WALTHAM, Mass., March 2 - Inverness Medical Innovations, Inc. (Amex: IMA), a leading manufacturer and marketer of rapid diagnostic products for the consumer and professional markets, today announced its financial results for the quarter and the year ended December 31, 2005.
In the fourth quarter of 2005, the Company recorded net revenues of $121.4 million compared to net revenues of $97.1 million in the fourth quarter of 2004. The revenue increase was due to increased sales in our Professional Diagnostic segment contributed by businesses acquired during 2005 including Binax, Inc., the Determine business, BioStar and IDT, as well as an increase in royalty revenues.
For the fourth quarter of 2005, Inverness Medical Innovations reported adjusted cash basis net loss of $3.2 million, or $0.12 per common share compared to adjusted cash basis net loss of $1.0 million, or $0.05 per common share, in the fourth quarter of 2004. The net loss available to common stockholders prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") was $7.3 million, or $0.27 per common share, in the fourth quarter of 2005 compared to a net loss available to common stockholders of $3.6 million, or $0.18 per common share, for the fourth quarter of 2004.
The Company's GAAP results for the fourth quarter of 2005 include amortization of $3.9 million and a $0.9 million charge principally associated with our previously announced decision to close one of our manufacturing facilities, and its GAAP results for the fourth quarter of 2004 include amortization of $2.7 million. These amounts, net of tax, have been excluded from the adjusted cash basis net loss per common share for the respective quarters.
Net revenues for the year ended December 31, 2005 were $421.9 million compared to net revenues of $374.0 million for 2004.
For the year ended December 31, 2005, the Company reported an adjusted cash basis net loss of $0.8 million, or $0.03 per common share, compared to adjusted cash basis net loss of $1.3 million, or $0.06 per common share, in 2004. The net loss available to common stockholders prepared in accordance with GAAP was $19.2 million, or $0.79 per common share, for the year ended December 31, 2005 compared to a net loss available to common stockholders of $17.3 million, or $0.87 per common share, in 2004.
The Company's GAAP results for 2005 include amortization of $12.8 million, a $5.1 million charge principally associated with our previously announced decision to close one of our manufacturing facilities and $1.7 million for non-recurring charges for a product recall and a write off of deferred debt origination costs, compared to amortization of $10.4 million, a charge of $1.7 million included in cost of sales related to a work force reduction at one of our manufacturing facilities and $4.5 million for the write off of deferred debt origination costs and non-cash discounts and redemption interest related to redeemable convertible preferred stock in 2004. These amounts have been excluded from the adjusted cash basis net loss per common share for the respective periods.
A detailed reconciliation of the Company's adjusted cash basis net loss, which is a non-GAAP financial measure, to net 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 9:00 a.m. (Eastern Time) today, March 2, 2006, 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 can be accessed by dialing 973-582-2952 (domestic and international), an access code is not required, or via a link on the Inverness website at http://www.invernessmedical.com. It is also available via link at http://orion.calleci.com/servlet/estreamgetevent?id=6578&folder=webstream using Real Player or via link at http://orion.calleci.com/servlet/estreamgetevent?id=6580&folder=webstream using Windows Media. A telephone replay of the call will be available by dialing 973-341-3080 (domestic and international) with an access code of 7091895. That replay will be available until 12:00 midnight (Eastern Time) on March 4, 2006. An on demand webcast of the call will be available at the Inverness website (http://www.invernessmedical.com/News.cfm) two hours after the end of the call and will be accessible for 12 months. 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 same website beginning shortly before the conference call and will continue to be available on this website for 12 months.
For more information about Inverness Medical Innovations, please visit our website at http://www.invernessmedical.com.
Inverness Medical Innovations is a leading global developer of advanced diagnostic devices and is presently exploring new opportunities for its proprietary electrochemical and other technologies in a variety of professional diagnostic and consumer-oriented applications including immuno-diagnostics with a focus on women's health and cardiology. The Company's new product development efforts, as well as its position as a leading supplier of consumer pregnancy and fertility/ovulation tests and rapid point-of-care diagnostics, are supported by the strength of its intellectual property portfolio. The Company is headquartered in Waltham, Massachusetts.
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 December 31, 2005
Non-GAAP
Adjusted
Non-GAAP Cash
GAAP Adjustments Basis (a)
Net revenues $121,365 $- $121,365
Cost of sales 75,590 (2,368)(b)(c) 73,222
Gross profit 45,775 2,368 48,143
Gross margin 38% 40%
Operating expenses:
Research and development 10,404 (850)(b)(c) 9,554
Selling, general and
administrative 34,979 (1,405)(c) 33,574
Total operating expenses 45,383 (2,255) 43,128
Operating income 392 4,623 5,015
Interest and other income
(expense), net (6,266) (232)(b)(d) (6,498)
Income tax provision 1,464 207 (d) 1,671
Net loss $(7,338) $4,184 $(3,154)
Non-cash amortization of discounts
and dividends on preferred stock - -
Net loss available to common
stockholders -- basic and
diluted $(7,338) $(3,154)
Net loss per common share:
Basic $(0.27) $(0.12)
Diluted $(0.27) (e) $(0.12)(e)
Weighted average shares -- basic 27,327 27,327
Weighted average shares -- diluted 7,327 (e) 27,327 (e)
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 December 31, 2004
(Restated)
Non-GAAP
Adjusted
Non-GAAP Cash
GAAP Adjustments Basis (a)
Net revenues $97,063 $- $97,063
Cost of sales 60,300 (1,377) (c) 58,923
Gross profit 36,763 1,377 38,140
Gross margin 38% 39%
Operating expenses:
Research and development 8,689 (315) (c) 8,374
Selling, general and
administrative 29,318 (1,007) (c) 28,311
Total operating expenses 38,007 (1,322) 36,685
Operating income (1,244) 2,699 1,455
Interest and other income (expense),
net (3,205) - (3,205)
Income tax provision (849) 122 (d) (727)
Net loss $(3,600) $2,577 $(1,023)
Non-cash amortization of discounts
and dividends on preferred stock - - -
Net loss available to common
stockholders -- basic and diluted $(3,600) $(1,023)
Net loss per common share:
Basic $(0.18) $(0.05)
Diluted $(0.18)(e) $(0.05)(e)
Weighted average shares -- basic 20,437 20,437
Weighted average shares -- diluted 20,437 (e) 20,437 (e)
(a) In calculating net income or loss on an adjusted cash basis, the
Company excludes from net income or loss (i) non-cash charges
including amortization 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. 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.
Management believes that excluding such charges and income from
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. 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.
(b) Restructuring charge of $0.9 million associated with the decision to
close a manufacturing facility in 2005, including $0.6 million
charged to cost of sales, $0.1 million charge to research and
development and $0.2 million charged to other expense, which
constitute charges having a significant negative impact on results
yet not occurring on a consistent or regular basis in our business.
(c) Amortization expense of $3.9 million and $2.7 million in the fourth
quarter of 2005 and 2004 GAAP results, respectively, including $1.7
million and $1.4 million charged to cost of sales, $0.8 million and
$0.3 million charged to research and development and $1.4 million and
$1.0 million charged to selling, general and administrative expense
in the respective quarters.
(d) Tax effect on adjustments as discussed above in notes (b) and (c).
(e) For the three months ended December 31, 2005 and 2004, potential
diluted shares were not used in the calculation of diluted net loss
per common share under GAAP 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)
Year Ended December 31, 2005
Non-GAAP
Adjusted
Non-GAAP Cash
GAAP Adjustments Basis (a)
Net revenues $421,850 300 (b) $422,150
Cost of sales 269,538 (12,543)(b)(c)(d) 256,995
Gross profit 152,312 12,843 165,155
Gross margin 36% 39%
Operating expenses:
Research and development 30,992 (2,802)(c)(d) 28,190
Selling, general and
administrative 132,093 (3,661)(c)(d) 128,432
Total operating expenses 163,085 (6,463) 156,622
Operating income (10,773) 19,306 8,533
Interest and other income
(expense), net (1,617) (132)(c)(e) (1,749)
Income tax provision 6,819 745 (f) 7,564
Net loss $(19,209) $18,429 $(780)
Non-cash amortization of
discounts and dividends on
preferred stock - -
Net loss available to common
stockholders -- basic and
diluted $(19,209) $(780)
Net loss per common share:
Basic $(0.79) $(0.03)
Diluted $(0.79) (g) $(0.03)(g)
Weighted average shares -- basic 24,358 24,358
Weighted average
shares -- diluted 24,358 (g) 24,358 (g)
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)
Year Ended December 31, 2004 (Restated)
Non-GAAP
Adjusted
Non-GAAP Cash
GAAP Adjustments Basis (a)
Net revenues $373,991 $- $373,991
Cost of sales 226,987 (7,227)(c)(d) 219,760
Gross profit 147,004 7,227 154,231
Gross margin 39% 41%
Operating expenses:
Research and development 31,954 (804)(d) 31,150
Selling, general and
administrative 110,664 (4,071)(d) 106,593
Total operating expenses 142,618 (4,875) 137,743
Operating income 4,386 12,102 16,488
Interest and other income
(expense), net (18,707) 3,788 (e) (14,919)
Income tax provision 2,275 583 (f) 2,858
Net loss $(16,596) $15,307 $(1,289)
Non-cash amortization of discounts
and dividends on preferred stock (749) 749 (h) - (h)
Net loss available to common
stockholders -- basic and
diluted $(17,345) $(1,289)
Net loss per common share:
Basic $(0.87) $(0.06)
Diluted $(0.87) (g) $(0.06)(g)
Weighted average shares -- basic 19,969 19,969
Weighted average shares -- diluted 19,969 (g) 19,969 (g)
(a) In calculating net income or loss on an adjusted cash basis, the
Company excludes from net income or loss (i) non-cash charges
including amortization 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. 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.
Management believes that excluding such charges and income from
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. 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.
(b) Product recall charge of $1.6 million in 2005, including $1.3 million
charged to cost of sales in the 2005 GAAP results, which constitutes
a charge having a significant negative impact on results yet does not
occur on a consistent or regular basis in our business.
(c) Restructuring charge of $5.1 million associated with the decision to
close a manufacturing facility in 2005, including $4.1 million
charged to cost of sales, $0.5 million charge to research and
development, $0.3 million charged to selling, general and
administrative and $0.2 million to other expense and a charge of $1.7
million included in cost of sales in the second quarter of 2004
related to a work force reduction at one of our manufacturing
facilities, which constitute charges having a significant negative
impact on results yet not occurring on a consistent or regular basis
in our business.
(d) Amortization expense of $12.8 million and $10.4 million in the 2005
and 2004 GAAP results, respectively, including $7.1 million and $5.5
million charged to cost of sales, $2.4 million and $0.8 million
charged to research and development and $3.3 million and $4.1 million
charged to selling, general and administrative expense in the
respective periods.
(e) Write off of $0.1 million and $3.8 million in 2005 and 2004,
respectively, of debt origination costs upon early extinguishment of
related debt, which constitutes a charge having a significant
negative impact on results yet does not occur on a consistent or
regular basis in our business.
(f) Tax effect on adjustments as discussed above in notes (b), (c), (d)
and (e).
(g) For 2005 and 2004, potential diluted shares were not used in the
calculation of diluted net loss per common share under GAAP because
inclusion thereof would be antidilutive.
(h) In addition to the non-cash and non-recurring and other charges or
income listed above, the diluted net loss per common share on an
adjusted cash basis excludes amortization of non-cash discounts and
redemption interest on preferred stock which are included in net
income or loss per common share calculated in accordance with GAAP.
There were no charges for non-cash discounts and redemption interest
on preferred stock during the three months ended March 31, 2005. The
charges for non-cash discounts and redemption interest on preferred
stock that are excluded above totaled $749,000, or $0.04 per dilutive
common share, for the three months ended March 31, 2004. Because all
issued preferred stock have been converted into common stock on
January 14, 2004, such shares have been included in basic and diluted
weighted average share calculations subsequent to that date. There
will be no amortization of non-cash discounts and redemption interest
in future periods, that would reduce net income or increase net loss
available to common stockholders.
Inverness Medical Innovations, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in $000s)
December 31, December 31,
2005 2004
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $34,270 $16,756
Accounts receivable, net 70,476 61,347
Inventories 71,209 61,234
Prepaid expenses and other current
assets 18,378 12,420
Total current assets 194,333 151,757
PROPERTY, PLANT AND EQUIPMENT, NET 72,211 66,780
GOODWILL AND OTHER INTANGIBLE ASSETS,
NET 510,491 339,704
DEFERRED FINANCING COSTS AND OTHER
ASSETS, NET 14,131 10,028
Total assets $791,166 $568,269
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of notes payable $2,909 $555
Other current liabilities 106,901 88,587
Total current liabilities 109,810 89,142
LONG-TERM LIABILITIES:
Notes payable, net of current portion 259,595 190,669
Other long-term liabilities 24,453 17,042
Total long-term liabilities 284,048 207,711
REDEEMABLE CONVERTIBLE PREFERRED
STOCK - -
TOTAL STOCKHOLDERS' EQUITY 397,308 271,416
Total liabilities and stockholders'
equity $791,166 $568,269
Contact:
Doug Guarino Director of Corporate Relations 781-647-3900
Christopher Lindop Chief Financial Officer
