SUNNYVALE, Calif., July 24 /PRNewswire-FirstCall/ -- Cepheid today reported revenue for the second quarter of 2008 of $42.1 million, an increase of 55% over the second quarter of fiscal 2007. Net loss was $7.5 million, or $(0.13) per share, which compares to revenue of $27.2 million and a net loss of $5.2 million, or $(0.10) per share, in the second quarter of fiscal 2007.
Excluding amortization of purchased intangible assets and stock compensation expenses, non-GAAP net loss for the second quarter was $3.5 million, or $(0.06) per share. This compares to a non-GAAP net loss of $2.7 million, or $(0.05) per share, in the second quarter of fiscal 2007.
“We are continuing to see rapid development of the Healthcare Associated Infection (HAI) market as sales for our Xpert(TM) MRSA test increased by 35% from the first quarter reaching approximately $11 million,” said John Bishop, Cepheid’s Chief Executive Officer. “Providing the fastest time-to-result in the industry, our GeneXpert(R) System continues to be the HAI molecular platform of choice, resulting in year-over-year growth in our clinical business of 186% for the first half of 2008.”
“While our core clinical product laboratory sales grew to record levels in the second quarter, non-core clinical sales of products to other companies were below our expectations and we expect non-core clinical sales of products to other companies to continue to be below our expectations for the remainder of 2008,” continued Bishop. “Our gross margin on product sales was also below our expectations as a result of a problem in the production of a cartridge part. Given that this was occurring with high volume production at an incidence rate of less than 1%, this could have taken an extended period to find and resolve. However, our operations team did an outstanding job in quickly finding the cause and correcting the problem with no impact on product availability. We expect our product gross margin to return to first quarter levels in the current third quarter.”
Excluding biothreat revenue to the US Postal Service, North America sales increased 121% when compared to the same quarter a year ago.
Accessing Cepheid’s Q208 Earnings Conference Call
The company will host a management presentation at 1:30 p.m. Pacific Time on Thursday, July 24, 2008 to discuss the results. To access the live webcast, please visit Cepheid’s website at http://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 866-825-1692 (domestic) or 617-213-8059 (international), and entering participant code 92219619. A replay will be available for seven days beginning at 3:30 p.m. Pacific Time. Access numbers for this replay are 888-286-8010 (domestic) and 617-801-6888 (international), with participant code 37466812.
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. 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) to its results of operations.
Amortization of purchased intangible assets. The Company incurs amortization of purchased intangible assets in connection with acquisitions and investments. 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.
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, 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: 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 level of testing for MRSA and other 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 licenses for new 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.
CONTACT: media, Jared Tipton, Corporate Communications, +1-408-400-8377,
jared.tipton@cepheid.com, or investors, Jacquie Ross, Investor Relations,
+1-408-400-8329, jacquie.ross@cepheid.com, both of Cepheid
Web site: http://www.cepheid.com/
