CEPHEID SUNNYVALE, Calif., July 28, 2016 /PRNewswire/ -- Cepheid (Nasdaq: CPHD) today reported revenue for the second quarter of 2016 of $146.0 million, representing growth of 10%, or 12% on a constant currency basis, from $132.5 million for the second quarter of 2015. Net loss was $(10.2) million, or $(0.14) per share, which compares to net loss of $(16.7) million, or $(0.23) per share, in the second quarter of 2015.
Excluding stock-based compensation expense, amortization of debt discount and transaction costs, and amortization of purchased intangible assets, non-GAAP net income for the second quarter of 2016 was $3.5 million, or $0.05 per share. This compares to non-GAAP net loss of $(4.5) million, or $(0.06) per share, in the second quarter of 2015, which excluded stock-based compensation expense, amortization of debt discount and transaction costs, and amortization of purchased intangible assets.
"Solid second quarter performance was driven by building momentum across our commercial organization that sets us up well for strong growth in the second half of 2016," said John Bishop, Cepheid's Chairman and Chief Executive Officer. "We also continued to move our virology and oncology products closer to market in the United States and Internationally, respectively, and made excellent progress on our next-generation platforms, the Honeycomb and Omni Systems. Taken together, we continue to build an attractive portfolio of products that builds on our leadership in innovation and leverages our substantial worldwide installed base."
Operational Overview
Total revenue was, in millions:
Three Months Ended June 30,
2016 2015 Change Change
(Reported) (Constant Currency)
--------- ------------------
Systems
and
Other $24.8 $24.4 2% 4%
Reagents
and
Disposables 121.2 108.1 12% 14%
----- -----
Total
Revenue 146.0 132.5 10% 12%
===== =====
By geography, total revenue was, in millions:
Three Months Ended June 30,
2016 2015 Change Change
(Reported) (Constant Currency)
--------- ------------------
North America $81.2 $76.2 7% -
International 64.8 56.3 15% 21%
---- ----
Total Revenue 146.0 132.5 10% 12%
===== =====
-- GAAP gross margin was 50% and non-GAAP gross margin was 51% for the
second quarter of 2016, which compares to 48% and 49%, respectively, in
the second quarter of 2015.
-- Cash, cash equivalents and investments were $378.7 million as of June
30, 2016.
-- DSO was 39 days.
Business Outlook
For the fiscal year ending December 31, 2016, the Company now expects:
-- Total revenue to be in the range of $618 to $635 million;
-- Net loss in the range of $(0.47) to $(0.44) per share; and
-- Non-GAAP net income in the range of $0.31 to $0.34 per share.
Expected non-GAAP net income excludes approximately $42 million related to stock-based compensation expense, approximately $11 million related to the amortization of debt discount and transaction costs, and approximately $5 million related to the amortization of purchased intangible assets. The fully diluted share count for the year is expected to be approximately 73 million shares for net loss per share, and approximately 75 million shares for non-GAAP net income per share.
The following table reconciles net loss per share to the non-GAAP net income per share range:
Guidance Range for Year
Ending December 31, 2016
------------------------
Low High
--- ----
Net Loss Per Share $(0.47) $(0.44)
Stock-Based Compensation
Expense 0.56 0.56
Amortization of Debt
Discount and Transaction
Costs 0.07 0.07
Amortization of Purchased
Intangible Assets 0.15 0.15
Non-GAAP Measure of Net
Income Per Share $0.31 $0.34
===== =====
Accessing Cepheid's 2016 Second Quarter Results Conference Call
The Company will host a management presentation at 2 p.m. Pacific Time on Thursday, July 28, 2016 to discuss the results. To access the live webcast, please visit Cepheid's website at http://ir.cepheid.com. A replay of the webcast will be available shortly following the call and will remain available for at least 90 days.
Summary of Management Presentation
In conjunction with today's press release, the Company is making a summary of the management presentation immediately available at http://ir.cepheid.com.
About Cepheid
Based in Sunnyvale, California, Cepheid (Nasdaq: CPHD) is a leading molecular diagnostics company that is dedicated to improving healthcare by developing, manufacturing, and marketing accurate yet easy-to-use molecular systems and tests. By automating highly complex and time-consuming manual procedures, the Company's solutions deliver a better way for institutions of any size to perform sophisticated genetic testing for organisms and genetic-based diseases. Through its strong molecular biology capabilities, the Company is focusing on those applications where accurate, rapid, and actionable test results are needed most, such as managing infectious diseases and cancer. For more information, visit http://www.cepheid.com.
Use of Non-GAAP Measures
The Company has supplemented its reported GAAP financial information, including (1) non-GAAP net income and non-GAAP gross margin that do not include stock-based compensation expense, amortization of debt discount and transaction costs and amortization of purchased intangible assets and (2) revenue metrics presented on a constant currency basis. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with U.S. 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 U.S. GAAP and that these measures should only be used to evaluate the Company's results of operations in conjunction with the corresponding GAAP measures.
Non-GAAP Net Income and Non-GAAP Gross Margin
As described above, the Company excludes the following items from one or more of its non-GAAP net income and non-GAAP gross margin when applicable:
Stock-based Compensation Expense. This consists primarily of expenses for stock options and restricted stock under ASC 718 (formerly SFAS 123(R)). The Company excludes stock-based compensation expense from its non-GAAP measures primarily because it is a non-cash expense that the Company does not believe is reflective of ongoing operating results in the period incurred. 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 Debt Discount and Transaction Costs. The Company incurs amortization of debt discount and transaction costs in connection with the Convertible Senior Notes issued in February 2014. The Company excludes these amounts because these expenses are not reflective of ongoing operating results in the period incurred. These amounts arise from the Company's issuance of debt and have no direct correlation to the operation of the Company's business.
Amortization of Purchased Intangible Assets. The Company incurs amortization of purchased intangible assets in connection with acquisitions. The Company excludes these amounts 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.
Constant Currency
The Company presents certain revenue information in this release on a constant currency basis that excludes the effect of foreign currency rate fluctuations and hedging transactions. The Company calculates constant currency revenue growth by (i) translating current quarter or year-to-date revenues to constant currency revenues using the applicable prior period exchange rates and (ii) excluding any gain or loss from foreign currency hedge contracts that are reported in revenue. The Company believes constant currency revenue growth provides useful supplemental information to investors about the financial performance of the Company's business and enables a more accurate comparison of financial results between periods, by excluding the impact of currency rate fluctuations and hedging transactions. Investors should be cautioned that the effect of changing foreign currency exchange rates has an actual effect on operating results.
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 projected future growth, future revenues, future net loss/income and profitability and future number of fully-diluted shares, including on a non-GAAP basis, strategic investments, market penetration and expansion, development and timing of new products, effectiveness of product development and commercialization efforts and the breadth and speed of test menu expansion, geographic expansion, customer segment expansion and market expansion. 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: the Company's success in increasing commercial and HBDC sales and the effectiveness of its sales personnel; the efficacy of the Company's on-going cost-reduction and gross margin improvement efforts; the relative mix of commercial and HBDC sales, and relative mix of instrument and test sales; manufacturing costs associated with the ramp-up of new products; the speed and extent of test menu expansion and utilization; the performance and market acceptance of new products, including the Honeycomb module and Omni System and new products related to oncology and genetics; the Company's ability to sell directly to the smaller hospital market and independent reference laboratory market; the on-going expansion of the Company's United States sales organization; sales organization productivity and the productivity and effectiveness of the Company's distributors; the Company's reliance on distributors in some regions to market, sell and support its products; sufficient customer demand, customer confidence in product availability and available customer budgets for the Company's products; the Company's ability to develop new products, complete clinical trials successfully and obtain regulatory clearances in a timely manner for new products; uncertainties related to the FDA regulatory and international regulatory processes; the potential impact of guidelines or recommendations and studies published by various organizations; the level of testing at clinical customer sites, including for Healthcare Associated Infections (HAIs); the Company's ability to successfully introduce and sell products in clinical markets other than HAIs; long sales cycles and variability in systems placements and reagent pull-through in the Company's HBDC program; the rate of environmental biothreat testing conducted by the USPS, which will affect the amount of consumable products sold to the USPS; unforeseen supply, development and manufacturing problems; the Company's ability to manage its inventory levels; the Company's ability to successfully complete and bring on additional manufacturing lines; the potential need for additional intellectual property licenses for tests and other products and the terms of such licenses; the occurrence of unforeseen expenditures, acquisitions or other transactions; costs associated with litigation; the impact of competitive products and pricing; the impact of foreign currency exchange; the Company's ability to manage geographically-dispersed operations; the Company's ability to penetrate new geographic markets and manage the operational risks associated with such new markets; and underlying market conditions worldwide. 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.
FINANCIAL TABLES FOLLOW
CEPHEID
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2016 2015 2016 2015
---- ---- ---- ----
Revenue $146,001 $132,475 $290,781 $265,112
Costs and operating expenses:
Cost of sales 73,235 69,377 145,830 130,578
Collaboration profit
sharing 1,284 1,326 1,942 2,593
Research and development 33,592 28,092 63,506 52,078
Sales and marketing 29,874 28,078 58,669 54,014
General and administrative 15,418 16,352 30,473 31,994
Total costs and operating
expenses 153,403 143,225 300,420 271,257
------- ------- ------- -------
Loss from operations (7,402) (10,750) (9,639) (6,145)
Other income (expense):
Interest income 799 416 1,459 789
Interest expense (3,812) (3,646) (7,577) (7,250)
Foreign currency exchange
gain (loss) and other, net 298 (1,496) (230) (2,440)
--- ------ ---- ------
Other expense, net (2,715) (4,726) (6,348) (8,901)
------ ------ ------ ------
Loss before income taxes (10,117) (15,476) (15,987) (15,046)
Provision for income taxes (115) (1,254) (846) (778)
---- ------ ---- ----
Net loss $(10,232) $(16,730) $(16,833) $(15,824)
======== ======== ======== ========
Basic net loss per share $(0.14) $(0.23) $(0.23) $(0.22)
====== ====== ====== ======
Diluted net loss per share $(0.14) $(0.23) $(0.23) $(0.22)
====== ====== ====== ======
Shares used in computing
basic net loss per share 72,921 71,861 72,754 71,563
====== ====== ====== ======
Shares used in computing
diluted net loss per share 72,921 71,861 72,754 71,563
====== ====== ====== ======
CEPHEID
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
June 30, December 31,
-------- ------------
2016 2015
---- ----
ASSETS
Current assets:
Cash and cash equivalents $100,331 $112,568
Short-term investments 223,155 210,147
Accounts receivable, net 62,828 66,550
Inventory, net 156,815 148,690
Prepaid expenses and other
current assets 23,384 18,515
------ ------
Total current assets 566,513 556,470
Property and equipment, net 151,999 127,639
Investments 55,184 62,175
Other non-current assets 5,665 4,205
Intangible assets, net 22,383 25,241
Goodwill 39,681 39,681
------ ------
Total assets $841,425 $815,411
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $64,296 $57,771
Accrued compensation 35,944 39,015
Accrued royalties 4,730 5,469
Accrued and other liabilities 29,483 27,451
Current portion of deferred
revenue 15,116 12,778
------ ------
Total current liabilities 149,569 142,484
Long-term portion of deferred
revenue 7,489 5,538
Convertible senior notes, net 287,005 281,627
Other liabilities 19,665 15,779
------ ------
Total liabilities 463,728 445,428
------- -------
Shareholders' equity:
Common stock 454,488 449,704
Additional paid-in capital 282,337 263,429
Accumulated other
comprehensive loss, net (53) (908)
Accumulated deficit (359,075) (342,242)
-------- --------
Total shareholders' equity 377,697 369,983
------- -------
Total liabilities and
shareholders' equity $841,425 $815,411
======== ========
CEPHEID
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended
June 30,
--------
2016 2015
---- ----
Cash flows from operating activities:
Net loss $(16,833) $(15,824)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and
amortization of
property and equipment 15,331 13,435
Amortization of
intangible assets 2,858 3,334
Unrealized foreign
exchange differences 57 1,338
Amortization of debt
discount and
transaction costs 5,377 5,044
Impairment of acquired
intangible assets,
licenses, property and
equipment - 224
Stock-based
compensation expense 18,839 15,799
Excess tax benefits
from stock-based
compensation expense - (53)
Other non-cash items 547 28
Changes in operating assets and liabilities:
Accounts receivable 3,722 (8,949)
Inventory, net (8,058) (9,267)
Prepaid expenses and
other current assets (4,252) (5,151)
Other non-current
assets (91) (207)
Accounts payable and
other current and non-
current liabilities 6,024 9,695
Accrued compensation (3,071) (2,514)
Deferred revenue 4,288 991
----- ---
Net cash provided by
operating activities 24,738 7,923
Cash flows from investing activities:
Capital expenditures (34,167) (19,308)
Cost of acquisitions,
net - (3,000)
Proceeds from sale of
equipment and an
intangible asset 44 834
Proceeds from sales of
marketable securities
and investments 40,730 44,873
Proceeds from
maturities of
marketable securities
and investments 112,313 118,497
Purchases of marketable
securities and
investments (158,527) (156,401)
Transfer from (to)
restricted cash (2,049) 1,328
------ -----
Net cash used in
investing activities (41,656) (13,177)
Cash flows from financing activities:
Net proceeds from the
issuance of common
shares and exercise of
stock options 4,836 20,592
Excess tax benefits
from stock-based
compensation expense - 53
Principal payment of
notes payable (85) (80)
--- ---
Net cash provided by
financing activities 4,751 20,565
Effect of foreign
exchange rate change
on cash and cash
equivalents (70) (1,405)
--- ------
Net increase (decrease)
in cash and cash
equivalents (12,237) 13,906
Cash and cash
equivalents at
beginning of period 112,568 96,663
------- ------
Cash and cash
equivalents at end of
period $100,331 $110,569
======== ========
CEPHEID
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2016 2015 2016 2015
---- ---- ---- ----
Revenue, as reported $146,001 $132,475 $290,781 $265,112
Foreign currency
exchange impact on
Q2'16 revenue using
Q2'15 rates (88) - 2,481 -
Loss/(benefit) from
cash flow hedges 248 (2,391) 222 (4,585)
Revenue, at constant
currency $146,161 $130,084 $293,484 $260,527
Revenue growth, as
reported 10% 10%
Revenue growth, at
constant currency 12% 13%
International Revenue,
as reported $64,799 $56,288 $127,189 $106,620
Foreign currency
exchange impact on
Q2'16 revenue using
Q2'15 rates (88) - 2,481 -
Loss/(benefit) from
cash flow hedges 248 (2,391) 222 (4,585)
Revenue, at constant
currency $64,959 $53,897 $129,892 $102,035
International Revenue
growth, as reported 15% 19%
International Revenue
growth, at constant
currency 21% 27%
Systems and Other
Revenue, as reported $24,838 $24,360 $49,122 $43,074
Foreign currency
exchange impact on
Q2'16 revenue using
Q2'15 rates (2) - 319 -
Loss/(benefit) from
cash flow hedges (19) (515) (18) (681)
Systems and Other
Revenue, at constant
currency $24,817 $23,845 $49,423 $42,393
Systems and Other
Revenue growth, as
reported 2% 14%
Systems and Other
Revenue growth, at
constant currency 4% 17%
Reagents and
Disposables Revenue,
as reported $121,163 $108,115 $241,659 $222,038
Foreign currency
exchange impact on
Q2'16 revenue using
Q2'15 rates (86) - 2,162 -
Loss/(benefit) from
cash flow hedges 267 (1,876) 240 (3,904)
Reagents and
Disposables Revenue,
at constant currency $121,344 $106,239 $244,061 $218,134
Reagents and
Disposables Revenue
growth, as reported 12% 9%
Reagents and
Disposables Revenue
growth, at constant
currency 14% 12%
Cost of sales $73,235 $69,377 $145,830 $130,578
Stock-based
compensation expense (1,583) (1,008) (3,098) (2,048)
Amortization of
purchased intangible
assets (829) (1,024) (1,658) (2,048)
Non-GAAP measure of
cost of sales $70,823 $67,345 $141,074 $126,482
Gross margin on revenue
per GAAP 50% 48% 50% 51%
Gross margin on revenue
per Non-GAAP 51% 49% 51% 52%
Operating expenses $78,884 $72,522 $152,648 $138,086
Stock-based
compensation expense (8,272) (7,262) (15,795) (13,779)
Amortization of
purchased intangible
assets (341) (382) (681) (766)
Non-GAAP measure of
operating expenses $70,271 $64,878 $136,172 $123,541
Loss from operations $(7,402) $(10,750) $(9,639) $(6,145)
Stock-based
compensation expense 9,855 8,270 18,893 15,827
Amortization of
purchased intangible
assets 1,170 1,406 2,339 2,814
Non-GAAP measure of
income (loss) from
operations $3,623 $(1,074) $11,593 $12,496
Net loss $(10,232) $(16,730) $(16,833) $(15,824)
Stock-based
compensation expense 9,855 8,270 18,893 15,827
Amortization of debt
discount and
transaction cost 2,710 2,542 5,377 5,044
Amortization of
purchased intangible
assets 1,170 1,406 2,339 2,814
----- ----- ----- -----
Non-GAAP measure of
net income (loss) $3,503 $(4,512) $9,776 $7,861
Basic net loss per
share $(0.14) $(0.23) $(0.23) $(0.22)
Stock-based
compensation expense 0.14 0.12 0.26 0.23
Amortization of debt
discount and
transaction cost 0.04 0.03 0.07 0.06
Amortization of
purchased intangible
assets 0.01 0.02 0.03 0.04
---- ---- ---- ----
Non-GAAP measure of
net income (loss) per
share $0.05 $(0.06) $0.13 $0.11
Diluted net loss per
share $(0.14) $(0.23) $(0.23) $(0.22)
Stock-based
compensation expense 0.14 0.12 0.26 0.23
Amortization of debt
discount and
transaction cost 0.04 0.03 0.07 0.06
Amortization of
purchased intangible
assets 0.01 0.02 0.03 0.04
---- ---- ---- ----
Non-GAAP measure of
net income (loss) per
share $0.05 $(0.06) $0.13 $0.11
Shares used in
computing basic net
income (loss) per
share 72,921 71,861 72,754 71,563
Shares used in
computing Non-GAAP
diluted net income
(loss) per share 74,267 71,861 74,143 74,330
For Media & Investor Inquiries:
Jacquie Ross, CFA
Tel: (408) 400 8329
corporate.communications@cepheid.com
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SOURCE Cepheid
