WALTHAM, Mass., Feb. 20 /PRNewswire-FirstCall/ -- Inverness Medical Innovations, Inc. (AMEX:IMA), a global leader in rapid point-of-care diagnostic products, today announced its financial results for the quarter ended December 31, 2007.
In the fourth quarter of 2007, the Company recorded net revenue of $288.0 million compared to net revenue of $157.0 million in the fourth quarter of 2006. The revenue increase was primarily due to increased product sales in our Professional Diagnostics segment which grew from $87.2 million in the fourth quarter of 2006 to $234.2 million in 2007, principally as a result of businesses acquired which contributed $139.3 million of the increased product revenue. Partially offsetting this increase was a decrease of $16.1 million in revenue as compared to the prior year's quarter as a result of our second quarter of 2007 formation of a joint venture for our Consumer Diagnostics business with the Procter & Gamble Company and a $3.3 million decrease in product sales from our Nutritional segment.
For the fourth quarter of 2007, the net loss prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") was $12.5 million, or $0.19 per diluted common share, compared to net income of $6.0 million, or $0.15 per diluted common share, for the fourth quarter of 2006. The Company reported adjusted cash basis net income of $27.6 million, or $0.40 per diluted common share, for the fourth quarter of 2007, compared to adjusted cash basis net income of $13.8 million, or $0.34 per diluted common share, for the fourth quarter of 2006.
The Company's GAAP results for the fourth quarter of 2007 include amortization of $25.6 million, the write-off of $4.8 million of in-process research and development acquired in connection with our acquisition of Diamics, $5.2 million of restructuring charges, $5.3 million of stock-based compensation expense, a $0.8 million charge related to the write-up to fair market value of inventory acquired in connection with the Cholestech and HemoSense acquisitions, and an unrealized foreign currency loss of $3.9 million associated with a cash escrow established in connection with the acquisition of BBI Holdings Plc. GAAP results for the fourth quarter of 2006 include amortization of $5.4 million, a $1.2 million restructuring charge, and $1.6 million of non-cash stock-based compensation expense. These amounts, net of tax, have been excluded from the adjusted cash basis net income per common share for the respective quarters.
A detailed reconciliation of the Company's adjusted cash basis net income, which is a non-GAAP financial measure, to net loss under GAAP, as well as a discussion regarding this non-GAAP financial measure, is included in the schedules to this press release.
The Company will host a conference call beginning at 10:00 a.m. (Eastern Time) today, February 20, 2008, to discuss these results as well as other corporate matters. During the conference call, the Company may answer questions concerning business and financial developments and trends and other business and financial matters. The Company's responses to these questions, as well as other matters discussed during the conference call, may contain or constitute information that has not been previously disclosed.
The conference call can be accessed by dialing 973-582-2700 (domestic and international), an access code is not required, or via a link on the Inverness website at http://www.invernessmedical.com/. It is also available via link at http://audioevent.mshow.com/342025/ using Real Player or Windows Media. A telephone replay of the call will be available by dialing 706-645-9291 (domestic and international) with an access code of 34933552. That replay will be available until 12:00 midnight (Eastern Time) on February 23, 2008. An on- demand webcast of the call will be available at the Inverness website (http://www.invernessmedical.com/News.cfm) two hours after the end of the call and will be accessible for 30 days. Additionally, reconciliations to non-GAAP financial measures not included in this press release that may be discussed during the call will also be available at the same website beginning shortly before the conference call and will continue to be available on this website for 30 days.
For more information about Inverness Medical Innovations, please visit our website at http://www.invernessmedical.com/.
By developing new capabilities in near-patient diagnosis, monitoring and health management, Inverness Medical Innovations enables individuals to take charge of improving their health and quality of life. A global leader in rapid point-of-care diagnostics, Inverness' products, as well as its new product development efforts, focus on infectious disease, cardiology, oncology, drugs of abuse and women's health. Inverness is headquartered in Waltham, Massachusetts.
Inverness Medical Innovations, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and
Reconciliation to Non-GAAP Adjusted Cash Basis Amounts
(in $000s, except per share amounts)
Three Months Ended December 31, 2007 Non-GAAP
Adjusted
Non-GAAP Cash
GAAP Adjustments Basis(a) Net revenue $287,960 $- $287,960
Cost of sales 149,209 (13,266)(b)(c)(d)(f) 135,943
Gross profit 138,751 13,266 152,017
Gross margin 48% 53% Operating expenses:
Research and
development 24,898 (3,838)(b)(c)(d) 21,060
Purchase of in-process
research and
development 4,825 (4,825)(g) -
Selling, general and
administrative 99,758 (19,658)(b)(c)(d) 80,100
Loss on dispositions,
net - - -
Operating income 9,270 41,587 50,857
Interest and other income
(expense), net (25,146) 4,006(c)(h) (21,140)
Income tax (benefit)
provision (3,366) 5,494(i) 2,128
Net (loss) income $(12,510) $40,099 $27,589 Net (loss) income per
common share:
Basic $(0.19) $0.42
Diluted $(0.19)(j) $0.40(k) Weighted average common
shares - basic 65,525 65,525
Weighted average common
shares - diluted 65,525(j) 69,578(k)
Three Months Ended December 31, 2006 Non-GAAP
Adjusted
Non-GAAP Cash
GAAP Adjustments Basis(a) Net revenue $157,008 $- $157,008
Cost of sales 89,680 (3,906)(b)(c)(d) 85,774
Gross profit 67,328 3,906 71,234
Gross margin 43% 45% Operating expenses:
Research and
development 13,917 (1,460)(c)(d) 12,457
Purchase of in-process
research and
development - - -
Selling, general and
administrative 44,584 (2,493)(c)(d) 42,091
Loss on dispositions,
net 307 (307)(e) -
Operating income 8,520 8,166 16,686 Interest and other income
(expense), net (650) 177(c) (473)
Income tax (benefit)
provision 1,843 552(i) 2,395
Net (loss) income $6,027 $7,791 $13,818 Net (loss) income per
common share:
Basic $0.15 $0.36
Diluted $0.15(l) $0.34(l) Weighted average common
shares - basic 38,885 38,885
Weighted average common
shares - diluted 40,715(l) 40,715(l)
(a) In calculating net income or loss on an adjusted cash basis, the
Company excludes from net income or loss (i) certain non-cash
charges including amortization expense and stock-based compensation
expense, (ii) non-recurring charges and income, and (iii) certain
other charges and income that have a significant positive or
negative impact on results yet do not occur on a consistent or
regular basis in its business. In determining whether a particular
item meets one of these criteria, management considers facts and
circumstances that it believes are relevant. Management believes
that excluding such charges and income from income or loss allows
investors and management to evaluate and compare the Company's
operating results from continuing operations from period to period
in a meaningful and consistent manner. Due to the frequency of
their occurrence in its business, the Company does not adjust net
income or loss for the costs associated with litigation, including
payments made or received through settlements. It should be noted
that "net income or loss on an adjusted cash basis" is not a
standard financial measurement under accounting principles generally
accepted in the United States of America ("GAAP") and should not be
considered as an alternative to net income or loss or cash flow from
operating activities, as a measure of liquidity or as an indicator
of operating performance or any measure of performance derived in
accordance with GAAP.
(b) Restructuring charge associated with the decision to close
facilities of $5.2 million and $1.2 million for the three months
ended December 31, 2007 and 2006, respectively. The $5.2 million
charge for the three months ended December 31, 2007 includes: $2.0
million charged to cost of sales, $2.2 million charged to research
and development, and $1.0 million charged to selling, general and
administrative expense. The $1.2 million charge for the three
months ended December 31, 2006 was charged to cost of sales. These
charges have been excluded from net income or loss because they have
a significant impact on results yet do not occur on a consistent or
regular basis in the Company's business.
(c) Amortization expense of $25.6 million and $5.4 million included in
the fourth quarter of 2007 and 2006 GAAP results, respectively,
including $10.2 million and $2.7 million charged to cost of sales,
$0.7 million and $1.0 million charged to research and development,
$14.6 million and $1.5 million charged to selling, general and
administrative expense, and $0.1 million and $0.2 million charged to
other income, in the respective quarters.
(d) Compensation costs of $5.3 million and $1.6 million associated with
stock-based compensation expense, including $0.3 million and $0.1
million charged to cost of sales, $0.9 million and $.5 million
charged to research and development and $4.1 million and $1.0
million charged to selling, general and administrative.
(e) Loss of $0.3 million associated with management's decision to
dispose of our SMB research facility.
(f) Write-offs in the amount of $0.7 million and $0.1 million during the
three months ended December 31, 2007, relating to inventory
adjustments recorded in connection with the acquisition of
Cholestech and HemoSense, respectively.
(g) Purchase of in-process research and development during the three
months ended December 31, 2007 includes a write-off of $4.8 million
associated with the value of in-process research and development
costs incurred in connection with our acquisition of Diamics.
(h) A $3.9 million unrealized foreign currency loss associated with a
cash escrow established in connection with the acquisition of BBI
Holdings Plc.
(i) Tax effect on adjustments as discussed above in notes (b), (c), (d),
(f) and (h).
(j) For the three months ended December 31, 2007, potential dilutive
shares were not used in the calculation of diluted net loss per
common share under GAAP because inclusion thereof would be
antidilutive.
(k) Included in the weighted average diluted common shares for the
calculation of diluted net income per common share for the three
months ended December 31, 2007, on an adjusted cash basis, are
dilutive shares consisting of 4,053,000 common stock equivalent
shares from the potential exercise of stock options and awards and
warrants. The diluted net income per common share calculation for
the three months ended December 31, 2007, on an adjusted cash
basis, does not include 2,868,000 common stock equivalent shares
from the potential conversion of convertible debt, as inclusion
thereof would be antidilutive.
(l) Included in the weighted average diluted common shares for the
calculation of diluted net income per common share for the three
months ended December 31, 2006, under GAAP and on an adjusted cash
basis, are dilutive shares consisting of 1,830,000 common stock
equivalent shares from the potential exercise of stock options and
warrants.
Inverness Medical Innovations, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and
Reconciliation to Non-GAAP Adjusted Cash Basis Amounts
(in $000s, except per share amounts)
Year Ended December 31, 2007 Non-GAAP
Adjusted
Non-GAAP Cash
GAAP Adjustments Basis(a) Net revenue $839,540 $- $839,540
Cost of sales 445,813 (34,877)(b)(c)(d)(f) 410,936
Gross profit 393,727 34,877 428,604
Gross margin 47% 51% Operating expenses:
Research and development 69,547 (7,597)(b)(c)(d) 61,950
Purchase of in-process
research and
development 173,825 (173,825)(g) - Selling, general and
administrative 323,766 (91,579)(b)(c)(d) 232,187
Loss on dispositions,
net - - -
Operating (loss)
income (173,411) 307,878 134,467 Interest and other income
(expense), net (69,879) 18,005(c)(b)(f) (51,874)
Income tax (benefit)
provision (1,799) 15,743(i) 13,944
Net (loss) income $(241,491) $310,140 $68,649 Net (loss) income per
common share:
Basic $(4.69) $1.33
Diluted $(4.69)(k) $1.27(l) Weighted average common
shares - basic 51,510 51,510
Weighted average common
shares - diluted 51,510(k) 54,236(l)
Year Ended December 31, 2006 Non-GAAP
Adjusted
Non-GAAP Cash
GAAP Adjustments Basis(a) Net revenue $569,454 $- $569,454
Cost of sales 340,231 (21,036)(b)(c)(d) 319,195
Gross profit 229,223 21,036 250,259
Gross margin 40% 44% Operating expenses:
Research and
development 53,666 (7,544)(b)(c)(d)(g) 46,122
Purchase of in-process
research and
development (4,960)(g) (4,960)
Selling, general and
administrative 165,688 (11,648)(b)(c)(d) 154,040
Loss on dispositions,
net 3,498 (3,498)(e) -
Operating (loss)
income 6,371 48,686 55,057 Interest and other income
(expense), net (17,486) (2,776)(b)(c)(h) (20,262)
Income tax (benefit)
provision 5,727 1,962(j) 7,689
Net (loss) income $(16,842) $43,948 $27,106 Net (loss) income per
common share:
Basic $(0.49) $0.79
Diluted $(0.49)(k) $0.76(m) Weighted average common
shares - basic 34,109 34,109
Weighted average common
shares - diluted 34,109(k) 35,578(m)
(a) In calculating net income or loss on an adjusted cash basis, the
Company excludes from net income or loss (i) certain non-cash
charges including amortization expense and stock-based compensation
expense, (ii) non-recurring charges and income, and (iii) certain
other charges and income that have a significant positive or
negative impact on results yet do not occur on a consistent or
regular basis in its business. In determining whether a particular
item meets one of these criteria, management considers facts and
circumstances that it believes are relevant. Management believes
that excluding such charges and income from income or loss allows
investors and management to evaluate and compare the Company's
operating results from continuing operations from period to period
in a meaningful and consistent manner. Due to the frequency of
their occurrence in its business, the Company does not adjust net
income or loss for the costs associated with litigation, including
payments made or received through settlements. It should be noted
that "net income or loss on an adjusted cash basis" is not a
standard financial measurement under accounting principles generally
accepted in the United States of America ("GAAP") and should not be
considered as an alternative to net income or loss or cash flow from
operating activities, as a measure of liquidity or as an indicator
of operating performance or any measure of performance derived in
accordance with GAAP.
(b) Restructuring charge associated with the decision to close
facilities of $6.7 million and $8.9 million for the year ended
December 31, 2007 and 2006, respectively. The $6.7 million charge
for the year ended December 31, 2007 includes: $2.0 million charged
to cost of sales, $2.5 million charged to research and development,
and $2.2 million charged to selling, general and administrative
expense. The $8.9 million charge for the year ended December 31,
2006 includes: $9.5 million charged to cost of sales, $2.9 million
charged to research and development and $0.8 million charged to
selling, general and administrative expense, offset by a $4.3
million net foreign currency gain resulting from the closure of our
CDIL operation in Ireland recorded to other income. These charges
have been excluded from net income or loss because they have a
significant impact on results yet do not occur on a consistent or
regular basis in the Company's business.
(c) Amortization expense of $62.2 million and $21.8 million for the year
2007 and 2006 GAAP results, respectively, including $24.1 million
and $11.2 million charged to cost of sales, $2.9 million and $3.3
million charged to research and development, $34.8 million and $7.1
million charged to selling, general and administrative expense, and
$0.4 million and $0.2 million charged to other expense in the
respective periods.
(d) Compensation costs of $57.4 million and $5.5 million associated with
stock-based compensation expense, including $0.6 million and $0.4
million charged to cost of sales, $2.2 million and $1.4 million
charged to research and development and $54.6 million and $3.7
million charged to selling, general and administrative. The $57.5
million charged to selling, general and administrative during the
year-ended December 31, 2007 includes $45.2 million of costs
associated with stock option acceleration and conversion in
connection with our recent acquisition of Biosite.
(e) A net loss of $3.5 million resulting from a loss of $4.9 million
associated with management's decision to dispose of our SMB research
operation, offset by a $1.4 million gain on the sale of an idle
manufacturing facility.
(f) Write-offs in the amount of $6.2 million, $1.9 million and $0.1
million during the year ended December 31, 2007, relating to
inventory adjustments recorded in connection with the acquisition of
Biosite, Cholestech and HemoSense, respectively.
(g) Purchase of in-process research and development during the year
ended December 31, 2007 includes a write-off of $169.0 million and
$4.8 million associated with the value of in-process research and
development costs incurred in connection with our acquisition of
Biosite and Diamics, respectively. Purchase of in-process research
and development during the year ended December 31, 2006 includes a
write-off of $5.0 million associated with the value of in-process
research and development costs incurred in connection with our
acquisition of Clondiag.
(h) Write-off of debt origination costs upon early extinguishment of
related debt, which constitutes a charge having a significant
negative impact on results yet does not occur on a consistent or
regular basis in our business in the amount of $15.6 million and
$1.3 million for the year ended December 31, 2007 and 2006,
respectively.
(i) A $3.9 million unrealized foreign currency loss associated with a
cash escrow established in connection with the acquisition of BBI
Holdings Plc, partially offset by a $1.9 million foreign currency
gain realized on the settlement of intercompany notes.
(j) Tax effect on adjustments as discussed above in notes (b), (c), (d),
(f), (h) and (i).
(k) For the year ended December 31, 2007 and 2006, potential dilutive
shares were not used in the calculation of diluted net loss per
common share under GAAP because inclusion thereof would be
antidilutive.
(l) Included in the weighted average diluted common shares for the
calculation of diluted net income per common share for the year
ended December 31, 2007, on an adjusted cash basis, are dilutive
shares consisting of 2,726,000 common stock equivalent shares from
the potential exercise of stock options and awards and warrants. The diluted net income per common share calculation for the year
ended December 31, 2007, on an adjusted cash basis, does not
include 1,807,000 common stock equivalent shares from the potential
conversion of convertible debt, as inclusion thereof would be
antidilutive.
(m) Included in the weighted average diluted common shares for the
calculation of diluted net income per common share for the year
ended December 31, 2006, on an adjusted cash basis, are dilutive
shares consisting of 1,469,000 common stock equivalent shares from
the potential exercise of stock options and warrants.
Inverness Medical Innovations, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in $000s) December 31, December 31,
2007 2006
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $414,732 $71,104
Restricted cash 141,869 -
Marketable securities 2,551 -
Accounts receivable, net 163,380 100,388
Inventories, net 148,231 78,322
Prepaid expenses and other current assets 82,211 25,730
Total current assets 952,974 275,544 PROPERTY, PLANT AND EQUIPMENT, NET 267,880 82,312
GOODWILL AND OTHER INTANGIBLE ASSETS, NET 3,496,616 679,002
DEFERRED FINANCING COSTS AND OTHER ASSETS, NET 165,731 48,913
Total assets $4,883,201 $1,085,771 LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of notes payable $21,096 $8,088
Other current liabilities 257,812 134,143
Total current liabilities 278,908 142,231 LONG-TERM LIABILITIES:
Notes payable, net of current portion 1,366,753 194,888
Deferred tax liability 325,308 23,984
Other long-term liabilities 322,303 10,530
Total long-term liabilities 2,014,364 229,402
TOTAL STOCKHOLDERS' EQUITY 2,589,929 714,138
Total liabilities and stockholders' equity $4,883,201 $1,085,771
DATASOURCE: Inverness Medical Innovations CONTACT: Doug Guarino, Director of Corporate Relations, or Jon Russell, Vice President of Finance, +1-781-647-3900, both of Inverness Medical Innovations Web site: http://www.invernessmedical.com/
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