Cepheid (CPHD) Prelim. Q2 Numbers Top Expectations; COO Reyes to Leave
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Cepheid (Nasdaq: CPHD) announced preliminary results for the 2013 Second Quarter, ended June 30, 2013. Based on current projections, second quarter revenue is expected to be approximately $96 million, including approximately $70 million in Commercial Clinical revenue, a record $17 million from HBDC, and $9 million in Non-Clinical revenue.
The Street sees revs of $92.2 million.
Within Commercial Clinical, reagents grew 17% from the second quarter of 2012 to approximately $60 million, driven by 22% growth in Xpert test revenue. Sequentially, Commercial Clinical reagents were flat, with growth of more than $4 million offset by an anticipated, seasonal decline in Xpert Flu revenue of more than $3 million and a decline in non-Xpert test revenue. Commercial Clinical system revenue of approximately $10 million reflected a total of 156 commercial system placements, including 53 in North America and 103 Internationally.
At the end of the quarter, Cepheid recorded an additional reserve of approximately $3.0 million of inventory. This impacted earnings per share by approximately $0.04. As a result, and based on current projections, GAAP net loss for the second quarter of 2013 is expected to be approximately $(6.6) million, or $(0.10) per share, and non GAAP net income for the second quarter of 2013 is expected to be approximately $1.2 million, or $0.02 per share. Non-GAAP net income excludes approximately $6.5 million related to employee stock-based compensation and approximately $1.2 million related to amortization of purchased intangible assets.
The Street was looking for non-GAAP loss of $0.03 per share.
"A key priority for the second quarter was to put three quarters of Xpert backorders firmly behind us and start to reassure customers that there were no longer any constraints with regards to Xpert test availability," said John L. Bishop, Cepheid's Chairman and Chief Executive Officer. "Record revenue of $96 million and the associated production volumes show that we made good progress in this regard. Revenue was driven by strength in HBDC and solid growth in our international commercial clinical business. Second quarter commercial clinical revenue in North America was at the lower end of our target range, although improving customer confidence allowed our sales organization to return to higher levels of productivity late in the quarter."
Continued Bishop, "This inventory reserve is associated with certain manufacturing materials that did not meet our internal in-process criteria but were expected to be salvageable for potential future use. An assessment of manufacturing inventory initiated by our new EVP, Global Operations in the last weeks of the quarter identified these items for further analysis and, having now completed the analysis, we have concluded that a portion of these materials should be reserved at this time."
Cepheid previously announced that Warren Kocmond had joined the company as EVP, Global Operations on May 6, 2013, taking responsibility for global manufacturing. Warren brings well over two decades of experience to Cepheid from large scale manufacturing operations including Lam Research, Verigy, Applied Materials and Silicon Graphics.
"In a few short weeks, Warren has already made a positive contribution to Cepheid, driving our manufacturing operations to record levels of productivity," added Bishop. "I am confident that his focus on metric-driven efficiency will quickly drive our manufacturing operations to sharpen operational focus and further enhance execution, returning Cepheid to a solid track record of consistent product delivery and expected improvements in gross margins."
Cepheid also announced today that Humberto Reyes, the company's former EVP, Chief Operating Officer, will transition out of the company effective July 16, 2013. In addition, the former head of US Manufacturing Operations has transitioned out of the company.
The Street sees revs of $92.2 million.
Within Commercial Clinical, reagents grew 17% from the second quarter of 2012 to approximately $60 million, driven by 22% growth in Xpert test revenue. Sequentially, Commercial Clinical reagents were flat, with growth of more than $4 million offset by an anticipated, seasonal decline in Xpert Flu revenue of more than $3 million and a decline in non-Xpert test revenue. Commercial Clinical system revenue of approximately $10 million reflected a total of 156 commercial system placements, including 53 in North America and 103 Internationally.
At the end of the quarter, Cepheid recorded an additional reserve of approximately $3.0 million of inventory. This impacted earnings per share by approximately $0.04. As a result, and based on current projections, GAAP net loss for the second quarter of 2013 is expected to be approximately $(6.6) million, or $(0.10) per share, and non GAAP net income for the second quarter of 2013 is expected to be approximately $1.2 million, or $0.02 per share. Non-GAAP net income excludes approximately $6.5 million related to employee stock-based compensation and approximately $1.2 million related to amortization of purchased intangible assets.
The Street was looking for non-GAAP loss of $0.03 per share.
"A key priority for the second quarter was to put three quarters of Xpert backorders firmly behind us and start to reassure customers that there were no longer any constraints with regards to Xpert test availability," said John L. Bishop, Cepheid's Chairman and Chief Executive Officer. "Record revenue of $96 million and the associated production volumes show that we made good progress in this regard. Revenue was driven by strength in HBDC and solid growth in our international commercial clinical business. Second quarter commercial clinical revenue in North America was at the lower end of our target range, although improving customer confidence allowed our sales organization to return to higher levels of productivity late in the quarter."
Continued Bishop, "This inventory reserve is associated with certain manufacturing materials that did not meet our internal in-process criteria but were expected to be salvageable for potential future use. An assessment of manufacturing inventory initiated by our new EVP, Global Operations in the last weeks of the quarter identified these items for further analysis and, having now completed the analysis, we have concluded that a portion of these materials should be reserved at this time."
Cepheid previously announced that Warren Kocmond had joined the company as EVP, Global Operations on May 6, 2013, taking responsibility for global manufacturing. Warren brings well over two decades of experience to Cepheid from large scale manufacturing operations including Lam Research, Verigy, Applied Materials and Silicon Graphics.
"In a few short weeks, Warren has already made a positive contribution to Cepheid, driving our manufacturing operations to record levels of productivity," added Bishop. "I am confident that his focus on metric-driven efficiency will quickly drive our manufacturing operations to sharpen operational focus and further enhance execution, returning Cepheid to a solid track record of consistent product delivery and expected improvements in gross margins."
Cepheid also announced today that Humberto Reyes, the company's former EVP, Chief Operating Officer, will transition out of the company effective July 16, 2013. In addition, the former head of US Manufacturing Operations has transitioned out of the company.
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