Alere Inc. Announces Second Quarter 2012 Results

WALTHAM, Mass., Aug. 8, 2012 /PRNewswire/ -- Alere Inc. (NYSE: ALR), a global leader in enabling individuals to take charge of their health at home through the merger of rapid diagnostics and health management, today announced its financial results for the quarter ended June 30, 2012.

Financial results for the second quarter of 2012:

• Adjusted net revenue of $701.6 million for the second quarter of 2012, compared to $567.2 million for the second quarter of 2011.
• Adjusted cash-basis net income per diluted common share of $0.48 for the second quarter of 2012, compared to adjusted cash-basis net income per diluted common share of $0.46 for the second quarter of 2011.
• Adjusted cash-basis net income for the second quarter of 2012 is net of an after tax charge of $0.08 per share related to the costs and reduced revenues associated with the previously disclosed FDA matters related to our Alere Triage® meter-based products.
• Adjusted product and services revenues from our Professional Diagnostics segment were $538.0 million in the second quarter of 2012, compared to adjusted net product and services revenue of $404.2 million in the second quarter of 2011. Recent professional diagnostics acquisitions contributed $135.4 million of incremental net revenue compared to the second quarter of 2011.
• North American influenza sales increased to $4.2 million for the second quarter of 2012, from $2.3 million for the second quarter of 2011.
• Excluding the impact of the change in North American influenza revenues and the impact on revenues of the FDA matters associated with our U.S. Alere Triage products, currency adjusted organic growth in our Professional Diagnostics segment was 6.3%.
• Adjusted cash-basis gross margins were 53.4% for the second quarter of 2012, compared to 54.9% in the second quarter of 2011 and 55.9% in the first quarter of 2012. Adjusted cash-basis gross margins from products and services in our Professional Diagnostics segment were 56.3% in the second quarter of 2012, compared to 58.6% in the second quarter of 2011 and 60.3% in the first quarter of 2012. Compared to the first quarter of 2012, professional diagnostics segment gross margins were reduced by 205 basis points related to the inclusion of $40.7 million of revenues from eScreen, Inc. at an adjusted gross margin of 31.3% and by a 79 basis point impact related to the incremental costs and lost revenues associated with the FDA matters relating to our Triage products.
• Product and services revenues from our Health Management segment were $138.6 million in the second quarter of 2012, compared to $135.6 million in the second quarter of 2011 and $130.8 million in the first quarter of 2012. The increase in revenues from the second quarter of 2011 was related primarily to increased revenues from our tobacco cessation and home coagulation monitoring programs. Adjusted cash-basis gross margins from our Health Management segment were 46.5% in the second quarter of 2012, compared to 48.4% in the second quarter of 2011 and 45.4% in the first quarter of 2012.
• GAAP net loss of $18.2 million attributable to common stockholders of Alere Inc., and respective net loss per common share of $0.23, for the second quarter of 2012, compared to GAAP net loss of $4.7 million attributable to common stockholders of Alere Inc., and respective net loss per common share of $0.05, for the second quarter of 2011.
• Adjusted free cash flow for the second quarter of 2012 was $46.2 million, reflecting cash flow from operations of $64.3 million and $21.0 million in proceeds from the sale of vacant land and an idle facility, offset by capital expenditures of $39.1 million.

The Company's GAAP results for the second quarter of 2012 exclude $1.1 million of revenue associated with acquired software license contracts that are not recognized due to business combination accounting rules and include amortization of $81.7 million, $1.4 million of restructuring charges, $4.4 million of stock-based compensation expense, $3.8 million of acquisition-related costs recorded in accordance with ASC 805, Business Combinations, and $1.3 million of interest expense associated with fees paid for modification of certain debt agreements, offset by $6.7 million of income recorded for fair value adjustments to acquisition-related contingent consideration obligations. The Company's GAAP results for the second quarter of 2011 include amortization of $81.2 million, $10.5 million of restructuring charges, $6.2 million of stock-based compensation expense, $1.4 million of acquisition-related costs recorded in accordance with ASC 805, Business Combinations, $29.9 million of interest expense associated with fees paid for modification of certain debt agreements and the termination of our senior secured credit facility and a related interest rate swap agreement, offset by $7.2 million of income recorded for fair value adjustments to acquisition-related contingent consideration obligations. These amounts, net of tax, have been excluded from the adjusted cash-basis net income per diluted common share attributable to Alere Inc. for the respective quarters.

A detailed reconciliation of the Company's adjusted cash-basis net income, which is a non-GAAP financial measure, to net loss under GAAP, as well as a discussion regarding this non-GAAP financial measure, is included in the schedules to this press release.

The Company will host a conference call beginning at 8:30 a.m. (Eastern Time) today, August 8, 2012, to discuss these results, as well as other corporate matters. During the conference call, the Company may answer questions concerning business and financial developments and trends and other business and financial matters. The Company's responses to these questions, as well as other matters discussed during the conference call, may contain or constitute information that has not been previously disclosed.

The conference call may be accessed by dialing (800) 860-2442 (domestic) or (412) 858-4600 (international) and asking for Alere Inc. A webcast of the call can also be accessed via the Alere website at www.alere.com/investors, or directly through the following link: http://www.videonewswire.com/event.

A replay of the call will be available approximately four hours after the conclusion of the call and will remain available for a period of seven days following the call. The replay may be accessed by dialing (877) 344-7529 (domestic) or (412) 317-0088 (international) and entering replay code 10017017. The replay will also be available via online webcast at http://www.videonewswire.com/event or via the Alere website at www.alere.com/investors for a period of 60 days following the call.

Additionally, reconciliations to non-GAAP financial measures not included in this press release that may be discussed during the call will also be available at the Alere website (http://www.alere.com/investors) under the Earnings Calls and Releases section shortly before the conference call begins and will continue to be available on this website.

For more information about Alere, please visit our website athttp://www.alere.com.

By developing new capabilities in near-patient diagnosis, monitoring and health management, Alere enables individuals to take charge of improving their health and quality of life at home. Alere's global leading products and services, as well as its new product development efforts, focus on cardiology, infectious disease, toxicology, diabetes, oncology and women's health. Alere is headquartered in Waltham, Massachusetts.