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
 
Press spacebar to pause and continue. Press esc to stop.