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2014

Cepheid Reports 2013 First Quarter Results

Clinical Reagent Revenue Growth of 23% Driven by Continued Momentum of Xpert® Test Portfolio

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SUNNYVALE, Calif., April 18, 2013 /PRNewswire/ -- Cepheid (Nasdaq: CPHD) today reported revenues for the first quarter of 2013 of $91.9 million, representing growth of 19% from $77.3 million for the first quarter of 2012.  Net income was $0.3 million, or $0.00 per share, which compares to net loss of $5.5 million, or $(0.08) per share, in the first quarter of 2012. 

Excluding employee stock-based compensation and amortization of purchased intangible assets, non-GAAP net income for the first quarter of 2013 was $7.8 million, or $0.11 per share.  This compares to a non-GAAP net loss of $1.2 million, or $(0.02) per share, in the first quarter of 2012.

"This was a solid start to 2013 for Cepheid with strong performance in our commercial clinical reagents driven both by broader test menu utilization by our installed base of more than 3,000 commercial GeneXpert® system customers globally and by new customer adoption," said John Bishop, Cepheid's Chairman and Chief Executive Officer.  "Our leading portfolio of molecular HAI tests continues to drive Cepheid's growth, but we were particularly pleased with the very strong level of interest in Xpert CT/NG in the first quarter, with about 10% of our North American installed base already using or validating the assay." 

Operational Overview

  • By business, total sales were, in millions:

Three Months Ended March 31,


2013


2012


Change

Clinical Systems

$                 12.5


$                 12.5


0%

Clinical Reagents

67.1


54.4


23%

    Total Clinical 

79.6


66.9


19%







Non-Clinical & Other

12.3


10.4


18%

Total Sales

$                 91.9


$                 77.3


19%

  • By geography, total sales were, in millions:

Three Months Ended March 31,


2013


2012


Change

North America






     Clinical

$                 52.2


$                 45.5


15%

     Non-Clinical & Other

11.4


8.9


28%

Total North America

63.6


54.4


17%







International






     Clinical

27.4


21.4


28%

     Non-Clinical & Other

0.9


1.5


-40%

Total International

28.3


22.9


24%







Total Sales

$                 91.9


$                 77.3


19%

  • During the quarter, Cepheid installed a total of 125 GeneXpert systems in its commercial Clinical business.  Additionally, the Company placed a total of 157 GeneXpert systems as part of its High Burden Developing Country (HBDC) program.  Including the HBDC systems, a cumulative total of 4,117 GeneXpert systems have been placed worldwide as of March 31, 2013.
  • GAAP gross margin on sales was 53% and non-GAAP gross margin on sales was 55%, which compares to 54% and 55%, respectively, in the first quarter of 2012. 
  • Cash and cash equivalents were $102.0 million as of March 31, 2013.
  • DSO was 45 days.

Business Outlook

For the fiscal year ending December 31, 2013, the Company continues to expect:

  • Total revenue to be in the range of $375 to $385 million;
  • Net income to range from a net loss of $(0.05) to net income of $0.01 per share; 
  • Non-GAAP net income in the range of $0.41 to $0.46 per share. 

Expected non-GAAP net income excludes approximately $29 million related to stock compensation expense and approximately $4 million related to the amortization of acquired intangibles.  The fully diluted share count for the year is expected to be approximately 72 million, except in the event of a GAAP loss where the share count would be approximately 67 million shares.

The following table reconciles net income (loss) per share to the non-GAAP net income per share range:



Guidance Range for Year



Ending December 31, 2013



Low 


High

Net Income (Loss) Per Share


$            (0.05)


$                0.01

   Stock Compensation Expense


0.40


0.39

   Amortization of Purchased Intangible Assets


0.06


0.06

Non-GAAP Measure of Net Income Per Share


$               0.41


$                0.46

Accessing Cepheid's 2013 First Quarter Results Conference Call

The Company will host a management presentation at 2 p.m. Pacific Time on Thursday, April 18, 2013, to discuss the results.  To access the live webcast, please visit Cepheid's website at http://ir.cepheid.com at least 15 minutes before the scheduled start time to download any necessary audio or plug-in software.  A replay of the webcast will be available shortly following the call and will remain available for at least 90 days.

About Cepheid

Based in Sunnyvale, Calif., Cepheid (Nasdaq: CPHD) is a leading molecular diagnostics company that is dedicated to improving healthcare by developing, manufacturing, and marketing accurate yet easy-to-use molecular systems and tests.  By automating highly complex and time-consuming manual procedures, the Company's solutions deliver a better way for institutions of any size to perform sophisticated genetic testing for organisms and genetic-based diseases.  Through its strong molecular biology capabilities, the Company is focusing on those applications where accurate, rapid, and actionable test results are needed most, such as managing infectious diseases and cancer. For more information, visit http://www.cepheid.com.

Use of Non-GAAP Measures

The Company has supplemented its reported GAAP financial information with non-GAAP measures that do not include employee stock-based compensation expense, amortization of purchased intangible assets and a tax benefit related to an intercompany intellectual property transaction.  The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with U.S. GAAP.   The Company's management uses the non-GAAP information internally to evaluate its ongoing business, continuing operational performance and cash requirements, and believes these non-GAAP measures are useful to investors as they provide a basis for evaluating the Company's cash requirements and additional insight into the underlying operating results and the Company's ongoing performance in the ordinary course of its operations.

These non-GAAP measures may be different from non-GAAP measures used by other companies.  In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles.  The Company believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with its results of operations as determined in accordance with U.S. GAAP and that these measures should only be used to evaluate the Company's results of operations in conjunction with the corresponding GAAP measures.

As described above, the Company excludes the following items from one or more of its non-GAAP measures when applicable:

Employee Stock-based Compensation Expense. These expenses consist primarily of expenses for employee stock options and employee restricted stock under ASC 718 (formerly SFAS 123(R)).  The Company excludes employee stock-based compensation expenses from its non-GAAP measures primarily because they are non-cash expenses that the Company does not believe are reflective of ongoing operating results in the period incurred.  Further, as the Company applies ASC 718, it believes that it is useful to investors to understand the impact of the application of ASC 718 on its results of operations.

Amortization of Purchased Intangible Assets.  The Company incurs amortization of purchased intangible assets in connection with acquisitions.  The Company excludes these items because these expenses are not reflective of ongoing operating results in the period incurred.  These amounts arise from the Company's prior acquisitions and have no direct correlation to the operation of the Company's business.

Tax Benefit Related to Intercompany Intellectual Property (IP) Transaction.  The Company excluded a tax benefit related to an intercompany IP transaction from its results for non-GAAP net loss for the first quarter ended March 31, 2012.  The Company excluded this item as it believes it is non-recurring in nature, and does not have a direct impact on the operation of the Company's core business. 

Forward-Looking Statements

This press release contains forward-looking statements that are not purely historical regarding Cepheid's or its management's intentions, beliefs, expectations and strategies for the future, including those relating to potential growth, future revenues and future net income/loss and profitability, including on a non-GAAP basis, and test menu expansion and utilization. Because such statements deal with future events, they are subject to various risks and uncertainties, and actual results could differ materially from the Company's current expectations. Factors that could cause actual results to differ materially include risks and uncertainties such as those relating to: our ability to successfully complete and bring on line additional manufacturing lines; our success in increasing direct sales and the effectiveness of our sales personnel; the performance and market acceptance of new products; sufficient customer demand; our ability to develop new products and complete clinical trials successfully in a timely manner for new products; uncertainties related to the FDA regulatory and European regulatory processes; the level of testing at clinical customer sites, including for Healthcare Associated Infections (HAIs); the Company's ability to successfully introduce and sell products in clinical markets other than HAIs; the rate of environmental biothreat testing conducted by the USPS, which will affect the amount of consumable products sold to the USPS; variability in systems placements and reagent pull-through in the Company's HBDC program and the level of sales through that program; other unforeseen supply, development and manufacturing problems; the potential need for additional intellectual property licenses for tests and other products and the terms of such licenses; lengthy sales cycles in certain markets; the Company's reliance on distributors in some regions to market, sell and support its products; the occurrence of unforeseen expenditures, acquisitions or other transactions; costs associated with litigation; the impact of competitive products and pricing; the Company's ability to manage geographically-dispersed operations; and underlying market conditions worldwide.  Readers should also refer to the section entitled "Risk Factors" in Cepheid's Annual Report on Form 10-K and its other reports filed with the Securities and Exchange Commission.

All forward-looking statements and reasons why results might differ included in this release are made as of the date of this press release, based on information currently available to Cepheid, and Cepheid assumes no obligation to update any such forward-looking statement or reasons why results might differ.

FINANCIAL TABLES FOLLOW

CEPHEID


CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS

(in thousands, except per share data)



Three Months Ended March 31, 


2013


2012





Sales:




System and other sales

$       16,010


$       15,230

Reagent and disposable sales

75,928


62,062

Total sales

91,938


77,292

Costs and operating expenses:




Cost of sales 

42,892


35,608

Collaboration profit sharing 

2,110


1,684

Research and development

17,727


22,102

Sales and marketing

19,126


14,512

General and administrative

9,763


11,051

Total costs and operating expenses 

91,618


84,957

Income (loss) from operations 

320


(7,665)

Other income, net

374


238

Income (loss) before income taxes

694


(7,427)

Benefit from (provision for) income taxes

(381)


1,901

Net income (loss)

$            313


$       (5,526)





Basic net income (loss) per share 

$           0.00


$         (0.08)





Diluted net income (loss) per share 

$           0.00


$         (0.08)





Shares used in computing basic net income (loss) per share 

66,824


65,027


69,406


65,027

Shares used in computing diluted net income (loss) per share 


CEPHEID


CONDENSED CONSOLIDATED UNAUDITED BALANCE SHEETS

(in thousands)






March 31, 2013


December 31, 2012





ASSETS




Current assets:




Cash and cash equivalents

$          101,988


$        95,779

Accounts receivable, net

45,046


43,999

Inventory

78,239


70,114

Prepaid expenses and other current assets 

12,907


9,448

Total current assets

238,180


219,340

Property and equipment, net

59,990


54,830

Other non-current assets

745


913

Intangible assets, net

18,207


18,767

Goodwill

37,660


37,694

Total assets

$          354,782


$      331,544





LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:




Accounts payable 

$            43,466


$        33,701

Accrued compensation 

15,926


16,540

Accrued royalties 

6,859


7,992

Accrued and other liabilities 

3,472


4,235

Current portion of deferred revenue

12,354


9,599

Current portion of notes payable

186


183

Total current liabilities 

82,263


72,250

Long-term portion of deferred revenue

1,009


1,156

Notes payable, less current portion

1,641


1,685

Other liabilities

8,579


8,911

Total liabilities

93,492


84,002

Shareholders' equity:




Common stock

362,012


355,867

Additional paid-in capital 

123,806


117,217

Accumulated other comprehensive income

757


56

Accumulated deficit 

(225,285)


(225,598)

Total shareholders' equity 

261,290


247,542

Total liabilities and shareholders' equity 

$          354,782


$      331,544

 

CEPHEID


CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS

(in thousands)




Three Months Ended
March 31, 


2013


2012

Cash flows from operating activities:




Net income (loss)

$             313


$        (5,526)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:




Depreciation and amortization of property and equipment

3,768


2,475

Amortization of intangible assets 

1,560


1,441

Unrealized exchange differences

444


-

Stock-based compensation related to employees and consulting services rendered

6,277


5,498

Changes in operating assets and liabilities:




Accounts receivable 

(1,047)


1,943

Inventory 

(7,814)


(5,457)

Prepaid expenses and other current assets 

(3,528)


(3,538)

Other non-current assets

168


(768)

Accounts payable and other current liabilities 

8,342


(1,600)

Accrued compensation 

(614)


(3,071)

Deferred revenue 

2,608


251

Net cash provided by (used in) operating activities 

10,477


(8,352)





Cash flows from investing activities:




Capital expenditures 

(8,929)


(4,587)

Payments for technology licenses 

(1,000)


-

Cost of acquisitions, net

-


(16,992)

Net cash used in investing activities 

(9,929)


(21,579)





Cash flows from financing activities:




Net proceeds from the issuance of common shares and exercise of stock options

6,145


19,409

Principal payment of notes payable

(41)


-

Net cash provided by financing activities 

6,104


19,409





Effect of exchange rate change on cash

(443)


(495)

Net increase (decrease) in cash and cash equivalents 

6,209


(11,017)

Cash and cash equivalents at beginning of period 

95,779


115,008

Cash and cash equivalents at end of period

$      101,988


$      103,991

CEPHEID


RECONCILIATION OF GAAP TO NON-GAAP MEASURES (UNAUDITED)

(in thousands, except per share data)












Three Months Ended
March 31,
















2013


2012

Cost of sales




$       42,892


$     35,608

  Stock compensation expense



(542)


(635)

  Amortization of purchased intangible assets


(854)


(333)

Non-GAAP measure of cost of sales


$       41,496


$     34,640









Gross margin on sales per GAAP



53%


54%

Gross margin on sales per Non-GAAP


55%


55%









Operating expenses




$       46,616


$     47,665

  Stock compensation expense



(5,735)


(4,863)

  Amortization of purchased intangible assets


(374)


(316)

Non-GAAP measure of operating expenses


$       40,507


$     42,486









Income (loss) from operations



$            320


$      (7,665)

  Stock compensation expense



6,277


5,498

  Amortization of purchased intangible assets


1,228


649

Non-GAAP measure of income from operations


$         7,825


$      (1,518)









Net income (loss)




$            313


$      (5,526)

  Stock compensation expense



6,277


5,498

  Amortization of purchased intangible assets


1,228


649

  Tax benefit related to intercompany IP transaction


-


(1,815)

Non-GAAP measure of net income



$         7,818


$      (1,194)









Basic net income (loss) per share



$           0.00


$        (0.08)

  Stock compensation expense



0.10


0.08

  Amortization of purchased intangible assets


0.02


0.01

  Tax benefit related to intercompany IP transaction


-


(0.03)

Non-GAAP measure of net income per share


$           0.12


$        (0.02)









Diluted net income (loss) per share



$           0.00


$        (0.08)

  Stock compensation expense



0.09


0.08

  Amortization of purchased intangible assets


0.02


0.01

  Tax benefit related to intercompany IP transaction


-


(0.03)

Non-GAAP measure of net income per share


$           0.11


$        (0.02)









Shares used in computing basic net income (loss) per share


66,824


65,027









Shares used in computing diluted net income (loss) per share


69,406


65,027

 

CONTACTS:


For Media Inquiries:

For Investor Inquiries:

Jared Tipton

Cepheid Corporate Communications

Tel: (408) 400 8377

communications@cepheid.com

Jacquie Ross

Cepheid Investor Relations

Tel: (408) 400 8329

investor.relations@cepheid.com

SOURCE Cepheid



RELATED LINKS
http://www.cepheid.com

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