Quidel Reports Third Quarter 2013 Financial Results

SAN DIEGO, CA--(Marketwired - Oct 23, 2013) - Quidel Corporation (NASDAQ: QDEL), a provider of rapid diagnostic testing solutions, cellular-based virology assays and molecular diagnostic systems, announced today financial results for the third quarter ended September 30, 2013.

Third Quarter 2013 and Recent Highlights:

• Total revenues were $33.5 million as compared to $33.0 million in the third quarter of 2012.
• Reported GAAP EPS of $(0.13) per share, as compared to GAAP EPS of $(0.02) per share in the third quarter of 2012, and non-GAAP EPS of $(0.02) per share, as compared to $0.08 per diluted share for the third quarter of 2012.
• Received 510(k) clearance from the United States Food and Drug Administration (FDA) for the Sofia RSV Fluorescent Immunoassay (FIA).
• Received 510(k) clearance from the FDA for the Sofia hCG Fluorescent Immunoassay (FIA).
• Received 510(k) clearances from the FDA for the Quidel Molecular Influenza A+B assay and the Quidel Molecular RSV + hMPV assay, both for use on the QuantStudio™ Dx Real-Time PCR Instrument by Life Technologies.
• Completed the acquisition of AnDiaTec, a German molecular diagnostics business, for approximately $2.6 million upfront and a 3-year, $4.7 million R&D earn-out.
  
  

Third Quarter 2013 Results

Total revenues for the third quarter of 2013 were $33.5 million as compared to $33.0 million in the third quarter of 2012. Influenza sales increased in the quarter, but were offset by lower sales of Strep A and Pregnancy visual lateral flow products, relative to the third quarter of 2012.

Net loss for the third quarter of 2013 was $4.4 million, or $(0.13) per share, compared to net loss of $0.7 million, or $(0.02) per share, for the third quarter of 2012. On a non-GAAP basis, excluding amortization of intangibles and stock compensation expense, net loss for the third quarter of 2013 was $0.6 million, or $(0.02) per share, compared to net income of $2.6 million, or $0.08 per diluted share, for the same period in 2012.

"While revenues in the third quarter were only slightly favorable to last year, flu revenues increased 23% on the strength of Sofia sales. We also received FDA clearances for two Sofia assays in the third quarter that were timely, and can make a positive impact on future Sofia system placements," said Douglas Bryant, president and CEO of Quidel Corporation. "On the molecular side, the acquisition of AnDiaTec broadens our molecular expertise and further accelerates our molecular assay development."

Nine Months Ended September 30, 2013

Total revenues were $125.2 million for the nine-month period ended September 30, 2013, compared to $101.8 million for the same nine-month period in 2012. For the nine-month period in 2013, net income was $6.3 million, or $0.18 per diluted share, compared to net loss of $3.7 million, or $(0.11) per share, for the same nine-month period in 2012. On a non-GAAP basis, excluding amortization of intangibles, stock compensation expense and certain non-recurring tax items, net income for the nine months ended September 30, 2013 was $14.1 million, or $0.40 per diluted share, compared to net income of $6.6 million, or $0.19 per diluted share, for the nine months ended September 30, 2012.

Non-GAAP Financial Information

The Company is providing non-GAAP financial information to exclude the effect of stock-based compensation, amortization of intangibles and certain non-recurring tax items on earnings (loss) and net earnings (loss) per share as a supplement to its consolidated financial statements, which are presented in accordance with generally accepted accounting principles in the U.S., or GAAP.

Management is providing the adjusted net earnings (loss) and adjusted net earnings (loss) per share information for the periods presented because it believes this enhances the comparison of the Company's financial performance from period-to-period, and to that of its competitors. This press release is not meant to be considered in isolation, or as a substitute for results prepared in accordance with GAAP. A reconciliation of the non-GAAP financial measures to the comparable GAAP measures is included in this press release as part of the attached financial tables.

Conference Call Information

Quidel management will host a conference call to discuss the third quarter results as well as other business matters today beginning at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). During the conference call, management may answer questions concerning business and financial developments and trends. Quidel'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.

To participate in the live call by telephone from the U.S., dial 877-415-3179, or from outside the U.S. dial 857-244-7322, and enter the pass code 82259864.

A live webcast of the call can be accessed at http://www.quidel.com, and the Web site replay will be available for 14 days. The telephone replay will be available for 48 hours beginning at 7:00 p.m. Eastern Time (4:00 p.m. Pacific Time) today by dialing 888-286-8010 from the U.S., or 617-801-6888 for international callers, and entering pass code 40948930.

About Quidel Corporation

Quidel Corporation serves to enhance the health and well being of people around the globe through the development of diagnostic solutions that can lead to improved patient outcomes and provide economic benefits to the healthcare system. Marketed under the QuickVue®, D3® Direct Detection and Thyretain® leading brand names, as well as under the new Sofia® and AmpliVue® brands, Quidel's products aid in the detection and diagnosis of many critical diseases and conditions, including, among others, influenza, respiratory syncytial virus, Strep A, herpes, pregnancy, thyroid disease and fecal occult blood. Quidel's research and development engine is also developing a continuum of diagnostic solutions from advanced lateral-flow and direct fluorescent antibody to molecular diagnostic tests to further improve the quality of healthcare in physicians' offices and hospital and reference laboratories. For more information about Quidel's comprehensive product portfolio, visit www.quidel.com and Diagnostic Hybrids at www.dhiusa.com.

This press release contains forward-looking statements within the meaning of the federal securities laws that involve material risks, assumptions and uncertainties. Many possible events or factors could affect our future financial results and performance, such that our actual results and performance may differ materially from those that may be described or implied in the forward-looking statements. As such, no forward-looking statement can be guaranteed. Differences in actual results and performance may arise as a result of a number of factors including, without limitation, fluctuations in our operating results resulting from seasonality; the timing of the onset, length and severity of cold and flu seasons; government and media attention focused on influenza and the related potential impact on humans from novel influenza viruses; adverse changes in competitive conditions in domestic and international markets; the reimbursement system currently in place and future changes to that system; changes in economic conditions in our domestic and international markets; changes in sales levels as it relates to the absorption of our fixed costs; lower than anticipated market penetration of our products; the quantity of our product in our distributors' inventory or distribution channels and changes in the buying patterns of our distributors; our development of new technologies, products and markets; our development and protection of intellectual property; our reliance on a limited number of key distributors; our reliance on sales of our influenza diagnostics tests; our ability to manage our growth strategy, including our ability to integrate companies or technologies we have acquired or may acquire; intellectual property risks, including but not limited to, infringement litigation; limitations and covenants in our senior credit facility; that we may incur significant additional indebtedness; our need for additional funds to finance our operating needs; volatility and disruption in the global capital and credit markets; acceptance of our products among physicians and other healthcare providers; competition with other providers of POC diagnostic products; changes in government policies; adverse actions or delays in product reviews by the U.S. Food and Drug Administration (the "FDA"); compliance with other government regulations, such as safe working conditions, manufacturing practices, environmental protection, fire hazard and disposal of hazardous substances; third-party reimbursement policies; our ability to meet demand for our products; interruptions in our supply of raw materials; product defects; business risks not covered by insurance; the loss of key personnel; international risks, including but not limited to, compliance with product registration requirements, exposure to currency exchange fluctuations, longer payment cycles, lower selling prices and greater difficulty in collecting accounts receivable, reduced protection of intellectual property rights, political and economic instability, taxes, and diversion of lower priced international products into US markets; our failure to maintain adequate internal control over financial reporting; volatility in our stock price; dilution resulting from future sales of our equity; and provisions in our charter documents and Delaware law that might delay stockholder actions with respect to business combinations or the election of directors. Forward-looking statements typically are identified by the use of terms such as "may," "will," "should," "might," "expect," "anticipate," "estimate," and similar words, although some forward-looking statements are expressed differently. The risks described under "Risk Factors" in reports and registration statements that we file with the Securities and Exchange Commission (SEC) from time to time should be carefully considered. You are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date of this press release. We undertake no obligation to publicly release the results of any revision or update of the forward-looking statements, except as required by law.

QUIDEL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data; unaudited)
			Three months ended September 30,
			2013				2012
Total revenues			$	33,539			$	32,998
Cost of sales (excludes amortization of intangible assets from acquired businesses and technology)				15,297				14,872
Research and development				7,462				5,085
Sales and marketing				8,658				7,776
General and administrative				5,795				4,759
Amortization of intangible assets from acquired businesses and technology				2,171				1,728
Facility restructuring charge				124				-
Total costs and expenses				39,507				34,220
Operating loss				(5,968	)			(1,222	)
Interest expense				(191	)			(286	)
Interest income				3				8
Other expense				-				(27	)
Other expense				(188	)			(305	)
Loss before taxes				(6,156	)			(1,527	)
Benefit for income taxes				(1,795	)			(851	)
Net loss			$	(4,361	)		$	(676	)
Basic and diluted loss per share			$	(0.13	)		$	(0.02	)
Weighted shares used in basic and diluted per share calculation				33,976				33,004
Gross profit as a % of total revenues				54	%			55	%
Research and development as a % of total revenues				22	%			15	%
Sales and marketing as a % of total revenues				26	%			24	%
General and administrative as a % of total revenues				17	%			14	%
	Condensed balance sheet data (in thousands):			9/30/13				12/31/12
	Cash, cash equivalents and restricted cash		$	10,248			$	17,012
	Accounts receivables			19,640				32,570
	Inventory			27,361				15,496
	Total assets			269,200				242,099
	Long term debt			5,242				10,567
	Stockholders' equity			217,661				199,780

QUIDEL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data; unaudited)
		Nine months ended September 30,
		2013				2012
Total revenues		$	125,240			$	101,816
Cost of sales (excludes amortization of intangible assets from acquired businesses and technology)			48,297				43,688
Research and development			22,896				20,433
Sales and marketing			24,162				21,989
General and administrative			19,337				15,812
Amortization of intangible assets from acquired businesses and technology			5,957				5,165
Facility restructuring charge			493				-
Total costs and expenses			121,142				107,087
Operating income (loss)			4,098				(5,271	)
Interest expense			(590	)			(985	)
Interest income			15				35
Other expense			-				(27	)
Total other expense			(575	)			(977	)
Income (loss) before taxes			3,523				(6,248	)
Benefit for income taxes			(2,728	)			(2,501	)
Net income (loss)		$	6,251			$	(3,747	)
Basic and diluted earnings (loss) per share		$	0.18			$	(0.11	)
Weighted shares used in basic per share calculation			33,774				33,036
Weighted shares used in diluted per share calculation			34,834				33,036
Gross profit as a % of total revenues			61	%			57	%
Research and development as a % of total revenues			18	%			20	%
Sales and marketing as a % of total revenues			19	%			22	%
General and administrative as a % of total revenues			15	%			16	%

QUIDEL CORPORATION
Reconciliation of Non-GAAP Financial Information
(In thousands, except per share data)
		Three months ended								Nine months ended
		September 30,								September 30,
		2013				2012				2013				2012
		(unaudited)								(unaudited)
Net income (loss) - GAAP		$	(4,361	)		$	(676	)		$	6,251			$	(3,747	)
Add: Non-cash stock compensation expense			1,419				1,406				5,447				5,001
	Amortization of intangibles		4,278				3,609				12,395				10,863
	Income tax impact of 2012 research and development tax credit		-				-				(510	)			-
	Income tax impact of reversal of tax contingency reserve		-				-				(3,458	)			-
	Income tax impact of non-cash stock compensation
	expense and amortization of intangibles		(1,937	)			(1,755	)			(6,066	)			(5,552	)
Adjusted net income (loss)		$	(601	)		$	2,584			$	14,059			$	6,565
Basic earnings (loss) per share:
	Adjusted net earnings (loss)	$	(0.02	)		$	0.08			$	0.42			$	0.20
	Net earnings (loss) - GAAP	$	(0.13	)		$	(0.02	)		$	0.18			$	(0.11	)
Diluted earnings (loss) per share:
	Adjusted net earnings (loss)	$	(0.02	)		$	0.08			$	0.40			$	0.19
	Net earnings (loss) - GAAP	$	(0.13	)		$	(0.02	)		$	0.18			$	(0.11	)