WALTHAM, Mass., Oct. 27 /PRNewswire-FirstCall/ -- 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 September 30, 2009.
Financial results for the third quarter of 2009: -- Net revenue of
$535.8 million for the third quarter of 2009, compared to $438.8
million for the third quarter of 2008. -- GAAP net income available
to common stockholders and earnings per share of $14.3 million and
$0.17 per diluted common share, compared to GAAP net loss available
to common stockholders and loss per share of $9.1 million and $0.12
per common share, for the third quarter of 2008. -- Adjusted cash
basis net income available to common stockholders and earnings per
share of $66.6 million and $0.74 per diluted common share, compared
to $37.7 million and $0.46 per diluted common share, for the third
quarter of 2008. Highlights for the third quarter of 2009: --
Currency adjusted organic revenue growth of 9.2% in our
Professional Diagnostics business, excluding North American
influenza sales. -- North American influenza sales totaled $40.4
million for the third quarter of 2009, compared to $6.8 million for
the third quarter of 2008. -- Recent acquisitions contributed $37.4
million of incremental net revenue, compared to the third quarter
of 2008. The Company's GAAP results for the third quarter of 2009
include amortization of $65.4 million, $6.2 million of
restructuring charges, $7.8 million of stock-based compensation
expense, a $0.7 million charge associated with the write-up to fair
market value of inventory acquired in connection with the
acquisition of Concateno plc, a $1.9 million compensation charge
incurred in connection with the acquisition of Concateno plc, a
$0.3 million loss recorded in connection with deferred purchase
price consideration to be paid with our common stock and $5.1
million of acquisition-related costs recorded in accordance with
our adoption of ASC 805, Business Combinations, offset by a $3.4
million gain on the disposition of our Diamics, Inc. operations and
a $2.9 million net realized foreign currency gain associated with
restricted cash established in connection with the Concateno plc
acquisition. GAAP results for the third quarter of 2008 include
amortization of $60.0 million, $5.8 million of restructuring
charges and $7.0 million of stock-based compensation expense. 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, October 27, 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 http://www.invmed.com/. It is also
available via link at
https://event.meetingstream.com/r.htm?e=173280&s=1&k=869A5F5A4B771B69A9B01D767
DE15ABF. 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 (http://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. 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) Nine Months Ended September 30, 2009 Non-GAAP Adjusted
Non-GAAP Cash GAAP Adjustments Basis (a) Net product sales and
services revenue $1,419,472 $- $1,419,472 License and royalty
revenue 20,588 - 20,588 Net revenue 1,440,060 - 1,440,060 Cost of
net revenue 683,898 (38,729)(b)(c)(d)(e) 645,169 Gross profit
756,162 38,729 794,891 Gross margin 53% 55% Operating expenses:
Research and development 80,811 (7,793)(b)(c)(d) 73,018 Selling,
general and administrative 570,154 (182,614)(b)(c)(d)(f) 387,540
Gain on disposition (3,355) 3,355 (h) - Operating income 108,552
225,781 334,333 Interest and other income (expense), net (71,235)
(231)(c)(g)(i)(j) (71,466) Income tax provision (benefit) 11,927
79,189 (k) 91,116 Equity earnings of unconsolidated entities, net
of tax 5,539 4,597 (b)(c) 10,136 Net income (loss) $30,929 $150,958
$181,887 Preferred stock dividends $(17,056) $(17,056) Net income
(loss) available to common stockholders $13,873 $164,831 Net income
(loss) per common share Basic $0.17 $2.07 Diluted $0.17 $1.92(m)
Weighted average common shares - basic 79,682 79,682 Weighted
average common shares - diluted 81,110 95,864(m) Nine Months Ended
September 30, 2008 Non-GAAP Adjusted Non-GAAP Cash GAAP Adjustments
Basis (a) Net product sales and services revenue $1,190,684 $-
$1,190,684 License and royalty revenue 21,476 - 21,476 Net revenue
1,212,160 - 1,212,160 Cost of net revenue 597,520
(53,560)(b)(c)(d)(e) 543,960 Gross profit 614,640 53,560 668,200
Gross margin 51% 55% Operating expenses: Research and development
86,426 (13,080)(b)(c)(d) 73,346 Selling, general and administrative
496,687 (142,286)(b)(c)(d) 354,401 Gain on disposition - - - - - -
Operating income 31,527 208,926 240,453 Interest and other income
(expense), net (84,151) 8,615(c)(g) (75,536) Income tax provision
(benefit) (13,274) 71,050(k) 57,776 Equity earnings of
unconsolidated entities, net of tax 1,169 6,678(b)(c) 7,847 Net
income (loss) $(38,181) $153,169 $114,988 Preferred stock dividends
$(8,500) $(8,500) Net income (loss) available to common
stockholders $(46,681) $106,488 Net income (loss) per common share
Basic $(0.60) $1.37 Diluted $(0.60)(l) $1.30(n) Weighted average
common shares - basic 77,630 77,630 Weighted average common shares
- diluted 77,630(l) 83,390(n) (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 $185.3 million and $155.1 million in the
first nine months of 2009 and 2008 GAAP results, respectively,
including $30.5 million and $34.2 million charged to cost of sales,
$3.2 million and $2.8 million charged to research and development
and $150.9 million and $117.4 million charged to selling, general
and administrative, in the respective periods, with $0.7 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 $16.5
million and $45.7 million in the first nine months of 2009 and 2008
GAAP results, respectively. The $16.5 million charge for the nine
months ended September 30, 2009 included $6.1 million charged to
cost of sales, $0.9 million charged to research and development,
$5.1 million charged to selling, general and administrative, $0.5
million charged to interest expense and $3.9 million charged
through equity earnings of unconsolidated entities, net of tax. The
$45.7 million charge for the nine months ended September 30, 2008
included $16.4 million charged to cost of sales, $6.9 million
charged to research and development, $9.6 million charged to
selling, general and administrative, $6.9 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 $20.3 million
and $19.7 million associated with stock-based compensation expense
in the first nine months of 2009 and 2008 GAAP results,
respectively, including $1.5 million and $1.0 million charged to
cost of sales, $3.7 million and $3.4 million charged to research
and development and $15.1 million and $15.3 million charged to
selling, general and administrative, in the respective periods. (e)
Write-off in the amount of $0.7 million and $2.0 million during the
nine months ended September 30, 2009 and 2008, respectively,
relating to inventory write-ups recorded in connection with the
acquisitions of Concateno plc during the third quarter of 2009 and
BBI Holdings Plc. during the first quarter of 2008, respectively.
(f) Acquisition-related costs in the amount of $11.5 million
recorded in connection with the adoption of ASC 805, Business
Combinations, on January 1, 2009. (g) A $2.9 million net realized
foreign currency gain and a $1.7 million net realized foreign
currency loss during the nine months ended September 30, 2009 and
2008, respectively, associated with restricted cash established in
connection with the acquisitions of Concanteno plc during the third
quarter of 2009 and BBI Holdings Plc during the first quarter of
2008, respectively. (h) A $3.4 million gain associated with
management's decision to dispose of our Diamics, Inc. operations.
(i) A $1.9 million compensation-related charge recorded in
connection with the acquisition of Concateno plc. (j) A $0.3
million loss recorded in connection with the deferred payment of a
portion of the ACON Second Territory Business purchase price
consideration to be paid with our common stock. (k) Tax effect on
adjustments as discussed above in notes (b), (c), (d), (e) (f),
(g), (h), (i) and (j). (l) For the nine months ended September 30,
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. (m) Included in the weighted average
diluted common shares for the calculation of net income per common
share for the nine months ended September 30, 2009, on an adjusted
cash basis, are dilutive shares consisting of 1,428,000 common
stock equivalent shares from the potential exercise of stock
options and warrants. Also included were potential dilutive shares
consisting of 3,422,000 common stock equivalent shares from the
potential conversion of convertible debt securities, 10,985,000
common stock equivalent shares from the potential conversion of
Series B convertible preferred stock and 346,000 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 nine months ended September 30, 2009, on an
adjusted cash basis, includes the add back of interest expense
related to the convertible debt of $2.1 million, the add back of
$17.1 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 $0.2 million
resulting in net income available to common stockholders of $184.2
million for the nine months ended September 30, 2009. (n) Included
in the weighted average diluted common shares for the calculation
of net income per common share for the nine months ended September
30, 2008, on an adjusted cash basis, are dilutive shares consisting
of 2,349,000 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 nine months ended
September 30, 2008, on an adjusted cash basis, includes the add
back of interest expense related to the convertible debt of $2.1
million resulting in net income available to common stockholders of
$108.6 million. Potential dilutive shares consisting of 5,479,000
common stock equivalent shares from the potential conversion of
Series B convertible preferred stock for the nine months ended
September 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) Three
Months Ended September 30, 2009 Non-GAAP Adjusted Non-GAAP Cash
GAAP Adjustments Basis (a) Net product sales and services revenue
$527,962 $- $527,962 License and royalty 7,848 - 7,848 revenue Net
revenue 535,810 - 535,810 Cost of net revenue 252,842
(14,084)(b)(c)(d)(e) 238,758 Gross profit 282,968 14,084 297,052
Gross margin 53% 55% Operating expenses: Research and development
27,720 (2,462)(b)(c)(d) 25,258 Selling, general and administrative
204,642 (67,325)(b)(c)(d)(f) 137,317 Gain on disposition (3,355)
3,355(g) - Operating income 53,961 80,516 134,477 Interest and
other income (expense), net (29,625) (504)(c)(h)(i)(j) (30,129)
Income tax provision (benefit) 6,253 28,818(k) 35,071 Equity
earnings of unconsolidated entities, net of tax 2,059 1,139(b)(c)
3,198 Net income (loss) $20,142 $52,333 $72,475 Preferred stock
dividends $(5,843) $(5,843) Net income (loss) available to common
stockholders $14,299 $66,632 Net income (loss) per common share
Basic $0.18 $0.82 Diluted $0.17 $0.74(m) Weighted average common
shares - basic 81,625 81,625 Weighted average common shares -
diluted 83,418 98,616(m) Three Months Ended September 30, 2008
Non-GAAP Adjusted Non-GAAP Cash GAAP Adjustments Basis (a) Net
product sales and services revenue $433,034 $- $433,034 License and
royalty revenue 5,766 - 5,766 Net revenue 438,800 - 438,800 Cost of
net revenue 210,652 (12,721)(b)(c)(d) 197,931 Gross profit 228,148
12,721 240,869 Gross margin 52% 55% Operating expenses: Research
and development 25,693 (2,387)(b)(c)(d) 23,306 Selling, general and
administrative 189,208 (57,165)(b)(c)(d) 132,043 Gain on
disposition - - - Operating income 13,247 72,273 85,520 Interest
and other income (expense), net (24,752) 300(c) (24,452) Income tax
provision (benefit) (4,696) 26,018(k) 21,322 Equity earnings of
unconsolidated entities, net of tax 3,150 237(b) 3,387 Net income
(loss) $(3,659) $46,792 $43,133 Preferred stock dividends $(5,393)
$(5,393) Net income (loss) available to common stockholders
$(9,052) $37,740 Net income (loss) per common share Basic $(0.12)
$0.48 Diluted $(0.12)(l) $0.46(n) Weighted average common shares -
basic 77,995 77,995 Weighted average common shares - diluted
77,995(l) 83,169(n) (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 $65.4 million and $60.0 million in the
third quarter of 2009 and 2008 GAAP results, respectively,
including $10.3 million and $10.5 million charged to cost of sales,
$0.9 million and $1.0 million charged to research and development
and $54.0 million and $48.3 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 $6.2
million and $5.8 million for the third quarter of 2009 and 2008
GAAP results, respectively. The $6.2 million charge for the third
quarter of 2009 included $2.6 million charged to cost of sales,
$0.1 million charged to research and development, $2.4 million
charged to selling, general and administrative, $0.2 million
charged to interest expense and $0.9 million charged through equity
earnings of unconsolidated entities, net of tax. The $5.8 million
charge for the third quarter of 2008 included $1.8 million charged
to cost of sales, $0.3 million charged to research and development,
$3.4 million charged to selling, general and administrative and
$0.3 million charged to interest expense. 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 $7.8 million
and $7.0 million associated with stock-based compensation expense
for the third quarter of 2009 and 2008 GAAP results, respectively,
including $0.6 million and $0.4 million charged to cost of sales,
$1.4 million and $1.1 million charged to research and development
and $5.8 million and $5.5 million charged to selling, general and
administrative, in the respective quarters. (e) Write-off in the
amount of $0.7 million relating to an inventory write-up recorded
in connection with the acquisition of Concateno plc during the
third quarter of 2009. (f) Acquisition-related costs in the amount
of $5.1 million recorded in connection with the adoption of ASC
805, Business Combinations, on January 1, 2009. (g) A $3.4 million
gain associated with management's decision to dispose of our
Diamics, Inc. operations. (h) A $2.9 million net realized foreign
currency gain associated with restricted cash established in
connection with the acquisition of Concateno plc. (i) A $1.9
million compensation-related charge recorded in connection with the
acquisition of Concateno plc. (j) A $0.3 million loss recorded in
connection with the deferred payment of a portion of the ACON
Second Territory Business purchase price consideration to be paid
with our common stock. (k) Tax effect on adjustments as discussed
above in notes (b), (c), (d), (e) (f), (g), (h), (i) and (j). (l)
For the nine months ended September 30, 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. (m) Included in the weighted average diluted common
shares for the calculation of net income per common share for the
nine months ended September 30, 2009, on an adjusted cash basis,
are dilutive shares consisting of 1,428,000 common stock equivalent
shares from the potential exercise of stock options and warrants.
Also included were potential dilutive shares consisting of
3,422,000 common stock equivalent shares from the potential
conversion of convertible debt securities, 10,985,000 common stock
equivalent shares from the potential conversion of Series B
convertible preferred stock and 346,000 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 nine
months ended September 30, 2009, on an adjusted cash basis,
includes the add back of interest expense related to the
convertible debt of $2.1 million, the add back of $17.1 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 $0.2 million resulting in net
income available to common stockholders of $184.2 million for the
nine months ended September 30, 2009. (n) Included in the weighted
average diluted common shares for the calculation of net income per
common share for the nine months ended September 30, 2008, on an
adjusted cash basis, are dilutive shares consisting of 2,349,000
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 nine months ended September 30,
2008, on an adjusted cash basis, includes the add back of interest
expense related to the convertible debt of $2.1 million resulting
in net income available to common stockholders of $108.6 million.
Potential dilutive shares consisting of 5,479,000 common stock
equivalent shares from the potential conversion of Series B
convertible preferred stock for the nine months ended September 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)
September 30, December 31, 2009 2008 ASSETS CURRENT ASSETS: Cash
and cash equivalents $555,871 $141,324 Restricted cash 3,098 2,748
Marketable securities 907 1,763 Accounts receivable, net 363,054
280,608 Inventories, net 223,103 199,131 Prepaid expenses and other
current assets 169,370 196,969 Total current assets 1,315,403
822,543 PROPERTY, PLANT AND EQUIPMENT, NET 324,020 284,483 GOODWILL
AND OTHER INTANGIBLE ASSETS, NET 5,188,346 4,717,704 DEFERRED
FINANCING COSTS AND OTHER ASSETS, NET 154,332 130,630 Total assets
$6,982,101 $5,955,360 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT
LIABILITIES: Current portion of notes payable $19,612 $19,509 Other
current liabilities 450,311 345,836 Total current liabilities
469,923 365,345 LONG-TERM LIABILITIES: Notes payable, net of
current portion 2,134,398 1,501,025 Deferred tax liabilities
506,074 462,787 Other long-term liabilities 393,023 347,365 Total
long-term liabilities 3,033,495 2,311,177 TOTAL STOCKHOLDERS'
EQUITY 3,478,683 3,278,838 Total liabilities and stockholders'
equity $6,982,101 $5,955,360 DATASOURCE: Inverness Medical
Innovations, Inc. CONTACT: Doug Guarino, Director of Corporate
Relations, or Jon Russell, Vice President of Finance, both of
Inverness, +1-781-647-3900 Web Site:
http://www.invernessmedical.com/
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