- Company Posts Quarterly EPS of $0.39, Total Revenues of $109.1 Million -
- For Full Year 2008, EPS Increase by 23%, Total Revenues by 17% -
- Company Generates $178.3 Million of Operating Cash in 2008 -
SAN DIEGO, Feb. 17 /PRNewswire-FirstCall/ -- Gen-Probe Incorporated today reported strong financial results for the fourth quarter and full year ended December 31, 2008, including quarterly earnings per share (EPS) of $0.39(1) and total revenues of $109.1 million.
“Gen-Probe posted strong financial results in the fourth quarter of 2008, driven by healthy growth in both clinical diagnostics and blood screening sales,” said Hank Nordhoff, the Company’s chairman and chief executive officer. “In addition, our fourth quarter performance completed an excellent 2008 that saw top- and bottom-line growth rates exceed our long-term goals.”
In the fourth quarter of 2008, product sales were $105.8 million, compared to $92.4 million in the prior year period, an increase of 15%. Total revenues for the fourth quarter of 2008 were $109.1 million, compared to $98.9 million in the prior year period, an increase of 10%. Net income in the fourth quarter of 2008 was $21.1 million ($0.39 per share), compared to $20.4 million ($0.37 per share) in the prior year period, an increase of 3% (5% per share). In the prior year period, both net income and EPS benefited from an income tax rate of approximately 22% that resulted mainly from the completion of an audit of the Company’s 2003 and 2004 California state income tax returns.
For the full year 2008, product sales were $429.2 million, compared to $370.9 million in the prior year, an increase of 16%. Total revenues for 2008 were $472.7 million, compared to $403.0 million in the prior year, an increase of 17%. Net income for 2008 was $107.0 million ($1.95 per share), compared to $86.1 million ($1.58 per share) in the prior year, an increase of 24% (23% per share). In the prior year, both net income and EPS benefited from an income tax rate of approximately 23% that resulted mainly from the item noted above and the completion of an audit of the Company’s 2003 and 2004 federal income tax returns, the benefit from which was recorded in the second quarter of 2007.
Detailed Results
Gen-Probe’s clinical diagnostics sales in the fourth quarter of 2008 reflected the continued growth of the APTIMA Combo 2(R) assay, an amplified nucleic acid test (NAT) for simultaneously detecting Chlamydia trachomatis (CT) and Neisseria gonorrhoeae (GC). Sales of this assay increased based on market share gains on both the Company’s semi-automated instrument platform and on the high-throughput, fully automated TIGRIS(R) system. Revenue from the PACE(R) product line, the Company’s non-amplified tests for the same microorganisms, declined in the fourth quarter compared to the prior year period, in line with Gen-Probe’s expectations.
In blood screening, product sales in the fourth quarter of 2008 benefited mainly from increased sales of the PROCLEIX(R) ULTRIO(R) assay. In contrast to the first three quarters of 2008, foreign exchange fluctuations had a negative effect of $0.1 million on blood screening growth in the fourth quarter compared to the prior year period. Chiron, a business unit of Novartis Vaccines and Diagnostics, markets the Company’s blood screening products worldwide.
Collaborative research revenues in the fourth quarter of 2008 were $2.1 million, compared to $5.4 million in the prior year period, a decrease of 61% that resulted primarily from the June 2008 termination of the Company’s collaboration with 3M to develop rapid tests for healthcare-associated infections. For the full year 2008, collaborative research revenues were $20.6 million, compared to $16.6 million in the prior year, an increase of 24% that resulted primarily from a $10 million milestone the Company earned from Chiron in the third quarter based on the full approval by the US Food and Drug Administration (FDA) of the PROCLEIX ULTRIO assay on the TIGRIS system.
Royalty and license revenues for the fourth quarter of 2008 were $1.3 million, compared to $1.1 million in the prior year period, an increase of 18%. For the full year 2008, royalty and license revenues were $22.9 million, compared to $15.5 million in the prior year, an increase of 48% that resulted primarily from revenue that was recorded in the first quarters of 2007 and 2008 associated with the settlement of Gen-Probe’s patent infringement litigation against Bayer (now Siemens Medical Solutions Diagnostics). Specifically, Gen-Probe recorded $10.3 million of revenue from this settlement in the first quarter of 2007, and a final payment of $16.4 million in the first quarter of 2008.
Gross margin on product sales in the fourth quarter of 2008 was 69.6%, compared to 69.2% in the prior year period. This increase resulted primarily from increased sales of blood screening products and APTIMA(R) assays. In the fourth quarter of 2008, gross margin on product sales was negatively affected by costs associated with the voluntary recall of certain AccuProbe(R) culture identification kits, which increased cost of product sales by $0.9 million and reduced gross margin on product sales by approximately 0.9%. For the full year 2008, gross margin on product sales was 70.2%, compared to 67.7% in the prior year. This increase resulted primarily from the factors discussed above.
Research and development (R&D) expenses in the fourth quarter of 2008 were $24.2 million, essentially unchanged from $24.3 million in the prior year period. For the full year 2008, R&D expenses were $101.1 million, compared to $97.1 million in the prior year, an increase of 4% that resulted primarily from costs associated with key development programs such as the post-marketing studies of the PROCLEIX ULTRIO assay in the United States, the investigational APTIMA human papillomavirus (HPV) assay, and Gen-Probe’s fully automated instrument system for low- and mid-volume labs, known as PANTHER.
Marketing and sales expenses in the fourth quarter of 2008 were $11.8 million, compared to $11.3 million in the prior year period, an increase of 4% that resulted primarily from European market development efforts related to the Company’s APTIMA Combo 2, APTIMA HPV and PROGENSA(TM) PCA3 assays. For the full year 2008, marketing and sales expenses were $45.9 million, compared to $39.9 million in the prior year, an increase of 15% that also resulted from European market development efforts.
General and administrative (G&A) expenses in the fourth quarter of 2008 were $13.8 million, compared to $12.3 million in the prior year period, an increase of 12% that resulted primarily from increased business development, legal and compensation costs. For the full year 2008, G&A expenses were $52.3 million, compared to $47.0 million in the prior year, an increase of 11% that resulted primarily from the factors described above.
Total other income in the fourth quarter of 2008 was $3.8 million, compared to $3.7 million in the prior year period, an increase of 3% that resulted primarily from higher short-term investment balances. For the full year 2008, total other income was $15.5 million, compared to $12.3 million in the prior year period, an increase of 26% that also resulted from higher short-term investment balances.
Gen-Probe continues to have a strong balance sheet. As of December 31, 2008, the Company had $505.2 million of cash, cash equivalents and short-term investments, and no debt. In the fourth quarter of 2008, the Company repurchased approximately 1.5 million shares of its common stock for $65 million. For the full year 2008, Gen-Probe generated net cash of $178.3 million from its operating activities, compared to the Company’s net income of $107.0 million.
2009 Financial Guidance
Gen-Probe provided its initial 2009 financial guidance via a press release issued on January 27, 2009.
“We expect 2009 to be another year of solid underlying earnings growth for Gen-Probe, although previously disclosed non-recurring items that added approximately $32 million of revenue and $0.34 of EPS will make comparisons to 2008 difficult,” said Herm Rosenman, the Company’s senior vice president of finance and chief financial officer.
Gen-Probe’s 2009 guidance excludes revenue and expense associated with the pending Tepnel acquisition, which is expected to close in the second quarter, as well as any incremental revenue from the PROCLEIX ULTRIO assay in the United States. For the full year 2009, the Company expects the following on a GAAP basis:
This guidance incorporates foreign exchange rate fluctuations approximately 10% higher and lower than recent levels. The Company recorded approximately $90 million of non-U.S.-dollar-denominated revenue in 2008.
Recent Events
Webcast Conference Call
A live webcast of Gen-Probe’s fourth quarter 2008 conference call for investors can be accessed at http://www.gen-probe.com beginning at 4:30 p.m. Eastern Time today. The webcast will be archived for at least 90 days. A telephone replay of the call also will be available for approximately 24 hours. The replay number is 800-873-5860 for domestic callers and 203-369-3996 for international callers.
About Gen-Probe
Gen-Probe Incorporated is a global leader in the development, manufacture and marketing of rapid, accurate and cost-effective nucleic acid tests (NATs) that are used primarily to diagnose human diseases and screen donated human blood. Gen-Probe has more than 25 years of NAT expertise, and received the 2004 National Medal of Technology, America’s highest honor for technological innovation, for developing NAT assays for blood screening. Gen-Probe is headquartered in San Diego and employs approximately 1,000 people. For more information, go to www.gen-probe.com.
Trademarks
AccuProbe, APTIMA, APTIMA COMBO 2, PACE and TIGRIS are trademarks of Gen-Probe. ULTRIO and PROCLEIX are trademarks of Novartis. All other trademarks are the property of their owners.
Caution Regarding Forward-Looking Statements
Any statements in this press release about our expectations, beliefs, plans, objectives, assumptions or future events or performance, including those under the heading “2009 Financial Guidance,” are not historical facts and are forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as believe, will, expect, anticipate, estimate, intend, plan and would. For example, statements concerning Gen-Probe’s financial condition, possible or expected results of operations, financial guidance, regulatory approvals, future milestone payments, growth opportunities, proposed acquisition of Tepnel Life Sciences, PLC, and plans and objectives of management are all forward-looking statements. Forward-looking statements are not guarantees of performance. They involve known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to differ materially from those expressed or implied. Some of these risks, uncertainties and assumptions include but are not limited to: (i) the risk that we may not achieve our expected 2009 growth, revenue, earnings or other financial targets, (ii) the possibility that the market for the sale of our new products, such as our TIGRIS system, APTIMA Combo 2 assay, PROCLEIX ULTRIO assay and PROGENSA PCA3 assay, may not develop as expected, (iii) the enhancement of existing products and the development of new products, including products, if any, to be developed under our recent industrial collaborations, may not proceed as planned, (iv) the risk that new products or indications may not be approved by regulatory authorities or become commercially available in the time frame we anticipate, or at all, (v) the risk that we may not be able to compete effectively, (vi) the risk that we may not be able to maintain our current corporate collaborations and enter into new corporate collaborations or customer contracts, (vii) the risk that our proposed acquisition of Tepnel may not be completed on the expected timeline, or at all, (viii) our dependence on Novartis, Siemens (as assignee of Bayer) and other third parties for the distribution of some of our products, (ix) our dependence on a small number of customers, contract manufacturers and single source suppliers of raw materials, (x) changes in third-party reimbursement policies regarding our products could adversely affect sales of our products, (xi) changes in government regulation affecting our diagnostic products could harm our sales and increase our development costs, (xii) the risk that our intellectual property may be infringed by third parties or invalidated, and (xiii) our involvement in patent and other intellectual property and commercial litigation could be expensive, could divert management’s attention, and could interfere with our ability to develop and distribute products. The foregoing list sets forth some, but not all, of the factors that could affect our ability to achieve results described in any forward-looking statements. For additional information about risks and uncertainties we face and a discussion of our financial statements and footnotes, see documents we file with the SEC, including our most recent annual report on Form 10-K and all subsequent periodic reports. We assume no obligation and expressly disclaim any duty to update forward-looking statements to reflect events or circumstances after the date of this news release or to reflect the occurrence of subsequent events.
(1) In this press release, all per share amounts are calculated on a fully diluted basis, and all results are presented in US GAAP. Some totals may not foot due to rounding.
CONTACT: Michael Watts, Vice president, investor relations and corporate
communications of Gen-Probe Incorporated, +1-858-410-8673
Web site: http://www.gen-probe.com/
