WALTHAM, Mass., May 22, 2017 /PRNewswire/ -- Alere Inc. (NYSE: ALR), a global leader in rapid diagnostic tests, today announced certain preliminary unaudited financial information for the fourth quarter and full fiscal year ended December 31, 2016 and the first quarter of 2017 ended March 31, 2017. The Company also provided an update on its expected filing of its 2016 Annual Report on Form 10-K and filed its preliminary proxy statement with respect to the pending merger with Abbott Laboratories.
The following amounts are preliminary, unaudited and are subject to change and reflect the impact of the Restatement (as defined below) adjustments identified to date, as described further below:
Preliminary Unaudited Full Year 2016 Results
- Revenue for the full year 2016 is expected to be $2.38 billion, which would be a decrease from $2.45 billion in full year 2015.
- GAAP loss from continuing operations is expected to be $(140) million, or $(1.86) per diluted share, for the full year 2016.
- Non-GAAP organic growth for the full year 2016 is expected to be +0.3% or +2.5% excluding Arriva*.
- Non-GAAP adjusted EBITDA is expected to be $344 million for the full year 2016, including approximately $135 million in merger-related costs, audit and legal fees related to ongoing investigations and legal settlements, as detailed in the Supplemental Financial Information table.
*During the period from November 4, 2016 to December 31, 2016, the Company furnished $9.8 million of Arriva products and services that were subject to the CMS revocation to customers but did not recognize any revenue for such products and services because they were not eligible for reimbursement by CMS at the time the Company furnished them.
Preliminary Unaudited Fourth Quarter 2016 Results
- Total revenue is expected to be $597 million, which would be a decrease from $617 million in the prior year period.
- Reported GAAP loss from continuing operations during the fourth quarter of 2016 is expected to be $(117) million, or $(1.41) per diluted share.
- Non-GAAP organic growth during the fourth quarter of 2016 is expected to be -0.9%, or +3.7% excluding Arriva.
- Non-GAAP adjusted EBITDA is expected to be $79 million in the fourth quarter of 2016, which includes approximately $50 million in merger-related costs, audit and legal fees related to ongoing investigations and legal settlements, as detailed in the Supplemental Financial Information table.
Preliminary Unaudited First Quarter 2017 Results
- Total revenue is expected to be $588 million.
- Non-GAAP organic growth is expected to be +0.9%, or +6.8% excluding Arriva.
Update on Annual Report 2016 Form 10-K
As previously disclosed, the Company was delayed in filing its Annual Report on Form 10-K for the fiscal year ended December 31, 2016 due to the Company’s review of certain revenue transactions in the Company’s South Korea and Japan locations. Based on this review, the Company determined that it had incorrectly recorded certain revenue transactions at its Standard Diagnostics subsidiary in South Korea. Specifically, the Company failed to correctly apply U.S. GAAP regarding the timing of revenue recognition primarily relating to transactions in which the Company recognized revenue prior to full satisfaction of all contractual criteria for title and risk of loss passing to the customer as required by U.S. GAAP. The principal cause of these misstatements in the timing of revenue recognition was inappropriate conduct at the Company’s Standard Diagnostics subsidiary. As also previously disclosed, as a result of this review, the Company will be restating certain previously issued financial statements (the “Restatement”).
The Company has completed its review of the above matters at its South Korea and Japan locations and, consistent with its prior expectation, the Company expects the following adjustments to previously reported financial information as set forth in the tables below. In addition, the Restatement reflects corrections for certain other misstatements that the Company identified in 2017 relating to 2014, 2015 and 2016. These adjustments relate to (a) misstatements in the classification of certain amounts between current assets, noncurrent assets and current liabilities, (b) misstatements in the classification of certain legal-related charges between non-operating expenses and operating expenses, and (c) misstatements to general and administrative expenses to correct the timing of bad debt expenses and fair value adjustments related to contingent consideration liabilities from acquisitions. These adjustments are incorporated into the tables below.
Annual Restatement Impact | Nine Months | Twelve Months | Twelve Months |
Twelve Months |
Revenue | $ 8 | $ (8) | $ 2 | $ (1) |
Pre-Tax Income | $ (1) | $ (4) | $ 0 | $ 1 |
Net Income | $ (0) | $ (3) | $ 0 | $ 0 |
2015 Quarterly Restatement | Three Months | Three Months | Three Months | Three Months |
Revenue | $ (3) | $ (1) | $ 1 | $ (6) |
Pre-Tax Income | $ (1) | $ (0) | $ 1 | $ (4) |
Net Income | $ (0) | $ (0) | $ 1 | $ (3) |
2016 Quarterly Restatement | Three Months | Three Months | Three Months | |
Revenue | $ 9 | $ (1) | $ (0) | |
Pre-Tax Income | $ 4 | $ 2 | $ (6) | |
Net Income | $ 4 | $ 2 | $ (6) | |
NOTE: The ($6) million pre-tax income impact for the Three Months Ended September 30, 2016 includes $4.4M of expense related to fair value adjustments for contingent consideration. | ||||
In addition, as the Company disclosed on May 11, 2017, it is in the process of reviewing sales transactions to a limited number of distributors from select selling entities during fiscal years 2012 to 2016 to determine if revenue recognition timing was appropriate according to U.S. GAAP with respect to collectability being reasonably assured at the time of sale. This review relates to the timing of the recognition of the revenue and not to the existence or measurement of revenue for these transactions and the selling entities being reviewed have historical collection rates in excess of 99.5%.
The Company’s goal is to complete its review and file its 2016 Annual Report on Form 10-K by no later than June 15, 2017.
The review necessary to complete the 2016 Annual Report on Form 10-K is not complete. The time necessary to review the foregoing matter may take longer than the Company expects, which would cause a further delay in the filing of the Annual Report beyond the projected filing date noted above. In the course of this ongoing review of revenue recognition and the completion of the review necessary to file the Annual Report, the Company may identify other matters that require additional time to review, which other matters may be similar or different to those identified above. In addition, any of these other items may require the Company to further adjust previously reported financial information, and such adjustments may be material in amount.
Information Regarding Preliminary Unaudited Results
The financial results presented in this release are preliminary and may change. These preliminary results include calculations that have been prepared by Alere management and have not been reviewed or audited by our independent registered public accounting firm.
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