Alere Inc. Announces First Quarter 2014 Results

               Alere Inc. Announces First Quarter 2014 Results  PR Newswire  WALTHAM, Mass., April 29, 2014  WALTHAM, Mass., April 29, 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 March 31, 2014.  Ron Zwanziger, Chairman, Chief Executive Officer and President of Alere said, "Despite a difficult quarter from a revenue perspective, principally related to weak U.S. influenza sales and a larger-than-expected reduction in U.S. healthcare utilization which primarily impacted our U.S. infectious disease revenue, we are pleased to have delivered adjusted earnings per diluted share in excess of our prior year's results. This was achieved in part through careful expense controls. Strong free cash flow generated during the quarter enabled us to reduce our net debt to adjusted EBITDA ratio during the quarter, again demonstrating our commitment to delivering continuing shareholder value."  Financial results for the first quarter of 2014:    oNet revenue of $716.6 million for the first quarter of 2014, compared to     $739.2 million for the first quarter of 2013. Non-GAAP adjusted net     revenue was $717.0 million for the first quarter of 2014, compared to     $739.9 million for the first quarter of 2013.   oNet loss of $11.5 million attributable to common stockholders of Alere     Inc., and respective net loss per diluted common share of $0.14, for the     first quarter of 2014, compared to net income of $7.2 million attributable     to common stockholders of Alere Inc., and respective net income per     diluted common share of $0.09, for the first quarter of 2013.   oNon-GAAP adjusted net income per diluted common share of $0.55 for the     first quarter of 2014, compared to non-GAAP adjusted net income per     diluted common share of $0.53 for the first quarter of 2013.   oNet product and services revenue from our Professional Diagnostics segment     was $561.3 million in the first quarter of 2014, compared to net product     and services revenue of $578.6 million in the first quarter of 2013.     Non-GAAP adjusted net product and services revenue from our Professional     Diagnostics segment was $561.8 million in the first quarter of 2014,     compared to non-GAAP adjusted net product and services revenue of $579.3     million in the first quarter of 2013. Recent Professional Diagnostics     acquisitions contributed $21.5 million of incremental net revenue,     compared to the first quarter of 2013, offset by a $6.4 million decrease     in net revenue related to our 2013 disposition of Spinreact.   oU.S. influenza, meter-based Triage products and mail-order diabetes     revenues were $7.3 million, $22.9 million and $32.3 million, respectively,     for the first quarter of 2014 compared to $34.3 million, $21.6 million and     $33.2 million, respectively, for the first quarter of 2013. Lower     influenza revenues reflect the relatively short 2013-2014 flu season,     which we noted in our fourth quarter 2013 earnings call. Meter-based     Triage products revenue increased from the prior year for the first time     since our supply issues began in the second quarter of 2012, reflecting     increased revenues from sales of our BNP, Cardiac Panel and D-dimer     products. Despite an increase in patients served from 282,000 at the end     of the first quarter of 2013 to 769,000 as of March 31, 2014, mail-order     diabetes revenues declined slightly, as a result of lower reimbursement     rates that became effective on July 1, 2013.   oExcluding the impact of the change in U.S. influenza revenues and the     impact on revenues from the U.S. meter-based Triage product sales,     currency adjusted organic growth in our Professional Diagnostics segment     was negative 1%. This growth rate was adversely impacted by the decrease     in reimbursement rates that 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 first quarter of 2014 was 4%     for the remainder of our Professional Diagnostics segment.   oThe 4% adjusted organic growth rate for our Professional Diagnostic     segment for the first quarter of 2014, adjusted for the impact of the U.S.     influenza, meter-based Triage products and mail-order diabetes revenues as     noted above, reflects a 2% decrease in adjusted U.S. revenues, compared to     the first quarter of 2013, offset by an 8% increase in adjusted net     revenues from our international business. The 2% decrease in the U.S.     business principally resulted from lower infectious disease revenues     reflecting lower utilization levels during 2014 than during 2013.   oNet product and services revenue from our Health Information Solutions     segment was $123.7 million in the first quarter of 2014, compared to     $134.2 million in the first quarter of 2013 and $130.0 million in the     fourth quarter of 2013, as a result of the weak contracting season that we     experienced during the second half of 2013.   oGross margin was 49.0% of net revenue in the first quarter of 2014,     compared to 49.3% in the first quarter of 2013. Non-GAAP adjusted gross     margins, which exclude from cost of net revenue amortization of     acquisition-related intangibles, stock-based compensation expense,     restructuring charges, and non-cash charges associated with acquired     inventory, was 51.5% of non-GAAP adjusted net revenue in the first quarter     of 2014 compared to 52.1% in the first quarter of 2013. The lower gross     margin in the current period principally reflects the lower U.S. influenza     sales and reduced mail-order diabetes reimbursement rates noted above.   oOperating expenses consisting of research and development and selling,     general and administrative expenses were $325.3 million for the first     quarter of 2014, compared to $333.8 million for the first quarter of 2013.     Non-GAAP adjusted operating expenses, which exclude amortization of     acquisition-related intangibles, restructuring charges, stock-based     compensation expense, acquisition-related fair value and     compensation-related contingent consideration charges and acquisition and     disposition costs, were $255.5 million for the first quarter of 2014, or     35.6% of non-GAAP adjusted net revenue, compared to $257.3 million, or     34.8% of non-GAAP adjusted net revenue, for the first quarter of 2013.   oFree cash flow for the first quarter of 2014 was $78.4 million, reflecting     cash flow from operations of $105.9 million, offset by capital     expenditures of $27.5 million. Free cash flow for the first quarter of     2013 was $35.0 million, reflecting cash flow from operations of $71.1     million, offset by capital expenditures of $36.1 million.   oNon-GAAP EBITDA for the first quarter of 2014 was $144.5 million, which     reflects adjustments to add back non-interest related restructuring     charges of $7.2 million, $0.3 million of acquisition-related costs and     $3.0 million of costs associated with potential business dispositions.     Non-GAAP EBITDA for the first quarter of 2013 was $153.3 million, which     reflects adjustments to add back non-interest related restructuring     charges of $3.9 million and $0.9 million of acquisition-related costs.     Adjusted non-GAAP EBITDA, which reflects adjustments to add back     restructuring, acquisition and disposition related and proxy costs,     totaled $661.0 million for the twelve-month period ended March 31, 2014,     compared to $619.5 million for the twelve-month period ended March 31,     2013.   oDebt, net of cash and restricted cash held to secure debt ("net debt"),     was $3.37 billion as of March 31, 2014, compared to net debt of $3.53     billion as of March 31, 2013. Our net debt to adjusted non-GAAP EBITDA     ratio was 5.1x as of March 31, 2014, compared to 5.7x as of March 31,     2013.  The Company's GAAP results for the first quarter of 2014 exclude $0.4 million of revenue associated with acquired software license contracts that are not recognized due to business combination accounting rules and include $66.6 million of amortization, $7.3 million of restructuring charges, $5.7 million of stock-based compensation expense, $0.3 million of acquisition-related costs recorded in accordance with ASC 805, Business Combinations, $4.6 million of income recorded for fair value adjustments to acquisition-related contingent consideration, $3.0 million of costs associated with potential business dispositions, $0.4 million of interest expense recorded in connection with fees paid for certain debt modifications, $0.4 million in compensation charges and $0.1 million of related interest accretion associated with acquisition-related contingent consideration obligations. The Company's GAAP results for the first 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 $76.0 million of amortization, $3.9 million of restructuring charges, $4.1 million of stock-based compensation expense, $0.9 million of acquisition-related costs recorded in accordance with ASC 805, Business Combinations, $11.0 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, $0.7 million in compensation charges associated with acquisition-related contingent consideration obligations, a $0.5 million charge associated with the write-up to fair market value of inventory acquired in connection with the acquisition of Epocal Inc. and $0.2 million of expense associated with the extinguishment of debt.  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, April 29, 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 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) 443-4809 (domestic) or (412) 902-6615 (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=99047.  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 10045124. The replay will also be available via online webcast at http://www.videonewswire.com/event.asp?id=99047 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 infectious disease, toxicology, cardiology 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 March 31,                                         2014                 2013 Net product sales and services revenue  $             $                                                711,410              735,185 License and royalty revenue             5,212                4,064  Net revenue                            716,622              739,249 Cost of net revenue                     365,383              374,992   Gross profit                     351,239              364,257   Gross margin                     49%                  49% Operating expenses:  Research and development               38,699               41,454  Selling, general and administrative    286,600              292,314   Total operating expenses             325,299              333,768   Operating income                25,940               30,489 Interest and other income (expense),    (47,322)             (57,869) net  Loss before benefit for income        (21,382)             (27,380)  taxes Benefit for income taxes                (9,917)              (36,871)  Income (loss) before equity earnings  of unconsolidated entities, net of     (11,465)             9,491  tax Equity earnings of unconsolidated       5,352                2,934 entities, net of tax Net income (loss)                       (6,113)              12,425  Less: Net income (loss) attributable   108                  (25)  to non-controlling interests Net income (loss) attributable to       (6,221)              12,450 Alere Inc. and Subsidiaries  Preferred stock dividends              (5,250)              (5,250) Net income (loss) available to common   $             $         stockholders                            (11,471)              7,200  Basic net income (loss) per common     $           $          share                                  (0.14)                 0.09  Diluted net income (loss) per common   $           $          share                                  (0.14)                 0.09 Weighted average shares - basic         82,387               81,199 Weighted average shares - diluted       82,387               81,300      Alere Inc. and Subsidiaries Condensed Consolidated Balance Sheets (in thousands)                                    March 31,              December 31,                                    2014                   2013 ASSETS CURRENT ASSETS: Cash and cash equivalents          $      433,026   $      361,908 Restricted cash                    4,222                  6,373 Marketable securities              781                    858 Accounts receivable, net           528,793                548,729 Inventories, net                   371,136                364,185 Prepaid expenses and other current 183,145                190,361 assets Total current assets               1,521,103              1,472,414 PROPERTY, PLANT AND EQUIPMENT, NET 545,051                545,164 GOODWILL AND OTHER INTANGIBLE      4,763,226              4,835,004 ASSETS, NET RESTRICTED CASH - NON-CURRENT      28,856                 29,370 DEFERRED FINANCING COSTS AND OTHER 177,950                178,862 ASSETS, NET Total assets                       $    7,036,186     $     7,060,814 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current portions of long-term debt $       71,472  $        and capital lease obligations                             55,967 Other current liabilities          620,709                617,219 Total current liabilities          692,181                673,186 LONG-TERM LIABILITIES: Long-term debt and capital lease obligations, net of current        3,760,886              3,787,195 portions Deferred tax liabilities           307,574                329,249 Other long-term liabilities        194,989                188,336 Total long-term liabilities        4,263,449              4,304,780 TOTAL EQUITY                       2,080,556              2,082,848 Total liabilities and equity       $    7,036,186     $     7,060,814      Alere Inc. and Subsidiaries Reconciliation to Non-GAAP Adjusted Operating Results (in thousands, except per share amounts)                                             Three Months Ended March 31,                                             2014               2013 Reconciliation to Non-GAAP Adjusted Operating Income ^(1) Operating income                           $          $                                                    25,940             30,489 Adjustment related to acquired software     419                643 license contracts Amortization of acquisition-related         66,473             75,867 intangible assets Restructuring charges                      7,215              3,892 Stock-based compensation expense            5,704              4,123 Compensation charges associated with acquisition-related contingent              422                690 consideration obligations Acquisition-related costs                   321                896 Fair value adjustments to acquisition-related contingent              4,550              11,018 consideration Non-cash charge associated with acquired    -                  461 inventory Costs associated with potential business    2,960              - dispositions Non-GAAP adjusted operating income          $           $                                                    114,004           128,079                                             Three Months Ended March 31,                                             2014               2013 Reconciliation to Non-GAAP Adjusted Net Income^(1) Net income (loss) available to common       $           $        stockholders                                (11,471)            7,200 Adjustment related to acquired software     419                643 license contracts Amortization of acquisition-related         66,491             75,989 intangible assets Restructuring charges                      7,340              3,947 Stock-based compensation expense            5,704              4,123 Compensation charges associated with acquisition-related contingent              422                690 consideration obligations Acquisition-related costs                   321                896 Fair value adjustments to acquisition-related contingent              4,550              11,018 consideration Non-cash charge associated with acquired    -                  461 inventory Costs associated with potential business    2,960              - dispositions Interest expense recorded in connection with fees paid for certain debt             364                952 modifications and the termination of our senior secured credit facility                                              95                 - Interest accretion associated with acquisition-related compensation charges Expense associated with extinguishment of   -                  163 debt Income tax effects on items above           (29,858)           (62,055) Non-GAAP adjusted net income available to   $          $        common stockholders                         47,337             44,027 Net income (loss) per diluted common share  $          $                                                     (0.14)              0.09 Non-GAAP adjusted net income per diluted    $          $        common share                                  0.55              0.53 Weighted average shares - diluted           82,387             81,300 Non-GAAP adjusted weighted average shares - 97,346             94,977 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 Segment                                   % Change                                          Q1 2014      Q1 2013      Q1 14 v. Q1                                                                    13 Infectious disease                       $        $        -14%                                          164,030     189,844 Toxicology                               151,897      149,049      2% Cardiology                               121,633      114,933      6% Diabetes                                 50,721       50,083       1% Other ^(1)                               73,052       74,719       -2%  Professional diagnostics net product    561,333      578,628      -3%  sales and services revenue ^(1) License and royalty revenue              5,212        3,864        35%  Professional diagnostics net revenue    $        $        -3%                                          566,545     582,492 Health Information Solutions Segment                               % Change                                          Q1 2014      Q1 2013      Q1 14 v. Q1                                                                    13 Condition and case management            $       $       -9%                                          49,319      54,126 Wellness                                 24,950       26,300       -5% Women's & children's health              22,215       29,080       -24% Patient self-testing services            27,184       24,701       10%                                            $        $        -8%  Health information solutions net        123,668     134,207  revenue    ^(1) Revenues are presented in accordance with generally accepted accounting principles and exclude an adjustment of $0.4 million and $0.6 million related  to acquired software license contracts which were not recognized during the three months ended March 31, 2014 and 2013, 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 March 31, 2014                      Professional  Health       Consumer Operating Segment    Diagnostics   Information  Diagnostics  Corporate  Total                                    Solutions                      $         $        $       $      $    Net revenue         566,545      123,668      26,409                                                                          -       716,622 Adjustment related to acquired          419           -            -            -          419 software license contracts (1) Non-GAAP adjusted    $         $        $       $      $    net revenue          566,964      123,668      26,409                                                                          -       717,041 Operating income     $        $       $       $      $    (loss)              51,326       (6,720)       2,248    (20,914)                                                                            25,940 Adjustment related to acquired          419           -            -            -          419 software license contracts (1) Amortization of acquisition-related  57,285        8,899        289          -          66,473 intangible assets Restructuring        4,303         2,817        -            95         7,215 charges Stock-based compensation         -             -            -            5,704      5,704 expense Compensation charges associated with acquisition-related  422           -            -            -          422 contingent consideration obligations Acquisition-related  -             -            -            321        321 costs Fair value adjustments to acquisition-related  5,461         (1,011)      -            100        4,550 contingent consideration Costs associated with potential       2,960         -            -            -          2,960 business dispositions Non-GAAP adjusted    $         $       $       $      $    operating income     122,176        3,985      2,537    (14,694)   (loss)                                                                  114,004 Non-GAAP adjusted operating income (loss) as % of       21.5%         3.2%         9.6%                    15.9% Non-GAAP adjusted net revenue  (1) Estimated revenue related to acquired software license contracts that was not recognized during the first quarter of 2014 due to business combination accounting rules.                                                                     For the Three Months Ended March 31, 2013                      Professional  Health       Consumer Operating Segment    Diagnostics   Information  Diagnostics  Corporate  Total                                    Solutions                      $         $        $       $      $    Net revenue         582,492      134,207      22,550                                                                          -       739,249 Adjustment related to acquired          643           -            -            -          643 software license contracts (1) Non-GAAP adjusted    $         $        $       $      $    net revenue          583,135      134,207      22,550                                                                          -       739,892 Operating income     $        $        $       $      $    (loss)              59,840       (13,893)      2,280    (17,738)                                                                            30,489 Adjustment related to acquired          643           -            -            -          643 software license contracts (1) Amortization of acquisition-related  64,293        11,038       536          -          75,867 intangible assets Restructuring        1,389         2,503        -            -          3,892 charges Stock-based compensation         -             -            -            4,123      4,123 expense Compensation charges associated with acquisition-related  690           -            -            -          690 contingent consideration obligations Non-cash charge associated with      461           -            -            -          461 acquired inventory Acquisition-related  -             -            -            896        896 costs Fair value adjustments to acquisition-related  7,063         3,355        -            600        11,018 contingent consideration Non-GAAP adjusted    $         $       $       $      $    operating income     134,379        3,003      2,816    (12,119)   (loss)                                                                  128,079 Non-GAAP adjusted operating income (loss) as % of       23.0%         2.2%         12.5%                   17.3% Non-GAAP adjusted net revenue  (1) Estimated revenue related to acquired software license contracts that was not recognized during the first quarter of 2013 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                                            March 31, 2014     March 31, 2013 Net revenue                              $          $                                                        716,622       739,249 Adjustment related to acquired software   419                643 license contracts Non-GAAP adjusted net revenue             $          $                                                        717,041       739,892 Cost of net revenue                       $          $                                                        365,383       374,992 Less adjustments: Amortization of acquisition-related       (16,636)           (19,170) intangible assets Restructuring charges                    (875)              (623) Stock-based compensation expense          (287)              (232) Non-cash charge associated with acquired  -                  (461) inventory Non-GAAP adjusted cost of net revenue     $          $                                                        347,585       354,506 Non-GAAP adjusted gross profit            $          $                                                        369,456       385,386                                           Three Months       Three Months                                           Ended March 31,    Ended March 31,                                           2014               2013                                           $          $         Research and development                                                                              38,699             41,454 Less adjustments: Amortization of acquisition-related       (1,165)            (1,282) intangible assets Stock-based compensation expense          (1,191)            (747) Non-GAAP adjusted research and            $          $         development                                                                                            36,343             39,425                                           Three Months       Three Months                                           Ended March 31,    Ended March 31,                                           2014               2013 Selling, general and administrative       $          $                                                        286,600       292,314 Less adjustments: Amortization of acquisition-related       (48,672)           (55,415) intangible assets Restructuring charges                    (6,340)            (3,269) Stock-based compensation expense          (4,226)            (3,144) Compensation charges associated with acquisition-related contingent            (422)              (690) consideration obligations Acquisition-related costs                 (321)              (896) Fair value adjustments to acquisition-related contingent            (4,550)            (11,018) consideration Costs associated with potential business  (2,960)            - dispositions Non-GAAP adjusted selling, general and    $          $         administrative                                219,109       217,882                                           Three Months       Three Months                                           Ended March 31,    Ended March 31,                                           2014               2013                                           $          $         Interest and other income (expense), net                                                               (47,322)           (57,869) Less adjustments: Restructuring charges                    125                55   Interest expense recorded in connection   364                952 with fees paid for certain debt modifications and the termination of our senior secured credit facility                                            95                 - Interest accretion associated with acquisition-related compensation charges Expense associated with extinguishment    -                  163 of debt Non-GAAP adjusted interest and other      $          $         income (expense), net                                                                                  (46,738)           (56,699)                                           Three Months       Three Months                                           Ended March 31,    Ended March 31,                                           2014               2013                                           $          $         Benefit for income taxes                                                                              (9,917)            (36,871)  Add: Income tax effects on Non-GAAP  29,887             62,061 adjustments Non-GAAP adjusted provision for income    $          $         taxes                                                                                                  19,970             25,190                                           Three Months       Three Months                                           Ended March 31,    Ended March 31,                                           2014               2013 Equity earnings of unconsolidated         $          $         entities, net of tax                                                                                   5,352             2,934 Less adjustments: Amortization of acquisition-related       148                151 intangible assets Income tax effects on items above         -                  -                                          $          $                                                                      Non-GAAP adjusted equity earnings of      5,500             3,085 unconsolidated entities, net of tax      Alere Inc. and Subsidiaries Reconciliations of Gross Profit/Margin to Non-GAAP Adjusted Gross Profit/Margin (in thousands)                               Three Months     Three Months     Three Months                               Ended           Ended           Ended Alere Consolidated            March 31, 2013  December 31,    March 31, 2014                                                2013 Net revenue                  $              $               $                                 739,249          772,326         716,622  Adjustment related to acquired  software license        643              470              419 contracts Non-GAAP adjusted net revenue 739,892          772,796          717,041 Cost of net revenue          374,992          387,977          365,383 Less adjustments:  Amortization of acquisition-related           19,170           17,656           16,636 intangible assets  Stock-based compensation  232              329              287 expense  Non-cash charge associated with acquired      461              624              - inventory  Restructuring charges     623              2,957            875  Non-GAAP adjusted    354,506          366,411          347,585 cost of net revenue Non-GAAP adjusted gross       $       52.1%  $        52.6%  $      51.5% profit/margin                385,386          406,385         369,456                               Three Months     Three Months     Three Months                               Ended           Ended           Ended Professional Diagnostics      March 31, 2013  December 31,    March 31, 2014 Segment                                        2013 Net product sales and         $              $               $   services revenue             578,628          600,667         561,333  Adjustment related to acquired  software license        643              470              419 contracts Non-GAAP adjusted net product 579,271          601,137          561,752 sales and services revenue Cost of net revenue          278,453          292,183          273,542 Less adjustments:  Amortization of acquisition-related           17,399           16,005           15,136 intangible assets  Stock-based compensation  232              329              287 expense  Non-cash charge associated with acquired      461              624              - inventory  Restructuring charges     199              2,253            833  Non-GAAP adjusted    260,162          272,972          257,286 cost of net revenue Non-GAAP adjusted gross       $       55.1%  $        54.6%  $      54.2% profit/margin                319,109          328,165         304,466                               Three Months     Three Months     Three Months                               Ended           Ended           Ended Health Information Solutions  March 31, 2013  December 31,    March 31, 2014 Segment                                        2013 Net product sales and         $              $               $   services revenue             134,207          130,012         123,668 Cost of net revenue          76,857           70,780           68,714 Less adjustments:  Amortization of acquisition-related           1,482            1,440            1,413 intangible assets  Restructuring charges     424              704              42  Non-GAAP adjusted    74,951           68,636           67,259 cost of net revenue Non-GAAP adjusted gross       $      44.2%  $      47.2%  $     45.6% profit/margin                59,256           61,376           56,409      Alere Inc. and Subsidiaries Reconciliation of Net Loss to Non-GAAP EBITDA (in thousands)                                                        Three Months Ended                                                        March 31, 2014 Net loss ^(1)                                         $                                                                 (6,113) Adjustment related to acquired software license        419 contracts Income tax benefit                                     (9,917) Depreciation and amortization                          98,234 Interest, net                                          51,659 Non-cash stock-based compensation expense              5,704 Non-cash fair value adjustments to acquisition-related 4,550 contingent consideration Non-GAAP EBITDA                                        $                                                                  144,536    ^(1) Net loss for the three months ended March 31, 2014 includes non-interest relatedrestructuring charges  of $7.2 million, $0.3 million of acquisition-related costs and $3.0 millionof costs associated with potential  business dispositions which have not been added back forpurposes of computing Non-GAAP EBITDA.      Reconciliation of Cash Flow from Operating Activities to Free Cash Flow (in thousands)                                            Three Months Ended                                            March 31, 2014 Cash flow from operating activities (GAAP) $           105,908 Capital expenditures                       (27,540) Free cash flow                             $            78,368  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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