WALTHAM, Mass., Oct. 27 /PRNewswire-FirstCall/ -- Inverness Medical
Innovations, Inc. (NYSE: IMA), a global leader in enabling individuals to take
charge of their health at home through the merger of rapid diagnostics and
health management, today announced its financial results for the quarter ended
September 30, 2009.
Financial results for the third quarter of 2009:
-- Net revenue of $535.8 million for the third quarter of 2009, compared
to
$438.8 million for the third quarter of 2008.
-- GAAP net income available to common stockholders and earnings per
share
of $14.3 million and $0.17 per diluted common share, compared to GAAP
net loss available to common stockholders and loss per share of $9.1
million and $0.12 per common share, for the third quarter of 2008.
-- Adjusted cash basis net income available to common stockholders and
earnings per share of $66.6 million and $0.74 per diluted common
share,
compared to $37.7 million and $0.46 per diluted common share, for the
third quarter of 2008.
Highlights for the third quarter of 2009:
-- Currency adjusted organic revenue growth of 9.2% in our Professional
Diagnostics business, excluding North American influenza sales.
-- North American influenza sales totaled $40.4 million for the third
quarter of 2009, compared to $6.8 million for the third quarter of
2008.
-- Recent acquisitions contributed $37.4 million of incremental net
revenue, compared to the third quarter of 2008.
The Company's GAAP results for the third quarter of 2009 include amortization
of $65.4 million, $6.2 million of restructuring charges, $7.8 million of
stock-based compensation expense, a $0.7 million charge associated with the
write-up to fair market value of inventory acquired in connection with the
acquisition of Concateno plc, a $1.9 million compensation charge incurred in
connection with the acquisition of Concateno plc, a $0.3 million loss recorded
in connection with deferred purchase price consideration to be paid with our
common stock and $5.1 million of acquisition-related costs recorded in
accordance with our adoption of ASC 805, Business Combinations, offset by a
$3.4 million gain on the disposition of our Diamics, Inc. operations and a
$2.9 million net realized foreign currency gain associated with restricted
cash established in connection with the Concateno plc acquisition. GAAP
results for the third quarter of 2008 include amortization of $60.0 million,
$5.8 million of restructuring charges and $7.0 million of 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 income (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, October 27, 2009, 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 may be accessed by dialing 706-679-1656 (domestic and
international), an access code is not required, or via a link on the Inverness
website at www.invmed.com. It is also available via link at
https://event.meetingstream.com/r.htm?e=173280&s=1&k=869A5F5A4B771B69A9B01D767DE15ABF.
An archive of the call will be available from the same link approximately two
hours after the conclusion of the live call and will be accessible for 90
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 Inverness website (www.invmed.com/News.cfm) shortly before
the conference call begins 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 at home. Inverness'
global leading products and services, 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)
Nine Months Ended September 30, 2009
Non-GAAP
Adjusted
Non-GAAP Cash
GAAP Adjustments Basis (a)
Net product sales
and services revenue $1,419,472 $- $1,419,472
License and royalty
revenue 20,588 - 20,588
Net revenue 1,440,060 - 1,440,060
Cost of net revenue 683,898 (38,729)(b)(c)(d)(e) 645,169
Gross profit 756,162 38,729 794,891
Gross margin 53% 55%
Operating expenses:
Research and
development 80,811 (7,793)(b)(c)(d) 73,018
Selling, general
and administrative 570,154 (182,614)(b)(c)(d)(f) 387,540
Gain on disposition (3,355) 3,355 (h) -
Operating
income 108,552 225,781 334,333
Interest and other
income (expense),
net (71,235) (231)(c)(g)(i)(j) (71,466)
Income tax provision
(benefit) 11,927 79,189 (k) 91,116
Equity earnings of
unconsolidated
entities, net of tax 5,539 4,597 (b)(c) 10,136
Net income (loss) $30,929 $150,958 $181,887
Preferred stock
dividends $(17,056) $(17,056)
Net income (loss)
available to
common
stockholders $13,873 $164,831
Net income (loss)
per common share
Basic $0.17 $2.07
Diluted $0.17 $1.92(m)
Weighted average
common shares -
basic 79,682 79,682
Weighted average
common shares -
diluted 81,110 95,864(m)
Nine Months Ended September 30, 2008
Non-GAAP
Adjusted
Non-GAAP Cash
GAAP Adjustments Basis (a)
Net product sales
and services revenue $1,190,684 $- $1,190,684
License and royalty
revenue 21,476 - 21,476
Net revenue 1,212,160 - 1,212,160
Cost of net revenue 597,520 (53,560)(b)(c)(d)(e) 543,960
Gross profit 614,640 53,560 668,200
Gross margin 51% 55%
Operating expenses:
Research and
development 86,426 (13,080)(b)(c)(d) 73,346
Selling, general
and administrative 496,687 (142,286)(b)(c)(d) 354,401
Gain on disposition - - -
- - -
Operating
income 31,527 208,926 240,453
Interest and other
income (expense),
net (84,151) 8,615(c)(g) (75,536)
Income tax provision
(benefit) (13,274) 71,050(k) 57,776
Equity earnings of
unconsolidated
entities, net of tax 1,169 6,678(b)(c) 7,847
Net income (loss) $(38,181) $153,169 $114,988
Preferred stock
dividends $(8,500) $(8,500)
Net income (loss)
available to
common
stockholders $(46,681) $106,488
Net income (loss)
per common share
Basic $(0.60) $1.37
Diluted $(0.60)(l) $1.30(n)
Weighted average
common shares -
basic 77,630 77,630
Weighted average
common shares -
diluted 77,630(l) 83,390(n)
(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 net 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. In addition, all
companies do not calculate non-GAAP financial measures in the same manner and,
accordingly, "net income or loss on an adjusted cash basis" presented in this
press release may not be comparable to similar measures used by other
companies.
(b) Amortization expense of $185.3 million and $155.1 million in the first
nine months of 2009 and 2008 GAAP results, respectively, including $30.5
million and $34.2 million charged to cost of sales, $3.2 million and $2.8
million charged to research and development and $150.9 million and $117.4
million charged to selling, general and administrative, in the respective
periods, with $0.7 million charged through equity earnings of unconsolidated
entities, net of tax during each of the respective periods.
(c) Restructuring charges associated with the decision to close facilities of
$16.5 million and $45.7 million in the first nine months of 2009 and 2008 GAAP
results, respectively. The $16.5 million charge for the nine months ended
September 30, 2009 included $6.1 million charged to cost of sales, $0.9
million charged to research and development, $5.1 million charged to selling,
general and administrative, $0.5 million charged to interest expense and $3.9
million charged through equity earnings of unconsolidated entities, net of
tax. The $45.7 million charge for the nine months ended September 30, 2008
included $16.4 million charged to cost of sales, $6.9 million charged to
research and development, $9.6 million charged to selling, general and
administrative, $6.9 million charged to interest expense and $6.0 million
charged through equity earnings of unconsolidated entities, net of tax. 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.
(d) Compensation costs of $20.3 million and $19.7 million associated with
stock-based compensation expense in the first nine months of 2009 and 2008
GAAP results, respectively, including $1.5 million and $1.0 million charged to
cost of sales, $3.7 million and $3.4 million charged to research and
development and $15.1 million and $15.3 million charged to selling, general
and administrative, in the respective periods.
(e) Write-off in the amount of $0.7 million and $2.0 million during the nine
months ended September 30, 2009 and 2008, respectively, relating to inventory
write-ups recorded in connection with the acquisitions of Concateno plc during
the third quarter of 2009 and BBI Holdings Plc. during the first quarter of
2008, respectively.
(f) Acquisition-related costs in the amount of $11.5 million recorded in
connection with the adoption of ASC 805, Business Combinations, on January 1,
2009.
(g) A $2.9 million net realized foreign currency gain and a $1.7 million net
realized foreign currency loss during the nine months ended September 30, 2009
and 2008, respectively, associated with restricted cash established in
connection with the acquisitions of Concanteno plc during the third quarter of
2009 and BBI Holdings Plc during the first quarter of 2008, respectively.
(h) A $3.4 million gain associated with management's decision to dispose of
our Diamics, Inc. operations.
(i) A $1.9 million compensation-related charge recorded in connection with the
acquisition of Concateno plc.
(j) A $0.3 million loss recorded in connection with the deferred payment of a
portion of the ACON Second Territory Business purchase price consideration to
be paid with our common stock.
(k) Tax effect on adjustments as discussed above in notes (b), (c), (d), (e)
(f), (g), (h), (i) and (j).
(l) For the nine months ended September 30, 2008, potential dilutive shares
were not used in the calculation of diluted net loss per common share under
GAAP because inclusion thereof would be antidilutive.
(m) Included in the weighted average diluted common shares for the
calculation of net income per common share for the nine months ended September
30, 2009, on an adjusted cash basis, are dilutive shares consisting of
1,428,000 common stock equivalent shares from the potential exercise of stock
options and warrants. Also included were potential dilutive shares consisting
of 3,422,000 common stock equivalent shares from the potential conversion of
convertible debt securities, 10,985,000 common stock equivalent shares from
the potential conversion of Series B convertible preferred stock and 346,000
common stock equivalents from the potential settlement of a portion of the
deferred purchase price consideration related to the ACON Second Territory
Business. The diluted net income per common share calculation for the nine
months ended September 30, 2009, on an adjusted cash basis, includes the add
back of interest expense related to the convertible debt of $2.1 million, the
add back of $17.1 million of preferred stock dividends related to the Series B
convertible preferred stock and the add back of interest expense related to
the ACON Second Territory Business of $0.2 million resulting in net income
available to common stockholders of $184.2 million for the nine months ended
September 30, 2009.
(n) Included in the weighted average diluted common shares for the
calculation of net income per common share for the nine months ended September
30, 2008, on an adjusted cash basis, are dilutive shares consisting of
2,349,000 common stock equivalent shares from the potential exercise of stock
options and warrants and potential dilutive shares consisting of 3,411,000
common stock equivalent shares from the potential conversion of convertible
debt securities. The net income per diluted share calculation for the nine
months ended September 30, 2008, on an adjusted cash basis, includes the add
back of interest expense related to the convertible debt of $2.1 million
resulting in net income available to common stockholders of $108.6 million.
Potential dilutive shares consisting of 5,479,000 common stock equivalent
shares from the potential conversion of Series B convertible preferred stock
for the nine months ended September 30, 2008 were not used in the calculation
of diluted net income per common share, on an adjusted cash basis, because
inclusion thereof would be antidilutive.
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 September 30, 2009
Non-GAAP
Adjusted
Non-GAAP Cash
GAAP Adjustments Basis (a)
Net product sales
and services revenue $527,962 $- $527,962
License and royalty 7,848 - 7,848
revenue
Net revenue 535,810 - 535,810
Cost of net revenue 252,842 (14,084)(b)(c)(d)(e) 238,758
Gross profit 282,968 14,084 297,052
Gross margin 53% 55%
Operating expenses:
Research and
development 27,720 (2,462)(b)(c)(d) 25,258
Selling, general
and administrative 204,642 (67,325)(b)(c)(d)(f) 137,317
Gain on disposition (3,355) 3,355(g) -
Operating income 53,961 80,516 134,477
Interest and other
income (expense), net (29,625) (504)(c)(h)(i)(j) (30,129)
Income tax provision
(benefit) 6,253 28,818(k) 35,071
Equity earnings of
unconsolidated entities,
net of tax 2,059 1,139(b)(c) 3,198
Net income (loss) $20,142 $52,333 $72,475
Preferred stock
dividends $(5,843) $(5,843)
Net income (loss)
available to common
stockholders $14,299 $66,632
Net income (loss)
per common share
Basic $0.18 $0.82
Diluted $0.17 $0.74(m)
Weighted average
common shares -
basic 81,625 81,625
Weighted average
common shares -
diluted 83,418 98,616(m)
Three Months Ended September 30, 2008
Non-GAAP
Adjusted
Non-GAAP Cash
GAAP Adjustments Basis (a)
Net product sales and
services revenue $433,034 $- $433,034
License and
royalty revenue 5,766 - 5,766
Net revenue 438,800 - 438,800
Cost of net revenue 210,652 (12,721)(b)(c)(d) 197,931
Gross profit 228,148 12,721 240,869
Gross margin 52% 55%
Operating expenses:
Research and
development 25,693 (2,387)(b)(c)(d) 23,306
Selling, general and
administrative 189,208 (57,165)(b)(c)(d) 132,043
Gain on disposition - - -
Operating income 13,247 72,273 85,520
Interest and other
income (expense), net (24,752) 300(c) (24,452)
Income tax
provision (benefit) (4,696) 26,018(k) 21,322
Equity earnings
of unconsolidated
entities, net of tax 3,150 237(b) 3,387
Net income (loss) $(3,659) $46,792 $43,133
Preferred stock
dividends $(5,393) $(5,393)
Net income (loss)
available to common
stockholders $(9,052) $37,740
Net income (loss)
per common share
Basic $(0.12) $0.48
Diluted $(0.12)(l) $0.46(n)
Weighted average
common shares -
basic 77,995 77,995
Weighted average
common shares -
diluted 77,995(l) 83,169(n)
(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 net 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. In addition, all
companies do not calculate non-GAAP financial measures in the same manner and,
accordingly, "net income or loss on an adjusted cash basis" presented in this
press release may not be comparable to similar measures used by other
companies.
(b) Amortization expense of $65.4 million and $60.0 million in the third
quarter of 2009 and 2008 GAAP results, respectively, including $10.3 million
and $10.5 million charged to cost of sales, $0.9 million and $1.0 million
charged to research and development and $54.0 million and $48.3 million
charged to selling, general and administrative, in the respective periods,
with $0.2 million charged through equity earnings of unconsolidated entities,
net of tax during each of the respective periods.
(c) Restructuring charges associated with the decision to close facilities of
$6.2 million and $5.8 million for the third quarter of 2009 and 2008 GAAP
results, respectively. The $6.2 million charge for the third quarter of 2009
included $2.6 million charged to cost of sales, $0.1 million charged to
research and development, $2.4 million charged to selling, general and
administrative, $0.2 million charged to interest expense and $0.9 million
charged through equity earnings of unconsolidated entities, net of tax. The
$5.8 million charge for the third quarter of 2008 included $1.8 million
charged to cost of sales, $0.3 million charged to research and development,
$3.4 million charged to selling, general and administrative and $0.3 million
charged to interest expense. 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.
(d) Compensation costs of $7.8 million and $7.0 million associated with
stock-based compensation expense for the third quarter of 2009 and 2008 GAAP
results, respectively, including $0.6 million and $0.4 million charged to cost
of sales, $1.4 million and $1.1 million charged to research and development
and $5.8 million and $5.5 million charged to selling, general and
administrative, in the respective quarters.
(e) Write-off in the amount of $0.7 million relating to an inventory write-up
recorded in connection with the acquisition of Concateno plc during the third
quarter of 2009.
(f) Acquisition-related costs in the amount of $5.1 million recorded in
connection with the adoption of ASC 805, Business Combinations, on January 1,
2009.
(g) A $3.4 million gain associated with management's decision to dispose of
our Diamics, Inc. operations.
(h) A $2.9 million net realized foreign currency gain associated with
restricted cash established in connection with the acquisition of Concateno
plc.
(i) A $1.9 million compensation-related charge recorded in connection with the
acquisition of Concateno plc.
(j) A $0.3 million loss recorded in connection with the deferred payment of a
portion of the ACON Second Territory Business purchase price consideration to
be paid with our common stock.
(k) Tax effect on adjustments as discussed above in notes (b), (c), (d), (e)
(f), (g), (h), (i) and (j).
(l) For the nine months ended September 30, 2008, potential dilutive shares
were not used in the calculation of diluted net loss per common share under
GAAP because inclusion thereof would be antidilutive.
(m) Included in the weighted average diluted common shares for the
calculation of net income per common share for the nine months ended September
30, 2009, on an adjusted cash basis, are dilutive shares consisting of
1,428,000 common stock equivalent shares from the potential exercise of stock
options and warrants. Also included were potential dilutive shares consisting
of 3,422,000 common stock equivalent shares from the potential conversion of
convertible debt securities, 10,985,000 common stock equivalent shares from
the potential conversion of Series B convertible preferred stock and 346,000
common stock equivalents from the potential settlement of a portion of the
deferred purchase price consideration related to the ACON Second Territory
Business. The diluted net income per common share calculation for the nine
months ended September 30, 2009, on an adjusted cash basis, includes the add
back of interest expense related to the convertible debt of $2.1 million, the
add back of $17.1 million of preferred stock dividends related to the Series B
convertible preferred stock and the add back of interest expense related to
the ACON Second Territory Business of $0.2 million resulting in net income
available to common stockholders of $184.2 million for the nine months ended
September 30, 2009.
(n) Included in the weighted average diluted common shares for the
calculation of net income per common share for the nine months ended September
30, 2008, on an adjusted cash basis, are dilutive shares consisting of
2,349,000 common stock equivalent shares from the potential exercise of stock
options and warrants and potential dilutive shares consisting of 3,411,000
common stock equivalent shares from the potential conversion of convertible
debt securities. The net income per diluted share calculation for the nine
months ended September 30, 2008, on an adjusted cash basis, includes the add
back of interest expense related to the convertible debt of $2.1 million
resulting in net income available to common stockholders of $108.6 million.
Potential dilutive shares consisting of 5,479,000 common stock equivalent
shares from the potential conversion of Series B convertible preferred stock
for the nine months ended September 30, 2008 were not used in the calculation
of diluted net income per common share, on an adjusted cash basis, because
inclusion thereof would be antidilutive.
Inverness Medical Innovations, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in $000s)
September 30, December 31,
2009 2008
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $555,871 $141,324
Restricted cash 3,098 2,748
Marketable securities 907 1,763
Accounts receivable, net 363,054 280,608
Inventories, net 223,103 199,131
Prepaid expenses and other current assets 169,370 196,969
Total current assets 1,315,403 822,543
PROPERTY, PLANT AND EQUIPMENT, NET 324,020 284,483
GOODWILL AND OTHER INTANGIBLE ASSETS, NET 5,188,346 4,717,704
DEFERRED FINANCING COSTS AND OTHER ASSETS, NET 154,332 130,630
Total assets $6,982,101 $5,955,360
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of notes payable $19,612 $19,509
Other current liabilities 450,311 345,836
Total current liabilities 469,923 365,345
LONG-TERM LIABILITIES:
Notes payable, net of current portion 2,134,398 1,501,025
Deferred tax liabilities 506,074 462,787
Other long-term liabilities 393,023 347,365
Total long-term liabilities 3,033,495 2,311,177
TOTAL STOCKHOLDERS' EQUITY 3,478,683 3,278,838
Total liabilities and stockholders' equity $6,982,101 $5,955,360
SOURCE Inverness Medical Innovations, Inc.
Doug Guarino, Director of Corporate Relations, or Jon Russell, Vice President
of Finance, both of Inverness, +1-781-647-3900
