WALTHAM, Mass., June 5, 2017 /PRNewswire/ -- Alere Inc. ALR, a global leader in rapid diagnostic tests, today announced that it has filed its Form 10-K and reported its financial results for the fourth quarter and full year ended December 31, 2016.
Full Year 2016 Results
- Revenue for the full year 2016 was $2.38 billion, a 3% decrease compared to $2.46 billion in the prior year period.
- Non-GAAP organic growth for the full year 2016 was +0.3% or +2.5% excluding Arriva*.
- Strong performance in Infectious Disease led by international growth on a constant currency basis included double-digit growth in Latin America, Asia Pacific and Africa. Patient self-testing also achieved double-digit growth in 2016.
- Negative impact of foreign currency exchange was $41 million in 2016.
- GAAP loss from continuing operations was $(137) million, or $(1.83) per diluted share, for the full year 2016, compared to $(15) million, or $(0.43) per diluted share in the prior year period.
- Non-GAAP adjusted EBITDA of $347 million for the full year 2016, a 30% decrease compared to $495 million in the prior year period. The decrease was primarily due to approximately $135 million in merger-related costs, audit and legal fees related to ongoing investigations and legal settlements, as detailed in the Supplemental Financial Information table.
*During the period from November 4, 2016 to December 31, 2016, the Company furnished $9.8 million of Arriva products and services that were subject to the CMS revocation to customers but did not recognize any revenue for such products and services because they were not eligible for reimbursement by CMS at the time the Company furnished them.
"Alere delivered solid 2016 results by maintaining our discipline and staying focused on core business growth as a leader in point-of-care diagnostics. Excluding extraordinary costs and the impact of foreign currency exchange and divestitures, our operating earnings in 2016 were roughly in line with 2015," said Namal Nawana, CEO of Alere. "We successfully accelerated growth in our global Infectious Disease business in 2016, achieving near double-digit sales growth driven by the success of the Alere i molecular platform with an expanded menu of three assays. In addition, we continued to invest in global operations and infrastructure to strengthen the enterprise. We have seen a strong start to 2017 in each of our global business units and look forward to reporting our progress in the first quarter results."
|
Revenue |
FY2016 |
FY2015 |
% Change | ||||
|
Cardiometabolic Disease |
$ |
622 |
$ |
704 |
(12%) | ||
|
Infectious Disease |
776 |
710 |
9% | ||||
|
Toxicology |
609 |
618 |
(2%) | ||||
|
Other |
140 |
192 |
(27%) | ||||
|
Consumer Diagnostics |
74 |
85 |
(13%) | ||||
|
Other Non-reportable* |
143 |
129 |
10% | ||||
|
License and Royalty |
12 |
17 |
(29%) | ||||
|
Total |
$ |
2,376 |
$ |
2,456 |
(3%) | ||
|
*Patient self-testing has been reclassified into a separate reporting segment called "Other Non-reportable." | |||||||
Fourth Quarter 2016 Results
- Total revenue was $597 million, a 3% decrease compared to $617 million in the prior year period.
- Global influenza sales were $39 million in the fourth quarter of 2016, a 60% increase compared to $24 million in the prior year period.
- Non-GAAP organic growth during the fourth quarter of 2016 was -0.9%, or +3.7% excluding Arriva.
- Negative impact of foreign currency exchange was $8 million in the fourth quarter of 2016.
- GAAP loss from continuing operations during the fourth quarter of 2016 was $(114) million, or $(1.38) per diluted share, compared to $(22) million, or $(0.31) per diluted share in the prior year period.
- Non-GAAP adjusted EBITDA was $82 million in the fourth quarter of 2016, a 10% decrease compared to $91 million in the prior year period. The decrease was primarily due to higher costs as detailed in the Supplemental Financial Information table.
|
Revenue (in millions) |
Fourth |
Fourth |
% Change | |||||
|
Cardiometabolic Disease |
$ |
144 |
$ |
180 |
(20%) | |||
|
Infectious Disease |
212 |
189 |
12% | |||||
|
Toxicology |
148 |
150 |
(1%) | |||||
|
Other |
38 |
45 |
(15%) | |||||
|
Consumer Diagnostics |
18 |
20 |
(11%) | |||||
|
Other Non-reportable* |
34 |
31 |
11% | |||||
|
License and Royalty |
4 |
3 |
30% | |||||
|
Total |
$ |
597 |
$ |
617 |
(3%) | |||
|
*Patient self-testing has been reclassified into a separate reporting segment called "Other Non-reportable." | ||||||||
Non-GAAP Information
To supplement the financial measures prepared in accordance with U.S. GAAP, the Company uses Non-GAAP adjusted EBITDA and Non-GAAP organic growth, which are non-GAAP financial measures. The reconciliations of Non-GAAP adjusted EBITDA to net income (loss) from continuing operations and Non-GAAP organic growth to revenue, the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP, are shown in the table in this press release. The Company believes Non-GAAP adjusted EBITDA and Non-GAAP organic growth are useful to investors because these metrics are commonly used by investors to assess the unleveraged, pre-tax financial performance and operating results of ongoing business operations. The Company's management also uses Non-GAAP adjusted EBITDA and Non-GAAP organic growth because the Company's management also believes that these are useful measures to evaluate the financial performance of the Company based on operational factors. It should also be noted that not all companies calculate Non-GAAP adjusted EBITDA and Non-GAAP organic growth in the same manner and, accordingly, these measures presented in this press release may not be comparable to similar measures used by other companies.
Conference Call
As announced on February 1, 2016, Alere entered into a definitive agreement under which Abbott will acquire Alere, which definitive agreement was amended on April 12, 2017. The transaction is expected to close by the end of the third quarter of 2017, subject to the approval of Alere shareholders and the satisfaction of certain customary closing conditions, including applicable regulatory approvals. Due to the pending transaction, Alere will no longer hold conference calls to discuss its quarterly financial results.
Cautionary Statement Regarding Forward-Looking Statements
This communication contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Readers can identify these statements by forward-looking words such as "preliminary", "may," "could," "should," "would," "intend," "will," "expect," "anticipate," "believe," "estimate," "can," "continue" or similar words. A number of important factors could cause actual results of Alere and its subsidiaries to differ materially from those indicated by such forward-looking statements. These factors include, but are not limited to, (i) the risk that the proposed merger with Abbott Laboratories ("Abbott") may not be completed in a timely manner or at all; (ii) the failure to receive, on a timely basis or otherwise, the required approval of the proposed merger with Abbott by Alere's stockholders, (iii) the possibility that competing offers or acquisition proposals for Alere will be made; (iv) the possibility that any or all of the various conditions to the consummation of the merger may not be satisfied or waived, including the failure to receive any required regulatory approvals from any applicable governmental entities (or any conditions, limitations or restrictions placed on such approvals); (v) the occurrence of any event, change or other circumstance that could give rise to the termination of the Agreement and Plan of Merger, as amended (the "Merger Agreement") among Alere and Abbott pursuant to which Abbott will acquire Alere, including in circumstances which would require Alere to pay a termination fee or other expenses; (vi) the effect of the announcement or pendency of the transactions contemplated by the Merger Agreement on Alere's ability to retain and hire key personnel, its ability to maintain relationships with its customers, suppliers and others with whom it does business, or its operating results and business generally; (vii) risks related to diverting management's attention from Alere's ongoing business operations; (viii) the risk that stockholder litigation in connection with the transactions contemplated by the Merger Agreement may result in significant costs of defense, indemnification and liability, (ix) the risk that the previously announced review of certain aspects of revenue recognition is not completed in a timely manner or the scope of such review expands, (x) the risk that the failure by Alere to file its Form 10-K for the fiscal year ended December 31, 2016 and Form 10-Q for the fiscal quarter ended in March 31, 2017 in a timely manner could lead to the acceleration of the maturity of certain of Alere's indebtedness, (xi) the possibility that the previously announced review of certain aspects of revenue recognition uncovers an additional error or errors in revenue recognition or other financial information which require additional adjustments which may be material, or material weaknesses in the Company's internal controls over financial reporting, (xii) the risk that the Company experiences an acceleration of amounts due under its senior secured credit facility due to the restatement, any circumstances described in Alere's Current Report on Form 8-K as filed on April 17, 2017, Current Report on Form 8-K as filed on May 22, 2017 or the failure to timely file the Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2017, (xiii) risks relating to the ongoing investigations by the United States Securities and Exchange Commission (the "SEC") and the United States Department of Justice, (xiv) the risk that these or other risk factors impact the expected timing of the filing of the Form 10-K for the fiscal year ended December 31, 2016 and Form 10-Q for the fiscal quarter ended in March 31, 2017, and (xv) the risk factors detailed in Part I, Item 1A, "Risk Factors," of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 (as filed with the SEC on June 5, 2017) and other risk factors identified herein or from time to time in our periodic filings with the SEC. Readers should carefully review these risk factors, and should not place undue reliance on our forward-looking statements. These forward-looking statements are based on information, plans and estimates at the date of this communication. The Company undertakes no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.
About Alere
Alere believes that when diagnosing and monitoring health conditions, Knowing now matters.™ Alere delivers reliable and actionable information by providing rapid diagnostic tests, enhancing clinical and economic healthcare outcomes globally. Headquartered in Waltham, Mass., Alere focuses on rapid diagnostics for cardiometabolic disease, infectious disease and toxicology. For more information on Alere, please visit www.alere.com.
Alere Inc. and Subsidiaries Condensed Consolidated Statements of Operations (in thousands, except per share amounts) Three Months Ended December 31, Twelve Months Ended December 31, 2016 2015 2016 2015 Net product sales and services revenue $ 592,553 $ 613,850 $ 2,364,337 $ 2,438,638 License and royalty revenue 4,256 3,286 11,998 16,977 Net revenue 596,809 617,136 2,376,335 2,455,615 Cost of net revenue 325,648 368,586 1,286,468 1,347,315 Gross profit 271,161 248,550 1,089,867 1,108,300 Gross margin 45% 40% 46% 45% Operating expenses: Research and development 25,184 28,228 112,122 119,453 Selling, general and administrative 261,431 229,877 966,831 808,595 Impairment and (gain) loss on disposition, net - 8,132 (3,810) 50,540 Operating income (15,454) (17,687) 14,724 129,712 Interest and other income (expense), net (32,137) (60,482) (167,122) (214,254) Loss from continuing operations before provision (benefit) for income taxes (47,591) (78,169) (152,398) (84,542) Provision (benefit) for income taxes 83,762 (51,145) 35,376 (53,564) Income (loss) from continuing operations before equity earnings of unconsolidated entities, (131,353) (27,024) (187,774) (30,978) Equity earnings of unconsolidated entities, net of tax 17,200 5,210 50,505 15,530 Income (loss) from continuing operations (114,153) (21,814) (137,269) (15,448) Income from discontinued operations, net of tax - 2,736 - 219,513 Net income (114,153) (19,078) (137,269) 204,065 Less: Net income attributable to non-controlling interests (103) (5) 350 381 Net income attributable to Alere Inc. and Subsidiaries (114,050) (19,073) (137,619) 203,684 Preferred stock dividends (5,367) (5,366) (21,350) (21,293) Net income available to common stockholders $ (119,417) $ (24,439) $ (158,969) $ 182,391 Basic net income per common share: Income (loss) from continuing operations $ (1.38) $ (0.31) $ (1.83) $ (0.43) Income from discontinued operations - 2.57 Basic and diluted net income per common share $ (1.38) $ (0.31) $ (1.83) $ 2.14 Diluted net income per common share: Income (loss) from continuing operations $ (1.38) $ (0.31) $ (1.83) $ (0.43) Income from discontinued operations - - 2.57 Diluted net income per common share $ (1.38) $ (0.31) $ (1.83) $ 2.14 Weighted average shares - basic 86,955 85,953 86,796 85,420 Weighted average shares - diluted 86,955 85,953 86,796 85,420
net of tax
Alere Inc. and Subsidiaries Condensed Consolidated Balance Sheets (in thousands) December 31, December 31, 2016 2015 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 567,215 $ 502,200 Restricted cash 51,550 5,694 Marketable securities 76 164 Accounts receivable, net 413,535 436,924 Inventories, net 308,920 350,949 Prepaid expenses and other current assets 118,607 114,514 Assets held for sale - 4,165 Total current assets 1,459,903 1,414,610 Property, Plant and Equipment, net 441,190 446,039 Goodwill and other intangible assets, net 3,592,107 3,862,306 Restricted Cash- non-current 2,171 43,228 Other non-current assets 152,908 138,640 Assets held for sale - non-current - 13,337 Total assets $ 5,648,279 $ 5,918,160 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Short-term debt and current portions of long-term debt and capital lease obligations $ 85,434 $ 203,954 Liabilities related to assets held for sale - 363 Other current liabilities 590,722 518,389 Total current liabilities 676,156 722,706 LONG-TERM LIABILITIES: Long-term debt and capital lease obligations, net of current portions 2,865,426 2,838,347 Deferred tax liabilities 119,098 147,618 Other long-term liabilities 155,992 154,193 Liabilities related to assets held for sale - non-current - - Total long-term liabilities 3,140,516 3,140,158 TOTAL EQUITY 1,831,607 2,055,296 Total liabilities and equity $ 5,648,279 $ 5,918,160
Alere Inc. and Subsidiaries Selected Consolidated Revenues (in thousands) Three Months Ended December 31, % Change 2016 2015 2016 v. 2015 Professional diagnostics segment (1) Cardiometabolic $ 143,569 $ 180,163 -20% Infectious disease 211,509 188,609 12% Toxicology 147,785 149,540 -1% Other 38,020 44,927 -15% Total professional diagnostics segment 540,883 563,239 -4% Consumer diagnostics segment (1) 17,569 19,768 -11% Other Non-reportable 34,101 30,843 11% License and royalty revenue 4,256 3,286 30% Net revenue $ 596,809 $ 617,136 -3% Twelve Months Ended December 31, % Change 2016 2015 2016 v. 2015 Professional diagnostics segment (1) Cardiometabolic $ 622,468 $ 703,553 -12% Infectious disease 776,153 710,178 9% Toxicology 608,635 618,362 -2% Other 140,426 192,321 -27% Total professional diagnostics segment 2,147,682 2,224,414 -3% Consumer diagnostics segment (1) 74,152 85,128 -13% Other Non-reportable 142,503 129,096 10% License and royalty revenue 11,998 16,977 -29% Net revenue $ 2,376,335 $ 2,455,615 -3% (1) Revenues have been restated for the impact of restatements made during the preparation of our consolidated financial statements for 2016. For more information on these restatements see Note 2 in our Form 10-K.
Alere Inc. and Subsidiaries Reconciliation of Net Income (Loss) to Non-GAAP EBITDA (in thousands) Three Months Ended December 31, 2016 2015 Net Income (loss) (1) $ (114,153) $ (19,078) Less: Income from discontinued operations, net of tax - 2,736 Loss from continuing operations (114,153) (21,814) Adjustment related to acquired software license contracts - - Income tax provision (benefit) 83,762 (51,145) Depreciation and amortization 71,467 75,719 Interest, net 42,342 57,954 Non-cash stock-based compensation expense 10,681 6,795 Non-cash fair value adjustments to acquisition-related contingent (1,419) (5,703) Impairment and (gain) loss on dispositions, net (11,152) 8,132 Non-cash INRatio product recall expenses - 21,100 Other - (40) Non-GAAP Adjusted EBITDA $ 81,528 $ 90,998 (1) Net income (loss) for the three months ended December 31, 2015 includes $16.7 million of cash costs associated with the voluntary withdrawal of INRatio products, restructuring charges of $4.3 million, $2.8 million of costs associated with business dispositions, $0.1 million of acquisition-related costs which have not been added back for purposes of computing Non-GAAP Adjusted EBITDA. The three months ended December 31, 2016 includes $22.1 million of Abbott integration costs, $14.3 million for a legal settlement accrual, $15.5 million of charges related to governmental investigations, non-interest related restructuring charges of $10.1 million, $0.5 million of cash costs associated with the voluntary withdrawal of InRatio product, and $0.1 million of acquisition-related costs which have not been added back for purposes of computing Non-GAAP Adjusted EBITDA. Twelve Months Ended December 31, 2016 2015 Net Income (loss) (1) $ (137,269) $ 204,065 Less: Income from discontinued operations, net of tax - 219,513 Loss from continuing operations (137,269) (15,448) Adjustment related to acquired software license contracts - 877 Income tax provision (benefit) 35,376 (53,564) Depreciation and amortization 285,884 309,684 Interest, net 168,320 212,551 Non-cash stock-based compensation expense 41,796 26,391 Non-cash fair value adjustments to acquisition-related contingent (13,308) (57,613) Impairment and (gain) loss on dispositions, net (33,683) 50,540 Non-cash INRatio product recall expenses - 21,100 Other - 622 Non-GAAP Adjusted EBITDA $ 347,116 $ 495,139 (1) Net income (loss) for the twelve months ended December 31, 2015 includes $16.7 million of cash costs associated with the voluntary withdrawal of INRatio products, restructuring charges of $15.6 million, $9.3 million of costs associated with business dispositions, and $0.5 million of acquisition-related costs which have not been added back for purposes of computing Non-GAAP Adjusted EBITDA. The twelve months ended December 31, 2016 includes $60.3 million of Abbott integration costs, restructuring charges of $37.9 million, $38.2 million of charges related to governmental investigations, $35.2 million for a legal settlement accrual, $6.0 million of acquisition-related costs, $1.8 million of cash costs associated with the withdrawal of InRatio product and $1.0 million of costs associated with business dispositions which have not been added back for purposes of computing Non-GAAP Adjusted EBITDA.
consideration
consideration
Alere Inc. and Subsidiaries Reconciliation of Non-GAAP Organic Revenue Growth (in thousands) Three Months Ended December 31, % Change 2016 2015 2016 v. 2015 Net revenue $ 596,809 $ 617,136 -3.3% Impact of foreign currency exchange 7,830 - Impact of acquisitions & dispositions (1,453) (8,234) Non-GAAP organic net revenue $ 603,186 $ 608,902 -0.9% Arriva revenue (11,622) (38,592) Non-GAAP organic net revenue (excluding Arriva) $ 591,564 $ 570,310 3.7% Twelve Months Ended December 31, % Change 2016 2015 2016 v. 2015 Net revenue $ 2,376,335 $ 2,455,615 -3.2% Impact of foreign currency exchange 40,543 - Impact of acquisitions & dispositions (13,984) (60,414) Non-GAAP organic net revenue $ 2,402,894 $ 2,395,201 0.3% Arriva revenue (99,887) (148,538) Non-GAAP organic net revenue (excluding Arriva) $ 2,303,007 $ 2,246,663 2.5%
Alere Inc. and Subsidiaries Supplemental Financial Information (in thousands, except per share amounts) Three months ended December 31, 2016 Cost of Net Research and Selling, General Impairment, Interest and Provision for Equity earnings of Net Income1 Amortization of acquisition-related intangible assets $ 12,281 $ 922 $ 31,384 $ - $ - $ - $ - $ (44,587) Restructuring charges 2,090 512 7,535 - - - - (10,136) Impairment Charges - - 193 - - - - (193) Stock-based compensation expense 518 531 9,633 - - - - (10,681) Acquisition-related costs - - 72 - - - - (72) Fair value adjustments to acquisition-related contingent consideration - - (1,419) - - - - 1,419 Costs associated with potential business dispositions - - 42 - - - - (42) Impairment and (gain) loss on disposition, net - - - - - - (11,152) 11,152 Amortization - Unconsolidated Subs - - - - - - 46 (46) Audit and legal fees related to on-going governmental investigations - - 15,493 - 1,697 - - (17,190) Abbott transaction related expenses - - 22,064 - - - - (22,064) INRatio recall expense 2,481 - (1,300) - - - - (1,181) Legal settlement accrual - - 14,300 - - - - (14,300) Income tax effects on items above - - - - - 70,892 - (70,892) Total of Supplemental Information $ 17,370 $ 1,965 $ 97,998 $ - $ 1,697 $ 70,892 $ (11,106) $ (178,815) Impact of above items on EPS numerator $ - Impact of above items on EPS denominator - 1) All impacts are shown as pre-tax with aggregate tax effect displayed as "Income tax effects on items above". Twelve months ended December 31, 2016 Cost of Net Research and Selling, General Impairment, Interest and Provision for Equity earnings of Net Income1 Amortization of acquisition-related intangible assets $ 49,616 $ 3,685 $ 127,253 $ - $ - $ - $ - $ (180,553) Restructuring charges 5,991 4,052 27,831 - - - - (37,874) Impairment Charges 85 - 193 - - - - (278) Stock-based compensation expense 2,054 1,904 37,838 - - - - (41,796) Acquisition-related costs - 5,000 1,030 - - - - (6,030) Fair value adjustments to acquisition-related contingent consideration - - (13,308) - - - - 13,308 Costs associated with potential business dispositions 7 - 995 - - - - (1,002) Impairment and (gain) loss on disposition, net - - - (3,810) - - (29,873) 33,683 Amortization - Unconsolidated Subs - - - - - - 275 (275) Audit and legal fees related to on-going governmental investigations - - 38,215 - 4,509 - - (42,725) Abbott transaction related expenses - - 60,266 - - - - (60,266) INRatio recall expense 4,581 - - - - - - (4,581) Legal settlement accrual - - 35,175 - - - - (35,175) Income tax effects on items above - - - - - (21,397) - 21,397 Total of Supplemental Information $ 62,333 $ 14,641 $ 315,488 $ (3,810) $ 4,509 $ (21,397) $ (29,598) $ (342,166) Impact of above items on EPS numerator $ (1,035) Impact of above items on EPS denominator (2,279) 1) All impacts are shown as pre-tax with aggregate tax effect displayed as "Income tax effects on items above".
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Development
& Administrative
net of loss on
disposition
other income,
net
income taxes
unconsolidated entities,
net of tax
Revenue
Development
& Administrative
net of loss on
disposition
other income,
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unconsolidated entities,
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SOURCE Alere Inc.
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