EX-99.1 2 b76468exv99w1.htm EX-99.1 PRESS RELEASE DATED JULY 28, 2009 exv99w1
Exhibit 99.1
             
Contact:
  Doug Guarino   Director of Corporate Relations   781-647-3900
 
  Jon Russell   Vice President of Finance    
INVERNESS MEDICAL INNOVATIONS ANNOUNCES
SECOND QUARTER 2009 RESULTS
WALTHAM, MA...July 28, 2009...Inverness Medical Innovations, Inc. (NYSE: IMA), a global leader in enabling individuals to take charge of their health at home through the merger of rapid diagnostics and health management, today announced its financial results for the quarter ended June 30, 2009.
In the second quarter of 2009, the Company recorded net revenue of $460.4 million compared to net revenue of $401.1 million in the second quarter of 2008. The revenue increase was primarily due to $34.2 million of incremental revenue provided by our Health Management segment principally as a result of incremental revenues from recently acquired businesses, along with $14.5 million of incremental revenue contributed by our other recently acquired businesses, offset in part by the adverse impact of foreign currency translation which reduced reported revenues by $15.6 million. The recent H1N1 flu outbreak resulted in an increase in sales of our influenza tests by $13.9 million from the second quarter of 2008. Excluding the impact of the flu increase, the currency adjusted organic growth rate in our Professional Diagnostics segment was approximately 6%.
For the second quarter of 2009, the net income prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) was $4.5 million, or $(0.02) per diluted common share after preferred stock dividends, based on a net loss available to common stockholders of $1.2 million, compared to net loss of $30.3 million, or $(0.43) per diluted common share, based on a net loss available to common stockholders of $33.5 million for the second quarter of 2008. The Company reported adjusted cash basis net income available to common stockholders of $47.6 million, or $0.57 per diluted common share, for the second quarter of 2009, compared to adjusted cash basis net income available to common stockholders of $29.6 million, or $0.37 per diluted common share, for the second quarter of 2008.
The Company’s GAAP results for the second quarter of 2009 include amortization of $61.2 million, $4.9 million of restructuring charges, $6.6 million of stock-based compensation expense and $1.7 million of acquisition-related costs recorded in accordance with our adoption of SFAS No. 141-R, Business Combinations. GAAP results for the second quarter of 2008 include amortization of $55.0 million, $23.6 million of restructuring charges, $7.2 million of stock-based compensation expense and a

 


 

$0.3 million charge related to the write-up to fair market value of inventory acquired in connection with the acquisitions of Panbio Limited and BBI Holdings Plc. These amounts, net of tax, have been excluded from the adjusted cash basis net income per common share for the respective quarters.
A detailed reconciliation of the Company’s adjusted cash basis net income, which is a non-GAAP financial measure, to net income(loss) under GAAP, as well as a discussion regarding this non-GAAP financial measure, is included in the schedules to this press release.
The Company will host a conference call beginning at 10:00 a.m. (Eastern Time) today, July 28, 2009, 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 information that has not been previously disclosed.
The conference call may be accessed by dialing 706-679-1656 (domestic and international), an access code is not required, or via a link on the Inverness website at www.invmed.com. It is also available via link at
http://event.meetingstream.com/r.htm?e=156792&s=1&k=4DD72347FD010D55172B7837F276D5F3. An archive of the call will be available from the same link approximately two hours after the conclusion of the live call and will be accessible for 90 days. 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 Inverness website (www.invmed.com/News.cfm) shortly before the conference call begins and will continue to be available on this website for 30 days.
For more information about Inverness Medical Innovations, please visit our website at http://www.invernessmedical.com.
By developing new capabilities in near-patient diagnosis, monitoring and health management, Inverness Medical Innovations enables individuals to take charge of improving their health and quality of life at home. Inverness’ global leading products and services, as well as its new product development efforts, focus on infectious disease, cardiology, oncology, drugs of abuse and women’s health. Inverness is headquartered in Waltham, Massachusetts.
Source: Inverness Medical Innovations

 


 

Inverness Medical Innovations, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and
Reconciliation to Non-GAAP Adjusted Cash Basis Amounts
(in $000s, except per share amounts)
                                                 
    Three Months Ended June 30, 2009     Three Months Ended June 30, 2008  
                    Non-GAAP                     Non-GAAP  
                    Adjusted                     Adjusted  
            Non-GAAP     Cash             Non-GAAP     Cash  
    GAAP     Adjustments     Basis (a)     GAAP     Adjustments     Basis (a)  
 
                                               
Net product sales and services revenue
  $ 456,710     $     $ 456,710     $ 396,289     $     $ 396,289  
License and royalty revenue
    3,680             3,680       4,838               4,838  
 
                                     
Net revenue
    460,390             460,390       401,127             401,127  
Cost of net revenue
    221,398       (12,228 )(b)(c)(d)     209,170       195,025       (17,225 )(b)(c)(d)(e)     177,800  
 
                                   
Gross profit
    238,992       12,228       251,220       206,102       17,225       223,327  
 
                                   
Gross margin
    52 %             55 %     52 %             56 %
 
                                               
Operating expenses:
                                               
Research and development
    26,038       (2,911 )(b)(c)(d)     23,127       29,808       (5,313 )(b)(c)(d)     24,495  
Selling, general and administrative
    186,516       (57,076 )(b)(c)(d)(f)     129,440       172,792       (50,794 )(b)(c)(d)     121,998  
 
                                   
Total operating expenses
    212,554       (59,987 )     152,567       202,600       (56,107 )     146,493  
 
                                   
Operating income
    26,438       72,215       98,653       3,502       73,332       76,834  
Interest and other income (expense), net
    (20,940 )     143 (c)     (20,797 )     (38,646 )     6,624 (c)     (32,022 )
Income tax provision (benefit)
    1,985       25,603 (g)     27,588       (7,698 )     23,066 (g)     15,368  
Equity earnings of unconsolidated entities, net of tax
    983       2,070 (b)(c)     3,053       (2,902 )     6,199 (b)(c)     3,297  
 
                                   
Net income (loss)
  $ 4,496     $ 48,825     $ 53,321     $ (30,348 )   $ 63,089     $ 32,741  
 
                                   
 
                                               
Preferred stock dividends
  $ (5,693 )           $ (5,693 )   $ (3,107 )           $ (3,107 )
 
                                               
Net (loss) income available to common stockholders — basic
  $ (1,197 )           $ 47,628     $ (33,455 )           $ 29,634  
 
                                       
 
                                               
Net (loss) income per common share
                                               
Basic
  $ (0.02 )           $ 0.60     $ (0.43 )           $ 0.38  
 
                                       
Diluted
  $ (0.02 )(h)           $ 0.57 (i)   $ (0.43 )(h)           $ 0.37 (j)
 
                                       
 
                                               
Weighted average common shares — basic
    78,775               78,775       77,647               77,647  
 
                                       
Weighted average common shares — diluted
    78,775 (h)             95,955 (i)     77,647 (h)             82,984 (j)
 
                                       
 
(a)   In calculating net income or loss on an adjusted cash basis, the Company excludes from net income or 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 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 net income or loss for the costs associated with litigation, including payments made or received through settlements. It should be noted that “net income or loss on an adjusted cash basis” 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 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, “net income or loss on an adjusted cash basis” presented in this press release may not be comparable to similar measures used by other companies.
 
(b)   Amortization expense of $61.2 million and $55.0 million in the second quarter of 2009 and 2008 GAAP results, respectively, including $10.2 million and $11.7 million charged to cost of sales, $1.3 million and $1.0 million charged to research and development and $49.5 million and $42.1 million charged to selling, general and administrative, in the respective periods, with $0.2 million charged through equity earnings of unconsolidated entities, net of tax during each of the respective periods.
 
(c)   Restructuring charges associated with the decision to close facilities of $4.9 million and $23.6 million for the second quarter of 2009 and 2008 GAAP results, respectively. The $4.9 million charge for the second quarter of 2009 included $1.5 million charged to cost of sales, $0.3 million charged to research and development, $1.1 million charged to selling, general and administrative, $0.1 million charged to interest expense and $1.9 million charged through equity earnings of unconsolidated entities, net of tax. The $23.6 million charge for the second quarter of 2008 included $4.8 million charged to cost of sales, $3.2 million charged to research and development, $3.0 million charged to selling, general and administrative, $6.6 million charged to interest expense and $6.0 million charged through equity earnings of unconsolidated entities, net of tax. These charges have been excluded from net income or loss because they have a significant impact on results yet do not occur on a consistent or regular basis in the Company’s business.
 
(d)   Compensation costs of $6.6 million and $7.2 million associated with stock-based compensation expense for the second quarter of 2009 and 2008 GAAP results, respectively, including $0.5 million and $0.4 million charged to cost of sales, $1.3 million and $1.1 million charged to research and development and $4.8 million and $5.7 million charged to selling, general and administrative, in the respective quarters.
 
(e)   Write-off in the amount of $0.3 million relating to inventory write-ups recorded in connection with the acquisitions of Panbio Limited and BBI Holdings Plc. during the first quarter of 2008.
 
(f)   Write-off in the amount of $1.7 million for acquisition-related costs recorded in connection with the adoption of SFAS No. 141-R, Business Combinations, on January 1, 2009.
 
(g)   Tax effect on adjustments as discussed above in notes (b), (c), (d), (e) and (f).
 
(h)   For the three months ended June 30, 2009 and 2008, potential dilutive shares were not used in the calculation of diluted net loss per common share under GAAP because inclusion thereof would be antidilutive.
 
(i)   Included in the weighted average diluted common shares for the calculation of net income per common share for the three months ended June 30, 2009, on an adjusted cash basis, are dilutive shares consisting of 1,527,000 common stock equivalent shares from the potential exercise of stock options and warrants. Also included were potential dilutive shares consisting of 3,416,000 common stock equivalent shares from the potential conversion of convertible debt securities, 10,981,000 common stock equivalent shares from the potential conversion of Series B convertible preferred stock and 1,256,000 common stock equivalents from the potential settlement of a portion of the deferred purchase price consideration related to the ACON Second Territory Business. The diluted net income per common share calculation for the three months ended June 30, 2009, on an adjusted cash basis, includes the add back of interest expense related to the convertible debt of $0.7 million, the add back of $5.7 million of preferred stock dividends related to the Series B convertible preferred stock and the add back of interest expense related to the ACON Second Territory Business of $0.3 million resulting in net income available to common stockholders of $54.3 million for the three months ended June 30, 2009.
 
(j)   Included in the weighted average diluted common shares for the calculation of net income per common share for the three months ended June 30, 2008, on an adjusted cash basis, are dilutive shares consisting of 1,926,000 common stock equivalent shares from the potential exercise of stock options and warrants and potential dilutive shares consisting of 3,411,000 common stock equivalent shares from the potential conversion of convertible debt securities. The net income per diluted share calculation for the three months ended June 30, 2008, on an adjusted cash basis, includes the add back of interest expense related to the convertible debt of $0.8 million resulting in net income available to common stockholders of $30.4million. Potential dilutive shares consisting of 6,008,000 common stock equivalent shares from the potential conversion of Series B convertible preferred stock for the three months ended June 30, 2008 were not used in the calculation of diluted net income per common share, on an adjusted cash basis, because inclusion thereof would be antidilutive.

 


 

Inverness Medical Innovations, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and
Reconciliation to Non-GAAP Adjusted Cash Basis Amounts
(in $000s, except per share amounts)
                                                 
    Six Months Ended June 30, 2009     Six Months Ended June 30, 2008  
                    Non-GAAP                     Non-GAAP  
                    Adjusted                     Adjusted  
            Non-GAAP     Cash             Non-GAAP     Cash  
    GAAP     Adjustments     Basis (a)     GAAP     Adjustments     Basis (a)  
 
                                               
Net product sales and services revenue
  $ 891,510     $     $ 891,510     $ 757,650     $     $ 757,650  
License and royalty revenue
    12,740               12,740       15,710               15,710  
 
                                   
Net revenue
    904,250             904,250       773,360             773,360  
Cost of net revenue
    431,056       (24,645 )(b)(c)(d)     406,411       386,868       (40,839 )(b)(c)(d)(e)     346,029  
 
                                   
Gross profit
    473,194       24,645       497,839       386,492       40,839       427,331  
 
                                   
Gross margin
    53 %             56 %     51 %             56 %
 
                                               
Operating expenses:
                                               
Research and development
    53,091       (5,331 )(b)(c)(d)     47,760       60,733       (10,693 )(b)(c)(d)     50,040  
Selling, general and administrative
    365,512       (115,289) (b)(c)(d)(g)     250,223       307,479       (85,121) (b)(c)(d)     222,358  
 
                                   
Total operating expenses
    418,603       (120,620 )     297,983       368,212       (95,814 )     272,398  
 
                                   
Operating income
    54,591       145,265       199,856       18,280       136,653       154,933  
Interest and other income (expense), net
    (41,610 )     273 (c)     (41,337 )     (59,399 )     8,315 (c)(f)     (51,084 )
Income tax provision (benefit)
    5,674       50,371 (h)     56,045       (8,578 )     45,032 (h)     36,454  
Equity earnings of unconsolidated entities, net of tax
    3,480       3,458 (b)(c)     6,938       (1,981 )     6,441 (b)(c)     4,460  
 
                                   
Net income (loss)
  $ 10,787     $ 98,625     $ 109,412     $ (34,522 )   $ 106,377     $ 71,855  
 
                                   
 
                                               
Preferred stock dividends
  $ (11,213 )           $ (11,213 )   $ (3,107 )           $ (3,107 )
 
                                               
Net (loss) income available to common stockholders — basic
  $ (426 )           $ 98,199     $ (37,629 )           $ 68,748  
 
                                       
 
                                               
Net (loss) income per common share
                                               
Basic
  $ (0.01 )           $ 1.25     $ (0.49 )           $ 0.89  
 
                                       
Diluted
  $ (0.01) (i)           $ 1.17 (j)   $ (0.49) (i)           $ 0.84 (k)
 
                                       
 
                                               
Weighted average common shares — basic
    78,695               78,695       77,446               77,446  
 
                                       
Weighted average common shares — diluted
    78,695 (i)             94,816 (j)     77,446 (i)             83,201 (k)
 
                                       
 
(a)   In calculating net income or loss on an adjusted cash basis, the Company excludes from net income or 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 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 net income or loss for the costs associated with litigation, including payments made or received through settlements. It should be noted that “net income or loss on an adjusted cash basis” 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 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, “net income or loss on an adjusted cash basis” presented in this press release may not be comparable to similar measures used by other companies.
 
(b)   Amortization expense of $119.8 million and $95.0 million in the first six months of 2009 and 2008 GAAP results, respectively, including $20.2 million and $23.7 million charged to cost of sales, $2.3 million and $1.8 million charged to research and development and $96.9 million and $69.1 million charged to selling, general and administrative, in the respective periods, with $0.4 million charged through equity earnings of unconsolidated entities, net of tax during both the six months ended June 30, 2009 and 2008.
 
(c)   Restructuring charges associated with the decision to close facilities of $10.3 million and $39.9 million in the first six months of 2009 and 2008 GAAP results, respectively. The $10.3 million charge for the six months ended June 30, 2009 included $3.5 million charged to cost of sales, $0.8 million charged to research and development, $2.7 million charged to selling, general and administrative, $0.3 million charged to interest expense and $3.0 million charged through equity earnings of unconsolidated entities, net of tax. The $39.9 million charge for the six months ended June 30, 2008 included $14.5 million charged to cost of sales, $6.6 million charged to research and development, $6.2 million charged to selling, general and administrative, $6.6 million charged to interest expense and $6.0 million charged through equity earnings of unconsolidated entities, net of tax. These charges have been excluded from net income or loss because they have a significant impact on results yet do not occur on a consistent or regular basis in the Company’s business.
 
(d)   Compensation costs of $12.5 million and $12.7 million associated with stock-based compensation expense in the first six months of 2009 and 2008 GAAP results, respectively, including $0.9 million and $0.6 million charged to cost of sales, $2.3 million and $2.3 million charged to research and development and $9.3 million and $9.8 million charged to selling, general and administrative, in the respective periods.
 
(e)   Write-off in the amount of $2.0 million relating to inventory write-ups recorded in connection with the acquisitions of Panbio Limited and BBI Holdings Plc. during the first quarter of 2008.
 
(f)   A $1.7 million net realized foreign currency loss associated with a cash escrow established in connection with the acquisition of BBI Holdings Plc.
 
(g)   Write-off in the amount of $6.4 million for acquisition-related costs recorded in connection with the adoption of SFAS No. 141-R, Business Combinations, on January 1, 2009.
 
(h)   Tax effect on adjustments as discussed above in notes (b), (c), (d), (e), (f) and (g).
 
(i)   For the six months ended June 30, 2009 and 2008, potential dilutive shares were not used in the calculation of diluted net loss per common share under GAAP because inclusion thereof would be antidilutive.
 
(j)   Included in the weighted average diluted common shares for the calculation of net income per common share for the six months ended June 30, 2009, on an adjusted cash basis, are dilutive shares consisting of 1,185,000 common stock equivalent shares from the potential exercise of stock options and warrants. Also included were potential dilutive shares consisting of 3,413,000 common stock equivalent shares from the potential conversion of convertible debt securities, 10,891,000 common stock equivalent shares from the potential conversion of Series B convertible preferred stock and 632,000 common stock equivalents from the potential settlement of a portion of the deferred purchase price consideration related to the ACON Second Territory Business. The diluted net income per common share calculation for the six months ended June 30, 2009, on an adjusted cash basis, includes the add back of interest expense related to the convertible debt of $1.4 million, the add back of $11.2 million of preferred stock dividends related to the Series B convertible preferred stock and the add back of interest expense related to the ACON Second Territory Business of $0.3 million resulting in net income available to common stockholders of $111.1 million for the six months ended June 30, 2009.
 
(k)   Included in the weighted average diluted common shares for the calculation of net income per common share for the six months ended June 30, 2008, on an adjusted cash basis, are dilutive shares consisting of 2,344,000 common stock equivalent shares from the potential exercise of stock options and warrants and potential dilutive shares consisting of 3,411,000 common stock equivalent shares from the potential conversion of convertible debt securities. The net income per diluted share calculation for the six months ended June 30, 2008, on an adjusted cash basis, includes the add back of interest expense related to the convertible debt of $1.5 million resulting in net income available to common stockholders of $70.2 million. Potential dilutive shares consisting of 3,004,000 common stock equivalent shares from the potential conversion of Series B convertible preferred stock for the six months ended June 30, 2008 were not used in the calculation of diluted net income per common share, on an adjusted cash basis, because inclusion thereof would be antidilutive.

 


 

Inverness Medical Innovations, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in $000s)
                 
    June 30,     December 31,  
    2009     2008  
    (unaudited)            
ASSETS
               
CURRENT ASSETS:
               
Cash and cash equivalents
  $ 424,018     $ 141,324  
Restricted cash
    142,895       2,748  
Marketable securities
    1,493       1,763  
Accounts receivable, net
    287,868       280,608  
Inventories, net
    207,149       199,131  
Prepaid expenses and other current assets
    156,681       196,969  
 
           
Total current assets
    1,220,104       822,543  
 
               
PROPERTY, PLANT AND EQUIPMENT, NET
    307,575       284,483  
GOODWILL AND OTHER INTANGIBLE ASSETS, NET
    4,787,364       4,717,704  
DEFERRED FINANCING COSTS AND OTHER ASSETS, NET
    148,269       130,630  
 
           
Total assets
  $ 6,463,312     $ 5,955,360  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
CURRENT LIABILITIES:
               
Current portion of notes payable
  $ 18,907     $ 19,509  
Other current liabilities
    460,999       345,836  
 
           
Total current liabilities
    479,906       365,345  
 
           
 
               
LONG-TERM LIABILITIES:
               
Notes payable, net of current portion
    1,884,461       1,501,025  
Deferred tax liabilities
    437,014       462,787  
Other long-term liabilities
    338,606       347,365  
 
           
Total long-term liabilities
    2,660,081       2,311,177  
 
           
 
               
TOTAL STOCKHOLDERS’ EQUITY
    3,323,325       3,278,838  
 
           
Total liabilities and stockholders’ equity
  $ 6,463,312     $ 5,955,360