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Alere Inc. Announces Fourth Quarter 2013 Results



               Alere Inc. Announces Fourth Quarter 2013 Results

PR Newswire

WALTHAM, Mass., Feb. 6, 2014

WALTHAM, Mass., Feb. 6, 2014 /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 December 31, 2013.

Ron Zwanziger, Chairman, Chief Executive Officer and President of Alere said,
"Our strong fourth quarter results complete a very successful year for Alere. 
Our focus on organic growth, expense control and value creation for our
shareholders positions us well for continued improvements in 2014 and beyond."

Financial results for the fourth quarter of 2013:

  o Net revenue of $772.3 million for the fourth quarter of 2013, compared to
    $755.8 million for the fourth quarter of 2012.  Non-GAAP adjusted net
    revenue was $772.8 million for the fourth quarter of 2013, compared to
    $756.5 million for the fourth quarter of 2012.
  o Net loss of $9.1 million attributable to common stockholders of Alere
    Inc., and respective net loss per diluted common share of $0.11, for the
    fourth quarter of 2013, compared to net loss of $68.0 million attributable
    to common stockholders of Alere Inc., and respective net loss per diluted
    common share of $0.84, for the fourth quarter of 2012.
  o Non-GAAP adjusted net income per diluted common share of $0.68 for the
    fourth quarter of 2013, compared to non-GAAP adjusted net income per
    diluted common share of $0.55 for the fourth quarter of 2012.
  o Net product and services revenue from our Professional Diagnostics segment
    was $600.7 million in the fourth quarter of 2013, compared to net product
    and services revenue of $584.1 million in the fourth quarter of 2012.
    Non-GAAP adjusted net product and services revenue from our Professional
    Diagnostics segment was $601.1 million in the fourth quarter of 2013,
    compared to non-GAAP adjusted net product and services revenue of $584.9
    million in the fourth quarter of 2012. Recent professional diagnostics
    acquisitions contributed $27.2 million of incremental net revenue compared
    to the fourth quarter of 2012, offset by a reduction in revenue of $6.3
    million related to dispositions in the quarter.
  o North American influenza sales decreased to $20.9 million for the fourth
    quarter of 2013, from $23.0 million for the fourth quarter of 2012.
  o Excluding 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 2.0%. This growth rate was adversely impacted by
    the change in reimbursement rates which became effective on July 1, 2013
    for our U.S. mail order diabetes business. Excluding revenues from our
    U.S. mail order diabetes business and considering the flu and Triage
    adjustments, the currency adjusted organic growth rate for the quarter was
    5.2% for the remainder of our Professional Diagnostics segment.
  o Net product and services revenue from our Health Information Solutions
    segment was $130.0 million in the fourth quarter of 2013, compared to
    $131.0 million in the fourth quarter of 2012 and $134.2 million in the
    third quarter of 2013.
  o Included in royalty revenues in the fourth quarter of 2013 was $8.5
    million associated with the license of certain of our molecular
    intellectual property, compared with $11.0 million during the fourth
    quarter of 2012.
  o Included in interest and other income (expense), is an incremental
    provision of $4.5 million to reflect an estimate of the settlement or
    litigation costs, which we may incur associated with an ongoing dispute
    with a customer in our U.S. toxicology business during the fourth quarter
    of 2013, and a charge of a $3.9 million associated with the settlement of
    a prior year dispute with a former distributor during the fourth quarter
    of 2012.

The Company's GAAP results for the fourth quarter of 2013 exclude $0.5 million
of revenue associated with acquired software license contracts that are not
recognized due to business combination accounting rules and include
amortization of $81.4 million, $7.8 million of restructuring charges, $6.7
million of stock-based compensation expense, $1.3 million of
acquisition-related costs recorded in accordance with ASC 805, Business
Combinations, $6.1 million of costs associated with potential business
dispositions, $0.4 million of interest expense recorded in connection with
fees paid for certain debt modifications, $0.8 million in compensation charges
and $0.1 million of related interest accretion associated with
acquisition-related contingent consideration obligations, a $0.6 million
charge associated with the write-up to fair market value of inventory acquired
in connection with the acquisition of Epocal Inc., $0.1 million of costs
associated with the proxy contest, offset by an $0.8 million reduction in the
loss on disposition of our Spinreact, S.A. subsidiary located in Spain, and
$1.0 million of income recorded for fair value adjustments to
acquisition-related contingent consideration.  The Company's GAAP results for
the fourth quarter of 2012 exclude $0.8 million of revenue associated with
acquired software license contracts that are not recognized due to business
combination accounting rules and include amortization of $105.1 million, $10.3
million of restructuring charges, $3.8 million of stock-based compensation
expense, $3.6 million of acquisition-related costs recorded in accordance with
ASC 805, Business Combinations, $10.2 million of expense recorded for fair
value adjustments to acquisition-related contingent consideration, $1.0
million of interest expense recorded in connection with fees paid for certain
debt modifications, and $23.2 million of expense associated with the
extinguishment of debt.  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, February 6, 2014, 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
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
http://www.alere.com/us/en/about/investor-relations/events.html, or directly
through the following link: http://www.videonewswire.com/event.asp?id=97913.

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
10040461.  The replay will also be available via online webcast at
http://www.videonewswire.com/event.asp?id=97913 or via the Alere website at
http://www.alere.com/us/en/about/investor-relations/events.html 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/us/en/about/investor-relations/events.html) 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 December 31, 
                                              2013             2012
Net product sales and services revenue        $                $          
                                              758,210          738,520
License and royalty revenue                   14,116           17,243
         Net revenue                          772,326          755,763
Cost of net revenue                           387,977          381,895
               Gross profit                   384,349          373,868
               Gross margin                   50%              49%
Operating expenses:
         Research and development             38,350           62,992
         Selling, general and administrative  307,200          309,888
         Loss (adjustment) on disposition     (761)            -
               Operating income               39,560           988
Interest and other income (expense), net      (57,236)         (84,054)
          Loss before benefit for income      (17,676)         (83,066)
         taxes 
Benefit for income taxes                      (10,159)         (17,698)
          Loss before equity earnings of
         unconsolidated entities, net of      (7,517)          (65,368)
         tax 
Equity earnings of unconsolidated entities,   4,205            2,828
net of tax
Net loss                                      (3,312)          (62,540)
         Less: Net income attributable to     375              138
         non-controlling interests
Net loss attributable to Alere Inc. and       (3,687)          (62,678)
Subsidiaries
         Preferred stock dividends            (5,367)          (5,353)
Net loss available to common stockholders     $                $          
                                               (9,054)          (68,031)
         Basic and diluted net loss per       $                $              
         common share                          (0.11)           (0.84)
Weighted average shares - basic and diluted   81,913           80,872

 

 

Alere Inc. and Subsidiaries
Condensed Consolidated Statements of Operations 
(in thousands, except per share amounts)
                                      Year Ended December 31, 
                                      2013                 2012
Net product sales and services        $         3,002,213  $         2,790,249
revenue
License and royalty revenue           27,229               28,576
 Net revenue                          3,029,442            2,818,825
Cost of net revenue                   1,527,703            1,390,503
       Gross profit                   1,501,739            1,428,322
       Gross margin                   50%                  51%
Operating expenses:
 Research and development             160,802              183,001
 Selling, general and administrative  1,201,061            1,136,189
 Loss on disposition                  5,124                -
       Operating income               134,752              109,132
Interest and other income (expense),  (268,784)            (230,603)
net
  Loss before benefit for income      (134,032)            (121,471)
 taxes 
Benefit for income taxes              (46,311)             (30,319)
  Loss before equity earnings of
 unconsolidated entities, net of      (87,721)             (91,152)
 tax 
Equity earnings of unconsolidated     17,443               13,245
entities, net of tax
 Net loss                             (70,278)             (77,907)
 Less: Net income attributable to     976                  275
 non-controlling interests
Net loss attributable to Alere Inc.   (71,254)             (78,182)
and Subsidiaries
 Preferred stock dividends            (21,293)             (21,293)
Net loss available to common          $                    $            
stockholders                          (92,547)             (99,475)
 Basic and diluted net loss per       $                    $                
 common share                         (1.13)               (1.23)
Weighted average shares - basic and   81,542               80,587
diluted

 

 

Alere Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
                                   December 31,           December 31,
                                   2013                   2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents          $            361,908   $            328,346
Restricted cash                    6,373                  3,076
Marketable securities              858                    904
Accounts receivable, net           548,729                524,332
Inventories, net                   364,185                337,121
Prepaid expenses and other current 190,361                212,958
assets
Total current assets               1,472,414              1,406,737
PROPERTY, PLANT AND EQUIPMENT, NET 545,164                534,469
GOODWILL AND OTHER INTANGIBLE      4,835,004              4,919,081
ASSETS, NET
RESTRICTED CASH - NON-CURRENT      29,370                 -
DEFERRED FINANCING COSTS AND OTHER 178,862                207,641
ASSETS, NET
Total assets                       $        7,060,814     $         7,067,928
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES:
Current portions of long-term debt $              55,967  $              
and capital lease obligations                             66,916
Other current liabilities          617,219                581,893
Total current liabilities          673,186                648,809
LONG-TERM LIABILITIES:
Long-term debt and capital lease
obligations, net of current        3,787,195              3,641,592
portions
                                   329,249                428,188
Other long-term liabilities        188,336                166,635
Total long-term liabilities        4,304,780              4,236,415
TOTAL EQUITY                       2,082,848              2,182,704
Total liabilities and equity       $        7,060,814     $         7,067,928

 

 

Alere Inc. and Subsidiaries
Reconciliation to Non-GAAP Adjusted Operating Results
(in thousands, except per share amounts)
                                          Three Months Ended December 31,
                                          2013               2012
Reconciliation to Non-GAAP Adjusted
Operating Income ^(1)
Operating income                          $                  $                
                                             39,560                988
Adjustment related to acquired software   470                783
license contracts 
Amortization of acquisition-related       81,240             104,941
intangible assets
Restructuring charges                     7,736              10,193
Stock-based compensation expense          6,748              3,796
Compensation charges associated with
acquisition-related contingent            762                -
consideration obligations
Acquisition-related costs                 1,315              3,575
Fair value adjustments to
acquisition-related contingent            (959)              10,174
consideration
Non-cash charge associated with acquired  624                -
inventory
Costs associated with proxy contest       58                 -
Costs associated with potential business  6,134              -
dispositions
Loss (adjustment) on disposition          (761)              -
Non-GAAP adjusted operating income        $                  $              
                                          142,927            134,450
                                          Three Months Ended December 31,
                                          2013               2012
Reconciliation to Non-GAAP Adjusted Net
Income^(1)
Net loss available to common stockholders $                  $              
                                           (9,054)            (68,031)
Adjustment related to acquired software   470                783
license contracts 
Amortization of acquisition-related       81,182             105,127
intangible assets
Restructuring charges                     7,819              10,312
Stock-based compensation expense          6,748              3,796
Compensation charges associated with
acquisition-related contingent
consideration                             762                -

 obligations
Acquisition-related costs                 1,315              3,575
Fair value adjustments to
acquisition-related contingent            (959)              10,174
consideration
Non-cash charge associated with acquired  624                -
inventory
Costs associated with proxy contest       58                 -
Costs associated with potential business  6,134              -
dispositions
Loss (adjustment) on disposition          (761)              -
Interest expense recorded in connection
with fees paid for certain debt
                                          364                991
modifications and the termination of our
senior secured credit facility
Interest accretion associated with        99                 -
acquisition-related compensation charges
Expense associated with extinguishment of -                  23,235
debt
Income tax effects on items above         (35,537)           (43,656)
Non-GAAP adjusted net income available to $                  $                
common stockholders                        59,264             46,306
Net loss per diluted common share         $                  $                
                                             (0.11)             (0.84)
Non-GAAP adjusted net income per diluted  $                  $                
common share                                  0.68               0.55
Weighted average shares - diluted         81,913             80,872
Non-GAAP adjusted weighted average shares 96,636             94,747
- 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)
                                          Year Ended December 31,
                                          2013               2012
Reconciliation to Non-GAAP Adjusted
Operating Income ^(1)
Operating income                          $                  $              
                                          134,752             109,132
Adjustment related to acquired software   2,240              4,100
license contracts 
Amortization of acquisition-related       318,513            347,108
intangible assets
Restructuring charges                     27,366             20,325
Stock-based compensation expense          21,210             15,665
Compensation charges associated with
acquisition-related contingent            2,794              -
consideration obligations
Acquisition-related costs                 3,087              9,669
Fair value adjustments to
acquisition-related contingent            18,036             (6,608)
consideration
Non-cash charge associated with acquired  2,504              4,681
inventory
Costs associated with proxy contest       5,525              -
Costs associated with potential business  6,134              -
dispositions
Loss on disposition                       5,124              -
Non-GAAP adjusted operating income        $                  $              
                                          547,285             504,072
                                          Year Ended December 31,
                                          2013               2012
Reconciliation to Non-GAAP Adjusted Net
Income^(1)
Net loss available to common stockholders $                  $              
                                          (92,547)            (99,475)
Adjustment related to acquired software   2,240              4,100
license contracts 
Amortization of acquisition-related       318,715            347,976
intangible assets
Restructuring charges                     27,677             20,602
Stock-based compensation expense          21,210             15,665
Compensation charges associated with
acquisition-related contingent            2,794              -
consideration obligations
Acquisition-related costs                 3,087              9,669
Fair value adjustments to
acquisition-related contingent            18,036             (6,608)
consideration
Costs associated with proxy contest       5,525              -
Costs associated with potential business  6,134              -
dispositions
Loss on disposition                       5,124              -
Interest expense recorded in connection
with fees paid for certain debt           2,490              4,951
modifications and the termination of our
senior secured credit facility
Interest accretion associated with        357                -
acquisition-related compensation charges
Non-cash write-off of an investment       5,110              -
Bargain purchase gain associated with     (8,023)            -
the  acquisition of the Liberty business
Expense associated with extinguishment of 35,767             23,235
debt
Non-cash charge associated with acquired  2,504              4,681
inventory
Income tax effects on items above         (148,273)          (136,684)
Non-GAAP adjusted net income available to $                  $              
common stockholders                       207,927             188,112
Net loss per diluted common share         $                  $                
                                             (1.13)             (1.23)
Non-GAAP adjusted net income per diluted  $                  $                
common share                                   2.41                2.25
Weighted average shares - diluted         81,542             80,587
Non-GAAP adjusted weighted average shares 95,952             94,572
- 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
Selected Consolidated Revenues by Business Area ^(1)
(in thousands)
Professional                                                    %       %
Diagnostics                                                     Change  Change
Segment
                                                                Q4 13   YTD 13
                  Q4 2013    YTD 2013      Q4 2012  YTD 2012    v. Q4   v. YTD
                                                                12      12
                  $          $             $        $        
Cardiology                   463,281                503,534     -3%     -8%
                  113,632                  116,740
Infectious        202,923    723,213       190,552  615,950     6%      17%
disease
Toxicology        151,258    632,727       149,525  587,261     1%      8%
Diabetes          47,350     225,488       43,813   144,441     8%      56%
Other ^(1)        85,504     321,495       83,510   314,030     2%      2%
   Professional
   diagnostics
   net product    600,667    2,366,204     584,140  2,165,216   3%      9%
   sales and
   services
   revenue ^(1)
License and       13,415     24,933        15,843   24,676      -15%    1%
royalty revenue
   Professional   $          $             $        $    
   diagnostics                2,391,137              2,189,892  2%      9%
   net revenue    614,082                  599,983
Health                                                          %       %
Information                                                     Change  Change
Solutions Segment
                                                                Q4 13   YTD 13
                  Q4 2013    YTD 2013      Q4 2012  YTD 2012    v. Q4   v. YTD
                                                                12      12
Disease and case  $          $             $        $        
management                   215,160                218,378     -2%     -1%
                  51,902                   53,101
Wellness          25,888     101,642       23,753   104,634     9%      -3%
Women's &         26,739     113,506       30,039   120,259     -11%    -6%
children's health
Patient
self-testing      25,483     102,919       24,077   92,151      6%      12%
services
   Health         $                        $      
   information               $                      $           -1%     0%
   solutions net  130,012    533,227       130,970  535,422
   revenue
^(1)Revenues are presented in accordance with generally accepted
accounting principles and exclude an adjustment of $0.5 million and
$0.8 million related to acquired software license contracts which were
not recognized during the three months ended December 31, 2013 and
2012, respectively, and $2.2 million and $4.1million during the year
ended December 31, 2013 and 2012, respectively, due to business
combination accounting rules.

 

 

                     Alere Inc. and Subsidiaries
                     Reconciliation of Operating Income (Loss) to Non-GAAP
                     Adjusted Operating Income (Loss)
                                                 (in
                                                 thousands)
                     For the Three Months Ended December 31, 2013
                                   Health
                     Professional                Consumer
Operating Segment    Diagnostics    Information  Diagnostics  Corporate  Total

                                   Solutions
                     $             $             $            $          $      
Net revenue          614,082       130,012        28,232                  
                                                                -        772,326
Adjustment related
to acquired          470           -             -            -          470
software license
contracts (1)
Non-GAAP adjusted    $             $             $            $          $      
net revenue          614,552       130,012        28,232                  
                                                                -        772,796
Operating income     $             $             $            $          $      
(loss)                70,161       (10,146)         3,091     (23,546)      
                                                                         39,560
Adjustment related
to acquired          470           -             -            -          470
software license
contracts (1)
Amortization of
acquisition-related  69,894        10,888        458          -          81,240
intangible assets
Restructuring        3,444         4,292         -            -          7,736
charges 
Stock-based
compensation         -             -             -            6,748      6,748
expense
Compensation
charges associated
with
acquisition-related  762           -             -            -          762
contingent

consideration
obligations
Non-cash charge
associated with      624           -             -            -          624
acquired inventory
Acquisition-related  -             -             -            1,315      1,315
costs
Fair value
adjustments to
acquisition-related  (2,859)       1,700         -            200        (959)
contingent
consideration
Costs associated     -             -             -            58         58
with proxy contest
Costs associated
with potential       6,134         -             -            -          6,134
business
dispositions
Loss (adjustment)    (761)         -             -            -          (761)
on disposition
Non-GAAP adjusted    $             $             $            $          $      
operating income      147,869         6,734         3,549      (15,225)   
(loss)                                                                   142,927
Non-GAAP adjusted
operating income
(loss) as % of
Non-GAAP             24.1%         5.2%          12.6%                   18.5%

adjusted net
revenue
(1) Estimated revenue related to acquired software license contracts
that was not recognized during the fourth quarter of 2013 due to
business combination accounting rules
                     For the Three Months Ended December 31, 2012
                                   Health
Operating Segment    Professional                Consumer     Corporate  Total
                     Diagnostics   Information   Diagnostics
                                   Solutions
                     $             $             $            $          $      
Net revenue           599,983       130,970        24,810                 
                                                                -        755,763
Adjustment related
to acquired          783           -             -            -          783
software license
contracts (1)
Non-GAAP adjusted    $             $             $            $          $      
net revenue           600,766       130,970        24,810                 
                                                                -        756,546
Operating income     $             $             $            $          $      
(loss)                 41,028       (27,052)         5,026    (18,014)          
                                                                            988
Adjustment related
to acquired          783           -             -            -          783
software license
contracts (1)
Amortization of
acquisition-related  91,960        13,724        (743)        -          104,941
intangible assets
Restructuring        3,375         6,852         -            (34)       10,193
charges 
Stock-based
compensation         -             -             -            3,796      3,796
expense
Acquisition-related  -             -             -            3,575      3,575
costs
Fair value
adjustments to
acquisition-related  7,014         3,860         -            (700)      10,174
contingent
consideration
Non-GAAP adjusted    $             $             $            $          $      
operating income      144,160        (2,616)         4,283    (11,377)    
(loss)                                                                   134,450
Non-GAAP adjusted
operating income
(loss) as % of       24.0%         -2.0%         17.3%                   17.8%
Non-GAAP adjusted
net revenue
(1) Estimated revenue related to acquired software license contracts
that was not recognized during the fourth 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 Year Ended December 31, 2013
                                   Health
                     Professional               Consumer
Operating Segment    Diagnostics   Information  Diagnostics  Corporate  Total

                                   Solutions
                     $             $            $            $          $        
Net revenue          2,391,137      533,227      105,078                3,029,442
                                                                  -
Adjustment related
to acquired          2,240         -            -            -          2,240
software license
contracts (1)
Non-GAAP adjusted    $             $            $            $          $        
net revenue          2,393,377      533,227      105,078                3,031,682
                                                                  -
Operating income     $             $            $            $          $        
(loss)                256,086       (43,001)       12,122                
                                                              (90,455)   134,752
Adjustment related
to acquired          2,240         -            -            -          2,240
software license
contracts (1)
Amortization of
acquisition-related  271,711       44,891       1,911        -          318,513
intangible assets
Restructuring        12,606        14,760       -            -          27,366
charges 
Stock-based
compensation         -             -            -            21,210     21,210
expense
Compensation
charges associated
with
acquisition-related  2,794         -            -            -          2,794
contingent

consideration
obligations
Non-cash charge
associated with      2,504         -            -            -          2,504
acquired inventory
Acquisition-related  -             -            -            3,087      3,087
costs
Fair value
adjustments to
acquisition-related  10,050        6,886        -            1,100      18,036
contingent
consideration
Costs associated     -             -            -            5,525      5,525
with proxy contest
Costs associated
with potential       6,134         -            -            -          6,134
business
dispositions
Loss on disposition  5,124         -            -            -          5,124
Non-GAAP adjusted    $             $            $            $          $        
operating income      569,249         23,536       14,033                
(loss)                                                        (59,533)   547,285
Non-GAAP adjusted
operating income
(loss) as % of
Non-GAAP             23.8%         4.4%         13.4%                   18.1%

 adjusted net
revenue
(1) Estimated revenue related to acquired software license contracts
that was not recognized during the year ended December 31, 2013 due to
business combination accounting rules
                     For the Year Ended December 31, 2012
                                   Health
                     Professional               Consumer
Operating Segment    Diagnostics   Information  Diagnostics  Corporate  Total

                                   Solutions
                     $             $            $            $          $        
Net revenue          2,189,892       535,422        93,511              2,818,825
                                                                  -
Adjustment related
to acquired          4,100         -            -            -          4,100
software license
contracts (1)
Non-GAAP adjusted    $             $            $            $          $        
net revenue          2,193,992       535,422        93,511              2,822,925
                                                                  -
Operating income     $             $            $            $          $        
(loss)                 237,754       (73,431)       12,707               
                                                             (67,898)    109,132
Adjustment related
to acquired          4,100         -            -            -          4,100
software license
contracts (1)
Amortization of
acquisition-related  289,033       56,869       1,206        -          347,108
intangible assets
Restructuring        11,124        9,203        -            (2)        20,325
charges 
Stock-based
compensation         -             -            -            15,665     15,665
expense
Non-cash charge
associated with      4,681         -            -            -          4,681
acquired inventory
Acquisition-related  -             -            -            9,669      9,669
costs
Fair value
adjustments to
acquisition-related  (15,688)      8,727        -            353        (6,608)
contingent
consideration
Non-GAAP adjusted    $             $            $            $          $        
operating income       531,004                      13,913               
(loss)                              1,368                    (42,213)    504,072
Non-GAAP adjusted
operating income
(loss) as % of
Non-GAAP             24.2%         0.3%         14.9%                   17.9%

adjusted net
revenue
(1) Estimated revenue related to acquired software license contracts
that was not recognized during the year ended December 31, 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 Ended  Three Months Ended

                                       December 31, 2013    December 31, 2012
Net revenue                            $                   $                  
                                                 772,326           755,763
Adjustment related to acquired         470                 783
software license contracts 
Non-GAAP adjusted net revenue          $                   $                  
                                                 772,796           756,546
Cost of net revenue                    $                   $                  
                                                 387,977           381,895
Less adjustments:
Amortization of acquisition-related    (17,656)            (20,658)
intangible assets
Restructuring charges                  (2,957)             (1,044)
Stock-based compensation expense       (329)               (262)
Non-cash charge associated with        (624)               -
acquired inventory
Non-GAAP adjusted cost of net revenue  $                   $                  
                                                 366,411           359,931
Non-GAAP adjusted gross profit         $                   $                  
                                                 406,385           396,615
                                       Three Months Ended  Three Months Ended

                                       December 31, 2013   December 31, 2012
Research and development               $                   $                  
                                                   38,350            62,992
Less adjustments:
Amortization of acquisition-related    (1,206)             (21,643)
intangible assets
Restructuring charges                  (50)                (640)
Stock-based compensation expense       (1,413)             (771)
Non-GAAP adjusted research and         $                   $                  
development                                        35,681            39,938
                                       Three Months Ended  Three Months Ended

                                       December 31, 2013   December 31, 2012
Selling, general and administrative    $                   $                  
                                                 307,200           309,888
Less adjustments:
Amortization of acquisition-related    (62,378)            (62,640)
intangible assets
Restructuring charges                  (4,729)             (8,509)
Stock-based compensation expense       (5,006)             (2,763)
Compensation charges associated with
acquisition-related contingent         (762)               -
consideration obligations
Acquisition-related costs              (1,315)             (3,575)
Fair value adjustments to
acquisition-related contingent         959                 (10,174)
consideration
Costs associated with proxy contest    (58)                -
Costs associated with potential        (6,134)             -
business dispositions
Non-GAAP adjusted selling, general     $                   $                  
and administrative                               227,777           222,227
                                       Three Months Ended  Three Months Ended

                                       December 31, 2013   December 31, 2012
                                       $                   $                  
Loss (adjustment) on disposition                                              
                                       (761)               -
Loss (adjustment) on disposition       761                 -
                                       $                   $                  
Non-GAAP adjusted loss on disposition                                         
                                           -               -
                                       Three Months Ended  Three Months Ended

                                       December 31, 2013   December 31, 2012
Interest and other income (expense),   $                   $                  
net                                              (57,236)          (84,054)
Less adjustments:
Restructuring charges                  83                  119
Interest expense recorded in
connection with fees paid for certain
debt                                   364                 991

modifications and the termination of
our senior secured credit facility
Interest accretion associated with
acquisition-related compensation       99                  -
charges
Expense associated with                -                   23,235
extinguishment of debt
Non-GAAP adjusted interest and other   $                   $                  
income (expense), net                            (56,690)          (59,709)
                                       Three Months Ended  Three Months Ended

                                       December 31, 2013   December 31, 2012
Benefit for income taxes               $                   $                  
                                                 (10,159)          (17,698)
    Add:  Income tax effects on        35,586              43,660
Non-GAAP adjustments
Non-GAAP adjusted provision for        $                   $                  
income taxes                                       25,427            25,962
                                       Three Months Ended  Three Months Ended

                                       December 31, 2013   December 31, 2012
Equity earnings of unconsolidated      $                   $                  
entities, net of tax                                                    2,828
                                        4,205
Less adjustments:
Amortization of acquisition-related    146                 213
intangible assets
Income tax effects on items above      -                   2
Non-GAAP adjusted equity earnings of   $                   $                  
unconsolidated entities, net of tax                                     3,039
                                        4,351

 

 

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

                                         December 31, 2013  December 31, 2012
Net revenue                              $                  $              
                                          3,029,442          2,818,825
Adjustment related to acquired software  2,240              4,100
license contracts 
Non-GAAP adjusted net revenue            $                  $              
                                          3,031,682          2,822,925
Cost of net revenue                      $                  $              
                                          1,527,703          1,390,503
Less adjustments:
Amortization of acquisition-related      (72,164)           (72,276)
intangible assets
Restructuring charges                    (7,865)            (3,113)
Stock-based compensation expense         (1,126)            (1,063)
Non-cash charge associated with          (2,504)            (4,681)
acquired inventory
Non-GAAP adjusted cost of net revenue    $                  $              
                                          1,444,044          1,309,370
Non-GAAP adjusted gross profit           $                  $              
                                          1,587,638          1,513,555
                                         Year Ended         Year Ended

                                         December 31, 2013  December 31, 2012
Research and development                 $                  $                
                                            160,802            183,001
Less adjustments:
Amortization of acquisition-related      (4,935)            (26,858)
intangible assets
Restructuring charges                    (1,795)            (1,278)
Stock-based compensation expense         (4,054)            (3,150)
Non-GAAP adjusted research and           $                  $                
development                                 150,018            151,715
                                         Year Ended         Year Ended

                                         December 31, 2013  December 31, 2012
Selling, general and administrative      $                  $              
                                          1,201,061          1,136,189
Less adjustments:
Amortization of acquisition-related      (241,414)          (247,974)
intangible assets
Restructuring charges                    (17,706)           (15,934)
Stock-based compensation expense         (16,030)           (11,452)
Compensation charges associated with
acquisition-related contingent           (2,794)            -
consideration obligations
Acquisition-related costs                (3,087)            (9,669)
Fair value adjustments to
acquisition-related contingent           (18,036)           6,608
consideration
Costs associated with proxy contest      (5,525)            -
Costs associated with potential          (6,134)            -
business dispositions
Non-GAAP adjusted selling, general and   $                  $                
administrative                              890,335            857,768
                                         Year Ended         Year Ended

                                         December 31, 2013   December 31, 2012
Loss on disposition                      $                  $                
                                                 5,124                     -
Loss on disposition                      (5,124)            -
Non-GAAP adjusted loss on disposition    $                  $                
                                                        -                  -
                                         Year Ended         Year Ended

                                         December 31, 2013  December 31, 2012
Interest and other income (expense),     $                  $                
net                                       (268,784)          (230,603)
Less adjustments:
Restructuring charges                    311                277
Interest expense recorded in connection
with fees paid for certain debt          2,490              4,951
modifications and the termination of
our senior secured credit facility
Interest accretion associated with
acquisition-related compensation         357                -
charges
Non-cash write-off of an investment      5,110              -
Bargain purchase gain associated with    (8,023)            -
the acquisition of the Liberty business
Expense associated with extinguishment   35,767             23,235
of debt
Non-GAAP adjusted interest and other     $                  $                
income (expense), net                     (232,772)          (202,140)
                                         Year Ended          Year Ended

                                         December 31, 2013  December 31, 2012 
Benefit for income taxes                 $                  $                
                                            (46,311)           (30,319)
    Add:  Income tax effects on          148,365            136,700
Non-GAAP adjustments
Non-GAAP adjusted provision for income   $                  $                
taxes                                       102,054            106,381
                                         Year Ended         Year Ended

                                         December 31, 2013  December 31, 2012
Equity earnings of unconsolidated        $                  $                
entities, net of tax                          17,443             13,245
Less adjustments:
Amortization of acquisition-related      594                977
intangible assets
Income tax effects on items above        -                  9
Non-GAAP adjusted equity earnings of     $                  $                
unconsolidated entities, net of tax           18,037             14,213

SOURCE Alere Inc.

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