Alere Inc. Announces First Quarter 2014 Results - KMPH FOX 26 | Central San Joaquin Valley News Source

Alere Inc. Announces First Quarter 2014 Results

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SOURCE Alere Inc.

WALTHAM, Mass., April 29, 2014 /PRNewswire/ -- Alere Inc. (NYSE: ALR), a global leader in enabling individuals to take charge of their health at home through the merger of rapid diagnostics and health information solutions, today announced its financial results for the quarter ended March 31, 2014.

Ron Zwanziger, Chairman, Chief Executive Officer and President of Alere said, "Despite a difficult quarter from a revenue perspective, principally related to weak U.S. influenza sales and a larger-than-expected reduction in U.S. healthcare utilization which primarily impacted our U.S. infectious disease revenue, we are pleased to have delivered adjusted earnings per diluted share in excess of our prior year's results.  This was achieved in part through careful expense controls.  Strong free cash flow generated during the quarter enabled us to reduce our net debt to adjusted EBITDA ratio during the quarter, again demonstrating our commitment to delivering continuing shareholder value."

Financial results for the first quarter of 2014:

  • Net revenue of $716.6 million for the first quarter of 2014, compared to $739.2 million for the first quarter of 2013.  Non-GAAP adjusted net revenue was $717.0 million for the first quarter of 2014, compared to $739.9 million for the first quarter of 2013.
  • Net loss of $11.5 million attributable to common stockholders of Alere Inc., and respective net loss per diluted common share of $0.14, for the first quarter of 2014, compared to net income of $7.2 million attributable to common stockholders of Alere Inc., and respective net income per diluted common share of $0.09, for the first quarter of 2013.
  • Non-GAAP adjusted net income per diluted common share of $0.55 for the first quarter of 2014, compared to non-GAAP adjusted net income per diluted common share of $0.53 for the first quarter of 2013.
  • Net product and services revenue from our Professional Diagnostics segment was $561.3 million in the first quarter of 2014, compared to net product and services revenue of $578.6 million in the first quarter of 2013. Non-GAAP adjusted net product and services revenue from our Professional Diagnostics segment was $561.8 million in the first quarter of 2014, compared to non-GAAP adjusted net product and services revenue of $579.3 million in the first quarter of 2013. Recent Professional Diagnostics acquisitions contributed $21.5 million of incremental net revenue, compared to the first quarter of 2013, offset by a $6.4 million decrease in net revenue related to our 2013 disposition of Spinreact.
  • U.S. influenza, meter-based Triage products and mail-order diabetes revenues were $7.3 million, $22.9 million and $32.3 million, respectively, for the first quarter of 2014 compared to $34.3 million, $21.6 million and $33.2 million, respectively, for the first quarter of 2013. Lower influenza revenues reflect the relatively short 2013-2014 flu season, which we noted in our fourth quarter 2013 earnings call. Meter-based Triage products revenue increased from the prior year for the first time since our supply issues began in the second quarter of 2012, reflecting increased revenues from sales of our BNP, Cardiac Panel and D-dimer products. Despite an increase in patients served from 282,000 at the end of the first quarter of 2013 to 769,000 as of March 31, 2014, mail-order diabetes revenues declined slightly, as a result of lower reimbursement rates that became effective on July 1, 2013.
  • Excluding the impact of the change in U.S. influenza revenues and the impact on revenues from the U.S. meter-based Triage product sales, currency adjusted organic growth in our Professional Diagnostics segment was negative 1%. This growth rate was adversely impacted by the decrease in reimbursement rates that became effective on July 1, 2013 for our U.S. mail-order diabetes business. Excluding revenues from our U.S. mail-order diabetes business and considering the flu and Triage adjustments, the currency adjusted organic growth rate for the first quarter of 2014 was 4% for the remainder of our Professional Diagnostics segment.
  • The 4% adjusted organic growth rate for our Professional Diagnostic segment for the first quarter of 2014, adjusted for the impact of the U.S. influenza, meter-based Triage products and mail-order diabetes revenues as noted above, reflects a 2% decrease in adjusted U.S. revenues, compared to the first quarter of 2013, offset by an 8% increase in adjusted net revenues from our international business. The 2% decrease in the U.S. business principally resulted from lower infectious disease revenues reflecting lower utilization levels during 2014 than during 2013.
  • Net product and services revenue from our Health Information Solutions segment was $123.7 million in the first quarter of 2014, compared to $134.2 million in the first quarter of 2013 and $130.0 million in the fourth quarter of 2013, as a result of the weak contracting season that we experienced during the second half of 2013.
  • Gross margin was 49.0% of net revenue in the first quarter of 2014, compared to 49.3% in the first quarter of 2013. Non-GAAP adjusted gross margins, which exclude from cost of net revenue amortization of acquisition-related intangibles, stock-based compensation expense, restructuring charges, and non-cash charges associated with acquired inventory, was 51.5% of non-GAAP adjusted net revenue in the first quarter of 2014 compared to 52.1% in the first quarter of 2013. The lower gross margin in the current period principally reflects the lower U.S. influenza sales and reduced mail-order diabetes reimbursement rates noted above.
  • Operating expenses consisting of research and development and selling, general and administrative expenses were $325.3 million for the first quarter of 2014, compared to $333.8 million for the first quarter of 2013. Non-GAAP adjusted operating expenses, which exclude amortization of acquisition-related intangibles, restructuring charges, stock-based compensation expense, acquisition-related fair value and compensation-related contingent consideration charges and acquisition and disposition costs, were $255.5 million for the first quarter of 2014, or 35.6% of non-GAAP adjusted net revenue, compared to $257.3 million, or 34.8% of non-GAAP adjusted net revenue, for the first quarter of 2013.
  • Free cash flow for the first quarter of 2014 was $78.4 million, reflecting cash flow from operations of $105.9 million, offset by capital expenditures of $27.5 million. Free cash flow for the first quarter of 2013 was $35.0 million, reflecting cash flow from operations of $71.1 million, offset by capital expenditures of $36.1 million.
  • Non-GAAP EBITDA for the first quarter of 2014 was $144.5 million, which reflects adjustments to add back non-interest related restructuring charges of $7.2 million, $0.3 million of acquisition-related costs and $3.0 million of costs associated with potential business dispositions. Non-GAAP EBITDA for the first quarter of 2013 was $153.3 million, which reflects adjustments to add back non-interest related restructuring charges of $3.9 million and $0.9 million of acquisition-related costs. Adjusted non-GAAP EBITDA, which reflects adjustments to add back restructuring, acquisition and disposition related and proxy costs, totaled $661.0 million for the twelve-month period ended March 31, 2014, compared to $619.5 million for the twelve-month period ended March 31, 2013.
  • Debt, net of cash and restricted cash held to secure debt ("net debt"), was $3.37 billion as of March 31, 2014, compared to net debt of $3.53 billion as of March 31, 2013. Our net debt to adjusted non-GAAP EBITDA ratio was 5.1x as of March 31, 2014, compared to 5.7x as of March 31, 2013.

The Company's GAAP results for the first quarter of 2014 exclude $0.4 million of revenue associated with acquired software license contracts that are not recognized due to business combination accounting rules and include $66.6 million of amortization, $7.3 million of restructuring charges, $5.7 million of stock-based compensation expense, $0.3 million of acquisition-related costs recorded in accordance with ASC 805, Business Combinations, $4.6 million of income recorded for fair value adjustments to acquisition-related contingent consideration, $3.0 million of costs associated with potential business dispositions, $0.4 million of interest expense recorded in connection with fees paid for certain debt modifications, $0.4 million in compensation charges and $0.1 million of related interest accretion associated with acquisition-related contingent consideration obligations.  The Company's GAAP results for the first quarter of 2013 exclude $0.6 million of revenue associated with acquired software license contracts that are not recognized due to business combination accounting rules and include $76.0 million of amortization, $3.9 million of restructuring charges, $4.1 million of stock-based compensation expense, $0.9 million of acquisition-related costs recorded in accordance with ASC 805, Business Combinations, $11.0 million of expense recorded for fair value adjustments to acquisition-related contingent consideration, $1.0 million of interest expense recorded in connection with fees paid for certain debt modifications, $0.7 million in compensation charges associated with acquisition-related contingent consideration obligations, a $0.5 million charge associated with the write-up to fair market value of inventory acquired in connection with the acquisition of Epocal Inc. and $0.2 million of expense associated with the extinguishment of debt.

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.

The Company will host a conference call beginning at 8:30 a.m. (Eastern Time) today, April 29, 2014, to discuss these results, as well as other corporate matters.  During the conference call, the Company may answer questions concerning business and financial developments and trends and other business and financial matters.  The Company's responses to these questions, as well as other matters discussed during the conference call, may contain or constitute material information that has not been previously disclosed.

The conference call may be accessed by dialing (877) 443-4809 (domestic) or (412) 902-6615 (international) and asking for Alere Inc.  A webcast of the call can also be accessed via the Alere website at http://www.alere.com/us/en/about/investor-relations/events.html, or directly through the following link: http://www.videonewswire.com/event.asp?id=99047.

A replay of the call 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.  The replay may be accessed by dialing (877) 344-7529 (domestic) or (412) 317-0088 (international) and entering replay code 10045124.  The replay will also be available via online webcast at http://www.videonewswire.com/event.asp?id=99047 or via the Alere website at http://www.alere.com/us/en/about/investor-relations/events.html for a period of 60 days following the call.

Additionally, reconciliations to non-GAAP financial measures not included in this press release that may be discussed during the call will also be available at the Alere website (http://www.alere.com/us/en/about/investor-relations/events.html) under the Earnings Calls and Releases section shortly before the conference call begins and will continue to be available on this website.

For more information about Alere, please visit our web site at http://www.alere.com.

By developing new capabilities in near-patient diagnosis, monitoring and health information solutions, Alere enables individuals to take charge of improving their health and quality of life at home.  Alere's global leading products and services, as well as its new product development efforts, focus on infectious disease, toxicology, cardiology and diabetes.  Alere is headquartered in Waltham, Massachusetts.

 

Alere Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)










Three Months Ended March 31, 




2014


2013







Net product sales and services revenue


$               711,410


$               735,185

License and royalty revenue


5,212


4,064


Net revenue


716,622


739,249

Cost of net revenue


365,383


374,992


      Gross profit


351,239


364,257


      Gross margin


49%


49%







Operating expenses:






Research and development


38,699


41,454


Selling, general and administrative


286,600


292,314


  Total operating expenses


325,299


333,768


      Operating income 


25,940


30,489

Interest and other income (expense), net


(47,322)


(57,869)


 Loss before benefit for income taxes 


(21,382)


(27,380)

Benefit for income taxes


(9,917)


(36,871)


 Income (loss) before equity earnings of unconsolidated entities, net of tax 


(11,465)


9,491

Equity earnings of unconsolidated entities, net of tax


5,352


2,934

Net income (loss)


(6,113)


12,425


Less: Net income (loss) attributable to non-controlling interests


108


(25)

Net income (loss) attributable to Alere Inc. and Subsidiaries


(6,221)


12,450








Preferred stock dividends


(5,250)


(5,250)







Net income (loss) available to common stockholders


$               (11,471)


$                    7,200








Basic net income (loss) per common share


$                   (0.14)


$                      0.09


Diluted net income (loss) per common share


$                   (0.14)


$                      0.09







Weighted average shares - basic


82,387


81,199

Weighted average shares - diluted


82,387


81,300

 

 

Alere Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands)






March 31,


December 31,


2014


2013

ASSETS




CURRENT ASSETS:




Cash and cash equivalents

$            433,026


$            361,908

Restricted cash

4,222


6,373

Marketable securities

781


858

Accounts receivable, net

528,793


548,729

Inventories, net

371,136


364,185

Prepaid expenses and other current assets

183,145


190,361

Total current assets

1,521,103


1,472,414





PROPERTY, PLANT AND EQUIPMENT, NET

545,051


545,164

GOODWILL AND OTHER INTANGIBLE ASSETS, NET

4,763,226


4,835,004

RESTRICTED CASH - NON-CURRENT

28,856


29,370

DEFERRED FINANCING COSTS AND OTHER ASSETS, NET

177,950


178,862

Total assets

$        7,036,186


$         7,060,814





LIABILITIES AND STOCKHOLDERS' EQUITY




CURRENT LIABILITIES:




Current portions of long-term debt and capital lease obligations

$              71,472


$               55,967

Other current liabilities

620,709


617,219

Total current liabilities

692,181


673,186





LONG-TERM LIABILITIES:




Long-term debt and capital lease obligations, net of current portions

3,760,886


3,787,195

Deferred tax liabilities

307,574


329,249

Other long-term liabilities

194,989


188,336

Total long-term liabilities

4,263,449


4,304,780





TOTAL EQUITY

2,080,556


2,082,848

Total liabilities and equity

$        7,036,186


$         7,060,814

 

 

Alere Inc. and Subsidiaries

Reconciliation to Non-GAAP Adjusted Operating Results

(in thousands, except per share amounts)






Three Months Ended March 31,


2014


2013

Reconciliation to Non-GAAP Adjusted Operating Income (1)




Operating income 

$                  25,940


$                  30,489





Adjustment related to acquired software license contracts 

419


643

Amortization of acquisition-related intangible assets

66,473


75,867

Restructuring charges 

7,215


3,892

Stock-based compensation expense

5,704


4,123

Compensation charges associated with acquisition-related contingent consideration obligations

422


690

Acquisition-related costs

321


896

Fair value adjustments to acquisition-related contingent consideration

4,550


11,018

Non-cash charge associated with acquired inventory

-


461

Costs associated with potential business dispositions

2,960


-

Non-GAAP adjusted operating income

$                114,004


$                128,079






Three Months Ended March 31,


2014


2013

Reconciliation to Non-GAAP Adjusted Net Income(1)




Net income (loss) available to common stockholders

$                (11,471)


$                    7,200





Adjustment related to acquired software license contracts 

419


643

Amortization of acquisition-related intangible assets

66,491


75,989

Restructuring charges 

7,340


3,947

Stock-based compensation expense

5,704


4,123

Compensation charges associated with acquisition-related contingent consideration obligations

422


690

Acquisition-related costs

321


896

Fair value adjustments to acquisition-related contingent consideration

4,550


11,018

Non-cash charge associated with acquired inventory

-


461

Costs associated with potential business dispositions

2,960


-

Interest expense recorded in connection with fees paid for certain debt modifications and the termination of our senior secured credit facility

364


952

 

Interest accretion associated with acquisition-related compensation charges

95


-

Expense associated with extinguishment of debt

-


163

Income tax effects on items above

(29,858)


(62,055)





Non-GAAP adjusted net income available to common stockholders

$                  47,337


$                  44,027









Net income (loss) per diluted common share

$                    (0.14)


$                       0.09

Non-GAAP adjusted net income per diluted common share

$                      0.55


$                       0.53





Weighted average shares - diluted

82,387


81,300

Non-GAAP adjusted weighted average shares - diluted

97,346


94,977





 

(1) In calculating "non-GAAP adjusted operating income" and "non-GAAP adjusted net income", 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" are not standard financial measurements under accounting principles generally accepted in the United States of America ("GAAP") and should not be considered as an alternative to operating income and net income or loss or cash flow from operating activities, as a measure of liquidity or as an indicator of operating performance or any measure of performance derived in accordance with GAAP. In addition, all companies do not calculate non-GAAP financial measures in the same manner and, accordingly, "non-GAAP adjusted operating income" and "non-GAAP adjusted net income" presented in this press release may not be comparable to similar measures used by other companies.   

 


 

Alere Inc. and Subsidiaries

Selected Consolidated Revenues by Business Area (1)

(in thousands)








Professional Diagnostics Segment





% Change



Q1 2014


Q1 2013


Q1 14 v. Q1 13








Infectious disease

$          164,030


$          189,844


-14%

Toxicology

151,897


149,049


2%

Cardiology

121,633


114,933


6%

Diabetes

50,721


50,083


1%

Other (1)

73,052


74,719


-2%


Professional diagnostics net product sales and services revenue (1)

561,333


578,628


-3%

License and royalty revenue

5,212


3,864


35%


Professional diagnostics net revenue

$          566,545


$          582,492


-3%















Health Information Solutions Segment





% Change



Q1 2014


Q1 2013


Q1 14 v. Q1 13

Condition and case management

$            49,319


$            54,126


-9%

Wellness

24,950


26,300


-5%

Women's & children's health

22,215


29,080


-24%

Patient self-testing services

27,184


24,701


10%


 

Health information solutions net revenue

$          123,668


$          134,207


-8%








 

(1) Revenues are presented in accordance with generally accepted accounting principles and exclude an adjustment of $0.4 million and $0.6 million related

to acquired software license contracts which were not recognized during the three months ended March 31, 2014 and 2013, 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 March 31, 2014

Operating Segment


Professional Diagnostics


Health Information Solutions


Consumer Diagnostics


Corporate


Total












Net revenue 


$          566,545


$          123,668


$             26,409


$                      -


$          716,622

Adjustment related to acquired software license contracts (1)


419


-


-


-


419

Non-GAAP adjusted net revenue


$          566,964


$          123,668


$             26,409


$                      -


$          717,041












Operating income (loss) 


$            51,326


$            (6,720)


$               2,248


$          (20,914)


$            25,940

Adjustment related to acquired software license contracts (1)


419


-


-


-


419

Amortization of acquisition-related intangible assets


57,285


8,899


289


-


66,473

Restructuring charges 


4,303


2,817


-


95


7,215

Stock-based compensation expense


-


-


-


5,704


5,704

Compensation charges associated with acquisition-related contingent consideration obligations


422


-


-


-


422

Acquisition-related costs


-


-


-


321


321

Fair value adjustments to acquisition-related contingent consideration


5,461


(1,011)


-


100


4,550

Costs associated with potential business dispositions


2,960


-


-


-


2,960

Non-GAAP adjusted operating income (loss)


$          122,176


$               3,985


$               2,537


$          (14,694)


$          114,004












Non-GAAP adjusted operating income (loss) as % of Non-GAAP adjusted net revenue


21.5%


3.2%


9.6%




15.9%












(1) Estimated revenue related to acquired software license contracts that was not recognized during the first quarter of 2014 due to business combination accounting rules.    



 

 

For the Three Months Ended March 31, 2013

Operating Segment


Professional Diagnostics


Health Information Solutions


Consumer Diagnostics


Corporate


Total












Net revenue 


$          582,492


$          134,207


$             22,550


$                      -


$          739,249

Adjustment related to acquired software license contracts (1)


643


-


-


-


643

Non-GAAP adjusted net revenue


$          583,135


$          134,207


$             22,550


$                      -


$          739,892












Operating income (loss) 


$            59,840


$          (13,893)


$               2,280


$          (17,738)


$            30,489

Adjustment related to acquired software license contracts (1)


643


-


-


-


643

Amortization of acquisition-related intangible assets


64,293


11,038


536


-


75,867

Restructuring charges 


1,389


2,503


-


-


3,892

Stock-based compensation expense


-


-


-


4,123


4,123

Compensation charges associated with acquisition-related contingent consideration obligations


690


-


-


-


690

Non-cash charge associated with acquired inventory


461


-


-


-


461

Acquisition-related costs


-


-


-


896


896

Fair value adjustments to acquisition-related contingent consideration


7,063


3,355


-


600


11,018

Non-GAAP adjusted operating income (loss)


$          134,379


$               3,003


$               2,816


$          (12,119)


$          128,079












Non-GAAP adjusted operating income (loss) as % of Non-GAAP adjusted net revenue


23.0%


2.2%


12.5%




17.3%












(1) Estimated revenue related to acquired software license contracts that was not recognized during the first quarter of 2013 due to business combination accounting rules.        

_________________________________________________

Comments:          


In calculating "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 "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, "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

March 31, 2014


Three Months Ended

March 31, 2013









Net revenue 


$                           716,622


$                           739,249

Adjustment related to acquired software license contracts 


419


643

Non-GAAP adjusted net revenue


$                           717,041


$                           739,892






Cost of net revenue


$                           365,383


$                           374,992

Less adjustments:





Amortization of acquisition-related intangible assets


(16,636)


(19,170)

Restructuring charges 


(875)


(623)

Stock-based compensation expense


(287)


(232)

Non-cash charge associated with acquired inventory


-


(461)

Non-GAAP adjusted cost of net revenue


$                           347,585


$                           354,506






Non-GAAP adjusted gross profit


$                           369,456


$                           385,386








Three Months Ended March 31, 2014


Three Months Ended March 31, 2013









Research and development 


$                             38,699


$                             41,454

Less adjustments:





Amortization of acquisition-related intangible assets


(1,165)


(1,282)

Stock-based compensation expense


(1,191)


(747)

Non-GAAP adjusted research and development


$                             36,343


$                             39,425








Three Months Ended March 31, 2014


Three Months Ended March 31, 2013









Selling, general and administrative


$                           286,600


$                           292,314

Less adjustments:





Amortization of acquisition-related intangible assets


(48,672)


(55,415)

Restructuring charges 


(6,340)


(3,269)

Stock-based compensation expense


(4,226)


(3,144)

Compensation charges associated with acquisition-related contingent consideration obligations


(422)


(690)

Acquisition-related costs


(321)


(896)

Fair value adjustments to acquisition-related contingent consideration


(4,550)


(11,018)

Costs associated with potential business dispositions


(2,960)


-

Non-GAAP adjusted selling, general and administrative 


$                           219,109


$                           217,882








Three Months Ended March 31, 2014


Three Months Ended March 31, 2013









Interest and other income (expense), net


$                           (47,322)


$                           (57,869)

Less adjustments:





Restructuring charges 


125


55

 

Interest expense recorded in connection with fees paid for certain debt modifications and the termination of our senior secured credit facility


364


952

 

Interest accretion associated with acquisition-related compensation charges


95


-

Expense associated with extinguishment of debt


-


163

Non-GAAP adjusted interest and other income (expense), net


$                           (46,738)


$                           (56,699)








Three Months Ended March 31, 2014


Three Months Ended March 31, 2013









Benefit for income taxes


$                             (9,917)


$                           (36,871)

    Add:  Income tax effects on Non-GAAP adjustments


29,887


62,061

Non-GAAP adjusted provision for income taxes


$                             19,970


$                             25,190








Three Months Ended March 31, 2014


Three Months Ended March 31, 2013









Equity earnings of unconsolidated entities, net of tax


$                                5,352


$                                2,934

Less adjustments:





Amortization of acquisition-related intangible assets


148


151

Income tax effects on items above


-


-

 

Non-GAAP adjusted equity earnings of unconsolidated entities, net of tax


$                                5,500


$                                3,085

 

 

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

 March 31, 2013


 December 31, 2013


March 31, 2014













Net revenue 

$     739,249




$    772,326




$     716,622



    Adjustment related to acquired












      software license contracts

643




470




419



Non-GAAP adjusted net revenue

739,892




772,796




717,041















Cost of net revenue 

374,992




387,977




365,383



Less adjustments:












    Amortization of acquisition-related intangible assets

19,170




17,656




16,636



    Stock-based compensation expense

232




329




287



    Non-cash charge associated with acquired inventory

461




624




-



    Restructuring charges

623




2,957




875



         Non-GAAP adjusted cost of net revenue

354,506




366,411




347,585















Non-GAAP adjusted gross profit/margin 

$     385,386


52.1%


$    406,385


52.6%


$     369,456


51.5%














Three Months Ended 


Three Months Ended 


Three Months Ended 

Professional Diagnostics Segment

 March 31, 2013


 December 31, 2013


March 31, 2014













Net product sales and services revenue 

$     578,628




$    600,667




$     561,333



    Adjustment related to acquired












      software license contracts

643




470




419



Non-GAAP adjusted net product sales and services revenue

579,271




601,137




561,752















Cost of net revenue 

278,453




292,183




273,542



Less adjustments:












    Amortization of acquisition-related intangible assets

17,399




16,005




15,136



    Stock-based compensation expense

232




329




287



    Non-cash charge associated with acquired inventory

461




624




-



    Restructuring charges

199




2,253




833



         Non-GAAP adjusted cost of net revenue

260,162




272,972




257,286















Non-GAAP adjusted gross profit/margin 

$     319,109


55.1%


$    328,165


54.6%


$     304,466


54.2%














Three Months Ended 


Three Months Ended 


Three Months Ended 

Health Information Solutions Segment

 March 31, 2013


 December 31, 2013


March 31, 2014













Net product sales and services revenue 

$     134,207




$    130,012




$     123,668















Cost of net revenue 

76,857




70,780




68,714



Less adjustments:












    Amortization of acquisition-related intangible assets

1,482




1,440




1,413



    Restructuring charges

424




704




42



         Non-GAAP adjusted cost of net revenue

74,951




68,636




67,259















Non-GAAP adjusted gross profit/margin 

$       59,256


44.2%


$       61,376


47.2%


$       56,409


45.6%

 

 

Alere Inc. and Subsidiaries

Reconciliation of Net Loss to Non-GAAP EBITDA

(in thousands)






 Three Months Ended 




March 31, 2014







Net loss (1) 

$                   (6,113)







Adjustment related to acquired software license contracts

419



Income tax benefit

(9,917)



Depreciation and amortization

98,234



Interest, net

51,659



Non-cash stock-based compensation expense

5,704



Non-cash fair value adjustments to acquisition-related contingent consideration

4,550











Non-GAAP EBITDA

$                      144,536







 

(1)  Net loss for the three months ended March 31, 2014 includes non-interest related restructuring charges

of $7.2 million, $0.3 million of acquisition-related costs and $3.0 million of costs associated with potential

business dispositions which have not been added back for purposes of computing Non-GAAP EBITDA. 

 


 

Reconciliation of Cash Flow from Operating Activities to Free Cash Flow

(in thousands)





Three Months Ended



March 31, 2014





Cash flow from operating activities (GAAP)

$                     105,908


Capital expenditures

(27,540)





Free cash flow

$                        78,368


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