Cepheid Offers Update on Xpert Test Availability, Sees Q4 Sales ~$92M vs $93.5M Est, EPS $0.10-0.12
Ahead of its presentation at the JP Morgan Healthcare Conference in San Francisco later today, Cepheid (Nasdaq: CPHD) this morning shared an update on Xpert test availability, highlighting that significant progress towards a return to normal manufacturing operations was achieved despite higher than anticipated demand for a number of Xpert test products during the fourth quarter.
"With respect to our manufacturing operations, the underlying causes of our 2012 second half challenges have been resolved," said John Bishop, Cepheid's Chief Executive Officer. "Additionally, we brought up a second Reagents on Board Automation Line, or ROBAL, here in Sunnyvale slightly ahead of schedule which expands our capacity significantly. Further, we are accelerating the completion of a second ROBAL line in our Swedish facility by one year and expect to have the line functional in the second half of this year."
Continued Bishop, "While many of our Xpert tests came off allocation in the fourth quarter as we expected, our operational remedies took several weeks longer than we originally anticipated. Having taken the extra time, however, we are confident that we are building a world-class manufacturing operation capable of meeting increasing product demand and ensuring a consistent supply of our growing menu of tests for all Xpert customers."
"That said, due to stronger than anticipated demand, certain Xpert products remain on allocation at this time, namely Xpert MRSA and Xpert Flu," concluded Bishop. "As we move through these final weeks of allocations, I'd like to thank our customers for their patience and reassure them that we are doing everything we can to ensure this experience is not repeated."
Preliminary 2012 Fourth Quarter Results
Based on preliminary analysis, the Company currently expects 2012 Fourth Quarter revenue results to include:
Preliminary Results Previous Company Guidance
(8 January 2013) (18 October 2012) Total Revenue Approximately $92 million Approximately $94 million Commercial Clinical Approximately $72 million Approximately $69 million HBDC Clinical Approximately $10 million Approximately $16 million
Commercial Clinical revenue was higher than expected due to strength in Xpert Flu, Xpert MRSA and Xpert C. difficile, which contributed to year-over-year normalized growth in Commercial Clinical reagents of approximately 30%. Commercial Clinical systems revenue was solid, as expected, and the Company expects to confirm more than 59 GeneXpert system placements in North America.
HBDC was impacted by variability in systems placements in addition to supply-related delays in our international manufacturing operation, which we expect to be fully resolved during the first quarter of 2013.
As a reminder, Cepheid's Commercial Clinical revenue contributes a higher gross margin than the Company's HBDC revenue. Based on preliminary analysis, and given the revenue mix in the fourth quarter, the Company currently expects to report bottom line results just above the upper end of its previously-announced guidance ranges. These were:
Fourth Quarter Guidance – As of 18 October 2012 GAAP EPS $(0.03) to $(0.01) Non-GAAP EPS $0.10 to $0.12
Full year non-GAAP net income per share excludes the effect of approximately $26 million related to stock-based compensation expense, approximately $15 million related to a litigation settlement, approximately $2.8 million related to the amortization of acquired intangibles, and a $1.8 million tax benefit related to an intercompany intellectual property transaction.
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