Alere Reports Third Quarter 2015 Financial Results

Nov 04, 2015, 16:29 ET from Alere Inc.

WALTHAM, Mass., Nov. 4, 2015 /PRNewswire/ -- Alere Inc. (NYSE: ALR), a global leader in rapid diagnostic tests, today announced its financial results for the quarter ended September 30, 2015. Net revenue for the third quarter of 2015 was $602.0 million, a 7.3 percent decrease compared to $649.2 million in the third quarter of 2014, or a 1.7 percent decrease in organic growth, which is on a constant currency basis, excluding impacts of acquisitions and divestitures. Net income from continuing operations available to common stockholders was $0.2 million, or $0.00 per diluted share, in the third quarter of 2015. On a non-GAAP basis, the Company reported non-GAAP adjusted net income from continuing operations available to common stockholders of $48.3 million, or $0.54 per diluted share, in the third quarter of 2015.

Net Revenue (in millions)

Third Quarter 2015

Third Quarter 2014 (1)

% Change

Cardiometabolic Disease

$208

$208

-

Infectious Disease

$164

$184

(11)

Toxicology

$163

$167

(2)

Other

$  45

$  65

(30)

Consumer Diagnostics

$  19

$  21

(12)

License and Royalty

$   3

$   4

(21)

Total

$602

$649

(7)





(1) Revenues, other than License and Royalty, have been reclassified due to a change in segment reporting as a result of the divestiture of our health management business in 2015 and the results of our patient self-testing business are primarily included within Cardiometabolic Disease.


"Third quarter revenue was impacted by currency and lower international sales.  Europe organic growth declined by 4 percent and tender awards in Africa and Asia have taken longer to ramp than anticipated; however, we expect both Africa and Asia to contribute to near-term growth," said Namal Nawana, CEO of Alere. "Pain management and INRatio revenue declined year-over-year and negatively impacted our profitability in the third quarter; however, excluding pain management, our core Toxicology revenue grew by 6% during the third quarter, which represents 10 consecutive quarters of organic growth.  Despite these short-term challenges, our core businesses and platforms had solid growth and we gained significant traction with the launch of Alere i, with revenue of $5 million in the third quarter and total worldwide placements of more than 2,800 instruments to date.

From an operational perspective, we exercised strong operating expense discipline and delivered third quarter non-GAAP EPS growth of 54 percent year-over-year. Looking ahead, we expect fourth quarter 2015 revenue to rebound and we are re-doubling our efforts to establish solid and sustainable organic growth for Alere. We are confident that the strength of our core platforms will eclipse near-term challenges and accelerate our overall growth.  The Alere team is fully focused on continuing to execute against our strategic growth initiatives to deliver enhanced value for our shareholders."

Third Quarter Highlights

  • Alere receives FDA CLIA Waiver for Alere™ i Strep A Rapid Molecular Test
  • Alere Agrees to Sell BBI Group and Acquires US Diagnostics
  • Dr. Geoffrey S. Ginsburg Joins Alere Board

Third Quarter 2015 Results

Third quarter 2015 net revenue of $602.0 million declined by $47.2 million from $649.2 million, or 7.3 percent, compared to the prior year period, primarily due to a $33.0 million negative impact from foreign currency exchange; a $12.6 million decrease in pain management; and a $7.7 million decrease in global sales of INRatio. In addition, BBI revenue and contract manufacturing revenue associated with our consumer joint venture declined by $8.7 million and CD4 and malaria sales in Africa decreased by $8.0 million during the third quarter. Growth areas included: patient self-testing, Afinion and epoc in Cardiometabolic Disease; dengue in Infectious Disease; and employer services and reagents in Toxicology. Global influenza sales were $19.6 million in the third quarter of 2015, a 15.9 percent increase over the prior year period, including approximately $4.9 million in Alere i sales.

Gross profit in the third quarter of 2015 was $275.0 million, with 45.7 percent gross margin, compared to $301.6 million in the third quarter of 2014, with 46.5 percent gross margin. Non-GAAP adjusted gross profit in the third quarter of 2015 was $292.5 million, with 48.5 percent non-GAAP adjusted gross margin, compared to $323.6 million in the third quarter of 2014, with 49.8 percent non-GAAP adjusted gross margin. Non-GAAP adjusted gross profit excludes amortization of acquisition-related intangibles, restructuring charges, and stock-based compensation.

Operating expenses were $245.9 million, or 40.8 percent of net revenue, in the third quarter of 2015, compared to operating expenses of $266.3 million, or 41.0 percent of net revenue, in the third quarter of 2014. Included in the third quarter 2015 operating expenses was R&D expense of $36.0 million, or 6.0 percent of net revenue, and SG&A expense of $207.8 million, or 34.5 percent of net revenue. Also included in the third quarter 2015 operating expenses were $2.1 million in net charges related to impairment and loss on dispositions. Non-GAAP adjusted operating expenses during the third quarter of 2015 were $187.0 million, or 31.0 percent of net revenue, and were comprised of $27.4 million of non-GAAP adjusted R&D expense, or 4.5 percent of net revenue, and non-GAAP adjusted SG&A expense of $159.6 million, or 26.5 percent of net revenue. Non-GAAP adjusted operating expenses, non-GAAP adjusted R&D expenses and non-GAAP adjusted SG&A expense exclude, as applicable, amortization of acquisition-related intangibles, restructuring charges, stock-based compensation, fair value adjustments to contingent consideration, compensation costs associated with contingent consideration, costs associated with business dispositions, and impairment and loss on dispositions, net.  

Operating income was $29.2 million in the third quarter of 2015, compared to operating income of $35.3 million in the third quarter of 2014. Non-GAAP adjusted operating income was $105.4 million in the third quarter of 2015, compared to non-GAAP adjusted operating income of $116.6 million in the third quarter of 2014.

Net income from continuing operations available to common stockholders was $0.2 million, or $0.00 per diluted share, in the third quarter of 2015, compared to a net loss from continuing operations available to common stockholders of $89.4 million, or $1.08 per diluted share, in the third quarter of 2014. On a non-GAAP basis, the Company reported non-GAAP adjusted net income from continuing operations available to common stockholders of $48.3 million, or $0.54 per diluted share, in the third quarter of 2015, compared to non-GAAP adjusted net income from continuing operations available to common stockholders of $30.0 million, or $0.35 per diluted share, in the third quarter of 2014.

Financial results for the three- and nine-month periods of 2015 and the comparable three- and nine-month periods of 2014 are included in the schedules to this press release.

Detailed reconciliations of the non-GAAP financial measures presented in this release to the most directly comparable financial measures under GAAP, as well as a discussion regarding these non-GAAP financial measures, are included in the schedules to this press release.

2015 Business Outlook

For the year ending December 31, 2015, the Company expects:

  • Net revenue to be in the range of $2.48 billion to $2.50 billion
  • Non-GAAP adjusted net income from continuing operations available to common stockholders in the range of $2.20 to $2.25 per diluted common share

Conference Call

We will host a conference call beginning at 5:00 p.m. (Eastern Time) today, November 4, 2015, to discuss these results, as well as other company matters. During the conference call, we may answer questions concerning business and financial developments and trends and other business and financial matters. Our responses to these questions, as well as other matters discussed during the conference call, may contain or constitute material information that has not been previously disclosed.

A live webcast will be available on the Investor Relations section of Alere's website, or accessed directly through the following link: https://www.webcaster4.com/Webcast/Page/411/11453

To access the audio conference call, please use the following dial-in numbers and access code 5625983:

  • US (toll-free): 1-888-317-6003
  • International: 1-412-317-6061
  • Canada (toll-free): 1-866-284-3684

A replay will be available approximately one hour after the conclusion of the call and will remain available for a period of seven days following the call. To hear a replay of the conference call, please use the following dial-in numbers and replay code 10075496 (available for seven days):

  • US (toll-free): 1-877-344-7529
  • International: 1-412-317-0088
  • Canada (toll-free): 1-855-669-9658

The replay will also be available via online webcast on the Investor Relations section of the Alere website.

Additionally, reconciliations to non-GAAP financial measures not included in this press release that may be discussed during the call will also be available on the Investor Relations section of the Alere website.

Forward-looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. For example, forward-looking statements include statements regarding: the Company expects both Africa and Asia to contribute to near-term growth, tender awards in Africa and Asia will ramp, revenue will rebound in the fourth quarter of 2015, the Company is re-doubling efforts to establish solid and sustainable organic growth, the strength of the Company's core platforms will eclipse near-term challenges and accelerate overall growth which will enable the Company to deliver enhanced value for our stockholders, expected net revenues for the year ending December 31, 2015, expected non-GAAP adjusted net income from continuing operations available to common stockholders per diluted share for the year ending December 31, 2015, future operating results, and future financial and operational goals.  In some cases, forward-looking statements can be identified by terms such as "may," "will," "intend," "expect," "plan," "believe," "estimate," "outlook," "predict" or the like.  These statements involve risks and uncertainties, and actual results could differ materially from the statements made in this press release. Factors that might cause these differences include, but are not limited to: limited demand for certain of our products in the markets we serve; limited market acceptance for new products brought to market (and inability to recover investments made in such products); the effect of intense competition in the markets we serve; ability to execute on business plans; risks and expenses arising from FDA inspections and government subpoenas; delays in product development; international business risks; fluctuations in currency exchange rates; the effects of healthcare reform; risks of clinical trials; potential regulatory burdens and obstacles; litigation and legal compliance risks; government investigations; cybersecurity risks; changes in global economic and political conditions; potential product defects; manufacturing or supply issues; potential intellectual property infringement and risks (and expense) related to the ability to enforce intellectual property rights held by the Company; risks of acquisitions and divestitures; substantial indebtedness and risks related to the inability to refinance outstanding indebtedness; contractual debt restrictions and requirements; fluctuations in quarterly results; potential future financial restatements; potential reviews, investigations or other proceedings by government authorities, stockholders or other parties; the risk that the Company's remediation plan related to its material weakness will be unsuccessful to prevent or detect additional misstatements, including a potential inability to prepare financial statements or file periodic reports on a timely basis, which would be a default under the Company's senior secured credit facility and note indentures as well as a violation of the Securities Exchange Act and the listing rules of the NYSE; and any additional material weaknesses in internal controls.  These and other risk factors are discussed in more detail under the heading "Risk Factors" in Item 1A of the Company's Annual Report on Form 10-K, as amended, filed with the Securities and Exchange Commission on May 28, 2015. Copies are available through the Company's Investor Relations department and at www.alere.com. The Company does not assume any obligation to update its forward-looking statements to reflect new information and developments.

About Alere

Alere believes that when diagnosing and monitoring health conditions, Knowing now matters.™  Alere delivers reliable and actionable information by providing rapid diagnostic tests, enhancing clinical and economic healthcare outcomes globally. Headquartered in Waltham, Mass., Alere focuses on rapid diagnostics for cardiometabolic disease, infectious disease and toxicology. For more information on Alere, please visit www.alere.com.

 

Alere Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)








Three Months Ended September 30, 



2015


2014






Net product sales and services revenue

$  598,745


$   645,028

License and royalty revenue

3,299


4,182


Net revenue

602,044


649,210

Cost of net revenue

326,995


347,588


      Gross profit

275,049


301,622


      Gross margin

46%


46%






Operating expenses:





Research and development

36,011


38,726


Selling, general and administrative

207,799


227,554


Impairment and loss on disposition, net

2,074


-


      Operating income 

29,165


35,342

Interest and other income (expense), net

(47,588)


(60,419)


Loss from continuing operations before provision (benefit) for income taxes

(18,423)


(25,077)

Provision (Benefit) for income taxes

(18,924)


65,489


Income (loss) from continuing operations before equity earnings of unconsolidated entities, net of tax

501


(90,566)

Equity earnings of unconsolidated entities, net of tax

5,000


6,277


Income (loss) from continuing operations

5,501


(84,289)


Loss from discontinued operations, net of tax

-


(14,401)

Net income (loss)

5,501


(98,690)


Less: Net loss attributable to non-controlling interests

(61)


(306)

Net income (loss) attributable to Alere Inc. and Subsidiaries

5,562


(98,384)







Preferred stock dividends

(5,367)


(5,367)






Net income (loss) available to common stockholders

$          195


$ (103,751)







Basic net loss per common share:





  Loss from continuing operations

$             -


$        (1.08)


  Loss from discontinued operations

-


(0.17)


      Basic net loss per common share

$             -


$        (1.25)







Diluted net loss per common share:





  Loss from continuing operations

$             -


$        (1.08)


  Loss from discontinued operations

-


(0.17)


      Diluted net loss per common share

$             -


$        (1.25)






Weighted average shares - basic 

85,895


83,115

Weighted average shares - diluted

87,169


83,115

 

Alere Inc. and Subsidiaries

Condensed Consolidated Statements of Operations 

(in thousands, except per share amounts)








Nine Months Ended September 30, 



2015


2014






Net product sales and services revenue

$  1,825,662


$  1,905,849

License and royalty revenue

13,691


15,998


Net revenue

1,839,353


1,921,847

Cost of net revenue

979,745


1,011,174


      Gross profit

859,608


910,673


      Gross margin

47%


47%






Operating expenses:





Research and development

91,225


114,855


Selling, general and administrative

577,566


730,591


Impairment and loss on disposition, net

42,408


638


      Operating income 

148,409


64,589

Interest and other income (expense), net

(150,523)


(154,112)


Loss from continuing operations before provision (benefit) for income taxes

(2,114)


(89,523)

Provision (benefit) for income taxes

(10,009)


69,273


Income (loss) from continuing operations before equity earnings of unconsolidated entities, net of tax

7,895


(158,796)

Equity earnings of unconsolidated entities, net of tax

10,320


13,716


Income (loss) from continuing operations

18,215


(145,080)


Income (loss) from discontinued operations, net of taxes

216,777


(4,082)

Net income (loss)

234,992


(149,162)


Less: Net income (loss) attributable to non-controlling interests

386


(136)

Net income (loss) attributable to Alere Inc. and Subsidiaries

234,606


(149,026)







Preferred stock dividends

(15,926)


(15,926)






Net Income (loss) available to common stockholders

$      218,680


$    (164,952)







Basic net income (loss) per common share:





  (Income) loss from continuing operations

$             0.02


$           (1.94)


  Income (loss) from discontinued operations

2.55


(0.05)


      Net Income (loss) per common share

$             2.57


$           (1.99)







Diluted net income (loss) per common share:





  Income (loss) from continuing operations

$             0.02


$           (1.94)


  Income (loss) from discontinued operations

2.51


(0.05)


      Diluted net income (loss) per common share

$             2.53


$           (1.99)






Weighted average shares - basic

85,141


82,719

Weighted average shares - diluted

86,279


82,719

 

Alere Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands)






September 30,


December 31,


2015


2014

ASSETS




CURRENT ASSETS:




Cash and cash equivalents

$            479,381


$          378,461

Restricted cash

430,821


37,571

Marketable securities

157


259

Accounts receivable, net

452,366


466,106

Inventories, net

362,226


365,165

Prepaid expenses and other current assets

136,447


244,986

Assets held for sale

25,312


315,515

Total current assets

1,886,710


1,808,063





PROPERTY, PLANT AND EQUIPMENT, NET

445,315


453,570

GOODWILL AND OTHER INTANGIBLE ASSETS, NET

3,924,614


4,246,761

RESTRICTED CASH - NON-CURRENT

44,148


-

DEFERRED FINANCING COSTS AND OTHER ASSETS, NET

147,330


170,562

Assets held for sale - non-current

126,048


-

Total assets

$         6,574,165


$       6,678,956





LIABILITIES AND STOCKHOLDERS' EQUITY




CURRENT LIABILITIES:




Short-term debt and current portions of long-term debt and capital lease obligations

$            607,597


$             93,116

Liabilities related to assets held for sale

8,836


78,843

Other current liabilities

509,582


589,086

Total current liabilities

1,126,015


761,045





LONG-TERM LIABILITIES:




Long-term debt and capital lease obligations, net of current portions

2,993,928


3,631,945

Deferred tax liabilities

207,451


214,639

Other long-term liabilities

135,200


161,582

Liabilities related to assets held for sale - non-current

9,603


-

Total long-term liabilities

3,346,182


4,008,166





TOTAL EQUITY

2,101,968


1,909,745

Total liabilities and equity

$         6,574,165


$       6,678,956

 

Alere Inc. and Subsidiaries

Reconciliation to Non-GAAP Adjusted Operating Results

(in thousands, except per share amounts)






Three Months Ended September 30, 


2015


2014

Reconciliation to Non-GAAP Adjusted Operating Income (1)




Operating income 

$    29,165


$      35,342





Adjustment related to acquired software license contracts 

430


324

Amortization of acquisition-related intangible assets

60,928


58,813

Restructuring charges 

2,264


17,296

Stock-based compensation expense

7,317


3,168

Compensation charges associated with acquisition-related contingent consideration obligations

191


670

Acquisition-related costs

241


325

Fair value adjustments to acquisition-related contingent consideration

957


(5,537)

Costs associated with potential business dispositions

1,878


6,203

Impairment and loss on disposition, net

2,074


-

Non-GAAP adjusted operating income

$  105,445


$   116,604






Three Months Ended September 30, 


2015


2014

Reconciliation to Non-GAAP Adjusted Net Income(1)




Net income (loss) available to common stockholders

$          195


$ (103,751)





Adjustment related to acquired software license contracts 

430


324

Amortization of acquisition-related intangible assets

60,954


58,818

Restructuring charges 

2,270


17,307

Stock-based compensation expense

7,317


3,168

Compensation charges associated with acquisition-related contingent consideration obligations

191


670

Acquisition-related costs

241


325

Fair value adjustments to acquisition-related contingent consideration

957


(5,537)

Costs associated with potential business dispositions

1,878


6,203

Impairment and loss on disposition, net

2,074


-

Loss on sale of equity investment

-


457

Write off of equity investment in BBI

662


-

Interest expense recorded in connection with fees paid for certain debt modifications and the termination of our senior secured credit facility

9,273


363

Interest accretion associated with acquisition-related compensation charges

35


102

Amortization of acquisition-related intangible assets, restructuring, fair value adjustments to acquisition-related contingent consideration, and impairment, net of gain on divestiture - Discontinued operations, net of tax

-


17,223

Income tax effects on items above

(38,179)


37,139

Non-GAAP adjusted net income available to common stockholders

$    48,298


$      32,811













Loss per diluted common share from continuing operations

$             -


$        (1.08)

Loss per diluted common share from discontinued operations

-


(0.17)

      Net loss per diluted common share

$             -


$        (1.25)





Weighted average shares - diluted

87,169


83,115





Non-GAAP adjusted income per diluted common share  from continuing operations (2)

$         0.54


$          0.35

Non-GAAP adjusted income per diluted common share  from discontinued operations (2)

-


0.03

      Non-GAAP adjusted net income per diluted common share(2)

$         0.54


$          0.38





Non-GAAP adjusted weighted average shares - diluted (2)

100,846


87,929





(1) In calculating "Non-GAAP adjusted operating income" and "Non-GAAP adjusted net income available to common stockholders", the Company excludes (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 operating income and 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 operating income or net income or loss for the costs associated with litigation, including payments made or received through settlements.  It should be noted that "Non-GAAP adjusted operating income" and "Non-GAAP adjusted net income available to common stockholders" are not standard financial measurements under accounting principles generally accepted in the United States of America ("GAAP") and should not be considered as an alternative to operating income and 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, "Non-GAAP adjusted operating income" and "Non-GAAP adjusted net income available to common stockholders" presented in this press release may not be comparable to similar measures used by other companies.


(2)Included in the weighted average diluted common shares for the calculation of net income per common share for the three months ended September 30, 2015, on a non-GAAP adjusted basis, are dilutive shares consisting of 1,244,000 common stock equivalent shares from the potential exercise of stock options and warrants. Also included were dilutive shares consisting of 3,438,000 common stock equivalent shares from the potential conversion of convertible debt securities, 30,000 potentially issuable shares of common stock associated with a contingent consideration arrangement,  and 10,239,000 common stock equivalent shares from the potential conversion of Series B convertible preferred stock. The diluted net income per common share calculation for the three months ended September 30, 2015, on a non-GAAP adjusted basis, included the add back of interest expense related to the convertible debt of $0.7 million and the add back of $5.4 million of preferred stock dividends related to the Series B convertible preferred stock, resulting in net income available to common stockholders of $54.4 million for the three months ended September 30, 2015.


Included in the weighted average diluted common shares for the calculation of net income per common share for the three months ended September 30, 2014, on a non-GAAP adjusted basis, were dilutive shares consisting of 1,376,000 common stock equivalent shares from the potential exercise of stock options and warrants. Also included were potential dilutive shares consisting of 3,438,000 common stock equivalent shares from the potential conversion of convertible debt securities. The diluted net income per common share calculation for the three months ended September 30, 2014, on a non-GAAP adjusted basis, included the add back of interest expense related to the convertible debt of $0.7 million, resulting in net income available to common stockholders of $33.5 million for the three months ended September 30, 2014.

  

 

Alere Inc. and Subsidiaries

Reconciliation to Non-GAAP Adjusted Operating Results

(in thousands, except per share amounts)






Nine Months Ended September 30, 


2015


2014

Reconciliation to Non-GAAP Adjusted Operating Income (1)




Operating income 

$  148,409


$      64,589





Adjustment related to acquired software license contracts 

877


1,116

Amortization of acquisition-related intangible assets

160,867


176,608

Restructuring charges 

11,387


37,074

Stock-based compensation expense

19,596


7,750

Compensation charges associated with acquisition-related contingent consideration obligations

(2,615)


1,673

Acquisition-related costs

332


695

Fair value adjustments to acquisition-related contingent consideration

(51,910)


12,442

Non-cash charge associated with acquired inventory

-


-

Costs associated with potential business dispositions

6,097


20,763

Impairment and loss on disposition, net

42,408


638

Non-GAAP adjusted operating income

$  335,448


$   323,348






Nine Months Ended September 30, 


2015


2014

Reconciliation to Non-GAAP Adjusted Net Income(1)




Net income (loss) available to common stockholders

$  218,680


$ (164,952)





Adjustment related to acquired software license contracts 

877


1,116

Amortization of acquisition-related intangible assets

160,941


176,651

Restructuring charges 

11,406


37,108

Stock-based compensation expense

19,596


7,750

Compensation charges associated with acquisition-related contingent consideration obligations

(2,615)


1,673

Acquisition-related costs

332


695

Fair value adjustments to acquisition-related contingent consideration

(51,910)


12,442

Costs associated with potential business dispositions

6,488


20,763

Impairment and loss on disposition, net

42,408


638

Loss on sale of equity investment

-


457

Write off of equity investment in BBI

662


-

Interest expense recorded in connection with fees paid for certain debt modifications and the termination of our senior secured credit facility

20,940


1,091

Interest accretion associated with acquisition-related compensation charges

(406)


295

Expense associated with extinguishment of debt

3,480


-

Amortization of acquisition-related intangible assets, restructuring, fair value adjustments to acquisition-related contingent consideration, and impairment, net of gain on divestiture - Discontinued operations, net of tax

(217,589)


12,386

Income tax effects on items above

(70,821)


6,766

Non-GAAP adjusted net income available to common stockholders

$  142,469


$   114,879













Income (loss) per diluted common share from continuing operations

$         0.02


$        (1.94)

Income (loss) per diluted common share from discontinued operations

2.51


(0.05)

      Net income (loss) per diluted common share

$         2.53


$        (1.99)





Weighted average shares - diluted

86,279


82,719





Non-GAAP adjusted income per diluted common share  from continuing operations (2)

$         1.62


$          1.25

Non-GAAP adjusted income (loss) per diluted common share  from discontinued operations (2)

(0.01)


0.09

      Non-GAAP adjusted net income per diluted common share(2)

$         1.61


$          1.34





Non-GAAP adjusted weighted average shares - diluted (2)

99,956


87,311





(1) In calculating "Non-GAAP adjusted operating income" and "Non-GAAP adjusted net income available to common stockholders", the Company excludes (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 operating income and 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 operating income or net income or loss for the costs associated with litigation, including payments made or received through settlements.  It should be noted that "Non-GAAP adjusted operating income" and "Non-GAAP adjusted net income available to common stockholders" are not standard financial measurements under accounting principles generally accepted in the United States of America ("GAAP") and should not be considered as an alternative to operating income and 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, "Non-GAAP adjusted operating income" and "Non-GAAP adjusted net income available to common stockholders" presented in this press release may not be comparable to similar measures used by other companies.


(2)Included in the weighted average diluted common shares for the calculation of net income per common share for the nine months ended September 30, 2015, on a non-GAAP adjusted basis, are dilutive shares consisting of 1,120,000 common stock equivalent shares from the potential exercise of stock options and warrants. Also included were dilutive shares consisting of 3,438,000 common stock equivalent shares from the potential conversion of convertible debt securities, 18,000 potentially issuable shares of common stock associated with a contingent consideration arrangement, and 10,239,000 common stock equivalent shares from the potential conversion of Series B convertible preferred stock. The diluted net income per common share calculation for the nine months ended September 30, 2015, on a non-GAAP adjusted basis, included the add back of interest expense related to the convertible debt of $2.1 million and the add back of $15.9 million of preferred stock dividends related to the Series B convertible preferred stock, resulting in net income available to common stockholders of $160.5 million for the nine months ended September 30, 2015.


Included in the weighted average diluted common shares for the calculation of net income per common share for the nine months ended September 30, 2014, on a non-GAAP adjusted basis, were dilutive shares consisting of 1,154,000 common stock equivalent shares from the potential exercise of stock options and warrants. Also included were potential dilutive shares consisting of 3,438,000 common stock equivalent shares from the potential conversion of convertible debt securities. The diluted net income per common share calculation for the nine months ended September 30, 2014, on a non-GAAP adjusted basis, included the add back of interest expense related to the convertible debt of $2.2 million, resulting in net income available to common stockholders of $117.1 million for the nine months ended September 30, 2014.

 

Alere Inc. and Subsidiaries

Selected Consolidated Revenues

(in thousands)

























% Change


% Change



Q3 2015


YTD 2015



Q3 2014


YTD 2014


Q3 15 v. Q3 14


YTD 15 v. YTD 14

Professional diagnostics segment (1)













Cardiometabolic

$   208,319


$       624,823



$   208,248


$       631,452


0%


-1%

Infectious disease

163,759


519,145



184,018


526,632


-11%


-1%

Toxicology

162,571


468,822



166,381


491,561


-2%


-5%

Other (2)

45,349


147,512



65,183


190,986


-30%


-23%


Total professional diagnostics segment(1) (2)

579,998


1,760,302



623,830


1,840,631


-7%


-4%

Consumer diagnostics segment (1)

18,747


65,360



21,198


65,218


-12%


0%

License and royalty revenue

3,299


13,691



4,182


15,998


-21%


-14%


Net revenue

$   602,044


$   1,839,353



$   649,210


$   1,921,847


-7%


-4%





























(1) Revenues have been restated for the impact of a change in segment reporting due to the divestiture of our health management business.






(2) Revenues are presented in accordance with generally accepted accounting principles and exclude an adjustment of $0.5 million and $0.9 million, and $0.3 million and $1.1 million related to acquired software license contracts which were not recognized during the three and nine months ended September 30, 2015 and 2014, respectively, due to business combination accounting rules.






 

 

Alere Inc. and Subsidiaries

Reconciliation of Operating Income (Loss) to Non-GAAP Adjusted Operating Income (Loss)

(in thousands)










For the Three Months Ended September 30, 2015

Operating Segment

Professional
Diagnostics


Consumer
Diagnostics


Corporate


Total









Net revenue 

$      583,297


$      18,747


$             -


$  602,044

Adjustment related to acquired software license contracts(1)

430


-


-


430

Non-GAAP adjusted net revenue

$      583,727


$      18,747


$             -


$  602,474









Operating income (loss) 

$         54,450


$         1,039


$ (26,324)


$    29,165

Adjustment related to acquired software license contracts(1)

430


-


-


430

Amortization of acquisition-related intangible assets

60,880


9


39


60,928

Restructuring charges 

1,578


-


686


2,264

Stock-based compensation expense

-


-


7,317


7,317

Compensation charges associated with acquisition-related contingent consideration obligations

191


-


-


191

Acquisition-related costs

-


-


241


241

Fair value adjustments to acquisition-related contingent consideration

957


-


-


957

Costs associated with potential business dispositions

1,878


-


-


1,878

Impairment and loss on disposition, net

2,074


-


-


2,074

Non-GAAP adjusted operating income (loss)

$      122,438


$         1,048


$ (18,041)


$  105,445









Non-GAAP adjusted operating income (loss) as % of Non-GAAP adjusted net revenue

21.0%


5.6%




17.5%









(1) Estimated revenue related to acquired software license contracts that was not recognized during the three months ended September 30, 2015 due to business combination accounting rules.


















For the Three Months Ended September 30, 2014

Operating Segment

Professional Diagnostics


Consumer Diagnostics


Corporate


Total









Net revenue  (1) 

$      628,012


$      21,198


$             -


$  649,210

Adjustment related to acquired software license contracts(2)

324


-


-


324

Non-GAAP adjusted net revenue

$      628,336


$      21,198


$             -


$  649,534









Operating income (loss) 

$         67,232


$         1,499


$ (33,389)


$    35,342

Adjustment related to acquired software license contracts(2)

324


-


-


324

Amortization of acquisition-related intangible assets

57,306


175


1,332


58,813

Restructuring charges 

14,118


-


3,178


17,296

Stock-based compensation expense

-


-


3,168


3,168

Compensation charges associated with acquisition-related contingent consideration obligations

670


-


-


670

Acquisition-related costs

-


-


325


325

Fair value adjustments to acquisition-related contingent consideration

(8,637)


-


3,100


(5,537)

Costs associated with potential business dispositions

6,203


-


-


6,203

Non-GAAP adjusted operating income (loss)

$      137,216


$         1,674


$ (22,286)


$  116,604









Non-GAAP adjusted operating income (loss) as % of Non-GAAP adjusted net revenue

21.8%


7.9%




18.0%









(1)  Net revenue has been restated for the impact of a change in segment reporting due to the divestiture of our health management business.

(2) Estimated revenue related to acquired software license contracts that was not recognized during the three months ended September 30, 2014 due to business combination accounting rules.









Comments:









In calculating "Non-GAAP adjusted operating income (loss)" in the schedule presented above, the Company excludes from "Operating income (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 "Operating income (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 "Operating income (loss)" for the costs associated with litigation, including payments made or received through settlements.  It should be noted that "Non-GAAP adjusted operating income (loss)" 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 "Operating income (loss)" 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, "Non-GAAP adjusted operating income (loss)" presented in this schedule may not be comparable to similar measures used by other companies.


Reference should also be made to the Company's financial results contained in our earnings press release respective to the periods presented in this schedule, which include a more detailed discussion of the adjustments to the GAAP operating results presented above.

 

Alere Inc. and Subsidiaries

Reconciliation of Operating Income (Loss) to Non-GAAP Adjusted Operating Income (Loss)

(in thousands)










For the Nine Months Ended September 30, 2015

Operating Segment

Professional Diagnostics


Consumer
Diagnostics


Corporate


Total









Net revenue 

$   1,773,993


$      65,360


$               -


$  1,839,353

Adjustment related to acquired software license contracts(1)

877


-


-


877

Non-GAAP adjusted net revenue

$   1,774,870


$      65,360


$               -


$  1,840,230









Operating income (loss) 

$      219,543


$         4,322


$   (75,456)


$     148,409

Adjustment related to acquired software license contracts(1)

877


-


-


877

Amortization of acquisition-related intangible assets

160,723


28


116


160,867

Restructuring charges 

10,103


-


1,284


11,387

Stock-based compensation expense

-


-


19,596


19,596

Compensation charges associated with acquisition-related contingent consideration obligations

(2,615)


-


-


(2,615)

Acquisition-related costs

-


-


332


332

Fair value adjustments to acquisition-related contingent consideration

-


-


(51,910)


(51,910)

Costs associated with potential business dispositions

6,488


-


-


6,488

 Impairment and gain (loss) on dispositions, net

42,408


-


-


42,408

Non-GAAP adjusted operating income (loss)

$      437,527


$         4,350


$ (106,038)


$     335,839









Non-GAAP adjusted operating income (loss) as % of Non-GAAP adjusted net revenue

24.7%


6.7%




18.2%









(1) Estimated revenue related to acquired software license contracts that was not recognized during the nine months ended September 30, 2015 due to business combination accounting rules.


















For the Nine Months Ended September 30, 2014

Operating Segment

Professional
Diagnostics


Consumer
Diagnostics


Corporate


Total









Net revenue  (1) 

$   1,855,318


$      66,529


$               -


$  1,921,847

Adjustment related to acquired software license contracts(2)

1,116


-


-


1,116

Non-GAAP adjusted net revenue

$   1,856,434


$      66,529


$               -


$  1,922,963









Operating income (loss) 

$      135,856


$         4,210


$   (75,477)


$        64,589

Adjustment related to acquired software license contracts(2)

1,116


-


-


1,116

Amortization of acquisition-related intangible assets

174,638


638


1,332


176,608

Restructuring charges 

29,746


-


7,328


37,074

Stock-based compensation expense

-


-


7,750


7,750

Compensation charges associated with acquisition-related contingent consideration obligations

1,673


-


-


1,673

Acquisition-related costs

-


-


695


695

Fair value adjustments to acquisition-related contingent consideration

9,042


-


3,400


12,442

Costs associated with potential business dispositions

20,763


-


-


20,763

Loss on disposition

638


-


-


638

Non-GAAP adjusted operating income (loss)

$      373,472


$         4,848


$   (54,972)


$     323,348









Non-GAAP adjusted operating income (loss) as % of Non-GAAP adjusted net revenue

20.1%


7.3%




16.8%









(1)  Net revenue has been restated for the impact of a change in segment reporting due to the divestiture of our health management business.



(2) Estimated revenue related to acquired software license contracts that was not recognized during the nine months ended September 30, 2014 due to business combination accounting rules.









Comments:









In calculating "Non-GAAP adjusted operating income (loss)" in the schedule presented above, the Company excludes from "Operating income (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 "Operating income (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 "Operating income (loss)" for the costs associated with litigation, including payments made or received through settlements.  It should be noted that "Non-GAAP adjusted operating income (loss)" 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 "Operating income (loss)" 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, "Non-GAAP adjusted operating income (loss)" presented in this schedule may not be comparable to similar measures used by other companies.


Reference should also be made to the Company's financial results contained in our earnings press release respective to the periods presented in this schedule, which include a more detailed discussion of the adjustments to the GAAP operating results presented above.

 

Alere Inc. and Subsidiaries

Reconciliations to Non-GAAP Adjusted P&L Categories

(in thousands)






Three Months Ended
September 30, 2015


Three Months Ended
September 30, 2014







Net revenue 

$                        602,044


$                        649,210

Adjustment related to acquired software license contracts 

430


324

Non-GAAP adjusted net revenue(1)

$                        602,474


$                        649,534





Cost of net revenue

$                        326,995


$                        347,588

Less adjustments:




Amortization of acquisition-related intangible assets

(16,132)


(15,684)

Restructuring charges 

(523)


(5,654)

Stock-based compensation expense

(326)


(291)

Non-GAAP adjusted cost of net revenue(1)

$                        310,014


$                        325,959





Non-GAAP adjusted gross profit(1)

$                        292,460


$                        323,575






Three Months Ended
September 30, 2015


Three Months Ended
September 30, 2014







Research and development 

$                          36,011


$                          38,726

Less adjustments:




Amortization of acquisition-related intangible assets

(8,304)


(1,372)

Restructuring charges 

(18)


(5,457)

Stock-based compensation expense

(287)


(279)

Non-GAAP adjusted research and development(1)

$                          27,402


$                          31,618






Three Months Ended
September 30, 2015


Three Months Ended
September 30, 2014







Selling, general and administrative

$                        207,799


$                        227,554

Less adjustments:




Amortization of acquisition-related intangible assets

(36,492)


(41,757)

Restructuring charges 

(1,723)


(6,185)

Stock-based compensation expense

(6,704)


(2,598)

Compensation charges associated with acquisition-related contingent consideration obligations

(191)


(670)

Acquisition-related costs

(241)


(325)

Fair value adjustments to acquisition-related contingent consideration

(957)


5,537

Costs associated with potential business dispositions

(1,878)


(6,203)

Non-GAAP adjusted selling, general and administrative(1)

$                        159,613


$                        175,353






Three Months Ended
September 30, 2015


Three Months Ended
September 30, 2014







Impairment and loss on disposition, net

$                             2,074


$                                    -

Impairment and loss on disposition, net

(2,074)


-

Non-GAAP adjusted impairment and loss on disposition, net(1)

$                                    -


$                                    -










Three Months Ended September 30, 2015


Three Months Ended September 30, 2014







Interest and other income (expense), net

$                        (47,588)


$                        (60,419)

Less adjustments:




Restructuring charges 

6


11

Write off of equity investment in BBI

662


-

Interest expense recorded in connection with fees paid for certain debt modifications and the termination of our senior secured credit facility

9,273


363

Interest accretion associated with acquisition-related compensation charges

35


102

Non-GAAP adjusted interest and other income (expense), net(1)

$                        (37,612)


$                        (59,943)






Three Months Ended
September 30, 2015


Three Months Ended
September 30, 2014







Provision (benefit) for income taxes

$                        (18,924)


$                          65,489

    Add:  Income tax effects on Non-GAAP adjustments

38,200


(37,109)

Non-GAAP adjusted provision for income taxes, net(1)

$                          19,276


$                          28,380






Three Months Ended
September 30, 2015


Three Months Ended
September 30, 2014







Equity earnings of unconsolidated entities, net of tax

$                             5,000


$                             6,277

Less adjustments:




Amortization of acquisition-related intangible assets

104


132

Loss on sale of equity investment

-


457

Income tax effects on items above

-


-

Non-GAAP adjusted equity earnings of unconsolidated entities, net of tax(1)

$                             5,104


$                             6,866






Three Months Ended
September 30, 2015


Three Months Ended
September 30, 2014







Loss from discontinued operations, net of taxes

$                                    -


$                        (14,401)

Less adjustments:




Amortization of acquisition-related intangible assets

-


7,514

Restructuring charges 

-


562

Goodwill impairment charge

-


17,984

Fair value adjustments to acquisition-related contingent consideration

-


(25,071)

Income tax effects on items above

-


16,234

Non-GAAP adjusted income from discontinued operations, net of taxes(1)

$                                    -


$                             2,822






Three Months Ended
September 30, 2015


Three Months Ended
September 30, 2014







Net loss attributable to non-controlling interests, net of tax

$                                (61)


$                              (306)

Less:  Amortization of acquisition-related intangible assets, net of tax

78


127

Income tax effects on items above

21


30

Non-GAAP adjusted net loss attributable to non-controlling interests, net of tax(1)

$                                   (4)


$                              (209)





(1)  The following is a summary of our non-GAAP adjusted measures included above:




Non-GAAP adjusted net revenue

$                        602,474


$                        649,534

Non-GAAP adjusted cost of net revenue

$                        310,014


$                        325,959

Non-GAAP adjusted research and development 

$                          27,402


$                          31,618

Non-GAAP adjusted selling, general and administrative

$                        159,613


$                        175,353

Non-GAAP adjusted impairment and loss on dispositions, net

$                                    -


$                                    -

Non-GAAP adjusted interest and other income (expense), net

$                        (37,612)


$                        (59,943)

Non-GAAP adjusted provision for income taxes

$                          19,276


$                          28,380

Non-GAAP adjusted equity earnings of unconsolidated entities, net of tax

$                             5,104


$                             6,866

Non-GAAP adjusted income from discontinued operations, net of tax

$                                    -


$                             2,822

Non-GAAP adjusted net loss attributable to non-controlling interests, net of tax

$                                   (4)


$                              (209)

 

Alere Inc. and Subsidiaries

Reconciliations to Non-GAAP Adjusted P&L Categories

(in thousands)






Nine Months Ended
September 30, 2015


Nine Months Ended
September 30, 2014







Net revenue

$                    1,839,353


$                    1,921,847

Adjustment related to acquired software license contracts 

877


1,116

Non-GAAP adjusted net revenue(1)

$                    1,840,230


$                    1,922,963





Cost of net revenue

$                        979,745


$                    1,011,174

Less adjustments:




Amortization of acquisition-related intangible assets

(43,440)


(47,242)

Restructuring charges 

(2,921)


(6,707)

Stock-based compensation expense

(866)


(863)

Costs associated with potential business dispositions

(391)


-

Non-GAAP adjusted cost of net revenue(1)

$                        932,127


$                        956,362





Non-GAAP adjusted gross profit(1)

$                        908,103


$                        966,601






Nine Months Ended
September 30, 2015


Nine Months Ended
September 30, 2014







Research and development

$                          91,225


$                        114,855

Less adjustments:




Amortization of acquisition-related intangible assets

(10,088)


(3,721)

Restructuring charges 

(666)


(8,488)

Stock-based compensation expense

(893)


341

Non-GAAP adjusted research and development(1)

$                          79,578


$                        102,987






Nine Months Ended
September 30, 2015


Nine Months Ended
September 30, 2014







Selling, general and administrative

$                        577,566


$                        730,591

Less adjustments:




Amortization of acquisition-related intangible assets

(107,339)


(125,645)

Restructuring charges 

(7,800)


(21,879)

Stock-based compensation expense

(17,837)


(7,228)

Compensation charges associated with acquisition-related contingent consideration obligations

2,615


(1,673)

Acquisition-related costs

(332)


(695)

Fair value adjustments to acquisition-related contingent consideration

51,910


(12,442)

Costs associated with potential business dispositions

(6,097)


(20,763)

Non-GAAP adjusted selling, general and administrative(1)

$                        492,686


$                        540,266






Nine Months Ended
September 30, 2015


Nine Months Ended
September 30, 2014







Impairment and loss on disposition, net

$                          42,408


$                                638

Impairment and loss on disposition, net

(42,408)


(638)

Non-GAAP adjusted impairment and loss on disposition, net(1)

$                                    -


$                                    -






Nine Months Ended
September 30, 2015


Nine Months Ended
September 30, 2014







Interest and other income (expense), net

$                      (150,523)


$                      (154,112)

Less adjustments:




Restructuring charges 

19


34

Write off of equity investment in BBI

662


-

Interest expense recorded in connection with fees paid for certain debt modifications and the termination of our senior secured credit facility

20,940


1,091

Interest accretion associated with acquisition-related compensation charges

(406)


295

Expense associated with extinguishment of debt

3,480


-

Non-GAAP adjusted interest and other income (expense), net(1)

$                      (125,828)


$                      (152,692)






Nine Months Ended
September 30, 2015


 Nine Months Ended
September 30, 2014 







Provision (benefit) for income taxes

$                        (10,009)


$                          69,273

    Add:  Income tax effects on Non-GAAP adjustments

70,884


(6,678)

Non-GAAP adjusted provision for income taxes, net(1)

$                          60,875


$                          62,595






Nine Months Ended
September 30, 2015


Nine Months Ended
September 30, 2014







Equity earnings of unconsolidated entities, net of tax 

$                          10,320


$                          13,716

Less adjustments:




Amortization of acquisition-related intangible assets

314


430

Loss on sale of equity investment

-


457

Income tax effects on items above

-


-

Non-GAAP adjusted equity earnings of unconsolidated entities, net of tax(1)

$                          10,634


$                          14,603






Nine Months Ended
September 30, 2015


Nine Months Ended
September 30, 2014







Income (loss) from discontinued operations, net of taxes

$                        216,777


$                          (4,082)

Less adjustments:




Amortization of acquisition-related intangible assets

559


22,541

Restructuring charges 

(13)


4,039

Goodwill impairment charge

-


17,984

Fair value adjustments to acquisition-related contingent consideration

-


(26,321)

Gain on Divestiture

(366,191)


-

Income tax effects on items above

148,056


(5,857)

Non-GAAP adjusted income (loss) from discontinued operations, net of taxes(1)

$                              (812)


$                             8,304






Nine Months Ended
September 30, 2015


Nine Months Ended
September 30, 2014







Net income (loss) attributable to non-controlling interests, net of tax

$                                386


$                              (136)

Less:  Amortization of acquisition-related intangible assets, net of tax

240


387

Income tax effects on items above

63


88

Non-GAAP adjusted net income attributable to non-controlling interests, net of tax(1)

$                                563


$                                163





(1)  The following is a summary of our non-GAAP adjusted measures included above:




Non-GAAP adjusted net revenue

$                    1,840,230


$                    1,922,963

Non-GAAP adjusted cost of net revenue

$                        932,127


$                        956,362

Non-GAAP adjusted research and development 

$                          79,578


$                        102,987

Non-GAAP adjusted selling, general and administrative

$                        492,686


$                        540,266

Non-GAAP adjusted impairment and loss on dispositions, net

$                                    -


$                                    -

Non-GAAP adjusted interest and other income (expense), net

$                      (125,828)


$                      (152,692)

Non-GAAP adjusted provision for income taxes

$                          60,875


$                          62,595

Non-GAAP adjusted equity earnings of unconsolidated entities, net of tax

$                          10,634


$                          14,603

Non-GAAP adjusted income (loss) from discontinued operations, net of tax

$                              (812)


$                             8,304

Non-GAAP adjusted net income attributable to non-controlling interests, net of tax

$                                563


$                                163

 

Alere Inc. and Subsidiaries

Reconciliations of Gross Profit/Margin to Non-GAAP Adjusted Gross Profit/Margin

(in thousands)














Three Months Ended 


Three Months Ended 


Three Months Ended 

Alere Consolidated

September 30, 2014 (1)


June 30, 2015


September 30, 2015













Net revenue 

$   649,210




$   629,156




$   602,044



    Adjustment related to acquired












      software license contracts

324




200




430



Non-GAAP adjusted net revenue

649,534




629,356




602,474















Cost of net revenue 

347,588




336,582




326,995



Less adjustments:












    Amortization of acquisition-related intangible assets

15,684




13,112




16,132



    Stock-based compensation expense

291




287




326



    Restructuring charges

5,654




897




523



         Non-GAAP adjusted cost of net revenue

325,959




322,286




310,014















Non-GAAP adjusted gross profit/margin 

$   323,575


49.8%


$   307,070


48.8%


$   292,460


48.5%














Three Months Ended 


Three Months Ended 


Three Months Ended 

Professional Diagnostics Segment

September 30, 2014 (1)


June 30, 2015


September 30, 2015













Net product sales and services revenue 

$   628,012




$   598,817




$   579,998



    Adjustment related to acquired












      software license contracts

324




200




430



Non-GAAP adjusted net product sales and services revenue

628,336




599,017




580,428















Cost of net revenue 

329,013




312,068




292,156



Less adjustments:












    Amortization of acquisition-related intangible assets

15,659




13,112




16,133



    Stock-based compensation expense

291




287




326



    Restructuring charges

5,654




897




523



         Non-GAAP adjusted cost of net revenue

307,409




297,772




275,174















Non-GAAP adjusted gross profit/margin 

$   320,927


51.1%


$   301,245


50.3%


$   305,254


52.6%













Note:












(1) Restated to reflect the impact of discontinued operations









and the impact of a change in segment reporting









 

Alere Inc. and Subsidiaries

Reconciliation of Net Income to Non-GAAP EBITDA

(in thousands)






 Three Months Ended 


 Nine Months Ended 


September 30, 2015


September 30, 2015





Net Income (1) 

$                             5,501


$                        234,992

  Less: Income from discontinued operations, net of tax

-


216,777

Income from continuing operations 

5,501


18,215





Adjustment related to acquired software license contracts

430


877

Income tax provision (benefit)

(18,924)


(10,009)

Depreciation and amortization

86,603


233,825

Interest, net (2)

49,999


154,596

Non-cash stock-based compensation expense

7,317


19,596

Non-cash fair value adjustments to acquisition-related contingent consideration

957


(51,910)

Non-cash write-off of an investment 

662


662

Impairment and gain (loss) on dispositions, net

2,074


42,408





Non-GAAP EBITDA

$                        134,619


$                        408,260













(1)  Net income for the three months and nine months ended September 30, 2015 includes non-interest related restructuring charges of $2.3 million and $11.4 million, respectively, and $1.9 million and $6.5 million of costs associated with business dispositions, respectively, which have not been added back for purposes of computing non-GAAP EBITDA.  The three months and nine months ended September 30, 2015 also includes $0.2 million and $0.3 million, respectively, of acquisition-related costs.

(2)  Includes $3.5 million of expense associated with the extinguishment of debt during the nine months ended September 30, 2015.

 

Alere Inc. and Subsidiaries

Reconciliation of Net Cash Provided by Operating Activities to Non-GAAP Free Cash Flow

(in thousands)






Three Months Ended


Nine Months Ended


September 30, 2015


September 30, 2015





Net cash provided by operating activities

$                        104,724


$                        137,250

Capital expenditures

(20,663)


$                        (67,947)





Non-GAAP free cash flow

$                          84,061


$                          69,303

SOURCE Alere Inc.



RELATED LINKS

http://www.alere.com