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Alere Inc. Announces Fourth Quarter 2012 Results
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WALTHAM, Mass., Feb. 15, 2013 /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 information solutions, today announced its financial results for the quarter ended December 31, 2012.

Financial results for the fourth quarter of 2012:

The Company's GAAP results for the fourth quarter of 2012 exclude $0.8 million of revenue associated with acquired software license contracts that are not recognized due to business combination accounting rules and include amortization of $105.1 million, $10.3 million of restructuring charges, $3.8 million of stock-based compensation expense, $3.6 million of acquisition-related costs recorded in accordance with ASC 805, Business Combinations,$10.2 million of expense recorded for fair value adjustments to acquisition-related contingent consideration, $1.0 million of interest expense recorded in connection with fees paid for certain debt modifications, and $23.2 million of expense associated with the extinguishment of debt. The Company's GAAP results for the fourth quarter of 2011 exclude $1.5 million of revenue associated with acquired software license contracts that are not recognized due to business combination accounting rules and include amortization of $80.9 million, $8.8 million of restructuring charges, $4.9 million of stock-based compensation expense, a $6.0 million non-cash charge associated with acquired inventory in connection with the acquisition of Axis-Shield plc, $5.3 million of acquisition-related costs recorded in accordance with ASC 805, Business Combinations, a $383.6 million non-cash charge associated with the impairment of goodwill in our Health Information Solutions segment and $1.3 million of interest expense recorded in connection with fees paid for certain debt modifications, offset by $4.4 million of income recorded for fair value adjustments to acquisition-related contingent consideration, a realized foreign currency gain of $5.4 million associated with a bank account funded for the acquisition of Axis-Shield plc and a $0.5 million gain associated with previously-owned shares of Axis-Shield plc recorded in connection with the completion of the acquisition during the quarter. These amounts, net of tax, have been excluded from the non-GAAP adjusted net income per diluted common share attributable to Alere Inc. for the respective quarters.

Detailed reconciliations of the Company's non-GAAP adjusted operating income and non-GAAP adjusted net income available to common shareholders to operating income and net loss available to common shareholders under GAAP, as well as a discussion regarding these non-GAAP financial measures, 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, February 15, 2013, 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 mattersdiscussed during the conference call, may contain or constitute information that has not been previously disclosed.

The conference call may be accessed by dialing (877) 270-2148 (domestic) or (412) 902-6510 (international) and asking for Alere Inc. A webcast of the call can also be accessed via the Alere web site 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 one hour 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 10025060. The replay will also be available via online webcast at http://www.videonewswire.com/event or via the Alere web site 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 web site (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 web site.

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

By developing new capabilities in near-patient diagnosis, monitoring and health information solutions, 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 and diabetes. Alere is headquartered in Waltham, Massachusetts.

Alere Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)










Three Months Ended December 31,




2012


2011







Net product sales and services revenue


$ 738,520


$ 645,359

License and royalty revenue


17,243


5,750


Net revenue


755,763


651,109

Cost of net revenue


381,895


310,171


Gross profit


373,868


340,938


Gross margin


49%


52%







Operating expenses:






Research and development


62,992


37,503


Selling, general and administrative


309,888


264,656


Goodwill impairment charge


-


383,612


Total operating expenses


372,880


685,771


Operating income (loss)


988


(344,833)

Interest and other income (expense), net


(84,054)


(42,417)


Loss before benefit for income taxes


(83,066)


(387,250)

Benefit for income taxes


(17,698)


(19,800)


Loss before equity earnings of unconsolidated entities, net of tax


(65,368)


(367,450)

Equity earnings of unconsolidated entities, net of tax


2,828


3,602

Net loss


(62,540)


(363,848)


Less: Net income attributable to non-controlling interests


138


73

Net loss attributable to Alere Inc. and Subsidiaries


(62,678)


(363,921)








Preferred stock dividends


(5,353)


(5,367)







Net loss available to common stockholders


$ (68,031)


$ (369,288)








Net loss per common share - basic and diluted


$ (0.84)


$ (4.67)







Weighted average shares - basic and diluted


80,872


79,034

Alere Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)










Year Ended December 31,




2012


2011







Net product sales and services revenue


$ 2,790,249


$ 2,363,054

License and royalty revenue


28,576


23,473


Net revenue


2,818,825


2,386,527

Cost of net revenue


1,390,503


1,140,692


Gross profit


1,428,322


1,245,835


Gross margin


51%


52%







Operating expenses:






Research and development


183,001


150,165


Selling, general and administrative


1,136,189


964,913


Goodwill impairment charge


-


383,612


Total operating expenses


1,319,190


1,498,690


Operating income (loss)


109,132


(252,855)

Interest and other income (expense), net


(230,603)


86,808


Loss before benefit for income taxes


(121,471)


(166,047)

Benefit for income taxes


(30,319)


(24,214)


Loss before equity earnings of unconsolidated entities, net of tax


(91,152)


(141,833)

Equity earnings of unconsolidated entities, net of tax


13,245


8,524


Net loss


(77,907)


(133,309)


Less: Net income attributable to non-controlling interests


275


233

Net loss attributable to Alere Inc. and Subsidiaries


(78,182)


(133,542)








Preferred stock dividends


(21,293)


(22,049)


Preferred stock repurchase


-


23,936







Net loss available to common stockholders


$ (99,475)


$ (131,655)








Net loss per common share - basic and diluted


$ (1.23)


$ (1.58)







Weighted average shares - basic and diluted


80,587


83,128

Alere Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands)






December 31,


December 31,


2012


2011

ASSETS




CURRENT ASSETS:




Cash and cash equivalents

$ 328,346


$ 299,173

Restricted cash

3,076


8,987

Marketable securities

904


1,086

Accounts receivable, net

524,332


475,824

Inventories, net

337,121


320,269

Prepaid expenses and other current assets

326,209


188,388

Total current assets

1,519,988


1,293,727





PROPERTY, PLANT AND EQUIPMENT, NET

534,469


491,205

GOODWILL AND OTHER INTANGIBLE ASSETS, NET

4,919,081


4,676,742

DEFERRED FINANCING COSTS AND OTHER ASSETS, NET

207,641


211,027

Total assets

$ 7,181,179


$ 6,672,701





LIABILITIES AND STOCKHOLDERS' EQUITY




CURRENT LIABILITIES:




Short-term debt and current portion of long-term debt

$ 66,916


$ 73,415

Other current liabilities

720,281


551,037

Total current liabilities

787,197


624,452





LONG-TERM LIABILITIES:




Long-term debt, net of current portion

3,641,592


3,280,080

Deferred tax liability

403,051


380,700

Other long-term liabilities

166,635


153,398

Total long-term liabilities

4,211,278


3,814,178





Redeemable non-controlling interest

-


2,497





TOTAL EQUITY

2,182,704


2,231,574

Total liabilities and equity

$ 7,181,179


$ 6,672,701

Alere Inc. and Subsidiaries

Reconciliation to Non-GAAP Adjusted Operating Results

(in thousands, except per share amounts)






Three Months Ended December 31,


2012


2011

Reconciliation to Non-GAAP Adjusted Operating Income (1)




Operating income (loss)

$ 988


$ (344,833)





Adjustment related to acquired software license contracts (1)

783


1,452

Amortization of acquisition-related intangible assets

104,941


80,653

Restructuring charges

10,193


8,656

Stock-based compensation expense

3,796


4,940

Goodwill impairment charge

-


383,612

Acquisition-related costs

3,575


5,273

Fair value adjustments to acquisition-related contingent consideration

10,174


(4,406)

Non-cash charge associated with acquired inventory

-


6,010





Non-GAAP adjusted operating income

$ 134,450


$ 141,357






Three Months Ended December 31,


2012


2011

Reconciliation to Non-GAAP Adjusted Net Income(1)




Net loss available to common stockholders

$ (68,031)


$ (369,288)





Adjustment related to acquired software license contracts (1)

783


1,452

Amortization of acquisition-related intangible assets

105,127


80,932

Restructuring charges

10,312


8,731

Stock-based compensation expense

3,796


4,940

Goodwill impairment charge

-


383,612

Acquisition-related costs

3,575


5,273

Fair value adjustments to acquisition-related contingent consideration

10,174


(4,406)

Realized foreign currency gain associated with a bank account funded for the acquisition of Axis-Shield plc

-


(5,408)

Gain related to previously-owned shares of Axis-Shield plc recorded in connection with the completion of the acquisition during the fourth quarter of 2011.

-


(465)

Non-cash charge associated with acquired inventory

-


6,010

Interest expense recorded in connection with fees paid for certain debt modifications and the termination of our senior secured credit facility and related interest rate swap agreement

991


1,320

Expense associated with extinguishment of debt

23,235


-

Income tax effects on items above

(43,656)


(54,164)





Non-GAAP adjusted net income available to common stockholders

$ 46,306


$ 58,539









Net income (loss) per diluted common share

$ (0.84)


$ 0.74

Non-GAAP adjusted net income per diluted common share

$ 0.55


$ 0.70





Weighted average shares - diluted

80,872


79,034

Non-GAAP adjusted weighted average shares - diluted

94,747


92,952





(1)In calculating "non-GAAP adjusted operating income" and "non-GAAP adjusted net income", the Company excludes (i) certain non-cash charges, including amortization expense and stock-based compensation 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. Management believes that excluding such charges and income from operating income and net 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. Due to the frequency of their occurrence in its business, the Company does not adjust operating income or net income or loss for the costs associated with litigation, including payments made or received through settlements. It should be noted that "non-GAAP adjusted operating income" and "non-GAAP adjusted net income" are not standard financial measurements under accounting principles generally accepted in the United States of America ("GAAP") and should not be considered as an alternative to operating income and 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. In addition, all companies do not calculate non-GAAP financial measures in the same manner and, accordingly, "non-GAAP adjusted operating income" and "non-GAAP adjusted net income" presented in this press release may not be comparable to similar measures used by other companies.

Alere Inc. and Subsidiaries

Reconciliation to Non-GAAP Adjusted Operating Results

(in thousands, except per share amounts)






Year Ended December 31,


2012


2011

Reconciliation to Non-GAAP Adjusted Operating Income (1)




Operating income (loss)

$ 109,132


$ (252,855)





Adjustment related to acquired software license contracts (1)

4,100


1,452

Amortization of acquisition-related intangible assets

347,108


307,859

Restructuring charges

20,325


28,282

Stock-based compensation expense

15,665


21,215

Goodwill impairment charge

-


383,612

Acquisition-related costs

9,669


11,464

Fair value adjustments to acquisition-related contingent consideration

(6,608)


(14,090)

Non-cash charge associated with acquired inventory

4,681


6,010

Fair value write-down in connection with an idle facility

-


596

Expenses incurred in connection with the sale of our vitamin and nutritional supplements business

-


23





Non-GAAP adjusted operating income

$ 504,072


$ 493,568






Year Ended December 31,


2012


2011

Reconciliation to Non-GAAP Adjusted Net Income(1)




Net loss available to common stockholders

$ (99,475)


$ (131,655)





Adjustment related to acquired software license contracts

4,100


1,452

Amortization of acquisition-related intangible assets

347,976


309,264

Restructuring charges

20,602


28,563

Stock-based compensation expense

15,665


21,215

Goodwill impairment charge

-


383,612

Acquisition-related costs

9,669


11,464

Fair value adjustments to acquisition-related contingent consideration

(6,608)


(14,090)

Interest expense recorded in connection with fees paid for certain debt modifications and the termination of our senior secured credit facility and related interest rate swap agreement

4,951


32,533

Expense associated with extinguishment of debt

23,235


-

Non-cash charge associated with acquired inventory

4,681


6,010

Gain in connection with the formation of a joint venture

-


(288,896)

Realized foreign currency gain associated with a bank account funded for the acquisition of Axis-Shield plc

-


12,641

Realized foreign currency loss associated with the settlement of an acquisition-related contingent consideration obligation

-


1,920

Fair value write-down in connection with an idle facility

-


596

Expenses incurred in connection with the sale of our vitamin and nutritional supplements business

-


23

Gain related to previously-owned shares of Axis-Shield plc recorded in connection with the completion of the acquisition during the fourth quarter of 2011.

-


(465)

Non-cash income allocated to net income available to common stockholders as a result of repurchases of preferred shares

-


(23,936)

Income tax effects on items above

(136,684)


(136,347)





Non-GAAP adjusted net income available to common stockholders

$ 188,112


$ 213,904









Net income (loss) per diluted common share

$ (1.23)


$ 2.57

Non-GAAP adjusted net income per diluted common share

$ 2.25


$ 2.44





Weighted average shares - diluted

80,587


83,128

Non-GAAP adjusted weighted average shares - diluted

94,572


98,079





(1)In calculating "non-GAAP adjusted operating income" and "non-GAAP adjusted net income", the Company excludes (i) certain non-cash charges, including amortization expense and stock-based compensation 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. Management believes that excluding such charges and income from operating income and net 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. Due to the frequency of their occurrence in its business, the Company does not adjust operating income or net income or loss for the costs associated with litigation, including payments made or received through settlements. It should be noted that "non-GAAP adjusted operating income" and "non-GAAP adjusted net income" are not standard financial measurements under accounting principles generally accepted in the United States of America ("GAAP") and should not be considered as an alternative to operating income and 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. In addition, all companies do not calculate non-GAAP financial measures in the same manner and, accordingly, "non-GAAP adjusted operating income" and "non-GAAP adjusted net income" presented in this press release may not be comparable to similar measures used by other companies.



















Alere Inc. and Subsidiaries



Selected Consolidated Revenues by Business Area (1)



(in thousands)

















Professional Diagnostics Segment










% Change


% Change



Q4 2012


YTD 2012



Q4 2011


YTD 2011


Q4 12 v. Q4 11


YTD 12 v. YTD 11

Cardiology

$ 116,740


$ 503,534



$ 128,094


$ 518,746


-9%


-3%

Infectious disease

190,552


615,950



159,424


564,983


20%


9%

Toxicology

149,525


587,261



119,375


387,209


25%


52%

Diabetes

43,813


144,441



14,960


14,960


193%


866%

Other (1)

83,510


314,030



74,068


250,274


13%


25%


Professional diagnostics net product sales and services revenue (1)

584,140


2,165,216



495,921


1,736,172


18%


25%

License and royalty revenue

15,843


24,676



5,750


20,337


176%


21%


Professional diagnostics net revenue

$ 599,983


$ 2,189,892



$ 501,671


$ 1,756,509


20%


25%





























Health Information Solutions Segment










% Change


% Change



Q4 2012


YTD 2012



Q4 2011


YTD 2011


Q4 12 v. Q4 11


YTD 12 v. YTD 11

Disease and case management

$ 53,101


$ 218,378



$ 55,820


$ 237,938


-5%


-8%

Wellness

23,753


104,634



24,499


104,868


-3%


0%

Women's & children's health

30,039


120,259



28,737


114,287


5%


5%

Patient self-testing services

24,077


92,151



16,892


77,421


43%


19%


Health information solutions net revenue

$ 130,970


$ 535,422



$ 125,948


$ 534,514


4%


0%















(1)Revenues are presented in accordance with Generally Accepted Accounting Principles and exclude an adjustment of $0.8 and $1.5 in revenue related to acquired software license contracts which were not recognized during the three months ended December 31, 2012 and 2011, respectively, and $4.1 and $1.5 during the year ended December 31, 2012 and 2011, respectively, due to business combination accounting rules.



SOURCE Alere Inc.

RELATED LINKS

http://www.alere.com

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