WALTHAM, Mass., Sept. 6, 2016 /PRNewswire/ -- Alere Inc. (NYSE: ALR), a global leader in rapid diagnostic tests, today announced that it has filed its Form 10-Q and reported its financial results for the second quarter ended June 30, 2016.
Revenue for the second quarter of 2016 was $611 million, a 2% decrease compared to $623 million in the prior year period. The year-over-year decrease in revenue was primarily due to a $16 million decrease in BBI revenue, which was divested in November 2015, a $10 million decrease in revenue in our mail order diabetes business and the negative impact of $10 million in foreign currency exchange. These revenue decreases were partially offset by revenue increases of $17 million in infectious disease product sales, $5 million in revenue associated with the acquisition of US Diagnostics and $4 million in patient self-testing revenue. Organic growth during the second quarter of 2016 was 2%.
Net income (loss) from continuing operations during the second quarter of 2016 was $(35) million, or $(0.46) per basic and diluted share, compared to $15 million, or $0.11 per basic and diluted share in the prior year period. On a non-GAAP basis, the Company reported non-GAAP adjusted EBITDA of $89 million in the second quarter of 2016, compared to $134 million in the prior year period. The year-over-year decline was driven primarily by $27 million in merger and legal expenses, $6 million in net foreign exchange losses compared to a $3 million gain in the prior year period and a $4 million increase in restructuring costs.
"With the filing of our second quarter 2016 Form 10-Q, we are now current in our financial filings and are on track to report our third quarter 2016 results within the normal time frame," said Namal Nawana, CEO of Alere. "We are pleased with the quarter-over-quarter improvement in revenue and organic growth in each of our three global business units. Our second quarter 2016 earnings were impacted by incremental costs associated with our pending merger and higher legal fees. In the second half of 2016, we will continue to execute on the performance improvement initiatives that we began earlier this year to drive both near-term and longer-term organic growth and profitability."
Revenue (in millions) | Second | Second Quarter 2015 | % Change | |||||
Cardiometabolic | $ | 204 | $ | 212 | (4%) | |||
Infectious Disease | 190 | 173 | 10% | |||||
Toxicology | 158 | 157 | - | |||||
Other | 36 | 51 | (29%) | |||||
Consumer Diagnostics | 20 | 25 | (20%) | |||||
License and Royalty | 3 | 5 | (56%) | |||||
Total | $ | 611 | $ | 623 | (2%) | |||
Non-GAAP Information
To supplement the financial measures prepared in accordance with U.S. GAAP, the Company uses non-GAAP adjusted EBITDA and organic growth, which are non-GAAP financial measures. The reconciliations of non-GAAP adjusted EBITDA to net income (loss) from continuing operations and organic growth to revenue, the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP, is shown in the table in this press release. The Company believes non-GAAP adjusted EBITDA and organic growth are useful to investors because these metrics are commonly used by investors to assess the unleveraged, pre-tax financial performance and operating results of ongoing business operations. The Company's management also uses non-GAAP adjusted EBITDA and organic growth because the Company's management also believes that these are useful measures to evaluate operating performance and cash flows of the Company based on operational factors. It should also be noted that not all companies calculate non-GAAP adjusted EBITDA and organic growth in the same manner and, accordingly, these measures presented in this press release may not be comparable to similar measures used by other companies.
Conference Call
As announced on February 1, 2016, Alere entered into a definitive agreement under which Abbott will acquire Alere for $56 per common share. Due to the pending transaction, Alere will no longer hold conference calls to discuss its quarterly financial results.
Cautionary Statement Regarding Forward-Looking Statements
This communication contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Readers can identify these statements by forward-looking words such as "may," "could," "should," "would," "intend," "will," "expect," "anticipate," "believe," "estimate," "continue," "goal," "can" or similar words. For example, forward-looking statements include statements regarding: the Company is on track to report its third quarter 2016 results within the normal time frame; and in the second half of 2016, the Company will continue to execute on the performance improvement initiatives that it began earlier this year to drive both near-term and longer-term organic growth and profitability. A number of important factors could cause actual results of the Company and its subsidiaries to differ materially from those indicated by such forward-looking statements. These factors include, but are not limited to, (i) the risk that the proposed merger with Abbott Laboratories ("Abbott") may not be completed in a timely manner or at all; (ii) the failure to receive, on a timely basis or otherwise, the required approval of the proposed merger with Abbott by Alere's stockholders; (iii) the possibility that competing offers or acquisition proposals for Alere will be made; (iv) the possibility that any or all of the various conditions to the consummation of the merger may not be satisfied or waived, including the failure to receive any required regulatory approvals from any applicable governmental entities (or any conditions, limitations or restrictions placed on such approvals); (v) the occurrence of any event, change or other circumstance that could give rise to the termination of the Agreement and Plan of Merger (the "Merger Agreement") among Alere and Abbott pursuant to which Abbott will acquire Alere, including in circumstances which would require Alere to pay a termination fee or other expenses; (vi) the effect of the announcement or pendency of the transactions contemplated by the Merger Agreement on Alere's ability to retain and hire key personnel, its ability to maintain relationships with its customers, suppliers and others with whom it does business, or its operating results and business generally; (vii) risks related to diverting management's attention from Alere's ongoing business operations; (viii) the risk that stockholder litigation in connection with the transactions contemplated by the Merger Agreement may result in significant costs of defense, indemnification and liability, (ix) the risk that Alere fails to file its future Quarterly Reports on Form 10-Q in a timely manner which could, among other things, lead to the acceleration of the maturity of certain of Alere's indebtedness; (x) the possibility that any analysis of revenue recognition for future or past periods uncovers an error or misstatements in revenue recognition which require adjustment which may be material; or material weaknesses in the Company's internal controls over financial reporting; (xi) risks relating to the ongoing investigations by the SEC and the United States Department of Justice; (xiii) the risk that these or other risk factors impact the expected timing of the filing of the Quarterly Report on Form 10-Q for the third quarter of 2016; and (xiv) the risk factors detailed in Part I, Item 1A, "Risk Factors," of our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 (as filed with the SEC on August 8, 2016) and other risk factors identified herein or from time to time in our periodic filings with the SEC. Readers should carefully review these risk factors, and should not place undue reliance on our forward-looking statements. These forward-looking statements are based on information, plans and estimates at the date of this report. The Company undertakes no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.
About Alere
Alere believes that when diagnosing and monitoring health conditions, Knowing now matters.™ Alere delivers reliable and actionable information by providing rapid diagnostic tests, enhancing clinical and economic healthcare outcomes globally. Headquartered in Waltham, Mass., Alere focuses on rapid diagnostics for cardiometabolic disease, infectious disease and toxicology. For more information on Alere, please visit www.alere.com.
Alere Inc. and Subsidiaries | |||||||||
Condensed Consolidated Statements of Operations | |||||||||
(in thousands, except per share amounts) | |||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||
2016 | 2015 | 2016 | 2015 | ||||||
Net product sales and services revenue | $ 608,555 | $ 617,677 | $1,184,035 | $ 1,225,871 | |||||
License and royalty revenue | 2,533 | 5,694 | 5,262 | 10,392 | |||||
Net revenue | 611,088 | 623,371 | 1,189,297 | 1,236,263 | |||||
Cost of net revenue | 329,227 | 336,037 | 641,179 | 653,714 | |||||
Gross profit | 281,861 | 287,334 | 548,118 | 582,549 | |||||
Gross margin | 46% | 46% | 46% | 47% | |||||
Operating expenses: | |||||||||
Research and development | 28,446 | 27,198 | 55,508 | 55,214 | |||||
Selling, general and administrative | 230,870 | 169,197 | 445,639 | 370,967 | |||||
Impairment and (gain) loss on disposition, net | - | 5,542 | (3,810) | 40,334 | |||||
Operating income | 22,545 | 85,397 | 50,781 | 116,034 | |||||
Interest and other income (expense), net | (56,441) | (56,299) | (99,896) | (105,097) | |||||
Loss from continuing operations before provision (benefit) for income taxes | (33,896) | 29,098 | (49,115) | 10,937 | |||||
Provision (benefit) for income taxes | 3,117 | 15,689 | 2,909 | 7,836 | |||||
Income (loss) from continuing operations before equity earnings of unconsolidated | (37,013) | 13,409 | (52,024) | 3,101 | |||||
Equity earnings of unconsolidated entities, net of tax | 2,122 | 1,361 | 7,156 | 5,320 | |||||
Income (loss) from continuing operations | (34,891) | 14,770 | (44,868) | 8,421 | |||||
Income from discontinued operations, net of tax | - | - | - | 216,777 | |||||
Net income | (34,891) | 14,770 | (44,868) | 225,198 | |||||
Less: Net income attributable to non-controlling interests | 143 | 359 | 246 | 447 | |||||
Net income attributable to Alere Inc. and Subsidiaries | (35,034) | 14,411 | (45,114) | 224,751 | |||||
Preferred stock dividends | (5,308) | (5,308) | (10,617) | (10,558) | |||||
Net income available to common stockholders | $ (40,342) | $ 9,103 | $ (55,731) | $ 214,193 | |||||
Basic net income per common share: | |||||||||
Income (loss) from continuing operations | $ (0.46) | $ 0.11 | $ (0.64) | $ (0.03) | |||||
Income from discontinued operations | - | - | 2.56 | ||||||
Basic and diluted net income per common share | $ (0.46) | $ 0.11 | $ (0.64) | $ 2.53 | |||||
Diluted net income per common share: | |||||||||
Income (loss) from continuing operations | $ (0.46) | $ 0.11 | $ (0.64) | $ (0.03) | |||||
Income from discontinued operations | - | - | - | 2.56 | |||||
Diluted net income per common share | $ (0.46) | $ 0.11 | $ (0.64) | $ 2.53 | |||||
Weighted average shares - basic | 86,737 | 85,173 | 86,692 | 84,758 | |||||
Weighted average shares - diluted | 86,737 | 86,635 | 86,692 | 84,758 | |||||
Alere Inc. and Subsidiaries | |||
Condensed Consolidated Balance Sheets | |||
(in thousands) | |||
June 30, | December 31, | ||
2016 | 2015 | ||
ASSETS | |||
CURRENT ASSETS: | |||
Cash and cash equivalents | $ 506,164 | $ 502,200 | |
Restricted cash | 5,662 | 5,694 | |
Marketable securities | 74 | 164 | |
Accounts receivable, net | 427,222 | 445,833 | |
Inventories, net | 333,846 | 347,001 | |
Prepaid expenses and other current assets | 162,339 | 152,233 | |
Assets held for sale | - | 4,165 | |
Total current assets | 1,435,307 | 1,457,290 | |
Property, Plant and Equipment, net | 438,787 | 446,039 | |
Goodwill and other intangible assets, net | 3,749,032 | 3,862,306 | |
Restricted Cash- non-current | 42,589 | 43,228 | |
Other non-current assets | 112,956 | 100,921 | |
Assets held for sale - non-current | 12,223 | 13,337 | |
Total assets | $ 5,790,894 | $ 5,923,121 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
CURRENT LIABILITIES: | |||
Short-term debt and current portions of long-term debt and capital lease obligations | $ 47,181 | $ 203,954 | |
Liabilities related to assets held for sale | - | 363 | |
Other current liabilities | 514,761 | 520,217 | |
Total current liabilities | 561,942 | 724,534 | |
LONG-TERM LIABILITIES: | |||
Long-term debt and capital lease obligations, net of current portions | 2,927,761 | 2,838,347 | |
Deferred tax liabilities | 140,864 | 147,618 | |
Other long-term liabilities | 148,165 | 154,193 | |
Liabilities related to assets held for sale - non-current | - | - | |
Total long-term liabilities | 3,216,790 | 3,140,158 | |
TOTAL EQUITY | 2,012,162 | 2,058,429 | |
Total liabilities and equity | $ 5,790,894 | $ 5,923,121 | |
Alere Inc. and Subsidiaries | ||||||||
Selected Consolidated Revenues | ||||||||
(in thousands) | ||||||||
Three Months Ended June 30, | % Change | |||||||
2016 | 2015 | 2016 v. 2015 | ||||||
Professional diagnostics segment (1) | ||||||||
Cardiometabolic | $ 203,982 | $ 211,672 | -4% | |||||
Infectious disease | 190,168 | 172,834 | 10% | |||||
Toxicology | 158,199 | 157,495 | 0% | |||||
Other | 36,412 | 51,031 | -29% | |||||
Total professional diagnostics segment | 588,761 | 593,032 | -1% | |||||
Consumer diagnostics segment (1) | 19,794 | 24,645 | -20% | |||||
License and royalty revenue | 2,533 | 5,694 | -56% | |||||
Net revenue | $ 611,088 | $ 623,371 | -2% | |||||
Six Months Ended June 30, | % Change | |||||||
2016 | 2015 | 2016 v. 2015 | ||||||
Professional diagnostics segment (1) | ||||||||
Cardiometabolic | $ 398,559 | $ 412,608 | -3% | |||||
Infectious disease | 373,402 | 358,236 | 4% | |||||
Toxicology | 304,982 | 306,251 | 0% | |||||
Other | 69,856 | 102,163 | -32% | |||||
Total professional diagnostics segment | 1,146,799 | 1,179,259 | -3% | |||||
Consumer diagnostics segment (1) | 37,236 | 46,613 | -20% | |||||
License and royalty revenue | 5,262 | 10,392 | -49% | |||||
Net revenue | $ 1,189,297 | $ 1,236,264 | -4% | |||||
(1) Revenues have been revised for the impact of revisions made during the preparation of our consolidated financial statements for 2015. For
| ||||||||
Alere Inc. and Subsidiaries | |||
Reconciliation of Net Income (Loss) to Non-GAAP EBITDA | |||
(in thousands) | |||
Three Months Ended June 30, | |||
2016 | 2015 | ||
Net Income (loss) (1) | $ (34,891) | $ 14,770 | |
Less: Income from discontinued operations, net of tax | - | - | |
Loss from continuing operations | (34,891) | 14,770 | |
Adjustment related to acquired software license contracts | 200 | ||
Income tax benefit | 3,117 | 15,689 | |
Depreciation and amortization | 69,978 | 72,795 | |
Interest, net | 41,684 | 58,765 | |
Non-cash stock-based compensation expense | 11,004 | 7,130 | |
Non-cash fair value adjustments to acquisition-related contingent | (1,922) | (41,090) | |
Impairment and (gain) loss on dispositions, net | - | 5,542 | |
Non-GAAP Adjusted EBITDA | $ 88,970 | $ 133,801 | |
(1)Net income (loss) for the three months ended June 30, 2015 includes restructuring charges of $4.9 million and $0.9 million of | |||
Six Months Ended June 30, | |||
2016 | 2015 | ||
Net Income (loss) (1) | $ (44,868) | $ 225,198 | |
Less: Income from discontinued operations, net of tax | - | 216,777 | |
Loss from continuing operations | (44,868) | 8,421 | |
Adjustment related to acquired software license contracts | 447 | ||
Income tax benefit | 2,909 | 7,836 | |
Depreciation and amortization | 142,589 | 147,314 | |
Interest, net | 82,625 | 104,597 | |
Non-cash stock-based compensation expense | 20,606 | 12,279 | |
Non-cash fair value adjustments to acquisition-related contingent | (1,780) | (52,867) | |
Impairment and (gain) loss on dispositions, net | (3,810) | 40,334 | |
Non-GAAP Adjusted EBITDA | $ 198,271 | $ 268,361 | |
(1)Net income (loss) for the six months ended June 30, 2015 includes restructuring charges of $9.1 million, $4.6million of | |||
Alere Inc. and Subsidiaries | ||||
Reconciliation of Organic Revenue Growth | ||||
(in thousands) | ||||
Three Months Ended June 30, | % Change | |||
2016 | 2015 | 2016 v. 2015 | ||
Net revenue | $ 611,088 | $ 623,371 | -2.0% | |
Impact of foreign currency exchange | 10,375 | - | ||
Impact of acquisitons & dispositions | (6,127) | (19,577) | ||
Non-GAAP organic net revenue | $ 615,337 | $ 603,794 | 1.9% | |
Six Months Ended June 30, | % Change | |||
2016 | 2015 | 2016 v. 2015 | ||
Net revenue | $ 1,189,297 | $ 1,236,263 | -3.8% | |
Impact of foreign currency exchange | 26,913 | - | ||
Impact of acquisitons & dispositions | (11,368) | (37,108) | ||
Non-GAAP organic net revenue | $ 1,204,842 | $ 1,199,155 | 0.5% | |
Alere Inc. and Subsidiaries | |||||||||||||||
Supplemental Financial Information | |||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||
Three months ended June 30, 2016 | |||||||||||||||
Cost of Net | Research and | Selling, General | Impairment, | Interest and | Provision for | Equity earnings of | Net Income1 | ||||||||
Amortization of acquisition-related intangible assets | $ 12,716 | $ 925 | $ 31,797 | $ - | $ - | $ - | $ - | $ (45,438) | |||||||
Restructuring charges | 1,103 | 1,034 | 6,648 | - | - | - | - | (8,785) | |||||||
Impairment Charges | 85 | - | - | - | - | - | (85) | ||||||||
Stock-based compensation expense | 601 | 481 | 9,922 | - | - | - | - | (11,004) | |||||||
Acquisition-related costs | - | - | 202 | - | - | - | - | (202) | |||||||
Fair value adjustments to acquisition-related contingent consideration | - | - | (1,922) | - | - | - | - | 1,922 | |||||||
Costs associated with potential business dispositions | - | - | 61 | - | - | - | - | (61) | |||||||
Impairment and (gain) loss on disposition, net | - | - | - | - | - | - | - | - | |||||||
Amortization - Unconsolidated Subs | - | - | - | - | - | - | 76 | (76) | |||||||
Audit and legal fees related to on-going SEC investigations | - | - | 5,056 | - | 890 | - | - | (5,946) | |||||||
Abbott transaction related expenses | - | - | 10,527 | - | - | - | - | (10,527) | |||||||
INRatio recall expense | 800 | - | - | - | - | - | - | (800) | |||||||
Legal settlement accrual | - | - | - | - | 10,200 | - | - | (10,200) | |||||||
Income tax effects on items above | - | - | - | - | - | (14,142) | - | 14,142 | |||||||
Total of Supplemental Information | $ 15,305 | $ 2,440 | $ 62,291 | $ - | $ 11,090 | $ (14,142) | $ 76 | $ (77,060) | |||||||
Impact of above items on EPS numerator | $ - | ||||||||||||||
Impact of above items on EPS denominator | (1,212) | ||||||||||||||
1) All impacts are shown as pre-tax with aggregate tax effect displayed as "Income tax effects on items above". | |||||||||||||||
Six months ended June 30, 2016 | |||||||||||||||
Cost of Net | Research and | Selling, General | Impairment, | Interest and | Provision for | Equity earnings of | Net Income1 | ||||||||
Amortization of acquisition-related intangible assets | $ 24,936 | $ 1,837 | $ 63,887 | $ - | $ - | $ - | $ - | $ (90,660) | |||||||
Restructuring charges | 2,370 | 2,954 | 11,124 | - | - | - | - | (16,448) | |||||||
Impairment Charges | 85 | - | - | - | - | - | - | (85) | |||||||
Stock-based compensation expense | 1,080 | 879 | 18,647 | - | - | - | - | (20,606) | |||||||
Acquisition-related costs | - | - | 691 | - | - | - | - | (691) | |||||||
Fair value adjustments to acquisition-related contingent consideration | - | - | (1,780) | - | - | - | - | 1,780 | |||||||
Costs associated with potential business dispositions | 7 | - | 902 | - | - | - | - | (909) | |||||||
Impairment and (gain) loss on disposition, net | - | - | - | (3,810) | - | - | - | 3,810 | |||||||
Amortization - Unconsolidated Subs | - | - | - | - | - | - | 183 | (183) | |||||||
Audit and legal fees related to on-going SEC investigations | - | - | 9,414 | - | 890 | - | - | (10,304) | |||||||
Abbott transaction related expenses | - | - | 20,868 | - | - | - | - | (20,868) | |||||||
INRatio recall expense | 1,500 | - | - | - | - | - | - | (1,500) | |||||||
Legal settlement accrual | - | - | - | - | 10,200 | - | - | (10,200) | |||||||
Income tax effects on items above | - | - | - | - | - | (30,628) | - | 30,628 | |||||||
Total of Supplemental Information | $ 29,978 | $ 5,670 | $ 123,753 | $ (3,810) | $ 11,090 | $ (30,628) | $ 183 | $ (136,236) | |||||||
Impact of above items on EPS numerator | $ (2,081) | ||||||||||||||
Impact of above items on EPS denominator | (4,919) | ||||||||||||||
1) All impacts are shown as pre-tax with aggregate tax effect displayed as "Income tax effects on items above". | |||||||||||||||
Alere Inc. and Subsidiaries | |||||
Reconciliation of Net Income (Loss) to Non-GAAP Adjusted EBITDA | |||||
(in thousands) | |||||
Three Months Ended | Three Months Ended | Three Months Ended | Three Months Ended | Year Ended | |
March 31, 2015 | June 30, 2015 | September 30, 2015 | December 31, 2015 | December 31, 2015 | |
Net Income | $ 210,428 | $ 14,770 | $ (2,383) | $ (16,059) | $ 206,757 |
Less: Income from discontinued operations, net of tax | 216,776 | (0) | 0 | 2,737 | 219,513 |
Income/(Loss) from continuing operations | (6,348) | 14,770 | (2,383) | (18,796) | (12,756) |
Adjustment related to acquired software license contracts | 247 | 201 | 430 | - | 877 |
Income tax benefit | (7,853) | 15,689 | (10,210) | (50,329) | (52,704) |
Depreciation and amortization | 74,519 | 72,795 | 86,651 | 75,719 | 309,684 |
Interest, net | 45,832 | 58,765 | 49,999 | 57,954 | 212,551 |
Non-cash stock-based compensation expense | 5,149 | 7,130 | 7,317 | 6,795 | 26,391 |
Non-cash fair value adjustments to acquisition-related contingent consideration | (11,777) | (41,090) | 957 | (5,703) | (57,613) |
Non-cash write-off of an investment | 662 | - | 662 | ||
Impairment and (gain) loss on dispositions, net | 34,792 | 5,542 | 2,074 | 8,132 | 50,540 |
Non-cash INRatio product recall expenses | - | - | - | 21,100 | 21,100 |
Write-off of acquisition-related obligation | - | - | - | (40) | (40) |
Non-GAAP Adjusted EBITDA | $ 134,561 | $ 133,801 | $ 135,496 | $ 94,833 | $ 498,691 |
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SOURCE Alere Inc.
