WALTHAM, Mass., April 28 /PRNewswire-FirstCall/ -- Inverness
Medical Innovations, Inc. (NYSE: IMA), a global leader in enabling
individuals to take charge of their health at home through the
merger of rapid diagnostics and health management, today announced
its financial results for the quarter ended March 31, 2010.
Financial results for the first quarter of 2010:
- Net revenue of $515.3 million for
the first quarter of 2010, compared to $425.2 million for the first quarter of
2009.
- Recent professional diagnostics acquisitions contributed
$54.1 million of incremental net
revenue, compared to the first quarter of 2009.
- North American influenza sales totaled $2.3 million for the first quarter of 2010,
compared to $6.4 million for the
first quarter of 2009 and $39.7
million in the fourth quarter of 2009.
- GAAP net income of $9.0 million
available to common stockholders of Inverness Medical Innovations,
Inc. and respective net income per diluted common share of
$0.10, compared to GAAP net income of
$0.7 million available to common
stockholders of Inverness Medical Innovations, Inc. and respective
net income per diluted common share $0.01, for the first quarter of 2009.
- Adjusted cash basis net income per diluted common share from
continuing operations of $0.64,
compared to adjusted cash basis net income per diluted common share
from continuing operations of $0.62,
for the first quarter of 2009.
- Gain of $19.6 million, net of
costs to dispose ($12.0 million, net
of tax) resulting from the disposition of our Nutritionals business
has been included in the first quarter of 2010 income from
discontinued operations.
The Company's GAAP results for the first quarter of 2010 include
amortization of $72.1 million,
$8.0 million of restructuring
charges, $7.6 million of stock-based
compensation expense, a $2.8 million
charge associated with the write-up to fair market value of
inventory acquired in connection with the acquisition of Standard
Diagnostics, Inc., $4.0 million of
acquisition-related costs recorded in accordance with our adoption
of ASC 805, Business Combinations and $0.3 million of expense incurred in connection
with the disposal of our nutritionals business, offset by
$3.1 million of income recorded for
fair value adjustments to acquisition-related contingent
consideration obligations and a $1.9
million allocation of certain of the aforementioned charges
to non-controlling stockholders. The Company's GAAP results
for the first quarter of 2009 include amortization of $58.6 million, $5.4
million of restructuring charges, $5.9 million of stock-based compensation expense
and $4.7 million of
acquisition-related costs recorded in accordance with our adoption
of ASC 805, Business Combinations. These amounts, net
of tax, have been excluded from the adjusted cash basis net income
per diluted common share attributable to Inverness Medical
Innovations, Inc. for the respective quarters.
A detailed reconciliation of the Company's adjusted cash basis
net income, which is a non-GAAP financial measure, to net income
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,
April 28, 2010, 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 may be accessed by dialing 706-679-1656
(domestic and international), an access code is not required, or
via a link on the Inverness website at www.invmed.com. It is
also available via link at
http://event.meetingstream.com/r.htm?e=207421&s=1&k=C89BF0299DF12A69267C1786338D6FF9
. An archive of the call will be available from the same link
approximately two hours after the conclusion of the live call and
will be accessible for 60 days. 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
Inverness website (www.invmed.com/News.cfm) shortly before the
conference call begins and will continue to be available on this
website.
For more information about Inverness Medical Innovations, please
visit our website at
http://www.invernessmedical.com.
By developing new capabilities in near-patient diagnosis,
monitoring and health management, Inverness Medical Innovations
enables individuals to take charge of improving their health and
quality of life at home. Inverness' global leading products
and services, as well as its new product development efforts, focus
on infectious disease, cardiology, oncology, drugs of abuse and
women's health. Inverness is headquartered in Waltham, Massachusetts.
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
March 31, 2010
|
|
Three Months Ended
March 31, 2009
|
|
|
|
|
|
|
|
|
Non-GAAP
|
|
|
|
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
Adjusted
|
|
|
|
|
|
Adjusted
|
|
|
|
|
|
|
Non-GAAP
|
|
Cash
|
|
|
|
Non-GAAP
|
|
Cash
|
|
|
|
|
GAAP
|
|
Adjustments
|
|
Basis
(a)
|
|
GAAP
|
|
Adjustments
|
|
Basis
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net product sales and services
revenue
|
$
509,405
|
|
$
-
|
|
$
509,405
|
|
$
416,093
|
|
$
-
|
|
$
416,093
|
|
|
License and royalty revenue
|
5,849
|
|
-
|
|
5,849
|
|
9,060
|
|
-
|
|
9,060
|
|
|
|
Net revenue
|
515,254
|
|
-
|
|
515,254
|
|
425,153
|
|
-
|
|
425,153
|
|
|
Cost of net revenue
|
241,297
|
|
(19,654)
|
(b) (c) (d) (e)
|
221,643
|
|
190,703
|
|
(12,417)
|
(b) (c) (d)
|
178,286
|
|
|
|
Gross
profit
|
273,957
|
|
19,654
|
|
293,611
|
|
234,450
|
|
12,417
|
|
246,867
|
|
|
|
Gross
margin
|
53%
|
|
|
|
57%
|
|
55%
|
|
|
|
58%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
30,993
|
|
(3,459)
|
(b) (c) (d)
|
27,534
|
|
27,052
|
|
(2,420)
|
(b) (c) (d)
|
24,632
|
|
|
|
Selling, general and
administrative
|
214,254
|
|
(67,015)
|
(b) (c) (d) (f) (g)
|
147,239
|
|
176,943
|
|
(58,159)
|
(b) (c) (d) (f)
|
118,784
|
|
|
|
Total operating
expenses
|
245,247
|
|
(70,474)
|
|
174,773
|
|
203,995
|
|
(60,579)
|
|
143,416
|
|
|
|
Operating
income
|
28,710
|
|
90,128
|
|
118,838
|
|
30,455
|
|
72,996
|
|
103,451
|
|
|
Interest and other income (expense),
net
|
(30,091)
|
|
191
|
(c)
|
(29,900)
|
|
(20,585)
|
|
130
|
(c)
|
(20,455)
|
|
|
|
(Loss) income from continuing
operations before provision for income taxes
|
(1,381)
|
|
90,319
|
|
88,938
|
|
9,870
|
|
73,126
|
|
82,996
|
|
|
Provision for income taxes
|
446
|
|
29,307
|
(j)
|
29,753
|
|
4,629
|
|
24,747
|
(j)
|
29,376
|
|
|
|
(Loss) income from continuing
operations before equity earnings of unconsolidated entities, net
of tax
|
(1,827)
|
|
61,012
|
|
59,185
|
|
5,241
|
|
48,379
|
|
53,620
|
|
|
Equity earnings of unconsolidated
entities, net of tax
|
4,040
|
|
972
|
(b) (c)
|
5,012
|
|
2,497
|
|
1,388
|
(b) (c)
|
3,885
|
|
|
|
Income from continuing
operations
|
2,213
|
|
61,984
|
|
64,197
|
|
7,738
|
|
49,767
|
|
57,505
|
|
|
|
Income (loss) from discontinued
operations, net of tax
|
11,946
|
|
166
|
(h)
|
12,112
|
|
(1,347)
|
|
33
|
(b)
|
(1,314)
|
|
|
Net income
|
14,159
|
|
62,150
|
|
76,309
|
|
6,391
|
|
49,800
|
|
56,191
|
|
|
|
Less: Net (loss) income attributable
to non-controlling interests, net of tax
|
(670)
|
|
1,439
|
(i)
|
769
|
|
100
|
|
-
|
|
100
|
|
|
Net income attributable to Inverness
Medical Innovations, Inc. and Subsidiaries
|
$
14,829
|
|
$
60,711
|
|
$
75,540
|
|
$
6,291
|
|
$
49,800
|
|
$
56,091
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividends
|
$
(5,853)
|
|
|
|
$
(5,853)
|
|
$
(5,520)
|
|
|
|
$
(5,520)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common
stockholders
|
$
8,976
|
|
|
|
$
69,687
|
|
$
771
|
|
|
|
$
50,571
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per common
share attributable to Inverness Medical Innovations, Inc. and
Subsidiaries:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) income per common share
from continuing operations
|
$
(0.03)
|
|
|
|
$
0.69
|
|
$
0.03
|
|
|
|
$
0.66
|
|
|
|
Basic income (loss) per common share
from discontinued operations
|
$
0.14
|
|
|
|
$
0.14
|
|
$
(0.02)
|
|
|
|
$
(0.02)
|
|
|
|
Basic net income per common
share
|
$
0.11
|
|
|
|
$
0.83
|
|
$
0.01
|
|
|
|
$
0.64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income (loss) per common
share attributable to Inverness Medical Innovations, Inc. and
Subsidiaries:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (loss) income per common share
from continuing operations
|
$
(0.03)
|
(k)
|
|
|
$
0.64
|
(n)
|
$
0.03
|
(m)
|
|
|
$
0.62
|
(o)
|
|
|
Diluted income (loss) per common share
from discontinued operations
|
$
0.14
|
(l)
|
|
|
$
0.12
|
(n)
|
$
(0.02)
|
(k)
|
|
|
$
(0.02)
|
(k)
|
|
|
Diluted net income per common
share
|
$
0.10
|
(l)
|
|
|
$
0.75
|
(n)
|
$
0.01
|
(m)
|
|
|
$
0.61
|
(o)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares -
basic
|
83,806
|
|
|
|
83,806
|
|
78,614
|
|
|
|
78,614
|
|
|
Weighted average common shares -
diluted
|
85,734
|
(l)
|
|
|
101,197
|
(n)
|
79,637
|
(m)
|
|
|
93,812
|
(o)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) In calculating net income or loss on an adjusted cash basis,
the Company excludes from net income or loss (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 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 net income or loss for the
costs associated with litigation, including payments made or
received through settlements. 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. In addition, all companies do not
calculate non-GAAP financial measures in the same manner and,
accordingly, "net income or loss on an adjusted cash basis"
presented in this press release may not be comparable to similar
measures used by other companies.
(b) Amortization expense of $72.1
million and $58.6 million in
the first quarter of 2010 and 2009 GAAP results, respectively,
including $14.9 million and
$10.0 million charged to cost of
sales, $1.2 million and $0.9 million charged to research and development,
$55.8 million and $47.4 million charged to selling, general and
administrative, with $0.2 million and
$0.2 million charged through equity
earnings of unconsolidated entities, net of tax during each of the
respective quarters. Amortization associated with discontinued
operations amounted to $0.1 million
during the first quarter of 2009. (See also footnote i below.)
(c) Restructuring charges associated with the decision to close
facilities of $8.0 million and
$5.4 million for the first quarter of
2010 and 2009 GAAP results, respectively. The $8.0 million charge for the first quarter of 2010
included $1.6 million charged to cost
of sales, $(0.1) million charged to
research and development, $5.5
million charged to selling, general and administrative
expense, $0.2 million charged to
interest expense and $0.8 million
charged through equity earnings of unconsolidated entities, net of
tax. The $5.4 million charge for the
first quarter of 2009 included $2.0
million charged to cost of sales, $0.5 million charged to research and development,
$1.6 million charged to selling,
general and administrative expense, $0.1
million charged to interest expense and $1.2 million charged through equity earnings of
unconsolidated entities, net of tax.
(d) Compensation costs of $7.6
million and $5.9 million
associated with stock-based compensation expense for the first
quarter of 2010 and 2009 GAAP results, respectively, including
$0.4 million and $0.5 million charged to cost of sales,
$2.4 million and $1.0 million charged to research and development
and $4.8 million and $4.4 million charged to selling, general and
administrative, in the respective quarters.
(e) A write-off in the amount of $2.8
million during the first quarter of 2010, relating to
inventory write-ups recorded in connection with the acquisition of
Standard Diagnostics, Inc. during the first quarter of 2010.
(See also footnote i below.)
(f) Acquisition-related costs in the amount of $4.0 million and $4.7
million in the first quarter of 2010 and 2009 GAAP results,
respectively, recorded in connection with the adoption of ASC 805,
Business Combinations, on January 1,
2009.
(g) $3.1 million of income
recorded in connection with fair value adjustments to
acquisition-related contingent consideration obligations in
accordance with ASC 805, Business Combinations.
(h) Expenses of $0.3 million
($0.2 million, net of tax) incurred
in connection with the sale of our vitamins and nutritional
supplements business.
(i) Amortization expense of $0.9
million ($0.7 million, net of
tax) and a write-off in the amount of $1.0 ($0.7 million,
net of tax) relating to inventory write-ups attributable to
operating results of non-controlling interests.
(j) Tax effect on adjustments as discussed above in notes (b),
(c), (d), (e), (f) and (g).
(k) For the three months ended March 31,
2010 and 2009 on a GAAP basis and for the three months ended
March 31, 2009 on an adjusted cash
basis, potential dilutive shares were not used in the calculation
of diluted net loss per common share because inclusion thereof
would be antidilutive.
(l) Included in the weighted average diluted common shares for
the calculation of net income per common share on a GAAP basis for
the three months ended March 31,
2010, are dilutive shares consisting of 1,928,000 common
stock equivalent shares from the potential exercise of stock
options and warrants. Potential dilutive shares consisting of
3,438,000 common stock equivalent shares from the potential
conversion of convertible debt securities, 610,000 common stock
equivalents from the potential settlement of a portion of the
deferred purchase price consideration related to the ACON Second
Territory Business and potential dilutive shares consisting of
11,414,000 common stock equivalent shares from the potential
conversion of Series B convertible preferred stock were not
included in the calculation of net income per common share on a
GAAP basis for the three months ended March
31, 2010 because inclusion thereof would be
antidilutive.
(m) Included in the weighted average diluted common shares for
the calculation of net income per common share on a GAAP basis for
the three months ended March 31,
2009, are dilutive shares consisting of 1,023,000 common
stock equivalent shares from the potential exercise of stock
options and warrants. Potential dilutive shares consisting of
3,411,000 common stock equivalent shares from the potential
conversion of convertible debt securities and potential dilutive
shares consisting of 10,765,000 common stock equivalent shares from
the potential conversion of Series B convertible preferred stock
were not included in the calculation of net income per common share
on a GAAP basis for the three months ended March 31, 2009 because inclusion thereof would be
antidilutive.
(n) Included in the weighted average diluted common shares for
the calculation of net income per common share for the three months
ended March 31, 2010, on an adjusted
cash basis, are dilutive shares consisting of 1,928,000 common
stock equivalent shares from the potential exercise of stock
options and warrants. Also included were potential dilutive
shares consisting of 3,438,000 common stock equivalent shares from
the potential conversion of convertible debt securities, 11,414,000
common stock equivalent shares from the potential conversion of
Series B convertible preferred stock and 610,000 common stock
equivalents from the potential settlement of a portion of the
deferred purchase price consideration related to the ACON Second
Territory Business. The diluted net income per common share
calculation for the three months ended March
31, 2010, on an adjusted cash basis, includes the add back
of interest expense related to the convertible debt of $0.7 million, the add back of $5.9 million of preferred stock dividends related
to the Series B convertible preferred stock and the add back of
interest expense related to the ACON Second Territory Business of
$0.1 million resulting in net income
available to common stockholders of $76.4
million for the three months ended March 31, 2010.
(o) Included in the weighted average diluted common shares for
the calculation of net income per common share for the three months
ended March 31, 2009, on an adjusted
cash basis, are dilutive shares consisting of 1,023,000 common
stock equivalent shares from the potential exercise of stock
options and warrants. Also included were potential dilutive
shares consisting of 3,411,000 common stock equivalent shares from
the potential conversion of convertible debt securities and
10,765,000 common stock equivalent shares from the potential
conversion of Series B convertible preferred stock. The
diluted net income per common share calculation for the three
months ended March 31, 2009, on an
adjusted cash basis, includes the add back of interest expense
related to the convertible debt of $0.7
million and the add back of preferred stock dividends
related to the Series B convertible preferred stock resulting in
net income available to common stockholders of $56.8 million for the three months ended
March 31, 2009.
Inverness Medical
Innovations, Inc. and Subsidiaries
|
|
Condensed
Consolidated Balance Sheets
|
|
(in
$000s)
|
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
|
2010
|
|
2009
|
|
ASSETS
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
Cash and cash equivalents
|
$ 275,330
|
|
$
492,773
|
|
Restricted cash
|
2,232
|
|
2,424
|
|
Marketable securities
|
1,853
|
|
947
|
|
Accounts receivable, net
|
368,201
|
|
354,453
|
|
Inventories, net
|
241,079
|
|
221,539
|
|
Prepaid expenses and other current
assets
|
126,293
|
|
140,674
|
|
Assets held for sale
|
-
|
|
54,148
|
|
Total current assets
|
1,014,988
|
|
1,266,958
|
|
|
|
|
|
|
PROPERTY, PLANT AND EQUIPMENT,
NET
|
346,949
|
|
324,388
|
|
GOODWILL AND OTHER INTANGIBLE ASSETS,
NET
|
5,511,219
|
|
5,193,429
|
|
DEFERRED FINANCING COSTS AND OTHER
ASSETS, NET
|
167,151
|
|
159,217
|
|
Total assets
|
$ 7,040,307
|
|
$ 6,943,992
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
Current portion of notes
payable
|
$
18,239
|
|
$
19,869
|
|
Liabilities related to assets held for
sale
|
-
|
|
11,558
|
|
Other current liabilities
|
404,366
|
|
406,587
|
|
Total current liabilities
|
422,605
|
|
438,014
|
|
|
|
|
|
|
LONG-TERM LIABILITIES:
|
|
|
|
|
Notes payable, net of current
portion
|
2,128,789
|
|
2,129,455
|
|
Deferred tax liability
|
464,203
|
|
442,049
|
|
Other long-term liabilities
|
437,822
|
|
405,585
|
|
Total long-term liabilities
|
3,030,814
|
|
2,977,089
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL EQUITY
|
3,586,888
|
|
3,528,889
|
|
Total liabilities and
equity
|
$ 7,040,307
|
|
$ 6,943,992
|
|
|
|
|
|
SOURCE Inverness Medical Innovations, Inc.