Alere Inc. Announces Second Quarter 2013 Results

               Alere Inc. Announces Second Quarter 2013 Results

PR Newswire

WALTHAM, Mass., July 31, 2013

WALTHAM, Mass., July 31, 2013 /PRNewswire/ --Alere Inc. (NYSE: ALR), a global
leader in enabling individuals to take charge of their health at home through
the merger of rapid diagnostics and health information solutions, today
announced its financial results for the quarter ended June 30, 2013.

Ron Zwanziger, Chairman, Chief Executive Officer and President of Alere said,
"We are pleased to report a very strong quarter for Alere and continued
progress against the three-point strategic plan that we implemented in
November 2012. In particular, our currency adjusted organic growth rate for
our professional diagnostics segment, excluding changes in our U.S. Triage and
influenza revenues, was 8.6%, reflecting the strength of our
highly-differentiated portfolio across the globe. In addition, our combined
adjusted research and development and selling, general and administrative
expenses decreased as a percentage of revenue by 230 basis points from the
prior year quarter. Our growth rate in the quarter, coupled with disciplined
expense control, demonstrates our continued momentum and commitment to
enhancing value for our shareholders."

Financial results for the second quarter of 2013:

  oNet revenue of $764.0 million for the second quarter of 2013, compared to
    $700.5 million for the second quarter of 2012. Non-GAAP adjusted net
    revenue was $764.6 million for the second quarter of 2013, compared to
    $701.6 million for the second quarter of 2012.
  oNet loss of $65.9 million attributable to common stockholders of Alere
    Inc., and respective net loss per diluted common share of $0.81, for the
    second quarter of 2013, compared to net loss of $18.2 million attributable
    to common stockholders of Alere Inc., and respective net loss per diluted
    common share of $0.23, for the second quarter of 2012.
  oNon-GAAP adjusted net income per diluted common share of $0.64 for the
    second quarter of 2013, compared to non-GAAP adjusted net income per
    diluted common share of $0.48 for the second quarter of 2012.
  oNet product and services revenue from our Professional Diagnostics segment
    was $599.6 million in the second quarter of 2013, compared to net product
    and services revenue of $536.9 million in the second quarter of 2012.
    Non-GAAP adjusted net product and services revenue from our Professional
    Diagnostics segment was $600.2 million in the second quarter of 2013,
    compared to non-GAAP adjusted net product and services revenue of $538.0
    million in the second quarter of 2012. Recent professional diagnostics
    acquisitions contributed $47.4 million of incremental net revenue compared
    to the second quarter of 2012.
  oNorth American influenza sales decreased to $2.0 million for the second
    quarter of 2013, from $4.2 million for the second quarter of 2012.
  oExcluding the impact of the change in North American influenza revenues
    and the impact on revenues from the reduction in our U.S. meter-based
    Triage product sales, currency adjusted organic growth in our Professional
    Diagnostics segment was 8.6%.
  oNet product and services revenue from our Health Information Solutions
    segment was $134.8 million in the second quarter of 2013, compared to
    $138.6 million in the second quarter of 2012 and $134.2 million in the
    first quarter of 2013. Despite the decrease in revenue as compared to Q2
    2012, Non-GAAP adjusted operating income increased to $6.3 million in the
    second quarter of 2013 from $3.0 million in the second quarter of 2012, as
    a result of a reduction in segment operating expenses, as compared to the
    prior year period.

The Company's GAAP results for the second quarter of 2013 exclude $0.6 million
of revenue associated with acquired software license contracts that are not
recognized due to business combination accounting rules and include
amortization of $79.3 million, $8.1 million of restructuring charges, $4.7
million of stock-based compensation expense, $0.4 million of
acquisition-related costs recorded in accordance with ASC 805, Business
Combinations, $5.3 million of expense recorded for fair value adjustments to
acquisition-related contingent consideration, $0.8 million of interest expense
recorded in connection with fees paid for certain debt modifications, $0.5
million in compensation charges and $0.2 million of related interest accretion
associated with acquisition-related contingent consideration obligations, a
$0.7 million charge associated with the write-up to fair market value of
inventory acquired in connection with the acquisition of Epocal Inc., $35.6
million of expense associated with the extinguishment of debt and a $5.1
million non-cash write-off of an investment, offset by a $8.1 million bargain
purchase gain in connection with our acquisition of the Liberty business. The
Company's GAAP results for the second quarter of 2012 exclude $1.1 million of
revenue associated with acquired software license contracts that are not
recognized due to business combination accounting rules and include
amortization of $81.7 million, $1.4 million of restructuring charges, $4.4
million of stock-based compensation expense, $3.8 million of
acquisition-related costs recorded in accordance with ASC 805, Business
Combinations, and $1.3 million of interest expense associated with fees paid
for modification of certain debt agreements, offset by $6.7 million of income
recorded for fair value adjustments to acquisition-related contingent
consideration obligations. These amounts, net of tax, have been excluded from
the non-GAAP adjusted net income per diluted common share attributable to
Alere Inc. for the respective quarters.

Detailed reconciliations of the non-GAAP financial measures presented in this
release to the most directly comparable financial measures under GAAP, as well
as a discussion regarding these non-GAAP financial measures, are included in
the schedules to this press release.

The Company will host a conference call beginning at 8:30 a.m. (Eastern Time)
today, July 31, 2013, 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 mattersdiscussed during the conference call, may contain or constitute
material information that has not been previously disclosed.

The conference call may be accessed by dialing (877) 270-2148 (domestic) or
(412) 902-6510 (international) and asking for Alere Inc. A webcast of the
call can also be accessed via the Alere website at www.alere.com/investors, or
directly through the following link: http://www.videonewswire.com/event.

A replay of the call will be available approximately one hour after the
conclusion of the call and will remain available for a period of seven days
following the call. The replay may be accessed by dialing (877) 344-7529
(domestic) or (412) 317-0088 (international) and entering replay code
10031621. The replay will also be available via online webcast at
http://www.videonewswire.com/event or via the Alere website at
www.alere.com/investors for a period of 60 days following the call.

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 Alere website (http://www.alere.com/investors) under the
Earnings Calls and Releases section shortly before the conference call begins
and will continue to be available on this website.

For more information about Alere, please visit our web site at 
http://www.alere.com.

By developing new capabilities in near-patient diagnosis, monitoring and
health information solutions, Alere enables individuals to take charge of
improving their health and quality of life at home. Alere's global leading
products and services, as well as its new product development efforts, focus
on cardiology, infectious disease, toxicology and diabetes. Alere is
headquartered in Waltham, Massachusetts.

Alere Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
                                        Three Months Ended June 30,
                                        2013                 2012
Net product sales and services revenue  $             $       
                                        759,120              697,280
License and royalty revenue             4,865                3,237
 Net revenue                            763,985              700,517
Cost of net revenue                     379,498              344,909
  Gross profit                     384,487              355,608
  Gross margin                     50%                  51%
Operating expenses:
 Research and development               40,500               40,447
 Selling, general and administrative    299,583              280,807
  Total operating expenses            340,083              321,254
  Operating income                 44,404               34,354
Interest and other income (expense),    (91,390)             (51,720)
net
 Loss before provision (benefit) for   (46,986)             (17,366)
 income taxes
Provision (benefit) for income taxes    17,867               (489)
 Loss before equity earnings of        (64,853)             (16,877)
 unconsolidated entities, net of tax
Equity earnings of unconsolidated       4,551                3,998
entities, net of tax
Net loss                                (60,302)             (12,879)
 Less: Net income attributable to       267                  36
 non-controlling interests
Net loss attributable to Alere Inc.     (60,569)             (12,915)
and Subsidiaries
 Preferred stock dividends              (5,309)              (5,279)
Net loss available to common            $             $       
stockholders                            (65,878)             (18,194)
 Basic net loss per common share        $           $        
                                        (0.81)                (0.23)
 Diluted net loss per common share      $           $        
                                        (0.81)                (0.23)
Weighted-average shares - basic         81,311               80,375
Weighted-average shares - diluted       81,311               80,375

Alere Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
                                      Six Months Ended June 30,
                                      2013                 2012
Net product sales and services        $               $     
revenue                               1,494,305            1,365,501
License and royalty revenue           8,929                6,145
 Net revenue                          1,503,234            1,371,646
Cost of net revenue                   754,490              662,967
  Gross profit                   748,744              708,679
  Gross margin                   50%                  52%
Operating expenses:
 Research and development             81,954               79,447
 Selling, general and administrative  591,897              559,820
  Total operating expenses          673,851              639,267
  Operating income               74,893               69,412
Interest and other income (expense),  (149,259)            (90,616)
net
 Loss before benefit for income      (74,366)             (21,204)
 taxes
Benefit for income taxes              (19,004)             (1,944)
 Loss before equity earnings of
 unconsolidated entities, net of      (55,362)             (19,260)
 tax
Equity earnings of unconsolidated     7,485                7,410
entities, net of tax
Net loss                              (47,877)             (11,850)
 Less: Net income (loss)
 attributable to non-controlling      242                  (149)
 interests
Net loss attributable to Alere Inc.   (48,119)             (11,701)
and Subsidiaries
 Preferred stock dividends            (10,559)             (10,588)
Net loss available to common          $             $       
stockholders                          (58,678)             (22,289)
 Basic net loss per common share      $           $         
                                      (0.72)               (0.28)
 Diluted net loss per common share    $           $         
                                      (0.72)               (0.28)
Weighted-average shares - basic       81,255               80,307
Weighted-average shares - diluted     81,255               80,307



Alere Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
                                   June 30,               December 31,
                                   2013                   2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents          $      320,547   $      328,346
Restricted cash                    9,919                  3,076
Marketable securities              889                    904
Accounts receivable, net           553,760                524,332
Inventories, net                   356,753                337,121
Prepaid expenses and other current 167,209                212,958
assets
Total current assets               1,409,077              1,406,737
PROPERTY, PLANT AND EQUIPMENT, NET 530,467                534,469
GOODWILL AND OTHER INTANGIBLE      4,965,095              4,919,081
ASSETS, NET
DEFERRED FINANCING COSTS AND OTHER 195,366                207,641
ASSETS, NET
Total assets                       $    7,100,005     $     7,067,928
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt  $       56,497  $       
and capital lease obligations                             66,916
Other current liabilities          603,931                581,893
Total current liabilities          660,428                648,809
LONG-TERM LIABILITIES:
Long-term debt and capital lease
obligations, net of current        3,819,987              3,641,592
portion
Deferred tax liabilities           390,012                428,188
Other long-term liabilities        197,781                166,635
Total long-term liabilities        4,407,780              4,236,415
TOTAL EQUITY                       2,031,797              2,182,704
Total liabilities and equity       $    7,100,005     $     7,067,928

Alere Inc. and Subsidiaries
Selected Consolidated Revenues by Business Area ^(1)
(in thousands)
Professional                                                    %       %
Diagnostics                                                     Change  Change
Segment
                                                                Q2 13   YTD 13
                 Q2 2013    YTD 2013      Q2 2012   YTD 2012    v. Q2   v. YTD
                                                                12      12
                 $      $        $      $    
Cardiology                                       -6%     -12%
                 118,436   233,369               264,423
                                          125,597
Infectious       157,706    347,550       137,821   288,837     14%     20%
disease
Toxicology       165,884    314,933       159,922   281,662     4%      12%
Diabetes         74,905     124,988       36,797    64,958      104%    92%
Other ^(1)       82,666     157,385       76,736    152,442     8%      3%
   Professional
   diagnostics
   net product
   sales and     599,597    1,178,225     536,873   1,052,322   12%     12%

   services
   revenue ^(1)
License and      4,165      8,029         3,237     6,145       29%     31%
royalty revenue
   Professional  $      $        $      $    
   diagnostics                                       12%     12%
   net revenue   603,762   1,186,254             1,058,467
                                          540,110
Health
Information                                                     %       %
Solutions                                                       Change  Change
Segment
                                                                Q2 13   YTD 13
                 Q2 2013    YTD 2013      Q2 2012   YTD 2012    v. Q2   v. YTD
                                                                12      12
                 $      $        $      $    
Disease and case                                -4%     -1%
management       52,578    106,704              107,894
                                          54,512
Wellness         27,230     53,530        29,567    56,591      -8%     -5%
Women's &
children's       29,256     58,336        31,313    61,084      -7%     -4%
health
Patient
self-testing     25,711     50,412        23,198    43,805      11%     15%
services
   Health        $      $        $      $    
   information                                   -3%     0%
   solutions net 134,775   268,982               269,374
   revenue                                138,590
^(1) Revenues are presented in accordance with Generally Accepted
Accounting Principles and exclude an adjustment of $0.6 million and
$1.2 million, and $1.1 million and $2.4 million, in revenue related to
acquired software license contracts which were not recognized during
the three and six months ended June 30, 2013 and 2012, respectively,
due to business combination accounting rules.



Alere Inc. and Subsidiaries
Reconciliation to Non-GAAP Adjusted Operating Results
(in thousands, except per share amounts)
                                   Three Months Ended June 30,
                                   2013                    2012
Reconciliation to Non-GAAP
Adjusted Operating Income ^(1)
Operating income                   $               $        
                                   44,404                 34,354
Adjustment related to acquired     592                     1,126
software license contracts
Amortization of
acquisition-related intangible     79,158                  81,371
assets
Restructuring charges             8,044                   1,365
Stock-based compensation expense   4,677                   4,368
Compensation charges associated
with acquisition-related           580                     -
contingent consideration
obligations
Acquisition-related costs          426                     3,800
Fair value adjustments to
acquisition-related contingent     5,258                   (6,681)
consideration
Non-cash charge associated with    711                     -
acquired inventory
Non-GAAP adjusted operating income $                $       
                                   143,850                119,703
                                   Three Months Ended June 30,
                                   2013                    2012
Reconciliation to Non-GAAP
Adjusted Net Income^(1)
Net loss available to common       $                $       
stockholders                       (65,878)               (18,194)
Adjustment related to acquired     592                     1,126
software license contracts
Amortization of
acquisition-related intangible     79,240                  81,644
assets
Restructuring charges             8,106                   1,415
Stock-based compensation expense   4,677                   4,368
Compensation charges associated
with acquisition-related           580                     -
contingent consideration
obligations
Acquisition-related costs          426                     3,800
Fair value adjustments to
acquisition-related contingent     5,258                   (6,681)
consideration
Non-cash charge associated with    711                     -
acquired inventory
Interest expense recorded in
connection with fees paid for
certain debt modifications and the 810                     1,320
termination of our senior secured
credit facility
Interest accretion associated with
acquisition-related compensation   160                     -
charges
Non-cash write-off of an           5,110                   -
investment
Bargain purchase gain associated
with the acquisition of the       (8,062)                 -
Liberty business
Expense associated with            35,604                  -
extinguishment of debt
Income tax effects on items above  (12,768)                (29,318)
Non-GAAP adjusted net income       $               $        
available to common stockholders   54,566                 39,480
Net loss per diluted common share  $              $         
                                   (0.81)                 (0.23)
Non-GAAP adjusted net income per   $              $         
diluted common share                 0.64                  0.48
Weighted-average shares - diluted  81,311                  80,375
Non-GAAP adjusted weighted average 95,207                  83,960
shares - diluted
^(1) In calculating "non-GAAP adjusted operating income" and "non-GAAP
adjusted net income", the Company excludes (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 operating income and 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 operating income or net income or
loss for the costs associated with litigation, including payments made or
received through settlements. It should be noted that "non-GAAP adjusted
operating income" and "non-GAAP adjusted net income" are not standard
financial measurements under accounting principles generally accepted in the
United States of America ("GAAP") and should not be considered as an
alternative to operating income and 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, "non-GAAP adjusted operating income" and
"non-GAAP adjusted net income" presented in this press release may not be
comparable to similar measures used by other companies.

Alere Inc. and Subsidiaries
Reconciliation to Non-GAAP Adjusted Operating Results
(in thousands, except per share amounts)
                                   Six Months Ended June 30,
                                   2013                    2012
Reconciliation to Non-GAAP
Adjusted Operating Income ^(1)
Operating income                   $               $        
                                   74,893                 69,412
Adjustment related to acquired     1,235                   2,412
software license contracts
Amortization of
acquisition-related intangible     155,025                 159,300
assets
Restructuring charges             11,936                  6,893
Stock-based compensation expense   8,800                   8,242
Compensation charges associated
with acquisition-related           1,270                   -
contingent consideration
obligations
Acquisition-related costs          1,322                   5,261
Fair value adjustments to
acquisition-related contingent     16,276                  (1,637)
consideration
Non-cash charge associated with    1,172                   4,681
acquired inventory
Non-GAAP adjusted operating income $                $       
                                   271,929                254,564
                                   Six Months Ended June 30,
                                   2013                    2012
Reconciliation to Non-GAAP
Adjusted Net Income^(1)
Net loss available to common       $                $       
stockholders                       (58,678)               (22,289)
Adjustment related to acquired     1,235                   2,412
software license contracts
Amortization of
acquisition-related intangible     155,229                 159,766
assets
Restructuring charges             12,053                  7,003
Stock-based compensation expense   8,800                   8,242
Compensation charges associated
with acquisition-related           1,270                   -
contingent consideration
obligations
Acquisition-related costs          1,322                   5,261
Fair value adjustments to
acquisition-related contingent     16,276                  (1,637)
consideration
Non-cash charge associated with    1,172                   4,681
acquired inventory
Interest expense recorded in
connection with fees paid for
certain debt modifications and the 1,762                   2,640
termination of our senior secured
credit facility
Interest accretion associated with
acquisition-related compensation   160                     -
charges
Non-cash write-off of an           5,110                   -
investment
Bargain purchase gain associated
with the acquisition of the       (8,062)                 -
Liberty business
Expense associated with            35,767                  -
extinguishment of debt
Income tax effects on items above  (74,823)                (60,097)
Non-GAAP adjusted net income       $               $       
available to common stockholders   98,593                 105,982
Net loss per diluted common share  $              $         
                                   (0.72)                 (0.28)
Non-GAAP adjusted net income per   $              $         
diluted common share                 1.16                  1.25
Weighted-average shares - diluted  81,255                  80,307
Non-GAAP adjusted weighted average 95,071                  94,189
shares - diluted
^(1) In calculating "non-GAAP adjusted operating income" and "non-GAAP
adjusted net income", the Company excludes (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 operating income and 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 operating income or net income or
loss for the costs associated with litigation, including payments made or
received through settlements. It should be noted that "non-GAAP adjusted
operating income" and "non-GAAP adjusted net income" are not standard
financial measurements under accounting principles generally accepted in the
United States of America ("GAAP") and should not be considered as an
alternative to operating income and 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, "non-GAAP adjusted operating income" and
"non-GAAP adjusted net income" presented in this press release may not be
comparable to similar measures used by other companies.

                     Alere Inc. and Subsidiaries
                     Reconciliation of Operating Income (Loss) to Non-GAAP
                     Adjusted Operating Income (Loss)
                                                (in
                                                thousands)
                     For the Three Months Ended June 30, 2013
                     Professional  Health       Consumer
Operating Segment    Diagnostics   Information  Diagnostics  Corporate  Total
                                   Solutions
                     $         $        $       $      $   
Net revenue         603,762      134,775      25,448           
                                                              -       763,985
Adjustment related
to acquired          592           -            -            -          592
software license
contracts (1)
Non-GAAP adjusted    $         $        $       $      $   
net revenue          604,354      134,775      25,448           
                                                              -       764,577
Operating income     $        $        $       $      $   
(loss)               72,896      (11,759)      3,404    (20,137)    
                                                                        44,404
Adjustment related
to acquired          592           -            -            -          592
software license
contracts (1)
Amortization of
acquisition-related  67,968        10,732       458          -          79,158
intangible assets
Non-cash charge
associated with      711           -            -            -          711
acquired inventory
Restructuring        1,740         6,304        -            -          8,044
charges
Stock-based
compensation         -             -            -            4,677      4,677
expense
Compensation
charges associated
with
acquisition-related  580           -            -            -          580
contingent
consideration
obligations
Acquisition-related  -             -            -            426        426
costs
Fair value
adjustments to
acquisition-related  4,330         1,028        -            (100)      5,258
contingent
consideration
Non-GAAP adjusted    $         $       $       $      $   
operating income     148,817        6,305      3,862    (15,134)  
(loss)                                                                  143,850
Non-GAAP adjusted
operating income
(loss) as % of       24.6%         4.7%         15.2%                   18.8%
Non-GAAP adjusted
net revenue
(1) Estimated revenue related to acquired software license contracts
that was not recognized during the second quarter of 2013 due to
business combination accounting rules
                     Reconciliation of Operating Income (Loss) to Non-GAAP
                     Adjusted Operating Income (Loss)
                                                (in
                                                thousands)
                     For the Three Months Ended June 30, 2012
                     Professional  Health       Consumer
Operating Segment    Diagnostics   Information  Diagnostics  Corporate  Total
                                   Solutions
                     $         $        $       $      $   
Net revenue         540,110      138,590      21,817           
                                                              -       700,517
Adjustment related
to acquired          1,126         -            -            -          1,126
software license
contracts (1)
Non-GAAP adjusted    $         $        $       $      $   
net revenue          541,236      138,590      21,817           
                                                              -       701,643
Operating income     $        $        $       $      $   
(loss)               63,251      (12,666)      2,699    (18,930)    
                                                                        34,354
Adjustment related
to acquired          1,126         -            -            -          1,126
software license
contracts (1)
Amortization of
acquisition-related  66,427        14,312       632          -          81,371
intangible assets
Restructuring        817           539          -            9          1,365
charges
Stock-based
compensation         -             -            -            4,368      4,368
expense
Non-cash charge
associated with      -             -            -            -          -
acquired inventory
Acquisition-related  -             -            -            3,800      3,800
costs
Fair value
adjustments to
acquisition-related  (6,901)       863          (288)        (355)      (6,681)
contingent
consideration
Non-GAAP adjusted    $         $       $       $      $   
operating income     124,720        3,048      3,043    (11,108)  
(loss)                                                                  119,703
Non-GAAP adjusted
operating income
(loss) as % of       23.0%         2.2%         13.9%                   17.1%
Non-GAAP adjusted
net revenue
(1) Estimated revenue related to acquired software license contracts
that was not recognized during the second quarter of 2012 due to
business combination accounting rules
Comments:
In calculating "adjusted operating income (loss)" in the schedule presented
above, the Company excludes from operating income (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 operating income (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 operating income (loss) for the costs associated with
litigation, including payments made or received through settlements. It should
be noted that "adjusted operating income (loss)" 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 operating
income (loss) 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,
"adjusted operating income (loss)" presented in this schedule may not be
comparable to similar measures used by other companies.
Reference should also be made to the Company's financial results contained in
our earnings press release respective to the periods presented in this schedule,
which include a more detailed discussion of the adjustments to the GAAP
operating results presented above.

                     Alere Inc. and Subsidiaries
                     Reconciliation of Operating Income (Loss) to Non-GAAP
                     Adjusted Operating Income (Loss)
                                                (in
                                                thousands)
                     For the Six Months Ended June 30, 2013
                     Professional  Health       Consumer
Operating Segment    Diagnostics   Information  Diagnostics  Corporate  Total
                                   Solutions
                     $          $        $       $      $   
Net revenue         1,186,254     268,982      47,998           1,503,234
                                                              -
Adjustment related
to acquired          1,235         -            -            -          1,235
software license
contracts (1)
Non-GAAP adjusted    $          $        $       $      $   
net revenue          1,187,489     268,982      47,998           1,504,469
                                                              -
Operating income     $         $        $       $      $    
(loss)              132,736      (25,652)      5,684    (37,875)   
                                                                        74,893
Adjustment related
to acquired          1,235         -            -            -          1,235
software license
contracts (1)
Amortization of
acquisition-related  132,261       21,770       994          -          155,025
intangible assets
Non-cash charge
associated with      1,172         -            -            -          1,172
acquired inventory
Restructuring        3,129         8,807        -            -          11,936
charges
Stock-based
compensation         -             -            -            8,800      8,800
expense
Compensation
charges associated
with
acquisition-related  1,270         -            -            -          1,270
contingent
consideration
obligations
Acquisition-related  -             -            -            1,322      1,322
costs
Fair value
adjustments to
acquisition-related  11,393        4,383        -            500        16,276
contingent
consideration
Non-GAAP adjusted    $         $       $       $      $    
operating income     283,196        9,308      6,678    (27,253)  271,929
(loss)
Non-GAAP adjusted
operating income
(loss) as % of
Non-GAAP             23.8%         3.5%         13.9%                   18.1%

adjusted net
revenue
(1) Estimated revenue related to acquired software license contracts that was not
recognized during the first six months of 2013 due to business combination
accounting rules
                     Reconciliation of Operating Income (Loss) to Non-GAAP
                     Adjusted Operating Income (Loss)
                                                (in
                                                thousands)
                     For the Six Months Ended June 30, 2012
                     Professional  Health       Consumer
Operating Segment    Diagnostics   Information  Diagnostics  Corporate  Total
                                   Solutions
                     $          $        $       $      $   
Net revenue         1,058,467     269,374      43,805           1,371,646
                                                              -
Adjustment related
to acquired          2,412         -            -            -          2,412
software license
contracts (1)
Non-GAAP adjusted    $          $        $       $      $   
net revenue          1,060,879     269,374      43,805           1,374,058
                                                              -
Operating income     $         $        $       $      $    
(loss)              133,430      (32,022)      3,064    (35,060)   
                                                                        69,412
Adjustment related
to acquired          2,412         -            -            -          2,412
software license
contracts (1)
Amortization of
acquisition-related  129,312       28,636       1,352        -          159,300
intangible assets
Restructuring        5,611         1,256        -            26         6,893
charges
Stock-based
compensation         -             -            -            8,242      8,242
expense
Non-cash charge
associated with      4,681         -            -            -          4,681
acquired inventory
Acquisition-related  -             -            -            5,261      5,261
costs
Fair value
adjustments to
acquisition-related  (6,325)       3,167        (204)        1,725      (1,637)
contingent
consideration
Non-GAAP adjusted    $         $       $       $      $    
operating income     269,121        1,037      4,212    (19,806)  254,564
(loss)
Non-GAAP adjusted
operating income
(loss) as % of
Non-GAAP             25.4%         0.4%         9.6%                    18.5%

adjusted net
revenue
(1) Estimated revenue related to acquired software license contracts that was not
recognized during the first six months of 2012 due to business combination
accounting rules
Comments:
In calculating "adjusted operating income (loss)" in the schedule presented
above, the Company excludes from operating income (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 operating income (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 operating income (loss) for the costs associated with litigation,
including payments made or received through settlements. It should be noted that
"adjusted operating income (loss)" 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 operating income (loss) 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, "adjusted operating
income (loss)" presented in this schedule may not be comparable to similar
measures used by other companies.
Reference should also be made to the Company's financial results contained in our
earnings press release respective to the periods presented in this schedule,
which include a more detailed discussion of the adjustments to the GAAP operating
results presented above.

Alere Inc. and Subsidiaries
Reconciliations to Non-GAAP Adjusted P&L Categories
(in thousands)
                                          Three Months       Three Months
                                          Ended              Ended

                                          June 30, 2013      June 30, 2012
Net revenue                              $          $        
                                               763,985       700,517
Adjustment related to acquired software   592                1,126
license contracts
Non-GAAP adjusted net revenue             $          $        
                                               764,577       701,643
Cost of net revenue                       $          $        
                                               379,498       344,909
Less adjustments:
Non-cash charge associated with acquired  (711)              -
inventory
Amortization of acquisition-related       (17,102)           (17,460)
intangible assets
Stock-based compensation expense          (278)              (263)
Restructuring charges                    (729)              (25)
Non-GAAP adjusted cost of net revenue     $          $        
                                               360,678       327,161
Non-GAAP adjusted gross profit            $          $        
                                               403,899       374,482
                                          Three Months       Three Months
                                          Ended              Ended

                                          June 30, 2013      June 30, 2012
                                          $          $        
Research and development                                   
                                          40,500             40,447
Less adjustments:
Amortization of acquisition-related       (1,216)            (1,502)
intangible assets
Stock-based compensation expense          (783)              (856)
Restructuring charges                    (645)              (14)
Non-GAAP adjusted research and            $          $        
development                                                 
                                          37,856             38,075
                                          Three Months       Three Months
                                          Ended              Ended

                                          June 30, 2013      June 30, 2012
Selling, general and administrative       $          $        
                                               299,583       280,807
Less adjustments:
Amortization of acquisition-related       (60,840)           (62,409)
intangible assets
Stock-based compensation expense          (3,616)            (3,249)
Compensation charges associated with
acquisition-related contingent            (580)              -
consideration obligations
Acquisition-related costs                 (426)              (3,800)
Fair value adjustments to
acquisition-related contingent            (5,258)            6,681
consideration
Restructuring charges                    (6,670)            (1,326)
Non-GAAP adjusted selling, general and    $          $        
administrative                                222,193       216,704
                                          Three Months       Three Months
                                          Ended              Ended

                                          June 30, 2013      June 30, 2012
                                          $          $        
Interest and other income (expense), net                    
                                          (91,390)           (51,720)
Less adjustments:
Interest expense recorded in connection
with fees paid for certain debt           810                1,320
modifications and the termination of our
senior secured credit facility
Interest accretion associated with        160                -
acquisition-related compensation charges
Non-cash write-off of an investment      5,110              -
Bargain purchase gain associated with     (8,062)            -
the acquisition of the Liberty business
Expense associated with extinguishment    35,604             -
of debt
Restructuring charges                    62                 50
Non-GAAP adjusted interest and other      $          $        
income (expense), net                                       
                                          (57,706)           (50,350)
                                          Three Months       Three Months
                                          Ended              Ended

                                          June 30, 2013      June 30, 2012
                                          $          $        
Provision (benefit) for income taxes                          
                                          17,867             (489)
 Add: Income tax effects on Non-GAAP  12,783             29,322
adjustments
Non-GAAP adjusted provision for income    $          $        
taxes                                                       
                                          30,650             28,833
                                          Three Months       Three Months
                                          Ended              Ended

                                          June 30, 2013      June 30, 2012
Equity earnings of unconsolidated         $          $        
entities, net of tax                                        
                                          4,551             3,998
Less adjustments:
Amortization of acquisition-related       150                301
intangible assets
Income tax effects on items above         -                  (3)
Non-GAAP adjusted equity earnings of      $          $        
unconsolidated entities, net of tax                         
                                          4,701             4,296

Alere Inc. and Subsidiaries
Reconciliations to Non-GAAP Adjusted P&L Categories
(in thousands)
                                         Six Months Ended    Six Months Ended

                                         June 30, 2013       June 30, 2012
Net revenue                             $           $        
                                            1,503,234        1,371,646
Adjustment related to acquired software  1,235               2,412
license contracts
Non-GAAP adjusted net revenue            $           $        
                                            1,504,469        1,374,058
Cost of net revenue                      $           $        
                                              754,490        662,967
Less adjustments:
Non-cash charge associated with          (1,172)             (4,681)
acquired inventory
Amortization of acquisition-related      (36,272)            (33,197)
intangible assets
Stock-based compensation expense         (510)               (532)
Restructuring charges                   (1,352)             (989)
Non-GAAP adjusted cost of net revenue    $           $        
                                              715,184        623,568
Non-GAAP adjusted gross profit           $           $        
                                              789,285        750,490
                                         Six Months Ended    Six Months Ended

                                         June 30, 2013       June 30, 2012
                                         $           $        
Research and development                      81,954       
                                                             79,447
Less adjustments:
Amortization of acquisition-related      (2,498)             (3,904)
intangible assets
Stock-based compensation expense         (1,530)             (1,627)
Restructuring charges                   (645)               (638)
Non-GAAP adjusted research and           $           $        
development                                    77,281       
                                                             73,278
                                         Six Months Ended    Six Months Ended

                                         June 30, 2013       June 30, 2012
Selling, general and administrative      $           $        
                                              591,897        559,820
Less adjustments:
Amortization of acquisition-related      (116,255)           (122,199)
intangible assets
Stock-based compensation expense         (6,760)             (6,083)
Compensation charges associated with
acquisition-related contingent           (1,270)             -
consideration obligations
Acquisition-related costs                (1,322)             (5,261)
Fair value adjustments to
acquisition-related contingent           (16,276)            1,637
consideration
Restructuring charges                   (9,939)             (5,266)
Non-GAAP adjusted selling, general and   $           $        
administrative                               440,075        422,648
                                         Six Months Ended    Six Months Ended

                                         June 30, 2013       June 30, 2012
Interest and other income (expense),     $           $        
net                                          (149,259)       
                                                             (90,616)
Less adjustments:
Interest expense recorded in connection
with fees paid for certain debt          1,762               2,640
modifications and the termination of
our senior secured credit facility
Interest accretion associated with
acquisition-related compensation         160                 -
charges
Non-cash write-off of an investment     5,110               -
Bargain purchase gain associated with
the acquisition of the Liberty          (8,062)             -
business
Expense associated with extinguishment   35,767              -
of debt
Restructuring charges                   117                 110
Non-GAAP adjusted interest and other     $           $        
income (expense), net                        (114,405)       
                                                             (87,866)
                                         Six Months Ended    Six Months Ended

                                         June 30, 2013       June 30, 2012
                                         $           $        
Benefit for income taxes                      (19,004)       
                                                             (1,944)
 Add: Income tax effects on          74,844              60,105
Non-GAAP adjustments
Non-GAAP adjusted provision for income   $           $        
taxes                                          55,840       
                                                             58,161
                                         Six Months Ended    Six Months Ended

                                         June 30, 2013       June 30, 2012
Equity earnings of unconsolidated        $           $        
entities, net of tax                                        
                                         7,485              7,410
Less adjustments:
Amortization of acquisition-related      301                 521
intangible assets
Income tax effects on items above        -                   (5)
Non-GAAP adjusted equity earnings of     $           $        
unconsolidated entities, net of tax                         
                                         7,786              7,926



SOURCE Alere Inc.

Website: http://www.alere.com
Contact: Doug Guarino, Director of Corporate Relations, 781-647-3900, or Jon
Russell Vice President of Finance
 
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