CPHD Cepheid (MM)

Cepheid (CPHD) reported EPS of 3 cents during the second quarter of fiscal 2011, much better than the loss of 3 cents in the year-ago period and the Zacks Consensus Estimate of a 2 cents loss.

Revenues during the quarter increased 31% to $63.6 million, beating the Zacks Consensus Estimate of $61 million. The upside was driven by a 42% growth in Clinical segment attributable to strong sales of reagents and systems. Based on strong revenue growth, Cepheid was able to improve its bottom line.

Among the different segments, the Clinical segment consisting of Clinical Systems (up 53% year over year to $13.2 million) and Clinical Reagents (up 40% to $44.1 million) contributed about 90% of the total sales during the quarter. Cepheid’s Non-Clinical business dropped 25% year over year to $6.3 million. Sales from North America and the international market recorded a year-over-year increase of 25% and 52%, respectively.

Gross margin on product sales improved to 54% compared with 48% in the second quarter of 2010. While product sales improved 31%, cost of products sold increased by only 16% leading to an improvement in margin.

Operating expenses amounted to $34.7 million, up 37.4% compared with the year-ago quarter, driven by higher research and development (37% annually to $13.9 million), sales and marketing (28.3% to $11.9 million), and general and administrative expenses (52.3.5% to $8.9 million).

During the quarter, Cepheid’s 148 GeneXpert systems were installed. In addition, the company placed 38 GeneXpert (58 in the first quarter) systems as part of its High Burden Developing Country (HBDC) Program. Including the HBDC systems, a cumulative total of 2,224 systems have been placed worldwide as of June 30, 2011. At the end of the reported quarter, cash and cash equivalents were $98.3 million, up from $79.5 million at the end of December 2010.

Raises Outlook

Cepheid raised its outlook for 2011. The company expects to report revenues of $265–$270 million (previous guidance of $245–$255 million) and EPS of 8–11 cents (loss of 1 cent to a profit of 4 cents per share).

 
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