ALERE INC WALTHAM, Mass., Nov. 4, 2015 /PRNewswire/ -- Alere Inc. (NYSE: ALR), a global leader in rapid diagnostic tests, today announced its financial results for the quarter ended September 30, 2015. Net revenue for the third quarter of 2015 was $602.0 million, a 7.3 percent decrease compared to $649.2 million in the third quarter of 2014, or a 1.7 percent decrease in organic growth, which is on a constant currency basis, excluding impacts of acquisitions and divestitures. Net income from continuing operations available to common stockholders was $0.2 million, or $0.00 per diluted share, in the third quarter of 2015. On a non-GAAP basis, the Company reported non-GAAP adjusted net income from continuing operations available to common stockholders of $48.3 million, or $0.54 per diluted share, in the third quarter of 2015.
Net Revenue (in
millions) Third Quarter 2015 Third Quarter 2014 (1) % Change
--------------- ------------------ --------------------- --------
Cardiometabolic Disease $208 $208 -
----------------------- ---- ---- ---
Infectious Disease $164 $184 (11)
------------------ ---- ---- ---
Toxicology $163 $167 (2)
---------- ---- ---- ---
Other $45 $65 (30)
----- --- --- ---
Consumer Diagnostics $19 $21 (12)
-------------------- --- --- ---
License and Royalty $3 $4 (21)
------------------- --- --- ---
Total $602 $649 (7)
----- ---- ---- ---
(1) Revenues, other than License and Royalty, have been reclassified due to a change in segment
reporting as a result of the divestiture of our health management business in 2015 and the
results of our patient self-testing business are primarily included within Cardiometabolic
Disease.
"Third quarter revenue was impacted by currency and lower international sales. Europe organic growth declined by 4 percent and tender awards in Africa and Asia have taken longer to ramp than anticipated; however, we expect both Africa and Asia to contribute to near-term growth," said Namal Nawana, CEO of Alere. "Pain management and INRatio revenue declined year-over-year and negatively impacted our profitability in the third quarter; however, excluding pain management, our core Toxicology revenue grew by 6% during the third quarter, which represents 10 consecutive quarters of organic growth. Despite these short-term challenges, our core businesses and platforms had solid growth and we gained significant traction with the launch of Alere i, with revenue of $5 million in the third quarter and total worldwide placements of more than 2,800 instruments to date.
From an operational perspective, we exercised strong operating expense discipline and delivered third quarter non-GAAP EPS growth of 54 percent year-over-year. Looking ahead, we expect fourth quarter 2015 revenue to rebound and we are re-doubling our efforts to establish solid and sustainable organic growth for Alere. We are confident that the strength of our core platforms will eclipse near-term challenges and accelerate our overall growth. The Alere team is fully focused on continuing to execute against our strategic growth initiatives to deliver enhanced value for our shareholders."
Third Quarter Highlights
-- Alere receives FDA CLIA Waiver for Alere(TM) i Strep A Rapid Molecular
Test
-- Alere Agrees to Sell BBI Group and Acquires US Diagnostics
-- Dr. Geoffrey S. Ginsburg Joins Alere Board
Third Quarter 2015 Results
Third quarter 2015 net revenue of $602.0 million declined by $47.2 million from $649.2 million, or 7.3 percent, compared to the prior year period, primarily due to a $33.0 million negative impact from foreign currency exchange; a $12.6 million decrease in pain management; and a $7.7 million decrease in global sales of INRatio. In addition, BBI revenue and contract manufacturing revenue associated with our consumer joint venture declined by $8.7 million and CD4 and malaria sales in Africa decreased by $8.0 million during the third quarter. Growth areas included: patient self-testing, Afinion and epoc in Cardiometabolic Disease; dengue in Infectious Disease; and employer services and reagents in Toxicology. Global influenza sales were $19.6 million in the third quarter of 2015, a 15.9 percent increase over the prior year period, including approximately $4.9 million in Alere i sales.
Gross profit in the third quarter of 2015 was $275.0 million, with 45.7 percent gross margin, compared to $301.6 million in the third quarter of 2014, with 46.5 percent gross margin. Non-GAAP adjusted gross profit in the third quarter of 2015 was $292.5 million, with 48.5 percent non-GAAP adjusted gross margin, compared to $323.6 million in the third quarter of 2014, with 49.8 percent non-GAAP adjusted gross margin. Non-GAAP adjusted gross profit excludes amortization of acquisition-related intangibles, restructuring charges, and stock-based compensation.
Operating expenses were $245.9 million, or 40.8 percent of net revenue, in the third quarter of 2015, compared to operating expenses of $266.3 million, or 41.0 percent of net revenue, in the third quarter of 2014. Included in the third quarter 2015 operating expenses was R&D expense of $36.0 million, or 6.0 percent of net revenue, and SG&A expense of $207.8 million, or 34.5 percent of net revenue. Also included in the third quarter 2015 operating expenses were $2.1 million in net charges related to impairment and loss on dispositions. Non-GAAP adjusted operating expenses during the third quarter of 2015 were $187.0 million, or 31.0 percent of net revenue, and were comprised of $27.4 million of non-GAAP adjusted R&D expense, or 4.5 percent of net revenue, and non-GAAP adjusted SG&A expense of $159.6 million, or 26.5 percent of net revenue. Non-GAAP adjusted operating expenses, non-GAAP adjusted R&D expenses and non-GAAP adjusted SG&A expense exclude, as applicable, amortization of acquisition-related intangibles, restructuring charges, stock-based compensation, fair value adjustments to contingent consideration, compensation costs associated with contingent consideration, costs associated with business dispositions, and impairment and loss on dispositions, net.
Operating income was $29.2 million in the third quarter of 2015, compared to operating income of $35.3 million in the third quarter of 2014. Non-GAAP adjusted operating income was $105.4 million in the third quarter of 2015, compared to non-GAAP adjusted operating income of $116.6 million in the third quarter of 2014.
Net income from continuing operations available to common stockholders was $0.2 million, or $0.00 per diluted share, in the third quarter of 2015, compared to a net loss from continuing operations available to common stockholders of $89.4 million, or $1.08 per diluted share, in the third quarter of 2014. On a non-GAAP basis, the Company reported non-GAAP adjusted net income from continuing operations available to common stockholders of $48.3 million, or $0.54 per diluted share, in the third quarter of 2015, compared to non-GAAP adjusted net income from continuing operations available to common stockholders of $30.0 million, or $0.35 per diluted share, in the third quarter of 2014.
Financial results for the three- and nine-month periods of 2015 and the comparable three- and nine-month periods of 2014 are included in the schedules to this press release.
Detailed reconciliations of the non-GAAP financial measures presented in this release to the most directly comparable financial measures under GAAP, as well as a discussion regarding these non-GAAP financial measures, are included in the schedules to this press release.
2015 Business Outlook
For the year ending December 31, 2015, the Company expects:
-- Net revenue to be in the range of $2.48 billion to $2.50 billion
-- Non-GAAP adjusted net income from continuing operations available to
common stockholders in the range of $2.20 to $2.25 per diluted common
share
Conference Call
We will host a conference call beginning at 5:00 p.m. (Eastern Time) today, November 4, 2015, to discuss these results, as well as other company matters. During the conference call, we may answer questions concerning business and financial developments and trends and other business and financial matters. Our responses to these questions, as well as other matters discussed during the conference call, may contain or constitute material information that has not been previously disclosed.
A live webcast will be available on the Investor Relations section of Alere's website, or accessed directly through the following link: https://www.webcaster4.com/Webcast/Page/411/11453
To access the audio conference call, please use the following dial-in numbers and access code 5625983:
-- US (toll-free): 1-888-317-6003
-- International: 1-412-317-6061
-- Canada (toll-free): 1-866-284-3684
A replay 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. To hear a replay of the conference call, please use the following dial-in numbers and replay code 10075496 (available for seven days):
-- US (toll-free): 1-877-344-7529
-- International: 1-412-317-0088
-- Canada (toll-free): 1-855-669-9658
The replay will also be available via online webcast on the Investor Relations section of the Alere website.
Additionally, reconciliations to non-GAAP financial measures not included in this press release that may be discussed during the call will also be available on the Investor Relations section of the Alere website.
Forward-looking Statements
This press release 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. For example, forward-looking statements include statements regarding: the Company expects both Africa and Asia to contribute to near-term growth, tender awards in Africa and Asia will ramp, revenue will rebound in the fourth quarter of 2015, the Company is re-doubling efforts to establish solid and sustainable organic growth, the strength of the Company's core platforms will eclipse near-term challenges and accelerate overall growth which will enable the Company to deliver enhanced value for our stockholders, expected net revenues for the year ending December 31, 2015, expected non-GAAP adjusted net income from continuing operations available to common stockholders per diluted share for the year ending December 31, 2015, future operating results, and future financial and operational goals. In some cases, forward-looking statements can be identified by terms such as "may," "will," "intend," "expect," "plan," "believe," "estimate," "outlook," "predict" or the like. These statements involve risks and uncertainties, and actual results could differ materially from the statements made in this press release. Factors that might cause these differences include, but are not limited to: limited demand for certain of our products in the markets we serve; limited market acceptance for new products brought to market (and inability to recover investments made in such products); the effect of intense competition in the markets we serve; ability to execute on business plans; risks and expenses arising from FDA inspections and government subpoenas; delays in product development; international business risks; fluctuations in currency exchange rates; the effects of healthcare reform; risks of clinical trials; potential regulatory burdens and obstacles; litigation and legal compliance risks; government investigations; cybersecurity risks; changes in global economic and political conditions; potential product defects; manufacturing or supply issues; potential intellectual property infringement and risks (and expense) related to the ability to enforce intellectual property rights held by the Company; risks of acquisitions and divestitures; substantial indebtedness and risks related to the inability to refinance outstanding indebtedness; contractual debt restrictions and requirements; fluctuations in quarterly results; potential future financial restatements; potential reviews, investigations or other proceedings by government authorities, stockholders or other parties; the risk that the Company's remediation plan related to its material weakness will be unsuccessful to prevent or detect additional misstatements, including a potential inability to prepare financial statements or file periodic reports on a timely basis, which would be a default under the Company's senior secured credit facility and note indentures as well as a violation of the Securities Exchange Act and the listing rules of the NYSE; and any additional material weaknesses in internal controls. These and other risk factors are discussed in more detail under the heading "Risk Factors" in Item 1A of the Company's Annual Report on Form 10-K, as amended, filed with the Securities and Exchange Commission on May 28, 2015. Copies are available through the Company's Investor Relations department and at www.alere.com. The Company does not assume any obligation to update its forward-looking statements to reflect new information and developments.
About Alere
Alere believes that when diagnosing and monitoring health conditions, Knowing now matters.(TM) 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 September 30,
2015 2014
---- ----
Net product sales and services
revenue $598,745 $645,028
License and royalty revenue 3,299 4,182
----- -----
Net revenue 602,044 649,210
Cost of net revenue 326,995 347,588
------- -------
Gross profit 275,049 301,622
Gross margin 46% 46%
Operating expenses:
Research and development 36,011 38,726
Selling, general and administrative 207,799 227,554
Impairment and loss on disposition,
net 2,074 -
-----
Operating income 29,165 35,342
Interest and other income
(expense), net (47,588) (60,419)
------- -------
Loss from continuing operations
before provision (benefit) for
income taxes (18,423) (25,077)
Provision (Benefit) for income
taxes (18,924) 65,489
------- ------
Income (loss) from continuing
operations before equity earnings of
unconsolidated entities, net of tax 501 (90,566)
Equity earnings of
unconsolidated entities, net of
tax 5,000 6,277
----- -----
Income (loss) from continuing
operations 5,501 (84,289)
Loss from discontinued operations,
net of tax - (14,401)
-----------------------------------
Net income (loss) 5,501 (98,690)
Less: Net loss attributable to non-
controlling interests (61) (306)
----
Net income (loss) attributable
to Alere Inc. and Subsidiaries 5,562 (98,384)
Preferred stock dividends (5,367) (5,367)
-------
Net income (loss) available to
common stockholders $195 $(103,751)
==== =========
Basic net loss per common share:
Loss from continuing operations $ - $(1.08)
Loss from discontinued operations - (0.17)
---------------------------------
Basic net loss per common share $ - $(1.25)
===============================
Diluted net loss per common share:
Loss from continuing operations $ - $(1.08)
Loss from discontinued operations - (0.17)
---------------------------------
Diluted net loss per common share $ - $(1.25)
=================================
Weighted average shares - basic 85,895 83,115
====== ======
Weighted average shares -
diluted 87,169 83,115
====== ======
Alere Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
Nine Months Ended September 30,
2015 2014
---- ----
Net product sales and services
revenue $1,825,662 $1,905,849
License and royalty revenue 13,691 15,998
------ ------
Net revenue 1,839,353 1,921,847
Cost of net revenue 979,745 1,011,174
------- ---------
Gross profit 859,608 910,673
Gross margin 47% 47%
Operating expenses:
Research and development 91,225 114,855
Selling, general and administrative 577,566 730,591
Impairment and loss on disposition,
net 42,408 638
------
Operating income 148,409 64,589
Interest and other income
(expense), net (150,523) (154,112)
-------- --------
Loss from continuing operations
before provision (benefit) for
income taxes (2,114) (89,523)
Provision (benefit) for income
taxes (10,009) 69,273
------- ------
Income (loss) from continuing
operations before equity earnings of
unconsolidated entities, net of tax 7,895 (158,796)
Equity earnings of
unconsolidated entities, net of
tax 10,320 13,716
------ ------
Income (loss) from continuing
operations 18,215 (145,080)
Income (loss) from discontinued
operations, net of taxes 216,777 (4,082)
-------
Net income (loss) 234,992 (149,162)
Less: Net income (loss) attributable
to non-controlling interests 386 (136)
---
Net income (loss) attributable
to Alere Inc. and Subsidiaries 234,606 (149,026)
Preferred stock dividends (15,926) (15,926)
--------
Net Income (loss) available to
common stockholders $218,680 $(164,952)
======== =========
Basic net income (loss) per common
share:
(Income) loss from continuing
operations $0.02 $(1.94)
Income (loss) from discontinued
operations 2.55 (0.05)
----
Net Income (loss) per common share $2.57 $(1.99)
==================================
Diluted net income (loss) per common
share:
Income (loss) from continuing
operations $0.02 $(1.94)
Income (loss) from discontinued
operations 2.51 (0.05)
----
Diluted net income (loss) per common
share $2.53 $(1.99)
======================================
Weighted average shares - basic 85,141 82,719
====== ======
Weighted average shares -
diluted 86,279 82,719
====== ======
Alere Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
September 30, December 31,
2015 2014
---- ----
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $479,381 $378,461
Restricted cash 430,821 37,571
Marketable securities 157 259
Accounts receivable, net 452,366 466,106
Inventories, net 362,226 365,165
Prepaid expenses and other
current assets 136,447 244,986
Assets held for sale 25,312 315,515
Total current assets 1,886,710 1,808,063
PROPERTY, PLANT AND
EQUIPMENT, NET 445,315 453,570
GOODWILL AND OTHER
INTANGIBLE ASSETS, NET 3,924,614 4,246,761
RESTRICTED CASH - NON-
CURRENT 44,148 -
DEFERRED FINANCING COSTS AND
OTHER ASSETS, NET 147,330 170,562
Assets held for sale - non-
current 126,048 -
------- ---
Total assets $6,574,165 $6,678,956
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Short-term debt and current
portions of long-term debt
and capital lease
obligations $607,597 $93,116
Liabilities related to
assets held for sale 8,836 78,843
Other current liabilities 509,582 589,086
Total current liabilities 1,126,015 761,045
--------- -------
LONG-TERM LIABILITIES:
Long-term debt and capital
lease obligations, net of
current portions 2,993,928 3,631,945
Deferred tax liabilities 207,451 214,639
Other long-term liabilities 135,200 161,582
Liabilities related to
assets held for sale -
non-current 9,603 -
Total long-term liabilities 3,346,182 4,008,166
--------- ---------
TOTAL EQUITY 2,101,968 1,909,745
Total liabilities and equity $6,574,165 $6,678,956
========== ==========
Alere Inc. and Subsidiaries
Reconciliation to Non-GAAP Adjusted Operating Results
(in thousands, except per share amounts)
Three Months Ended September 30,
2015 2014
---- ----
Reconciliation to Non-GAAP Adjusted Operating Income (1)
Operating income $29,165 $35,342
Adjustment related to
acquired software
license contracts 430 324
Amortization of
acquisition-related
intangible assets 60,928 58,813
Restructuring charges 2,264 17,296
Stock-based
compensation expense 7,317 3,168
Compensation charges
associated with
acquisition-related
contingent
consideration
obligations 191 670
Acquisition-related
costs 241 325
Fair value adjustments
to acquisition-
related contingent
consideration 957 (5,537)
Costs associated with
potential business
dispositions 1,878 6,203
Impairment and loss on
disposition, net 2,074 -
Non-GAAP adjusted
operating income $105,445 $116,604
======== ========
Three Months Ended September 30,
2015 2014
---- ----
Reconciliation to Non-GAAP Adjusted Net Income(1)
Net income (loss)
available to common
stockholders $195 $(103,751)
Adjustment related to
acquired software
license contracts 430 324
Amortization of
acquisition-related
intangible assets 60,954 58,818
Restructuring charges 2,270 17,307
Stock-based
compensation expense 7,317 3,168
Compensation charges
associated with
acquisition-related
contingent
consideration
obligations 191 670
Acquisition-related
costs 241 325
Fair value adjustments
to acquisition-
related contingent
consideration 957 (5,537)
Costs associated with
potential business
dispositions 1,878 6,203
Impairment and loss on
disposition, net 2,074 -
Loss on sale of equity
investment - 457
Write off of equity
investment in BBI 662 -
Interest expense
recorded in connection
with fees paid for
certain debt
modifications and the
termination of our
senior secured credit
facility 9,273 363
Interest accretion
associated with
acquisition-related
compensation charges 35 102
Amortization of
acquisition-related operations, net of tax
intangible assets,
restructuring, fair
value adjustments to
acquisition-related
contingent
consideration, and
impairment, net of
gain on divestiture -
Discontinued - 17,223
Income tax effects on
items above (38,179) 37,139
Non-GAAP adjusted net
income available to
common stockholders $48,298 $32,811
======= =======
Loss per diluted common
share from continuing
operations $ - $(1.08)
Loss per diluted common
share from
discontinued
operations - (0.17)
--- -----
Net loss per diluted
common share $ - $(1.25)
=============== ======
Weighted average shares
-diluted 87,169 83,115
====== ======
Non-GAAP adjusted
income per diluted
common share from
continuing operations
(2) $0.54 $0.35
Non-GAAP adjusted
income per diluted
common share from
discontinued
operations (2) - 0.03
Non-GAAP adjusted net
income per diluted
common share(2) $0.54 $0.38
===== =====
Non-GAAP adjusted
weighted average
shares - diluted (2) 100,846 87,929
======= ======
(1) In calculating "Non-GAAP adjusted operating income" and "Non-GAAP adjusted net income available to common
stockholders", 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
(2)Included in the weighted average diluted common shares for the calculation of net income per common share for
the three months ended September 30, 2015, on a non-GAAP adjusted basis, are dilutive shares consisting of
1,244,000 common stock equivalent shares from the potential exercise of stock options and warrants. Also
included were dilutive shares consisting of 3,438,000 common stock equivalent shares from the potential
conversion of convertible debt securities, 30,000 potentially issuable shares of common stock associated with a
contingent consideration arrangement, and 10,239,000 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 September 30, 2015, on a non-GAAP adjusted basis, included the add back of interest expense
related to the convertible debt of $0.7 million and the add back of $5.4 million of preferred stock dividends
related to the Series B convertible preferred stock, resulting in net income available to common stockholders of
$54.4 million for the three months ended September 30, 2015.
Included in the weighted average diluted common shares for the calculation of net income per common share for the
three months ended September 30, 2014, on a non-GAAP adjusted basis, were dilutive shares consisting of
1,376,000 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. The diluted net income per common share calculation for the
three months ended September 30, 2014, on a non-GAAP adjusted basis, included the add back of interest expense
related to the convertible debt of $0.7 million, resulting in net income available to common stockholders of
$33.5 million for the three months ended September 30, 2014.
Alere Inc. and Subsidiaries
Reconciliation to Non-GAAP Adjusted Operating Results
(in thousands, except per share amounts)
Nine Months Ended September 30,
2015 2014
---- ----
Reconciliation to Non-GAAP Adjusted Operating Income (1)
Operating income $148,409 $64,589
Adjustment related to
acquired software
license contracts 877 1,116
Amortization of
acquisition-related
intangible assets 160,867 176,608
Restructuring charges 11,387 37,074
Stock-based
compensation expense 19,596 7,750
Compensation charges
associated with
acquisition-related
contingent
consideration
obligations (2,615) 1,673
Acquisition-related
costs 332 695
Fair value adjustments
to acquisition-
related contingent
consideration (51,910) 12,442
Non-cash charge
associated with
acquired inventory - -
Costs associated with
potential business
dispositions 6,097 20,763
Impairment and loss on
disposition, net 42,408 638
Non-GAAP adjusted
operating income $335,448 $323,348
======== ========
Nine Months Ended September 30,
2015 2014
---- ----
Reconciliation to Non-GAAP Adjusted Net Income(1)
Net income (loss)
available to common
stockholders $218,680 $(164,952)
Adjustment related to
acquired software
license contracts 877 1,116
Amortization of
acquisition-related
intangible assets 160,941 176,651
Restructuring charges 11,406 37,108
Stock-based
compensation expense 19,596 7,750
Compensation charges
associated with
acquisition-related
contingent
consideration
obligations (2,615) 1,673
Acquisition-related
costs 332 695
Fair value adjustments
to acquisition-
related contingent
consideration (51,910) 12,442
Costs associated with
potential business
dispositions 6,488 20,763
Impairment and loss on
disposition, net 42,408 638
Loss on sale of equity
investment - 457
Write off of equity
investment in BBI 662 -
Interest expense
recorded in connection
with fees paid for
certain debt
modifications and the
termination of our
senior secured credit
facility 20,940 1,091
Interest accretion
associated with
acquisition-related
compensation charges (406) 295
Expense associated with
extinguishment of debt 3,480 -
Amortization of
acquisition-related operations, net of tax
intangible assets,
restructuring, fair
value adjustments to
acquisition-related
contingent
consideration, and
impairment, net of
gain on divestiture -
Discontinued (217,589) 12,386
Income tax effects on
items above (70,821) 6,766
Non-GAAP adjusted net
income available to
common stockholders $142,469 $114,879
======== ========
Income (loss) per
diluted common share
from continuing
operations $0.02 $(1.94)
Income (loss) per
diluted common share
from discontinued
operations 2.51 (0.05)
---- -----
Net income (loss) per
diluted common share $2.53 $(1.99)
===== ======
Weighted average shares
-diluted 86,279 82,719
====== ======
Non-GAAP adjusted
income per diluted
common share from
continuing operations
(2) $1.62 $1.25
Non-GAAP adjusted
income (loss) per
diluted common share
from discontinued
operations (2) (0.01) 0.09
Non-GAAP adjusted net
income per diluted
common share(2) $1.61 $1.34
===== =====
Non-GAAP adjusted
weighted average
shares - diluted (2) 99,956 87,311
====== ======
(1) In calculating "Non-GAAP adjusted operating income" and "Non-GAAP adjusted net income available to
common stockholders", 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
(2)Included in the weighted average diluted common shares for the calculation of net income per common share
for the nine months ended September 30, 2015, on a non-GAAP adjusted basis, are dilutive shares consisting
of 1,120,000 common stock equivalent shares from the potential exercise of stock options and warrants. Also
included were dilutive shares consisting of 3,438,000 common stock equivalent shares from the potential
conversion of convertible debt securities, 18,000 potentially issuable shares of common stock associated with
a contingent consideration arrangement, and 10,239,000 common stock equivalent shares from the potential
conversion of Series B convertible preferred stock. The diluted net income per common share calculation for
the nine months ended September 30, 2015, on a non-GAAP adjusted basis, included the add back of interest
expense related to the convertible debt of $2.1 million and the add back of $15.9 million of preferred stock
dividends related to the Series B convertible preferred stock, resulting in net income available to common
stockholders of $160.5 million for the nine months ended September 30, 2015.
Included in the weighted average diluted common shares for the calculation of net income per common share for
the nine months ended September 30, 2014, on a non-GAAP adjusted basis, were dilutive shares consisting of
1,154,000 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. The diluted net income per common share calculation for
the nine months ended September 30, 2014, on a non-GAAP adjusted basis, included the add back of interest
expense related to the convertible debt of $2.2 million, resulting in net income available to common
stockholders of $117.1 million for the nine months ended September 30, 2014.
Alere Inc. and Subsidiaries
Selected Consolidated Revenues
(in thousands)
% Change % Change
Q3 2015 YTD 2015 Q3 2014 YTD 2014 Q3 15 v. Q3 14 YTD 15 v. YTD 14
------- -------- ------- -------- -------------- ----------------
Professional diagnostics segment (1)
Cardiometabolic $208,319 $624,823 $208,248 $631,452 0% -1%
Infectious disease 163,759 519,145 184,018 526,632 -11% -1%
Toxicology 162,571 468,822 166,381 491,561 -2% -5%
Other (2) 45,349 147,512 65,183 190,986 -30% -23%
------ ------- ------ -------
Total professional diagnostics
segment(1) (2) 579,998 1,760,302 623,830 1,840,631 -7% -4%
Consumer diagnostics segment (1) 18,747 65,360 21,198 65,218 -12% 0%
License and royalty revenue 3,299 13,691 4,182 15,998 -21% -14%
----- ------ ----- ------
Net revenue $602,044 $1,839,353 $649,210 $1,921,847 -7% -4%
===========
(1) Revenues have been restated for the impact of a change in segment reporting due to the divestiture of our health management business.
(2) Revenues are presented in accordance with generally accepted accounting principles and exclude an adjustment of $0.5 million and $0.9 million, and $0.3 million and $1.1 million related to acquired software license
contracts which were not recognized during the three and nine months ended September 30, 2015 and 2014, respectively, due to business combination accounting rules.
Alere Inc. and Subsidiaries
Reconciliation of Operating Income (Loss) to Non-GAAP Adjusted Operating Income (Loss)
(in thousands)
For the Three Months Ended September 30, 2015
---------------------------------------------
Operating Segment Professional Consumer Corporate Total
Diagnostics Diagnostics
----------- -----------
Net revenue $583,297 $18,747 $ - $602,044
Adjustment related to acquired
software license contracts(1) 430 - - 430
--- --- --- ---
Non-GAAP adjusted net revenue $583,727 $18,747 $ - $602,474
======== ======= =============== ========
Operating income (loss) $54,450 $1,039 $(26,324) $29,165
Adjustment related to acquired
software license contracts(1) 430 - - 430
Amortization of acquisition-related
intangible assets 60,880 9 39 60,928
Restructuring charges 1,578 - 686 2,264
Stock-based compensation expense - - 7,317 7,317
Compensation charges associated with
acquisition-related contingent
consideration obligations 191 - - 191
Acquisition-related costs - - 241 241
Fair value adjustments to
acquisition-related contingent
consideration 957 - - 957
Costs associated with potential
business dispositions 1,878 - - 1,878
Impairment and loss on disposition,
net 2,074 - - 2,074
Non-GAAP adjusted operating income
(loss) $122,438 $1,048 $(18,041) $105,445
======== ====== ======== ========
Non-GAAP adjusted operating income
(loss) as % of Non-GAAP adjusted
net revenue 21.0% 5.6% 17.5%
==== === ====
(1) Estimated revenue related to acquired software license contracts that was not recognized during the three months ended September 30, 2015 due to business combination accounting rules.
For the Three Months Ended September 30, 2014
---------------------------------------------
Operating Segment Professional Diagnostics Consumer Diagnostics Corporate Total
------------------------ -------------------- --------- -----
Net revenue (1) $628,012 $21,198 $ - $649,210
Adjustment related to acquired
software license contracts(2) 324 - - 324
--- --- --- ---
Non-GAAP adjusted net revenue $628,336 $21,198 $ - $649,534
======== ======= =============== ========
Operating income (loss) $67,232 $1,499 $(33,389) $35,342
Adjustment related to acquired
software license contracts(2) 324 - - 324
Amortization of acquisition-related
intangible assets 57,306 175 1,332 58,813
Restructuring charges 14,118 - 3,178 17,296
Stock-based compensation expense - - 3,168 3,168
Compensation charges associated with
acquisition-related contingent
consideration obligations 670 - - 670
Acquisition-related costs - - 325 325
Fair value adjustments to
acquisition-related contingent
consideration (8,637) - 3,100 (5,537)
Costs associated with potential
business dispositions 6,203 - - 6,203
Non-GAAP adjusted operating income
(loss) $137,216 $1,674 $(22,286) $116,604
======== ====== ======== ========
Non-GAAP adjusted operating income
(loss) as % of Non-GAAP adjusted
net revenue 21.8% 7.9% 18.0%
==== === ====
(1) Net revenue has been restated for the impact of a change in segment reporting due to the divestiture of our health management business.
(2) Estimated revenue related to acquired software license contracts that was not recognized during the three months ended September 30, 2014 due to business combination accounting rules.
Comments:
In calculating "Non-GAAP adjusted operating income (loss)" in the schedule presented above, the Company excludes from "Operating income (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 "Operating income (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 (loss)" for the costs associated with litigation, including payments made or received through settlements. It should be noted that "Non-GAAP adjusted operating income (loss)"
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 "Operating income
(loss)" 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 (loss)" presented in this schedule may not be comparable to similar measures used by other companies.
Reference should also be made to the Company's financial results contained in our earnings press release respective to the periods presented in this schedule, which include a more detailed
discussion of the adjustments to the GAAP operating results presented above.
Alere Inc. and Subsidiaries
Reconciliation of Operating Income (Loss) to Non-GAAP Adjusted Operating Income (Loss)
(in thousands)
For the Nine Months Ended September 30, 2015
--------------------------------------------
Operating Segment Professional Diagnostics Consumer Corporate Total
Diagnostics
---
Net revenue $1,773,993 $65,360 $ - $1,839,353
Adjustment related to acquired
software license contracts(1) 877 - - 877
--- --- --- ---
Non-GAAP adjusted net revenue $1,774,870 $65,360 $ - $1,840,230
========== ======= ================= ==========
Operating income (loss) $219,543 $4,322 $(75,456) $148,409
Adjustment related to acquired
software license contracts(1) 877 - - 877
Amortization of acquisition-related
intangible assets 160,723 28 116 160,867
Restructuring charges 10,103 - 1,284 11,387
Stock-based compensation expense - - 19,596 19,596
Compensation charges associated with
acquisition-related contingent
consideration obligations (2,615) - - (2,615)
Acquisition-related costs - - 332 332
Fair value adjustments to
acquisition-related contingent
consideration - - (51,910) (51,910)
Costs associated with potential
business dispositions 6,488 - - 6,488
Impairment and gain (loss) on
dispositions, net 42,408 - - 42,408
Non-GAAP adjusted operating income
(loss) $437,527 $4,350 $(106,038) $335,839
======== ====== ========= ========
Non-GAAP adjusted operating income
(loss) as % of Non-GAAP adjusted
net revenue 24.7% 6.7% 18.2%
==== === ====
(1) Estimated revenue related to acquired software license contracts that was not recognized during the nine months ended September 30, 2015 due to business combination accounting rules.
For the Nine Months Ended September 30, 2014
--------------------------------------------
Operating Segment Professional Consumer Corporate Total
Diagnostics Diagnostics
----------- -----------
Net revenue (1) $1,855,318 $66,529 $ - $1,921,847
Adjustment related to acquired
software license contracts(2) 1,116 - - 1,116
----- --- --- -----
Non-GAAP adjusted net revenue $1,856,434 $66,529 $ - $1,922,963
========== ======= ================= ==========
Operating income (loss) $135,856 $4,210 $(75,477) $64,589
Adjustment related to acquired
software license contracts(2) 1,116 - - 1,116
Amortization of acquisition-related
intangible assets 174,638 638 1,332 176,608
Restructuring charges 29,746 - 7,328 37,074
Stock-based compensation expense - - 7,750 7,750
Compensation charges associated with
acquisition-related contingent
consideration obligations 1,673 - - 1,673
Acquisition-related costs - - 695 695
Fair value adjustments to
acquisition-related contingent
consideration 9,042 - 3,400 12,442
Costs associated with potential
business dispositions 20,763 - - 20,763
Loss on disposition 638 - - 638
Non-GAAP adjusted operating income
(loss) $373,472 $4,848 $(54,972) $323,348
======== ====== ======== ========
Non-GAAP adjusted operating income
(loss) as % of Non-GAAP adjusted
net revenue 20.1% 7.3% 16.8%
==== === ====
(1) Net revenue has been restated for the impact of a change in segment reporting due to the divestiture of our health management business.
(2) Estimated revenue related to acquired software license contracts that was not recognized during the nine months ended September 30, 2014 due to business combination accounting rules.
Comments:
In calculating "Non-GAAP adjusted operating income (loss)" in the schedule presented above, the Company excludes from "Operating income (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 "Operating income (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 (loss)" for the costs associated with litigation,
including payments made or received through settlements. It should be noted that "Non-GAAP adjusted operating income (loss)" 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 "Operating income (loss)" 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 (loss)" presented in this schedule
may not be comparable to similar measures used by other companies.
Reference should also be made to the Company's financial results contained in our earnings press release respective to the periods presented in this schedule, which include a more detailed discussion of the
adjustments to the GAAP operating results presented above.
Alere Inc. and Subsidiaries
Reconciliations to Non-GAAP Adjusted P&L Categories
(in thousands)
Three Months Ended Three Months Ended
September 30, 2015 September 30, 2014
------------------ ------------------
Net revenue $602,044 $649,210
Adjustment related to acquired
software license contracts 430 324
Non-GAAP adjusted net revenue(1) $602,474 $649,534
-------- --------
Cost of net revenue $326,995 $347,588
Less adjustments:
Amortization of acquisition-
related intangible assets (16,132) (15,684)
Restructuring charges (523) (5,654)
Stock-based compensation expense (326) (291)
Non-GAAP adjusted cost of net
revenue(1) $310,014 $325,959
-------- --------
Non-GAAP adjusted gross profit(1) $292,460 $323,575
======== ========
Three Months Ended Three Months Ended
September 30, 2015 September 30, 2014
------------------ ------------------
Research and development $36,011 $38,726
Less adjustments:
Amortization of acquisition-
related intangible assets (8,304) (1,372)
Restructuring charges (18) (5,457)
Stock-based compensation expense (287) (279)
---- ----
Non-GAAP adjusted research and
development(1) $27,402 $31,618
======= =======
Three Months Ended Three Months Ended
September 30, 2015 September 30, 2014
------------------ ------------------
Selling, general and
administrative $207,799 $227,554
Less adjustments:
Amortization of acquisition-
related intangible assets (36,492) (41,757)
Restructuring charges (1,723) (6,185)
Stock-based compensation expense (6,704) (2,598)
Compensation charges associated
with acquisition-related
contingent consideration
obligations (191) (670)
Acquisition-related costs (241) (325)
Fair value adjustments to
acquisition-related contingent
consideration (957) 5,537
Costs associated with potential
business dispositions (1,878) (6,203)
------ ------
Non-GAAP adjusted selling,
general and administrative(1) $159,613 $175,353
======== ========
Three Months Ended Three Months Ended
September 30, 2015 September 30, 2014
------------------ ------------------
Impairment and loss on
disposition, net $2,074 $ -
Impairment and loss on
disposition, net (2,074) -
------ ---
Non-GAAP adjusted impairment and
loss on disposition, net(1) $ - $ -
====================================== ======================================
Three Months Ended September 30, 2015 Three Months Ended September 30, 2014
------------------------------------- -------------------------------------
Interest and other income
(expense), net $(47,588) $(60,419)
Less adjustments:
Restructuring charges 6 11
Write off of equity investment in
BBI 662 -
Interest expense recorded in
connection with fees paid for
certain debt modifications and
the termination of our senior
secured credit facility 9,273 363
Interest accretion associated
with acquisition-related
compensation charges 35 102
Non-GAAP adjusted interest and
other income (expense), net(1) $(37,612) $(59,943)
======== ========
Three Months Ended Three Months Ended
September 30, 2015 September 30, 2014
------------------ ------------------
Provision (benefit) for income
taxes $(18,924) $65,489
Add: Income tax effects on Non-
GAAP adjustments 38,200 (37,109)
------ -------
Non-GAAP adjusted provision for
income taxes, net(1) $19,276 $28,380
======= =======
Three Months Ended Three Months Ended
September 30, 2015 September 30, 2014
------------------ ------------------
Equity earnings of unconsolidated
entities, net of tax $5,000 $6,277
Less adjustments:
Amortization of acquisition-
related intangible assets 104 132
Loss on sale of equity investment - 457
Income tax effects on items above - -
--- ---
Non-GAAP adjusted equity
earnings of unconsolidated
entities, net of tax(1) $5,104 $6,866
====== ======
Three Months Ended Three Months Ended
September 30, 2015 September 30, 2014
------------------ ------------------
Loss from discontinued
operations, net of taxes $ - $(14,401)
Less adjustments:
Amortization of acquisition-
related intangible assets - 7,514
Restructuring charges - 562
Goodwill impairment charge - 17,984
Fair value adjustments to
acquisition-related contingent
consideration - (25,071)
Income tax effects on items above - 16,234
--- ------
Non-GAAP adjusted income from
discontinued operations, net of
taxes(1) $ - $2,822
====================================== ======
Three Months Ended Three Months Ended
September 30, 2015 September 30, 2014
------------------ ------------------
Net loss attributable to non-
controlling interests, net of
tax $(61) $(306)
Less: Amortization of
acquisition-related intangible
assets, net of tax 78 127
Income tax effects on items above 21 30
--- ---
Non-GAAP adjusted net loss
attributable to non-controlling
interests, net of tax(1) $(4) $(209)
=== =====
(1) The following is a summary of our non-GAAP adjusted measures included above:
Non-GAAP adjusted net revenue $602,474 $649,534
Non-GAAP adjusted cost of net
revenue $310,014 $325,959
Non-GAAP adjusted research and
development $27,402 $31,618
Non-GAAP adjusted selling,
general and administrative $159,613 $175,353
Non-GAAP adjusted impairment and
loss on dispositions, net $ - $ -
Non-GAAP adjusted interest and
other income (expense), net $(37,612) $(59,943)
Non-GAAP adjusted provision for
income taxes $19,276 $28,380
Non-GAAP adjusted equity
earnings of unconsolidated
entities, net of tax $5,104 $6,866
Non-GAAP adjusted income from
discontinued operations, net of
tax $ - $2,822
Non-GAAP adjusted net loss
attributable to non-controlling
interests, net of tax $(4) $(209)
Alere Inc. and Subsidiaries
Reconciliations to Non-GAAP Adjusted P&L Categories
(in thousands)
Nine Months Ended Nine Months Ended
September 30, 2015 September 30, 2014
------------------ ------------------
Net revenue $1,839,353 $1,921,847
Adjustment related to acquired
software license contracts 877 1,116
--- -----
Non-GAAP adjusted net revenue(1) $1,840,230 $1,922,963
---------- ----------
Cost of net revenue $979,745 $1,011,174
Less adjustments:
Amortization of acquisition-
related intangible assets (43,440) (47,242)
Restructuring charges (2,921) (6,707)
Stock-based compensation expense (866) (863)
Costs associated with potential
business dispositions (391) -
---- ---
Non-GAAP adjusted cost of net
revenue(1) $932,127 $956,362
-------- --------
Non-GAAP adjusted gross profit(1) $908,103 $966,601
======== ========
Nine Months Ended Nine Months Ended
September 30, 2015 September 30, 2014
------------------ ------------------
Research and development $91,225 $114,855
Less adjustments:
Amortization of acquisition-
related intangible assets (10,088) (3,721)
Restructuring charges (666) (8,488)
Stock-based compensation expense (893) 341
---- ---
Non-GAAP adjusted research and
development(1) $79,578 $102,987
======= ========
Nine Months Ended Nine Months Ended
September 30, 2015 September 30, 2014
------------------ ------------------
Selling, general and
administrative $577,566 $730,591
Less adjustments:
Amortization of acquisition-
related intangible assets (107,339) (125,645)
Restructuring charges (7,800) (21,879)
Stock-based compensation expense (17,837) (7,228)
Compensation charges associated
with acquisition-related
contingent consideration
obligations 2,615 (1,673)
Acquisition-related costs (332) (695)
Fair value adjustments to
acquisition-related contingent
consideration 51,910 (12,442)
Costs associated with potential
business dispositions (6,097) (20,763)
------ -------
Non-GAAP adjusted selling,
general and administrative(1) $492,686 $540,266
======== ========
Nine Months Ended Nine Months Ended
September 30, 2015 September 30, 2014
------------------ ------------------
Impairment and loss on
disposition, net $42,408 $638
Impairment and loss on
disposition, net (42,408) (638)
------- ----
Non-GAAP adjusted impairment and
loss on disposition, net(1) $ - $ -
====================================== ======================================
Nine Months Ended Nine Months Ended
September 30, 2015 September 30, 2014
------------------ ------------------
Interest and other income
(expense), net $(150,523) $(154,112)
Less adjustments:
Restructuring charges 19 34
Write off of equity investment in
BBI 662 -
Interest expense recorded in
connection with fees paid for
certain debt modifications and
the termination of our senior
secured credit facility 20,940 1,091
Interest accretion associated
with acquisition-related
compensation charges (406) 295
Expense associated with
extinguishment of debt 3,480 -
----- ---
Non-GAAP adjusted interest and
other income (expense), net(1) $(125,828) $(152,692)
========= =========
Nine Months Ended Nine Months Ended
September 30, 2015 September 30, 2014
------------------ ------------------
Provision (benefit) for income
taxes $(10,009) $69,273
Add: Income tax effects on Non-
GAAP adjustments 70,884 (6,678)
------ ------
Non-GAAP adjusted provision for
income taxes, net(1) $60,875 $62,595
======= =======
Nine Months Ended Nine Months Ended
September 30, 2015 September 30, 2014
------------------ ------------------
Equity earnings of unconsolidated
entities, net of tax $10,320 $13,716
Less adjustments:
Amortization of acquisition-
related intangible assets 314 430
Loss on sale of equity investment - 457
Income tax effects on items above - -
--- ---
Non-GAAP adjusted equity
earnings of unconsolidated
entities, net of tax(1) $10,634 $14,603
======= =======
Nine Months Ended Nine Months Ended
September 30, 2015 September 30, 2014
------------------ ------------------
Income (loss) from discontinued
operations, net of taxes $216,777 $(4,082)
Less adjustments:
Amortization of acquisition-
related intangible assets 559 22,541
Restructuring charges (13) 4,039
Goodwill impairment charge - 17,984
Fair value adjustments to
acquisition-related contingent
consideration - (26,321)
Gain on Divestiture (366,191) -
Income tax effects on items above 148,056 (5,857)
------- ------
Non-GAAP adjusted income (loss)
from discontinued operations,
net of taxes(1) $(812) $8,304
===== ======
Nine Months Ended Nine Months Ended
September 30, 2015 September 30, 2014
------------------ ------------------
Net income (loss) attributable to
non-controlling interests, net
of tax $386 $(136)
Less: Amortization of
acquisition-related intangible
assets, net of tax 240 387
Income tax effects on items above 63 88
--- ---
Non-GAAP adjusted net income
attributable to non-controlling
interests, net of tax(1) $563 $163
==== ====
(1) The following is a summary of our non-GAAP adjusted measures included above:
Non-GAAP adjusted net revenue $1,840,230 $1,922,963
Non-GAAP adjusted cost of net
revenue $932,127 $956,362
Non-GAAP adjusted research and
development $79,578 $102,987
Non-GAAP adjusted selling,
general and administrative $492,686 $540,266
Non-GAAP adjusted impairment and
loss on dispositions, net $ - $ -
Non-GAAP adjusted interest and
other income (expense), net $(125,828) $(152,692)
Non-GAAP adjusted provision for
income taxes $60,875 $62,595
Non-GAAP adjusted equity
earnings of unconsolidated
entities, net of tax $10,634 $14,603
Non-GAAP adjusted income (loss)
from discontinued operations,
net of tax $(812) $8,304
Non-GAAP adjusted net income
attributable to non-controlling
interests, net of tax $563 $163
Alere Inc. and Subsidiaries
Reconciliations of Gross Profit/Margin to Non-GAAP Adjusted Gross Profit/Margin
(in thousands)
Three Months Ended Three Months Ended Three Months Ended
Alere Consolidated September 30, 2014 (1) June 30, 2015 September 30, 2015
--------------------- ------------- ------------------
Net revenue $649,210 $629,156 $602,044
Adjustment related to acquired
software license contracts 324 200 430
--- --- ---
Non-GAAP adjusted net revenue 649,534 629,356 602,474
------- ------- -------
Cost of net revenue 347,588 336,582 326,995
Less adjustments:
Amortization of acquisition-related intangible assets 15,684 13,112 16,132
Stock-based compensation expense 291 287 326
Restructuring charges 5,654 897 523
Non-GAAP adjusted cost of net revenue 325,959 322,286 310,014
------- ------- -------
Non-GAAP adjusted gross profit/margin $323,575 49.8% $307,070 48.8% $292,460 48.5%
======== ==== ======== ==== ======== ====
Three Months Ended Three Months Ended Three Months Ended
Professional Diagnostics Segment September 30, 2014 (1) June 30, 2015 September 30, 2015
--------------------- ------------- ------------------
Net product sales and services revenue $628,012 $598,817 $579,998
Adjustment related to acquired
software license contracts 324 200 430
--- --- ---
Non-GAAP adjusted net product sales and services revenue 628,336 599,017 580,428
------- ------- -------
Cost of net revenue 329,013 312,068 292,156
Less adjustments:
Amortization of acquisition-related intangible assets 15,659 13,112 16,133
Stock-based compensation expense 291 287 326
Restructuring charges 5,654 897 523
Non-GAAP adjusted cost of net revenue 307,409 297,772 275,174
------- ------- -------
Non-GAAP adjusted gross profit/margin $320,927 51.1% $301,245 50.3% $305,254 52.6%
======== ==== ======== ==== ======== ====
Note:
-----
(1) Restated to reflect the impact of discontinued operations
and the impact of a change in segment reporting
Alere Inc. and Subsidiaries
Reconciliation of Net Income to Non-GAAP EBITDA
(in thousands)
Three Months Ended Nine Months Ended
September 30, 2015 September 30, 2015
------------------ ------------------
Net Income (1) $5,501 $234,992
Less: Income from discontinued operations, net of tax - 216,777
--- -------
Income from continuing operations 5,501 18,215
Adjustment related to acquired software license contracts 430 877
Income tax provision (benefit) (18,924) (10,009)
Depreciation and amortization 86,603 233,825
Interest, net (2) 49,999 154,596
Non-cash stock-based compensation expense 7,317 19,596
Non-cash fair value adjustments to acquisition-related contingent consideration 957 (51,910)
Non-cash write-off of an investment 662 662
Impairment and gain (loss) on dispositions, net 2,074 42,408
Non-GAAP EBITDA $134,619 $408,260
======== ========
(1) Net income for the three months and nine months ended September 30, 2015 includes non-interest related restructuring charges of $2.3 million and $11.4 million, respectively, and $1.9 million and $6.5 million of costs
associated with business dispositions, respectively, which have not been added back for purposes of computing non-GAAP EBITDA. The three months and nine months ended September 30, 2015 also includes $0.2 million and $0.3
million, respectively, of acquisition-related costs.
(2) Includes $3.5 million of expense associated with the extinguishment of debt during the nine months ended September 30, 2015.
Alere Inc. and Subsidiaries
Reconciliation of Net Cash Provided by Operating Activities to Non-GAAP Free Cash Flow
(in thousands)
Three Months Ended Nine Months Ended
September 30, 2015 September 30, 2015
------------------ ------------------
Net cash provided
by operating
activities $104,724 $137,250
Capital
expenditures (20,663) $(67,947)
Non-GAAP free
cash flow $84,061 $69,303
======= =======
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SOURCE Alere Inc.
