CEPHEID 
By SUNNYVALE, Calif., Jan. 28 /PRNewswire-FirstCall/ -- Cepheid (Nasdaq: CPHD) today reported revenue for the fourth quarter of 2009 of $49.2 million. Net loss was $4.3 million, or $(0.07) per share, which compares to revenue of $37.8 million and a net loss of $6.0 million, or $(0.10) per share, in the fourth quarter of fiscal 2008. Excluding amortization of purchased intangible assets and stock compensation expenses, non-GAAP net income for the fourth quarter of fiscal 2009 was $0.3 million, or $0.01 per share. This compares to a non-GAAP net loss of $2.5 million, or $(0.04) per share, in the fourth quarter of fiscal 2008.
Fiscal 2009 Overview
For the full fiscal year ended December 31, 2009, Cepheid reported revenue of $170.6 million. Net loss for the full year was $22.5 million, or $(0.39) per share, which compares to a net loss of $22.4 million, or $(0.39) per share in 2008. Excluding amortization of purchased intangible assets and stock compensation expenses, non-GAAP net loss for the full year was $5.0 million, or $(0.09) per share. This compares to a non-GAAP net loss of $7.1 million, or $(0.13) per share, for the full year 2008.
"Increasing recognition of the accuracy and ease of use of our GeneXpert® System, coupled with one of the broadest menus of rapid molecular tests available on the market, resulted in year-over-year growth of 28% in our Clinical business," said John Bishop, Cepheid's Chief Executive Officer. "During 2010, we expect our Clinical business will continue to grow rapidly, as we build on our leadership position in molecular diagnostic testing for Healthcare Associated Infections and further extend our women's health test menu and our menu for other critical infectious diseases."
Operational Overview
-- Fourth quarter of fiscal 2009 Clinical sales of $35.6 million grew 46%
from $24.4 million in the fourth quarter of 2008, and total fourth
quarter of fiscal 2009 product sales of $48.2 million grew 34% from the
same quarter a year ago. For the full year 2009, total product sales of
$165.2 million compared to $159.4 million reported for the full year
2008. By industry, product sales were, in millions:
Three Months Ended Full Year Ended
December 31, December 31,
2009 2008 Change 2009 2008 Change
----- ----- ------ ------ ----- ------
Clinical Systems $10.0 $7.8 28% $26.2 $32.1 -18%
Clinical Reagents 25.6 16.6 54% 89.7 58.2 54%
----- ----- ------ -----
Total Clinical 35.6 24.4 46% 115.9 90.3 28%
Industrial 6.1 3.9 58% 19.2 15.4 24%
Biothreat 5.1 5.2 -2% 24.8 35.8 -31%
Partner 1.4 2.6 -46% 5.3 17.9 -70%
----- ----- ------ ------
Total Product Sales $48.2 $36.1 34% $165.2 $159.4 4%
===== ===== ====== ======
-- By geography, product sales were, in millions:
Three Months Ended Full Year Ended
December 31, December 31,
2009 2008 Change 2009 2008 Change
----- ----- ------ ------ ------ ------
North America
Clinical $27.1 $19.0 43% $88.6 $70.2 26%
Other 9.1 9.3 -3% 40.2 55.1 -27%
----- ----- ------ ------
Total North America 36.2 28.3 28% 128.8 125.3 3%
International
Clinical 8.5 5.5 55% 27.4 20.0 37%
Other 3.5 2.3 54% 9.0 14.1 -36%
----- ----- ------ ------
Total International 12.0 7.8 54% 36.4 34.1 7%
----- ----- ------ ------
Total Product Sales $48.2 $36.1 34% $165.2 $159.4 4%
===== ===== ====== ======
-- During the fourth quarter of fiscal 2009, Cepheid placed a total of 134
GeneXpert systems and 796 modules. For the full year 2009, 428
GeneXpert systems and 2,446 modules were installed. As of December 31,
2009, a cumulative total of 1,375 GeneXpert systems and 7,553 modules
have been placed worldwide.
-- Cash, cash equivalents, restricted cash and investments, net of the debt
associated with our Auction Rate Securities, were $46.1 million as of
December 31, 2009.
-- DSO improved to 43 days, ahead of the Company's target range.
Business Outlook
For the fiscal year ending December 31, 2010, the Company expects:
-- Total revenue to be in the range of $195 to $205 million;
-- Net loss in the range of $(0.35) to $(0.27) per share;
-- Non-GAAP net income ranging from a loss of $(0.05) to net income of
$0.02 per share.
Expected non-GAAP net income/loss excludes approximately $16.5 million related to stock compensation expense and approximately $1.5 million related to the amortization of acquired intangibles.
Accessing Cepheid's Fourth Quarter and Full Year 2009 Results Conference Call
The company will host a management presentation at 2:00 p.m. Pacific Time on Thursday, January 28, 2010 to discuss the results. To access the live webcast, please visit Cepheid's website at www.cepheid.com/investors at least 15 minutes before the scheduled start time to download any necessary audio or plug-in software. A replay of the webcast will be available shortly following the call and will remain available for at least 90 days.
Interested participants and investors may also listen to the live teleconference call by dialing 800-299-9086 (domestic) or 617-786-2903 (international), and entering participant code 23247524. A replay will be available for seven days beginning at about 4 p.m. Pacific Time. Access numbers for this replay are 888-286-8010 (domestic) and 617-801-6888 (international), with passcode 33489639.
About Cepheid
Based in Sunnyvale, Calif., Cepheid (Nasdaq: CPHD) is an on-demand molecular diagnostics company that develops, manufactures, and markets fully-integrated systems and tests for genetic analysis in the clinical, industrial and biothreat markets. The company's systems enable rapid, sophisticated genetic testing for organisms and genetic-based diseases by automating otherwise complex manual laboratory procedures. The company's easy-to-use systems integrate a number of complicated and time-intensive steps, including sample preparation, DNA amplification and detection, which enable the analysis of complex biological samples in its proprietary test cartridges. Through its strong molecular biology capabilities, the company is focusing on those applications where rapid molecular testing is particularly important, such as identifying infectious disease and cancer in the clinical market; food, agricultural, and environmental testing in the industrial market; and identifying bio-terrorism agents in the biothreat market. See www.cepheid.com for more information.
Use of Non-GAAP Measures
The company has supplemented its reported GAAP financial information with non-GAAP measures that do not include employee share-based compensation expense and amortization of purchased intangible assets and restructuring charges. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with GAAP. The company's management uses the non-GAAP information internally to evaluate its ongoing business, continuing operational performance and cash requirements, and believes these non-GAAP measures are useful to investors as they provide a basis for evaluating the company's cash requirements and additional insight into the underlying operating results and the company's ongoing performance in the ordinary course of its operations.
These non-GAAP measures may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. The company believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with its results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate the company's results of operations in conjunction with the corresponding GAAP measures.
As described above, the company excludes the following items from one or more of its non-GAAP measures when applicable:
Employee stock-based compensation expense. These expenses consist primarily of expenses for employee stock options and employee restricted stock under ASC 718 (formerly SFAS 123(R)). The company excludes employee stock-based compensation expenses from its non-GAAP measures primarily because they are non-cash expenses that the company does not believe are reflective of ongoing operating results. Further, as the company applies ASC 718, it believes that it is useful to investors to understand the impact of the application of ASC 718 on its results of operations.
Amortization of purchased intangible assets. The company incurs amortization of purchased intangible assets in connection with acquisitions. The company excludes these items because these expenses are not reflective of ongoing operating results in the period incurred. These amounts arise from the company's prior acquisitions and have no direct correlation to the operation of the company's business.
Forward-Looking Statements
This press release contains forward-looking statements that are not purely historical regarding Cepheid's or its management's intentions, beliefs, expectations and strategies for the future, including those relating to potential growth particularly in the clinical market, product pipeline, demand for certain products, future revenues and future net loss. Because such statements deal with future events, they are subject to various risks and uncertainties, and actual results could differ materially from the company's current expectations. Factors that could cause actual results to differ materially include risks and uncertainties such as those relating to: our success in increasing direct sales and the effectiveness of new sales personnel; the performance and market acceptance of new products; sufficient customer demand; our ability to develop and complete clinical trials successfully in a timely manner for new products; uncertainties related to the FDA regulatory and European regulatory processes; the level of testing at clinical customer sites; changes in the protocols or levels of testing for Healthcare Associated Infections (HAIs); the company's ability to successfully introduce and sell products in clinical markets other than HAIs; the rate of environmental biothreat testing conducted by the USPS, which will affect the amount of consumable products sold to the USPS; unforeseen development and manufacturing problems; the potential need for additional intellectual property licenses for tests and other products and the terms of such licenses; lengthy sales cycles in certain markets; the company's reliance on distributors in some regions to market, sell and support its products; the occurrence of unforeseen expenditures, acquisitions or other transactions; the impact of acquisitions; the impact of competitive products and pricing; the company's ability to manage geographically-dispersed operations; and underlying market conditions worldwide, including the uncertain impact of the significant global economic downturn on our business, and that of our customers, potential customers and business partners. Readers should also refer to the section entitled "Risk Factors" in Cepheid's Annual Report on Form 10-K, its most recent Quarterly Report on Form 10-Q, and its other reports filed with the Securities and Exchange Commission.
All forward-looking statements and reasons why results might differ included in this release are made as of the date of this press release, based on information currently available to Cepheid, and Cepheid assumes no obligation to update any such forward-looking statement or reasons why results might differ.
CONTACTS:
For Media Inquiries: For Investor Inquiries:
-------------------- -----------------------
Jared Tipton Jacquie Ross
Cepheid Corporate Communications Cepheid Investor Relations
Tel: (408) 400 8377 Tel: (408) 400 8329
jared.tipton@cepheid.com investor.relations@cepheid.com
FINANCIAL TABLES FOLLOW
CEPHEID
CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
-------------------- ---------------------
2009 2008 2009 2008
-------- -------- --------- ---------
Revenues:
System sales $15,545 $11,058 $42,993 $51,766
Reagent and
disposable sales 32,694 25,059 122,192 107,617
-------- -------- --------- ---------
Total product sales 48,239 36,117 165,185 159,383
Other revenues 965 1,712 5,442 10,244
-------- -------- --------- ---------
Total revenues 49,204 37,829 170,627 169,627
-------- -------- --------- ---------
Costs and operating
expenses:
Cost of product
sales 27,837 19,729 95,542 89,714
Collaboration profit
sharing 1,653 2,119 8,200 11,089
Research and
development 9,916 10,837 39,313 43,310
Sales and marketing 8,387 7,511 29,156 29,757
General and
administrative 5,446 5,079 21,278 20,861
Gain from legal
settlement - (1,454) (243) (1,454)
Restructuring charge - - 747 -
-------- -------- --------- ---------
Total costs and
operating expenses 53,239 43,821 193,993 193,277
-------- -------- --------- ---------
Loss from operations (4,035) (5,992) (23,366) (23,650)
Other income
(expense), net (223) (215) 424 352
-------- -------- --------- ---------
Loss before income
tax benefit
(expense) (4,258) (6,207) (22,942) (23,298)
Income tax benefit
(expense) (24) 161 440 911
-------- -------- --------- ---------
Net loss $(4,282) $(6,046) $(22,502) $(22,387)
======== ======== ========= =========
Basic and diluted
net loss per share $(0.07) $(0.10) $(0.39) $(0.39)
======== ======== ========= =========
Shares used in
computing basic and
diluted net loss
per share 58,596 57,648 58,206 57,101
======== ======== ========= =========
CEPHEID
CONDENSED CONSOLIDATED UNAUDITED BALANCE SHEETS
(in thousands)
December 31, December 31,
2009 2008
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $35,786 $23,478
Restricted cash - 1,500
Short-term investments 24,931 -
Accounts receivable, net 23,014 18,952
Inventory 38,015 33,498
Prepaid expenses and other current assets 2,421 4,636
--------- ---------
Total current assets 124,167 82,064
Property and equipment, net 24,021 24,109
Investments - 24,539
Other non-current assets 495 920
Intangible assets 30,817 33,791
Goodwill 18,626 18,556
--------- ---------
Total assets $198,126 $183,979
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $21,242 $13,163
Accrued compensation 8,869 7,919
Accrued royalties 12,929 7,951
Accrued collaboration profit sharing 826 2,023
Accrued other liabilities 1,800 1,324
Current portion of deferred revenue 2,923 2,834
Current portion of note payable 108 -
Bank borrowing 14,618 14,639
--------- ---------
Total current liabilities 63,315 49,853
Long-term portion of deferred revenue 2,279 1,753
Note payable, less current portion 732 -
Other liabilities 4,234 3,549
--------- ---------
Total liabilities 70,560 55,155
--------- ---------
Shareholders' equity:
Common stock 273,052 266,991
Additional paid-in capital 56,408 41,619
Accumulated other comprehensive income (loss) 371 (23)
Accumulated deficit (202,265) (179,763)
--------- ---------
Total shareholders' equity 127,566 128,824
--------- ---------
Total liabilities and shareholders' equity $198,126 $183,979
========= =========
CEPHEID
CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended
December 31,
------------
2009 2008
--------- ---------
Cash flows from operating activities:
Net loss $(22,502) $(22,387)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Depreciation and amortization 8,808 7,632
Amortization of intangible assets 6,823 5,749
Amortization of prepaid compensation
expense 147 252
Stock-based compensation related to
employees and consulting services rendered 15,215 14,064
Unrealized gain (loss) on auction rate
securities (6,734) 9,899
Unrealized gain (loss) on put option 6,143 (9,438)
Deferred rent (26) 231
Changes in operating assets and
liabilities:
Accounts receivable (4,062) 2,495
Inventory (4,937) (8,580)
Prepaid expenses and other current assets 2,059 (2,520)
Other non-current assets 425 (676)
Accounts payable and other current
liabilities 10,753 1,106
Accrued compensation 949 (663)
Deferred revenue 615 (1,771)
-------- --------
Net cash provided by (used in) operating
activities 13,676 (4,607)
-------- --------
Cash flows from investing activities:
Capital expenditures (8,575) (14,936)
Acquisition of leasehold improvements - 327
Payments for technology licenses (1,500) (418)
Cost of acquisition, net (148) (1,884)
Proceeds from sales and maturities of
marketable securities and short-term
investments 200 2,550
Proceeds from the sale of fixed assets 20 125
Transfer to unrestricted cash 1,500 (983)
-------- --------
Net cash used in investing activities (8,503) (15,219)
-------- --------
Cash flows from financing activities:
Net proceeds from the issuance of common
shares and exercise of stock options and
awards 6,061 12,183
Proceeds from bank borrowing 20 14,700
Proceeds from note payable 849 -
Principal payments of bank borrowing (40) (61)
Principal payments of notes payable (9) (4)
-------- --------
Net cash provided by financing
activities 6,881 26,818
-------- --------
Effect of exchange rate change on cash 254 10
-------- --------
Net increase in cash and cash equivalents 12,308 7,002
Cash and cash equivalents at beginning of
period 23,478 16,476
-------- --------
Cash and cash equivalents at end of period $35,786 $23,478
======== ========
CEPHEID
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (UNAUDITED)
(in thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
------------------ -----------------
2009 2008 2009 2008
-------- -------- -------- ---------
Cost of product
sales $27,837 $19,729 $95,542 $89,714
Stock compensation
expense (682) - (2,411) (1,016)
Amortization of
purchased
intangible assets (324) (240) (1,296) (963)
-------- -------- --------- ---------
Non-GAAP measure
of cost of
product sales $26,831 $19,489 $91,835 $87,735
Gross margin on
product sales per
GAAP 42% 45% 42% 44%
Gross margin on
product sales per
non-GAAP 44% 46% 44% 45%
Operating expenses $23,749 $23,427 $89,747 $93,928
Stock compensation
expense (3,502) (3,226) (12,679) (13,047)
Amortization of
purchased
intangible assets (83) (88) (332) (222)
-------- -------- --------- ---------
Non-GAAP measure
of operating
expenses $20,164 $20,113 $76,736 $80,659
Income (loss) from
operations $(4,035) $(5,992) $(23,366) $(23,650)
Restructuring
charge - - 747 -
Stock compensation
expense 4,184 3,226 15,090 14,063
Amortization of
purchased
intangible assets 407 328 1,628 1,185
-------- -------- --------- ---------
Non-GAAP measure
of income (loss)
from operations $556 $(2,438) $(5,901) $(8,402)
Net income (loss) $(4,282) $(6,046) $(22,502) $(22,387)
Restructuring
charge - - 747 -
Stock compensation
expense 4,184 3,226 15,090 14,063
Amortization of
purchased
intangible assets 407 328 1,628 1,185
-------- -------- --------- ---------
Non-GAAP measure
of net income
(loss) $309 $(2,492) $(5,037) $(7,139)
Basic net income
(loss) per share $(0.07) $(0.10) $(0.39) $(0.39)
Restructuring
charge - - 0.01 -
Stock compensation
expense 0.07 0.06 0.26 0.25
Amortization of
purchased
intangible assets 0.01 - 0.03 0.01
-------- -------- -------- ---------
Non-GAAP measure
of net income
(loss) $0.01 $(0.04) $(0.09) $(0.13)
Diluted net income
(loss) per share $(0.07) $(0.10) $(0.39) $(0.39)
Restructuring
charge - - 0.01 -
Stock compensation
expense 0.07 0.06 0.26 0.25
Amortization of
purchased
intangible assets 0.01 - 0.03 0.01
-------- -------- --------- ---------
Non-GAAP measure
of net income
(loss) $0.01 $(0.04) $(0.09) $(0.13)
Shares used in
computing basic
net income (loss)
per share 58,596 57,648 58,206 57,101
Incremental shares
from the assumed
conversion of
dilutive stock
options 2,758 - - -
-------- -------- --------- ---------
Shares used in
computing diluted
net income (loss)
per share 61,354 57,648 58,206 57,101
SOURCE Cepheid
