipore and is
commercially available today. Millipore's global sales organization is
expected to sell the MTC-NI assay until the new sample preparation
products and higher sensitivity assays that are being developed by the
two companies are launched.
Webcast Conference Call
A live webcast of Gen-Probe's second quarter 2007 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) 414-6073 for domestic callers and
(203) 369-0677 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 24 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 http://www.gen-probe.com.
Trademarks
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 "Updated 2007 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. Some of these risks,
uncertainties and assumptions include but are not limited to: (i) the risk
that we may not achieve our expected 2007 growth, revenue, earnings or other
financial targets, (ii) the risk that we may not earn or receive milestone
payments from our collaborators, including Novartis and 3M, (iii) 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, (iv) 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, (v) the risk that products including our PROCLEIX ULTRIO assay or
TIGRIS instrument for blood screening may not be approved by regulatory
authorities or commercially available in the time frame 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 or customer contracts, (viii) we are dependent on Novartis,
Siemens (as assignee of Bayer) 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, (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 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.
Gen-Probe Incorporated
Consolidated Balance Sheets
(In thousands, except share and per share data)
June 30, December 31,
2007 2006
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $39,429 $87,905
Short-term investments 303,607 202,008
Trade accounts receivable, net of allowance
for doubtful accounts of $650 and $670 at
June 30, 2007 and December 31, 2006,
respectively 32,675 25,880
Accounts receivable - other 5,619 1,646
Inventories 50,414 52,056
Deferred income tax - short term 7,381 7,247
Prepaid income tax 8,049 --
Prepaid expenses 13,172 11,362
Other current assets 4,641 2,583
Total current assets 464,987 390,687
Property, plant and equipment, net 135,170 134,614
Capitalized software 17,180 18,437
Goodwill 18,621 18,621
Deferred income tax - long term 2,092 2,064
License, manufacturing access fees
and other assets 60,097 59,416
Total assets $698,147 $623,839
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $13,305 $13,586
Accrued salaries and employee benefits 17,931 16,723
Other accrued expenses 3,759 3,320
Income tax payable 657 14,075
Deferred income tax - short term 101 --
Deferred revenue 1,016 921
Total current liabilities 36,769 48,625
Non-current income tax payable 4,565 --
Deferred revenue 3,333 3,667
Deferred rent 70 128
Deferred compensation plan liabilities 1,630 1,211
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, 52,935,270
and 52,233,656 shares issued and outstanding
at June 30, 2007 and December 31, 2006,
respectively 5 5
Additional paid-in capital 368,681 334,184
Accumulated other comprehensive income (loss) (445) (5)
Retained earnings 283,539 236,024
Total stockholders' equity 651,780 570,208
Total liabilities and stockholders' equity $698,147 $623,839
Gen-Probe Incorporated
Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
Revenues:
Product sales $93,897 $77,813 $181,049 $156,341
Collaborative research revenue 5,769 6,388 8,121 13,273
Royalty and license revenue 1,615 1,021 13,162 1,864
Total revenues 101,281 85,222 202,332 171,478
Operating expenses:
Cost of product sales 30,178 25,300 59,338 51,909
Research and development 24,973 20,329 45,231 39,655
Marketing and sales 9,393 9,145 18,929 18,007
General and administrative 12,081 10,698 23,362 21,356
Total operating expenses 76,625 65,472 146,860 130,927
Income from operations 24,656 19,750 55,472 40,551
Total other income, net 2,732 1,403 5,277 3,160
Income before income tax 27,388 21,153 60,749 43,711
Income tax expense 386 7,828 12,272 16,158
Net income $27,002 $13,325 $48,477 $27,553
Net income per share:
Basic $0.51 $0.26 $0.93 $0.54
Diluted $0.50 $0.25 $0.90 $0.52
Weighted average shares outstanding:
Basic 52,504 51,563 52,347 51,403
Diluted 54,051 53,186 53,852 53,023
Gen-Probe Incorporated
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended
June 30,
2007 2006
Operating activities:
Net income $48,477 $27,553
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 16,802 12,507
Stock-based compensation charges 9,187 10,733
Stock option income tax benefits 841 --
Excess tax benefit from employee stock options (5,272) (6,918)
Gain on disposal of property and equipment 224 (23)
Changes in assets and liabilities:
Accounts receivable (10,754) 3,538
Inventories 1,338 (2,546)
Prepaid expenses (1,807) (564)
Other current assets (2,051) 997
Other long term assets (821) (1,214)
Accounts payable (288) (441)
Accrued salaries and employee benefits 1,208 (1,768)
Other accrued expenses 427 423
Income tax payable (13,214) 31
Deferred revenue (239) (4,181)
Deferred income tax (302) (374)
Deferred rent (58) (58)
Deferred compensation plan liabilities 419 512
Net cash provided by operating activities 44,117 38,207
Investing activities:
Proceeds from sales and maturities of
short-term investments 28,156 40,528
Purchases of short-term investments (130,132) (62,225)
Purchases of property, plant and equipment (14,223) (32,836)
Capitalization of intangible assets, including
license and manufacturing access fees (1,924) (2,074)
Cash paid for investment in Qualigen -- (6,993)
Other assets (263) 42
Net cash used in investing activities (118,386) (63,558)
Financing activities:
Excess tax benefit from employee stock options 5,272 6,918
Proceeds from issuance of common stock 20,383 14,822
Net cash provided by financing activities 25,655 21,740
Effect of exchange rate changes on cash and
cash equivalents 138 408
Net decrease in cash and cash equivalents (48,476) (3,203)
Cash and cash equivalents at the beginning of
period 87,905 32,328
Cash and cash equivalents at the end of period $39,429 $29,125
Contact:
Michael Watts
Sr. director, investor relations and
corporate communications
858-410-8673
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
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