WALTHAM, Mass., Nov. 2 /PRNewswire-FirstCall/ -- Inverness Medical Innovations, Inc. , a leading manufacturer and marketer of rapid diagnostic products for the consumer and professional markets, today announced its financial results for the quarter and the nine months ended September 30, 2005.
For the third quarter of 2005, Inverness Medical Innovations reported adjusted cash basis net loss of $2.9 million, or $0.11 per diluted share compared to adjusted cash basis net income of $1.3 million, or $0.06 per share, in the third quarter of 2004. The net loss available to common stockholders prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) was $6.6 million, or $0.25 per common share, in the third quarter of 2005 compared to a net loss available to common stockholders of $2.9 million, or $0.14 per common share, for the third quarter of 2004.
The Company’s GAAP results for the third quarter of 2005 include amortization of $3.2 million, a $0.7 million charge associated with our previously announced decision to close one of our manufacturing facilities and a $0.1 million write off of deferred debt origination costs, and its GAAP results for the third quarter of 2004 include amortization of $2.7 million and a charge of $1.7 million in the third quarter of 2004 related to a work force reduction at one of our manufacturing facilities. These amounts, net of tax, have been excluded from the adjusted cash basis net loss or income per common share for the respective quarters.
In the third quarter of 2005, the Company recorded net revenues of $106.3 million compared to net revenues of $96.7 million in the third quarter of 2004. The revenue increase was due to increased sales in our Professional Diagnostic segment contributed by Binax, Inc., which we acquired on March 31, 2005 and the Determine business, acquired on June 30, 2005, as well as an increase in royalty revenues principally relating to the impact of the ongoing royalty earned during the quarter from our settlement with Quidel.
For the nine months ended September 30, 2005, the Company reported an adjusted cash basis net income of $2.4 million, or $0.10 per diluted share, compared to adjusted cash basis net loss of $0.3 million, or $0.01 per share, in the nine months ended September 30, 2004. The net loss available to common stockholders prepared in accordance with GAAP was $11.9 million, or $0.51 per common share, for the nine months ended September 30, 2005 compared to a net loss available to common stockholders of $13.7 million, or $0.69 per common share, in the nine months ended September 30, 2004.
The Company’s GAAP results for the first nine months of 2005 include amortization of $8.9 million, a $4.2 million charge associated with our previously announced decision to close one of our manufacturing facilities, a $1.6 million non-recurring charge for a product recall and a $0.1 million write off of deferred debt origination costs, compared to amortization of $7.7 million, a charge of $1.7 million included in cost of sales in the third quarter of 2004 related to a work force reduction at one of our manufacturing facilities, a $3.8 million write off of deferred debt origination costs and non-cash discounts and redemption interest related to redeemable convertible preferred stock of $749,000 in the first nine months of 2004. These amounts have been excluded from the adjusted cash basis net loss or income per common share for the respective periods.
Net revenues for the nine months ended September 30, 2005 were $300.5 million compared to net revenues of $276.9 million for nine months ended September 30, 2004.
A detailed reconciliation of the Company’s adjusted cash basis net income or loss, which is a non-GAAP financial measure, to net income or 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 10:00 a.m. (Eastern Time) today, November 2, 2005, 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 can be accessed by dialing 973-935-2401 (domestic and international), an access code is not required, or via a link on the Inverness website at http://www.invernessmedical.com. It is also available via link at http://orion.calleci.com/servlet/estreamgetevent?id=6086&folder=webstream using Real Player or via link at http://orion.calleci.com/servlet/estreamgetevent?id=6088&folder=webstream using Windows Media. A telephone replay of the call will be available by dialing 973-341-3080 (domestic and international) with an access code of 6229724. That replay will be available until 12:00 midnight (Eastern Time) on November 5, 2005. An on demand webcast of the call will be available at the Inverness website (http://www.invernessmedical.com/News.cfm) two hours after the end of the call and will be accessible for 12 months. 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 same website beginning shortly before the conference call and will continue to be available on this website for 12 months.
For more information about Inverness Medical Innovations, please visit our website at http://www.invernessmedical.com.
Inverness Medical Innovations is a leading global developer of advanced diagnostic devices and is presently exploring new opportunities for its proprietary electrochemical and other technologies in a variety of professional diagnostic and consumer-oriented applications including immuno- diagnostics with a focus on women’s health and cardiology. The Company’s new product development efforts, as well as its position as a leading supplier of consumer pregnancy and fertility/ovulation tests and rapid point-of-care diagnostics, are supported by the strength of its intellectual property portfolio. The Company is headquartered in Waltham, Massachusetts.
Contact: Doug Guarino Director of Corporate Relations 781-647-3900 Christopher Lindop Chief Financial Officer Inverness Medical Innovations, Inc. and Subsidiaries Condensed Consolidated Statements of Operations and Reconciliation to Non-GAAP Adjusted Cash Basis Amounts (in $000s, except per share amounts) Three Months Ended September 30, 2005 Non-GAAP Adjusted Non-GAAP Cash GAAP Adjustments Basis (a) Net revenues $106,294 $- $106,294 Cost of sales 66,659 (2,571) (b)(c) 4,088 Gross profit 39,635 2,571 42,206 Gross margin 37% 40% Operating expenses: Research and development 7,996 (477) (b)(c) 7,519 Selling, general and administrative 32,061 (800) (b)(c) 31,261 Total operating expenses 40,057 (1,277) 38,780 Operating income (422) 3,848 3,426 Interest and other income (expense), net (5,162) 100 (d) (5,062) Income tax provision 988 296 (e) 1,284 Net (loss) income $(6,572) $3,652 $(2,920) Non-cash amortization of discounts and dividends on preferred stock - - Net (loss) income available to common stockholders - basic and diluted $(6,572) $(2,920) Net (loss) income per common share: Basic $(0.25) $(0.11) Diluted $(0.25)(f) $(0.11)(f) Weighted average shares - basic 25,951 25,951 Weighted average shares - diluted 25,951 (f) 25,951(f) Three Months Ended September 30, 2004 Non-GAAP Adjusted GAAP Non-GAAP Cash Restated Adjustments Basis(a) Net revenues $96,677 $- $96,677 Cost of sales 58,961 (3,069) (b)(c) 55,892 Gross profit 37,716 3,069 40,785 Gross margin 39% 42% Operating expenses: Research and development 7,850 (238) (c) 7,612 Selling, general and administrative 27,877 (1,131) (c) 26,746 Total operating expenses 35,727 (1,369) 34,358 Operating income 1,989 4,438 6,427 Interest and other income (expense), net (3,667) - (3,667) Income tax provision 1,202 294 (e) 1,496 Net (loss) income $(2,880) $4,144 $1,264 Non-cash amortization of discounts and dividends on preferred stock - - - Net (loss) income available to common stockholders - basic and diluted $(2,880) $1,264 Net (loss) income per common share: Basic $(0.14) $0.06 Diluted $(0.14) $0.06(g) Weighted average shares - basic 20,296 20,296 Weighted average shares - diluted 20,296(f) 578 (g) 20,874(g) (a) In calculating net income or loss on an adjusted cash basis, the Company excludes from net income or loss (i) non-cash charges including amortization expense, (ii) non-recurring charges and income, and (iii) certain other charges and income that have a significant positive or negative impact on results yet do not occur on a consistent or regular basis in its business. In determining whether a particular item meets one of these criteria, management considers facts and circumstances that it believes are relevant. Due to the frequency of their occurrence in its business, the Company does not adjust net income for the costs associated with litigation including payments made or received through settlements. Management believes that excluding such charges and income from income or loss allows investors and management to evaluate and compare the Company’s operating results from continuing operations from period to period in a meaningful and consistent manner. It should be noted that “net income or loss on an adjusted cash basis” is not a standard financial measurement under accounting principles generally accepted in the United States of America (“GAAP”) and should not be considered as an alternative to net income or loss or cash flow from operating activities, as a measure of liquidity or as an indicator of operating performance or any measure of performance derived in accordance with GAAP. (b) Restructuring charge of $0.7 million associated with the decision to close a manufacturing facility in the second quarter of 2005 , including $0.6 million charged to cost of sales and $0.1 million charged to selling, general and administrative expense in the third quarter of 2005 GAAP results and a charge of $1.7 million included in cost of sales in the third quarter of 2004 related to a work force reduction at one of our manufacturing facilities, which constitute charges having a significant negative impact on results yet not occurring on a consistent or regular basis in our business. (c) Amortization expense of $3.2 million and $2.7 million in the third quarter of 2005 and 2004 GAAP results, respectively, including $2.0 million and $1.3 million charged to cost of sales, $0.5 million and $0.2 million charged to research and development and $0.7 million and $1.2 million charged to selling, general and administrative expense in the respective quarters. (d) Write off of debt origination costs upon early extinguishment of related debt, which constitutes a charge having a significant negative impact on results yet does not occur on a consistent or regular basis in our business. (e) Tax effect on adjustments as discussed above in notes (b), (c) and (d). (f) For the three months ended September 30, 2005 and 2004, potential diluted shares were not used in the calculation of diluted loss per share under GAAP because inclusion thereof would be antidilutive. (g) Included in the weighted average dilutive common shares for the calculation of net income or loss per common share for the three months ended September 30, 2004 are dilutive shares consisting of 578,000 common stock equivalent shares from the potential exercise of stock options and warrants. Inverness Medical Innovations, Inc. and Subsidiaries Condensed Consolidated Statements of Operations and Reconciliation to Non-GAAP Adjusted Cash Basis Amounts (in $000s, except per share amounts) Nine Months Ended September 30, 2005 Non-GAAP Adjusted Non-GAAP Cash GAAP Adjustments Basis (a) Net revenues $300,485 $300 (b) $300,785 Cost of sales 193,948 (10,175) (b) 183,773 (c) (d) Gross profit 106,537 10,475 117,012 Gross margin 35% 39% Operating expenses: Research and development 20,588 (1,952)(c)(d) 18,636 Selling, general and administrative 97,114 (2,256)(c)(d) 94,858 Total operating expenses 117,702 (4,208) 113,494 Operating income (11,165) 14,683 3,518 Interest and other income (expense), net 4,649 100 (e) 4,749 Income tax provision 5,355 538 (f) 5,893 Net (loss) income $(11,871) $14,245 $2,374 Non-cash amortization of discounts and dividends on preferred stock - - Net (loss) income available to common stockholders - basic and diluted $(11,871) $2,374 Net (loss) income per common share: Basic $(0.51) $0.10 Diluted $(0.51) $0.10 (i) Weighted average shares - basic 23,358 23,358 Weighted average shares - diluted 23,358 1,408 (i) 24,766 (i) Inverness Medical Innovations, Inc. and Subsidiaries Condensed Consolidated Statements of Operations and Reconciliation to Non-GAAP Adjusted Cash Basis Amounts (in $000s, except per share amounts) Nine Months Ended September 30, 2004 Non-GAAP Adjusted Non-GAAP Cash GAAP Adjustments Basis (a) Net revenues $276,928 $- $276,928 Cost of sales 166,687 (5,850)(c)(d) 160,837 Gross profit 110,241 5,850 116,091 Gross margin 40% 42% Operating expenses: Research and development 23,265 (489) (d) 22,776 Selling, general and administrative 81,346 (3,064) (d) 78,282 Total operating expenses 104,611 (3,553) 101,058 Operating income 5,630 9,403 15,033 Interest and other income (expense), net (15,502) 3,788 (e) (11,714) Income tax provision 3,124 461 (f) 3,585 Net (loss) income $(12,996) $12,730 $(266) Non-cash amortization of discounts and dividends on preferred stock (749) 749 (h) - (h) Net (loss) income available to common stockholders - basic and diluted $(13,745) $(266) Net (loss) income per common share: Basic $(0.69) $(0.01) Diluted $(0.69) (g) $(0.01)(g) Weighted average shares - basic 19,813 19,813 Weighted average shares - diluted 19,813 (g) 19,813 (g) (a) In calculating net income or loss on an adjusted cash basis, the Company excludes from net income or loss (i) non-cash charges including amortization expense, (ii) non-recurring charges and income, and (iii) certain other charges and income that have a significant positive or negative impact on results yet do not occur on a consistent or regular basis in its business. In determining whether a particular item meets one of these criteria, management considers facts and circumstances that it believes are relevant. Due to the frequency of their occurrence in its business, the Company does not adjust net income for the costs associated with litigation including payments made or received through settlements. Management believes that excluding such charges and income from income or loss allows investors and management to evaluate and compare the Company’s operating results from continuing operations from period to period in a meaningful and consistent manner. It should be noted that “net income or loss on an adjusted cash basis” is not a standard financial measurement under accounting principles generally accepted in the United States of America (“GAAP”) and should not be considered as an alternative to net income or loss or cash flow from operating activities, as a measure of liquidity or as an indicator of operating performance or any measure of performance derived in accordance with GAAP. (b) Product recall charge of $1.6 million in 2005, including $1.3 million charged to cost of sales in the 2005 GAAP results, which constitutes a charge having a significant negative impact on results yet does not occur on a consistent or regular basis in our business. (c) Restructuring charge of $4.2 million associated with the decision to close a manufacturing facility in 2005, including $3.5 million charged to cost of sales, $0.4 million charge to research and development and $0.3 million charged to selling, general and administrative expense in the second quarter of 2005 GAAP results and a charge of $1.7 million included in cost of sales in the second quarter of 2004 related to a work force reduction at one of our manufacturing facilities, which constitute charges having a significant negative impact on results yet not occurring on a consistent or regular basis in our business. (d) Amortization expense of $8.9 million and $7.7 million in the 2005 and 2004 GAAP results, respectively, including $5.4 million and $4.1 million charged to cost of sales, $1.6 million and $0.5 million charged to research and development and $1.9 million and $3.1 million charged to selling, general and administrative expense in the respective periods. (e) Write off of debt origination costs upon early extinguishment of related debt, which constitutes a charge having a significant negative impact on results yet does not occur on a consistent or regular basis in our business. (f) Tax effect on adjustments as discussed above in notes (b), (c), (d) and (e). (g) For 2004, potential diluted shares were not used in the calculation of diluted loss per share under GAAP because inclusion thereof would be antidilutive. (h) In addition to the non-cash and non-recurring and other charges or income listed above, the diluted net income or loss per common share on an adjusted cash basis excludes amortization of non-cash discounts and redemption interest on preferred stock which are included in net income or loss per common share calculated in accordance with GAAP. There were no charges for non-cash discounts and redemption interest on preferred stock during the three months ended March 31, 2005. The charges for non-cash discounts and redemption interest on preferred stock that are excluded above totaled $749,000, or $0.04 per dilutive common share, for the three months ended March 31, 2004. Because all issued preferred stock have been converted into common stock on January 14, 2004, such shares have been included in basic and diluted weighted average share calculations subsequent to that date. There will be no amortization of non-cash discounts and redemption interest in future periods, that would reduce net income or increase net loss available to common stockholders. (i) Included in the weighted average dilutive common shares for the calculation of net income or loss per common share for 2005 are dilutive shares consisting of 1,322,000 common stock equivalent shares from the potential exercise of stock options and warrants and 76,000 shares held in escrow. Inverness Medical Innovations, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (in $000s) September 30, December 31, 2005 2004 ASSETS CURRENT ASSETS: Cash and cash equivalents $29,973 $16,756 Accounts receivable, net 72,885 61,347 Inventories 72,967 61,234 Prepaid expenses and other current assets 16,715 12,420 Total current assets 192,540 151,757 PROPERTY, PLANT AND EQUIPMENT, NET 71,722 66,780 GOODWILL AND OTHER INTANGIBLE ASSETS, NET 511,155 339,704 DEFERRED FINANCING COSTS AND OTHER ASSETS, NET 27,203 10,028 Total assets $802,620 $568,269 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Current portion of notes payable $2,934 $555 Other current liabilities 117,486 88,587 Total current liabilities 120,420 89,142 LONG-TERM LIABILITIES: Notes payable, net of current portion 244,663 190,669 Other long-term liabilities 32,358 17,042 Total long-term liabilities 277,021 207,711 REDEEMABLE CONVERTIBLE PREFERRED STOCK - - TOTAL STOCKHOLDERS’ EQUITY 405,179 271,416 Total liabilities and stockholders’ equity $802,620 $568,269
Inverness Medical Innovations, Inc.
CONTACT: Doug Guarino, Director of Corporate Relations, +1-781-647-3900,or Christopher Lindop, Chief Financial Officer, both of Inverness MedicalInnovations, Inc.