GPRO GoPro Inc

SAN DIEGO, Feb. 15, 2011 /PRNewswire/ -- Gen-Probe Incorporated (Nasdaq: GPRO) today reported financial results for the fourth quarter and full year 2010, highlighted by record non-GAAP earnings per share (EPS) of $0.61 in the quarter, 17% higher than in the prior year period.

"In the fourth quarter of 2010, Gen-Probe generated record clinical diagnostics sales and an all-time high in earnings per share despite macroeconomic headwinds and unusually strong sales of influenza products a year ago," said Carl Hull, the Company's president and chief executive officer.  "At the same time, we took important steps to accelerate our future growth by filing US regulatory applications for the APTIMA® human papillomavirus (HPV) and trichomonas products, and by acquiring GTI Diagnostics."

Key financial results for the fourth quarter of 2010 were ($ in millions, except EPS):

Key financial results for the full year 2010 were ($ in millions, except EPS):

Revenue Detail

Clinical diagnostics product sales established a new record in the fourth quarter of 2010, with growth driven by the APTIMA Combo 2® assay for detecting Chlamydia and gonorrhea.  Increased APTIMA sales offset lower sales of PRODESSE influenza assays, which were unusually strong in the prior year period due to the H1N1 pandemic.  Foreign exchange fluctuations reduced clinical diagnostics sales by an estimated $0.5 million, or less than 1%, compared to the prior year period.  

Blood screening product sales decreased in the fourth quarter of 2010, as expected, due to lower sales of TIGRIS® instruments to Novartis, the Company's blood screening collaboration partner.  Sales of blood screening assays were flat compared to the prior year period.  Foreign exchange fluctuations reduced blood screening sales by an estimated $0.7 million, or 1%, compared to the prior year period.

Sales of research products and services in the fourth quarter of 2010 declined mainly due to the divestiture of the BioKits food testing business late in 2009, and foreign exchange effects.

Fourth quarter product sales were ($ in millions):

Product sales for the full year 2010 were ($ in millions):

Collaborative research revenues in the fourth quarter of 2010 were $3.7 million, compared to $2.0 million in the prior year period, an increase of 85% that resulted primarily from increased funding from Novartis associated with the development of the fully automated PANTHER™ instrument and the PROCLEIX® ULTRIO® Plus assay for the blood screening market.  

Royalty and license revenues in the fourth quarter of 2010 were $1.9 million, compared to $1.4 million in the prior year period, an increase of 36% that resulted primarily from higher royalties received from Novartis and Ventana.  

GAAP Income Statement Details

Gross margin on product sales was 69.4% in the fourth quarter of 2010, compared to 67.2% in the prior year period.  This increase resulted mainly from decreased sales of low-margin instruments.  

Acquisition-related amortization expenses were $2.2 million in the fourth quarter of 2010, compared to $1.9 million in the prior year period, an increase of 16% that resulted mainly from the October 2009 acquisition of Prodesse and its related intangible assets.

Research and development (R&D) expenses in the fourth quarter of 2010 were $26.9 million, compared to $27.4 million in the prior year period, a decrease of 2% that resulted primarily from lower clinical trial expenses.  

Marketing and sales expenses in the fourth quarter of 2010 were $15.0 million, similar to $15.3 million in the prior year period.  

G&A expenses were $15.6 million in the fourth quarter of 2010, compared to $14.9 million in the prior year period, an increase of 5% that resulted mainly from expenses associated with the consolidation of United Kingdom operations and the acquisition of GTI Diagnostics.

Total other income was $1.2 million in the fourth quarter of 2010, compared to $2.3 million in the prior year period.  This decrease of 48% resulted primarily from lower realized gains from the sale of marketable securities, lower yields on the Company's municipal bond portfolio, and lower investment balances due to share repurchases, acquisitions and strategic investments.  

Income tax expense was $10.8 million in the fourth quarter of 2010, corresponding to a tax rate of 28%.  Income tax expense benefited from the reinstatement of the federal R&D tax credit, which was retroactive to the beginning of 2010.  

Non-GAAP Income Statement Details

Excluding $0.1 million of acquisition-related depreciation expense, gross margin on product sales in the fourth quarter of 2010 was 69.5%, compared to 67.3% in the prior year period.  

Excluding transaction-related costs, general and administrative (G&A) expenses in the fourth quarter of 2010 were $14.7 million, similar to $14.5 million in the prior year period.  

Excluding a $0.4 million non-cash gain on a change in the fair value of contingent consideration, total other income in the fourth quarter of 2010 was $0.8 million, compared to $2.3 million in the prior year period.

Excluding adjustments to contingent consideration that largely are not taxable, income tax expense in the fourth quarter of 2010 was $11.4 million, corresponding to a tax rate of 28%.  

Cash Flows and Balance Sheet

In the fourth quarter of 2010, Gen-Probe generated net cash of $43.8 million from operating activities, and spent $8.6 million on property, plant and equipment, leading to free cash flow of $35.2 million.  The Company repurchased approximately 245,000 shares of its stock in the fourth quarter for $11.9 million, thereby completing its $100 million buyback program.  In a separate press release today, Gen-Probe announced a new, $150 million stock repurchase program.

Gen-Probe continues to have a strong balance sheet.  As of December 31, 2010, the Company had $489.7 million of cash, cash equivalents and marketable securities, and $240.0 million of short-term debt.  The Company pays interest on this debt at a rate 0.6% above the one-month London Interbank Offered Rate (LIBOR), which has been below 0.3%.  

2011 Financial Guidance

"We anticipate 2011 will be a good year financially for Gen-Probe," said Herm Rosenman, the Company's senior vice president and chief financial officer.  "As we said in our recent analyst day, we forecast continued, high-single-digit growth in product sales, even as instrument sales decline.  We also expect improving gross and operating margins to drive solid earnings growth, despite increased legal expenses and lower non-operating income."  Gen-Probe's 2011 financial guidance is described in the table below:

Notes on Presentation

In this press release, all per share amounts are calculated on a fully diluted basis.  Some totals may not foot due to rounding.  Certain prior year amounts have been reclassified to conform to the current year presentation.  

About Non-GAAP Financial Measures

To supplement Gen-Probe's financial results for the fourth quarter of 2010 and its 2011 financial guidance, in each case presented in accordance with GAAP, Gen-Probe uses the following financial measures defined as non-GAAP by the SEC: non-GAAP net income, non-GAAP gross margin, non-GAAP marketing and sales expenses, non-GAAP G&A expenses, non-GAAP operating margin, non-GAAP income tax rate, and non-GAAP EPS.  Gen-Probe's management does not, nor does it suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared and presented in accordance with GAAP.  Gen-Probe's management believes that these non-GAAP financial measures provide meaningful supplemental information regarding the Company's performance by excluding certain expenses and adjustments that may not be indicative of core business results.  Gen-Probe believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing Gen-Probe's performance and when planning, forecasting and analyzing future periods.  These non-GAAP financial measures also facilitate management's internal comparisons to Gen-Probe's historical performance and our competitors' operating results.  Gen-Probe believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making.  Further, our reconciliations of non-GAAP to GAAP operating results, which are included on the attached tables, are presented in the format of consolidated statements of income solely to assist a reader in understanding the impact of the various adjustments to our GAAP operating results, individually and in the aggregate, and are not intended to place any undue prominence on our non-GAAP operating results.

Webcast Conference Call

A live webcast of Gen-Probe's fourth quarter 2010 conference call for investors can be accessed at http://www.gen-probe.com beginning at 4:30 p.m. Eastern Time today.  The webcast will be archived for at least 90 days. A telephone replay of the call will be available for approximately 24 hours.  Call 800-294-4406 (US) or 203-369-3231 (international).  

About Gen-Probe

Gen-Probe is a global leader in the development, manufacture and marketing of rapid, accurate and cost-effective molecular diagnostic products and services that are used primarily to diagnose human diseases, screen donated human blood, and ensure transplant compatibility.  Gen-Probe has approximately 28 years of expertise in nucleic acid testing (NAT), and received the 2004 National Medal of Technology, America's highest honor for technological innovation, for developing NAT assays for blood screening.  Gen-Probe is headquartered in San Diego and employs approximately 1,400 people. For more information, go to www.gen-probe.com.

Trademarks

APTIMA, APTIMA COMBO 2, PANTHER, PRODESSE and TIGRIS are trademarks of Gen-Probe.  All other trademarks are the property of their owners.

Caution Regarding Forward-Looking Statements

Any statements in this news release about our expectations, beliefs, plans, objectives, assumptions or future events or performance, including those under the heading " 2011 Financial Guidance," are not historical facts and are forward-looking statements.  These statements are often, but not always, made through the use of words or phrases such as believe, will, expect, anticipate, estimate, intend, plan and would.  For example, statements concerning Gen-Probe's financial condition, possible or expected results of operations, the development and commercialization of new products, regulatory approvals, future milestones, growth opportunities, and plans of management are all forward-looking statements.  Forward-looking statements are not guarantees of performance.  They involve known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to differ materially from those expressed or implied.  Some of these risks, uncertainties and assumptions include but are not limited to: (i) the risk that we may not achieve our expected 2011 financial targets, (ii) the risk that we may not integrate acquisitions, such as Tepnel, Prodesse and GTI Diagnostics, successfully, (iii) the possibility that the market for the sale of our new products, such as our PANTHER instrument system and PROGENSA PCA3, APTIMA HPV and APTIMA trichomonas assays, may not develop as expected, (iv) the enhancement of existing products and the development of new products may not proceed as planned, (v) the risk that investigational products, including those now in US clinical trials, may not be approved by regulatory authorities or become commercially available in the time frame we anticipate, or at all, (vi) the risk that we may not be able to compete effectively, (vii) the risk that we may not be able to maintain our current corporate collaborations and enter into new corporate collaborations or customer contracts, (viii) our dependence on Novartis and other third parties for the distribution of some of our products, (ix) our dependence on a small number of customers, contract manufacturers and single source suppliers of raw materials, (x) changes in third-party reimbursement policies regarding our products could adversely affect sales, (xi) changes in government regulation or tax policy affecting our diagnostic products could harm our sales, increase our development costs or increase our taxes, (xii) the risk that our intellectual property may be infringed by third parties or invalidated, and (xiii) our involvement in patent and other intellectual property and commercial litigation could be expensive and could divert management's attention.  This list includes some, but not all, of the factors that could affect our ability to achieve results described in any forward-looking statements.  For additional information about risks and uncertainties we face and a discussion of our financial statements and footnotes, see documents we file with the SEC, including our most recent annual report on Form 10-K and all subsequent periodic reports.  We assume no obligation and expressly disclaim any duty to update forward-looking statements to reflect events or circumstances after the date of this news release or to reflect the occurrence of subsequent events.

SOURCE Gen-Probe Incorporated