Announces Actions to Reduce 2009 Spending
SUNNYVALE, Calif., Feb. 5 /PRNewswire-FirstCall/ -- Cepheid today reported revenue for the fourth quarter of 2008 of $37.8 million. Net loss was $5.9 million, or $(0.10) per share, which compares to revenue of $40.4 million and a net loss of $5.3 million, or $(0.10) per share, in the fourth quarter of fiscal 2007. Excluding amortization of purchased intangible assets and stock compensation expenses, non-GAAP net loss for the fourth quarter of fiscal 2008 was $2.3 million, or $(0.04) per share. This compares to a non-GAAP net loss of $1.2 million, or $(0.02) per share, in the fourth quarter of fiscal 2007.
Fiscal 2008 Overview
For the full fiscal year ended December 31, 2008, Cepheid reported record revenue of $169.6 million, representing an increase of 31% from 2007 associated with the widespread adoption of the company’s GeneXpert(R) system for on-demand, random access molecular testing.
Net loss for the full year was $21.7 million, or $(0.38) per share, which compares to a net loss of $21.4 million, or $(0.39) per share in 2007. Excluding amortization of purchased intangible assets and stock compensation expenses, non-GAAP net loss for the full year was $6.5 million, or $(0.11) per share. This compares to a non-GAAP net loss of $9.3 million, or $(0.17) per share, for the full year 2007.
“Despite a challenging selling environment driven by increasing economic uncertainty as the year ended, continued adoption of our GeneXpert systems and Xpert(TM) tests drove full year growth of 112% in our Core Clinical business,” said John Bishop, Cepheid’s Chief Executive Officer. “Full year growth of more than 400% for our Xpert MRSA test positions us as the leader in molecular testing for Healthcare Associated Infections, and we enter 2009 with a broadened - and expanding - test menu that we believe will enable continued adoption of our GeneXpert system even in today’s tough economic environment.”
“With the potential for on-going economic uncertainty, we have executed a series of actions designed to optimize our opportunity for growth in our Core Clinical sales while reducing our 2009 spending levels and supporting our profitability improvement objectives. These actions included: a reduction-in-force totaling 47 positions that impacted employees, contractors and replacement positions; the implementation of a hiring freeze with the exception of specified positions in sales, marketing and manufacturing; and the suspension of annual salary increases for 2009.”
“Without detriment to our near-term strategic imperatives, we have postponed certain facility expansions and selectively slowed development of some of our longer term strategic projects. Our near-term projects were not impacted by these actions. Notably, development of our Clostridium difficile test, our vanA/vanB Xpert test for vancomycin-resistant enterococci (or VRE), and our MRSA/SA nasal pre-surgical test are on-track and are expected to be released in the United States in the second half of 2009. In addition, in the first half of the year, we expect the European release of our Xpert TB test which simultaneously detects TB along with multi-drug resistance.”
Operational Overview
Business Outlook
For the fiscal year ending December 31, 2009, the Company expects:
Non-GAAP net loss excludes approximately $16 million related to stock compensation expense, $1 million related to the amortization of acquired intangibles, and $0.8 million related to restructuring expenses.
Accessing Cepheid’s Fourth Quarter and Full Year 2008 Results Conference Call
The company will host a management presentation at 2:00 p.m. Pacific Time on Thursday, February 5, 2009 to discuss the results. To access the live webcast, please visit Cepheid’s website at www.cepheid.com/investors 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.
Interested participants and investors may also listen to the live teleconference call by dialing 888-396-2298 (domestic) or 617-847-8708 (international), and entering participant code 81765966. A replay will be available for seven days beginning at about 4 p.m. Pacific Time. Access numbers for this replay are 888-286-8010 (domestic) and 617-801-6888 (international), with passcode 18804591.
About Cepheid
Cepheid , based in Sunnyvale, Calif., is an on-demand molecular diagnostics company that develops, manufactures, and markets fully-integrated systems and tests for genetic analysis in the clinical, industrial and biothreat markets. The Company’s systems enable rapid, sophisticated genetic testing for organisms and genetic-based diseases by automating otherwise complex manual laboratory procedures. Cepheid’s easy-to-use systems integrate a number of complicated and time-intensive steps, including sample preparation, DNA amplification and detection, which enable the analysis of complex biological samples in its proprietary test cartridges. Through its strong molecular biology capabilities, the Company is focusing on those applications where rapid molecular testing is particularly important, such as identifying infectious disease and cancer in the clinical market; food, agricultural, and environmental testing in the industrial market; and identifying bio-terrorism agents in the biothreat market.
Use of Non-GAAP Measures
The Company has supplemented its reported GAAP financial information with non-GAAP measures that do not include employee share-based compensation expense and amortization of purchased intangible assets, and with respect to the Company’s outlook for 2009, restructuring charges. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with 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 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 share-based compensation expense. These expenses consist primarily of expenses for employee stock options and employee restricted stock under SFAS 123(R). The Company excludes employee share-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. Further, as the Company applies SFAS 123(R), it believes that it is useful to investors to understand the impact of the application of SFAS 123(R) 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.
Restructuring expenses. The Company also excluded expenses associated with its restructuring in computing its outlook for non-GAAP net loss for 2009. The Company excluded these items as it currently anticipates that such amounts are non-recurring in nature, and do 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 in clinical product sales, product pipeline, future revenues and gross margin and demand for certain products, future net income and other future operating results. 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: the uncertain impact of the significant global economic downturn on our business, and that of our customers, potential customers and business partners; our success in increasing direct sales and the effectiveness of new sales personnel; the performance and market acceptance of new products; sufficient customer demand; our ability to develop 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; changes in the protocols or levels of testing for MRSA and other Healthcare Associated Infections (HAIs); the Company’s ability to successfully introduce and sell products in clinical markets other than HAIs; the mix of products sold, which can affect gross margins; the rate of environmental biothreat testing conducted by the USPS, which will affect the amount of consumable products sold to the USPS; unforeseen 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 ability to continue to realize manufacturing efficiencies, which are an important factor in improving gross margins; 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; the impact of acquisitions; 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 for 2007 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
CONTACT: media, Jared Tipton of Cepheid Corporate Communications,
+1-408-400-8377, jared.tipton@cepheid.com, or investors, Jacquie Ross of
Cepheid Investor Relations, +1-408-400-8329, jacquie.ross@cepheid.com
Web site: http://www.cepheid.com/
