Alere Reports Third Quarter 2015 Financial Results

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.

"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.

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