- Company Reports Quarterly EPS of $0.53, Up 71% Versus Prior Year, As Total
Revenues Rise 19% to $121.2 Million -
- Company Generates $67.3 Million of Cash from Operating Activities in Third
Quarter -
- Company Now Expects Full-Year EPS of $1.91 to $1.93 -
SAN DIEGO, Oct. 30 /PRNewswire-FirstCall/ -- Gen-Probe Incorporated
(Nasdaq: GPRO) today reported strong financial results for the third quarter
of 2008 and raised its full-year guidance for earnings per share (EPS).
"Gen-Probe posted very good financial results in the third quarter of
2008, driven by solid growth in both our clinical diagnostics and blood
screening businesses and substantially improved gross margins," said Henry L.
Nordhoff, the Company's chairman and chief executive officer.
In the third quarter of 2008, product sales were $108.3 million, compared
to $97.4 million in the prior year period, an increase of 11%. Total revenues
for the third quarter of 2008 were $121.2 million, compared to $101.7 million
in the prior year period, an increase of 19%. Net income was $29.1 million
($0.53 per share) in the third quarter of 2008, compared to $17.3 million
($0.31 per share) in the prior year period, an increase of 68% (71% per
share).
For the first nine months of 2008, product sales were $323.5 million,
compared to $278.5 million in the prior year period, an increase of 16%.
Total revenues for the first nine months of 2008 were $363.6 million, compared
to $304.1 million in the prior year period, an increase of 20%. Net income
was $85.8 million ($1.56 per share) in the first nine months of 2008, compared
to $65.7 million ($1.21 per share) in the prior year period, an increase of
31% (29% per share).
In this press release, all per share amounts are calculated on a fully
diluted basis, and all results are presented on a U.S. GAAP basis. Some
totals may not foot due to rounding.
Detailed Results
Gen-Probe's clinical diagnostics sales in the third quarter of 2008
benefited from 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 third quarter compared to the prior year
period, in line with Gen-Probe's expectations.
In blood screening, product sales in the third quarter of 2008 benefited
from increased international and domestic sales of the PROCLEIX(R) ULTRIO(R)
assay, and from approximately $1.8 million of foreign exchange benefit
compared to the prior year. 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 Nine Months Ended
Sept. 30, Sept. 30,
2008 2007 Increase 2008 2007 Increase
Clinical diagnostics $55.5 $51.8* 7% $165.2 $149.5 11%
Blood screening $52.7 $45.6 16% $158.2 $129.0 23%
Total product sales $108.3 $97.4 11% $323.5 $278.5 16%
* As previously disclosed, clinical diagnostics sales in the third quarter
of 2007 included approximately $3 million of one-time, incremental
instrument sales. Excluding these sales from the prior year period,
clinical diagnostics growth in the third quarter of 2008 would have been
approximately 14%, and total product sales growth would have been about
15%.
Collaborative research revenues in the third quarter of 2008 were $11.3
million, compared to $3.1 million in the prior year period. This significant
increase resulted primarily from a $10 million milestone the Company earned
from Chiron based on the full approval by the US Food and Drug Administration
(FDA) of the PROCLEIX ULTRIO assay on the TIGRIS system. For the first nine
months of 2008, collaborative research revenues were $18.5 million, compared
to $11.2 million in the prior year period, an increase of 65%.
Royalty and license revenues for the third quarter of 2008 were
$1.6 million, compared to $1.2 million in the prior year period, an increase
of 33% that resulted primarily from higher royalties from Chiron associated
with the use of Gen-Probe's technologies in the plasma screening market. For
the first nine months of 2008, royalty and license revenues were
$21.6 million, compared to $14.4 million in the prior year period, an increase
of 50% 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 third quarter of 2008 was 71.7%,
compared to 67.3% in the prior year period. This increase resulted primarily
from increased sales of blood screening products and APTIMA(R) assays, reduced
sales of lower-margin instrumentation, and operational efficiencies. For the
first nine months of 2008, gross margin on product sales was 70.4%, compared
to 67.3% in the prior year period.
Research and development (R&D) expenses in the third quarter of 2008 were
$24.5 million, compared to $27.6 million in the prior year period, a decrease
of 11% that resulted primarily from the purchase of human papillomavirus (HPV)
oligonucleotides from Roche in the prior year period. For the first nine
months of 2008, R&D expenses were $76.9 million, compared to $72.8 million in
the prior year period, an increase of 6% 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 third quarter of 2008 were $10.7
million, compared to $9.7 million in the prior year period, an increase of 10%
that resulted primarily from European market development efforts related to
the Company's APTIMA Combo 2, APTIMA HPV and PROGENSATM PCA3 assays. For the
first nine months of 2008, marketing and sales expenses were $34.1 million,
compared to $28.6 million in the prior year period, an increase of 19%.
General and administrative (G&A) expenses in the third quarter of 2008
were $12.9 million, compared to $11.4 million in the prior year period, an
increase of 13% that resulted primarily from increased compensation and legal
costs. For the first nine months of 2008, G&A expenses were $38.5 million,
compared to $34.7 million in the prior year period, an increase of 11%.
Total other income in the third quarter of 2008 was $2.2 million, compared
to $3.3 million in the prior year period, a decrease of 33% that resulted
primarily from a $1.6 million impairment charge associated with the Company's
equity investment in Qualigen, Inc. The Company reviews its investments
regularly and records impairment charges when an investment has experienced a
decline that is expected to be other-than temporary. For the first nine
months of 2008, total other income was $11.6 million, compared to $8.6 million
in the prior year period, an increase of 35% that resulted primarily from
higher short-term investment balances.
Gen-Probe continues to have a strong balance sheet. As of September 30,
2008, the Company had $555.5 million of cash, cash equivalents and short-term
investments, and no debt. In the third quarter of 2008, the Company generated
net cash of $67.3 million from its operating activities, while spending $4.8
million on property, plant and equipment. In the first nine months of 2008,
Gen-Probe generated net cash of $159.0 million from its operating activities,
compared to the Company's year-to-date net income of $85.8 million.
Updated 2008 Financial Guidance
"Based on our strong performance in the third quarter, we are raising our
full-year 2008 EPS guidance and tightening our revenue range upward," said
Herm Rosenman, the Company's senior vice president of finance and chief
financial officer. Gen-Probe's 2008 financial guidance is:
Current Guidance Previous Guidance
Total revenues $470 million to $467 million to
$472 million $472 million
Product gross margins 70% 69% to 70%
R&D expenses 22% 22% to 23%
Marketing and sales expenses 10% 9% to 10%
G&A expenses 11% 11%
Tax rate 34% 34%
Diluted shares outstanding 55 million 55 million to 56 million
EPS $1.91 to $1.93 $1.83 to $1.87
Recent Events
-- FDA Approves PROCLEIX ULTRIO Assay. On August 13, Gen-Probe announced
that the FDA had approved the Company's supplemental regulatory
application to use the PROCLEIX ULTRIO assay to screen donated blood
for the hepatitis B virus (HBV). The FDA had previously approved the
assay to screen donated blood for HIV-1 and the hepatitis C virus
(HCV). The assay is now approved to screen donated blood, plasma,
organs and tissue for the three viruses in individual blood donations
or in pools of up to 16 blood samples. The assay may be run on the
enhanced semi-automated PROCLEIX system (eSAS) and on the fully
automated, high-throughput TIGRIS system.
-- PROCLEIX ULTRIO Study Results. On October 7, independent investigators
presented key results of the PROCLEIX ULTRIO post-marketing HBV "yield"
studies at the annual meeting of the AABB. A total of 3.7 million
blood donations were screened in the two studies. Approximately 54% of
the donations were tested in pools of 16 donations, 30% were tested in
pools of eight donations, and 16% were tested as individual donations.
The ULTRIO assay detected eight cases of HBV yield, with yield defined
as HBV-infected blood donations that were missed by serology screening.
These donations therefore could have been transfused if not for the use
of the ULTRIO assay. In addition, the ULTRIO assay had a specificity
of greater than 99.9% in both studies, meaning that it generated fewer
than 0.1% "false positive" results. Based in part on the results of
these studies, the FDA fully approved the assay as described above.
-- $250 Million Stock Repurchase Plan. On August 26, Gen-Probe announced
that its board of directors had authorized the repurchase of up to
$250 million of the Company's common stock over the two years following
adoption of the program. Under the plan, repurchases may occur from
time to time and at Gen-Probe's discretion, depending on market
conditions and other factors. Shares may be purchased on the open
market or through private transactions, pursuant to Rule 10b5-1 trading
plans or other available means. The Company repurchased approximately
$10 million of its stock in the third quarter.
Webcast Conference Call
A live webcast of Gen-Probe's third 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 (866) 505-9257 for domestic callers and (203)
369-1881 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 NATs that are used
primarily to diagnose human diseases and screen donated human blood. Gen-Probe
has approximately 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
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 2008 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, updated financial guidance, 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 2008 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) we may
not be able to compete effectively, (vi) we may not be able to maintain our
current corporate collaborations and enter into new corporate collaborations
or customer contracts, (vii) we are dependent on Novartis, Siemens (as
assignee of Bayer) and other third parties for the distribution of some of our
products, (viii) we are dependent on a small number of customers, contract
manufacturers and single source suppliers of raw materials, (ix) changes in
third-party reimbursement policies regarding our products could adversely
affect sales of our products, (x) changes in government regulation affecting
our diagnostic products could harm our sales and increase our development
costs, (xi) the risk that our intellectual property may be infringed by third
parties or invalidated, and (xii) 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.
Contact:
Michael Watts
Sr. director, investor relations and
corporate communications
858-410-8673
Gen-Probe Incorporated
Consolidated Balance Sheets
(In thousands, except share and per share data)
September December
30, 31,
2008 2007
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $74,366 $75,963
Short-term investments 481,127 357,531
Trade accounts receivable, net of allowance
for doubtful accounts of $700 and $719 at
September 30, 2008 and December 31, 2007,
respectively 28,632 32,678
Accounts receivable - other 3,684 11,044
Inventories 53,241 48,540
Deferred income tax - short term 9,985 8,825
Prepaid income tax 2,358 2,390
Prepaid expenses 10,409 17,505
Other current assets 7,068 4,402
Total current assets 670,870 558,878
Property, plant and equipment, net 139,554 129,493
Capitalized software, net 14,037 15,923
Goodwill 18,621 18,621
Deferred income tax - long term 7,744 7,942
License, manufacturing access fees and other
assets, net 58,368 58,196
Total assets $909,194 $789,053
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $19,163 $11,777
Accrued salaries and employee benefits 25,908 20,997
Other accrued expenses 4,081 4,014
Income tax payable 3,909 846
Deferred revenue - short term 1,544 2,836
Total current liabilities 54,605 40,470
Non-current income tax payable 4,216 3,958
Deferred income tax - long term 69 75
Deferred revenue - long term 2,500 4,607
Deferred rent - 10
Deferred compensation plan liabilities 2,330 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, 54,374,929
and 53,916,298 shares issued and outstanding
at September 30, 2008 and December 31, 2007,
respectively 5 5
Additional paid-in capital 439,402 415,229
Accumulated other comprehensive (loss) / income (949) 1,604
Retained earnings 407,016 321,202
Total stockholders' equity 845,474 738,040
Total liabilities and stockholders' equity $909,194 $789,053
Gen-Probe Incorporated
Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
Revenues:
Product sales $108,253 $97,402 $323,461 $278,451
Collaborative research revenue 11,343 3,118 18,453 11,239
Royalty and license revenue 1,581 1,213 21,640 14,375
Total revenues 121,177 101,733 363,554 304,065
Operating expenses:
Cost of product sales 30,681 31,810 95,827 91,148
Research and development 24,507 27,582 76,941 72,813
Marketing and sales 10,709 9,651 34,070 28,580
General and administrative 12,908 11,380 38,516 34,742
Total operating expenses 78,805 80,423 245,354 227,283
Income from operations 42,372 21,310 118,200 76,782
Interest income 4,167 3,327 12,274 8,935
Interest expense (1) - (3) 30
Other income/(expense) (1,929) 6 (647) (355)
Total other income, net 2,237 3,333 11,624 8,610
Income before income tax 44,609 24,643 129,824 85,392
Income tax expense 15,531 7,392 44,010 19,664
Net income $29,078 $17,251 $85,814 $65,728
Net income per share:
Basic $0.54 $0.32 $1.59 $1.25
Diluted $0.53 $0.31 $1.56 $1.21
Weighted average shares
outstanding:
Basic 54,084 53,221 53,882 52,661
Diluted 55,322 54,857 55,117 54,210
Gen-Probe Incorporated
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
2008 2007
Operating activities:
Net income $85,814 $65,728
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 26,217 25,518
Amortization of premiums on investments, net of
accretion of discounts 5,118 3,379
Stock-based compensation charges 15,012 14,487
Stock-based compensation income tax benefits 3,025 2,031
Excess tax benefit from stock-based compensation (2,510) (13,055)
Gain on sale of stock holdings of Molecular
Profiling Institute, Inc. (1,600) -
Impairment charges 5,086 -
Loss on disposal of property and equipment 38 202
Changes in assets and liabilities:
Accounts receivable 11,403 (15,861)
Inventories (4,270) 2,660
Prepaid expenses 7,060 (6,538)
Other current assets (2,255) (2,756)
Other long term assets (510) (930)
Accounts payable 7,381 1,116
Accrued salaries and employee benefits 4,922 6,328
Other accrued expenses 96 5,343
Income tax payable 2,926 (14,544)
Deferred revenue (3,399) 202
Deferred income tax (961) 794
Deferred rent (10) (88)
Deferred compensation plan liabilities 436 544
Net cash provided by operating activities 159,019 74,560
Investing activities:
Proceeds from sales and maturities of short-term
investments 94,103 54,012
Purchases of short-term investments (225,290) (182,449)
Purchases of property, plant and equipment (30,530) (17,674)
Capitalization of intangible assets, including
license and manufacturing access fees (1,868) (2,127)
Sale of stock holdings of Molecular Profiling
Institute, Inc. 4,100 -
Cash paid for Roche manufacturing access fees (10,000) -
Other items, net 10 (334)
Net cash used in investing activities (169,475) (148,572)
Financing activities:
Repurchase and retirement of restricted stock for
payment of taxes (1,309) (1,020)
Repurchase and retirement of common stock (9,992) -
Excess tax benefit from stock-based compensation 2,510 13,055
Proceeds from issuance of common stock 17,848 40,677
Net cash provided by financing activities 9,057 52,712
Effect of exchange rate changes on cash and cash
equivalents (198) 283
Net decrease in cash and cash equivalents (1,597) (21,017)
Cash and cash equivalents at the beginning of period 75,963 87,905
Cash and cash equivalents at the end of period $74,366 $66,888
SOURCE Gen-Probe Incorporated
10/30/2008
CONTACT: Michael Watts, Sr. director, investor relations and corporate
communications of Gen-Probe Incorporated, +1-858-410-8673
Web site: http://www.gen-probe.com
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