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Quidel Reports Third Quarter Financial Results
Total revenues for the third quarter of 2002 were $14.5 million, compared with $16.6 million for the third quarter of 2001. As previously announced, the shortfall in expected revenues was primarily due to certain U.S. distributors not making expected quarter-end purchases and to changes in distributors' inventory management practices.
On a pre-tax basis, the loss for the third quarter of 2002 was $2.0 million, or $0.07 per share, compared with pre-tax earnings of $0.4 million, or $0.01 per share, in the third quarter of 2001. On a net basis, the loss for the 2002 third quarter was $1.2 million, or $0.04 per share, compared with a net loss of $0.1 million, or $0.00 per share, in the third quarter of 2001. These results are within the range of third quarter guidance provided by Quidel on October 3, 2002.
Gross margin on net sales for the third quarter of 2002 was 44%, compared with a gross margin of 50% in the third quarter of 2001, primarily influenced by lower revenues. Operating expenses for the third quarter of 2002 totaled $8.5 million, or 60% of net sales, compared with $7.9 million, or 49% of net sales, for the third quarter of 2001.
S. Wayne Kay, Quidel's president and chief executive officer, stated, "Actions by certain of our distributors late in the third quarter had an unexpected impact on our reported financial results, although we believe end-user demand for our product lines in the U.S. and overseas remains strong."
Mr. Kay added, "In the brief period since we updated third quarter financial guidance, we have begun an initiative to move to a demand tracking system that will provide greater visibility into distributor demand requirements. We believe this system will improve the predictability of sales, allow for a more even ordering pattern throughout each quarter and enhance service levels with distributors. We anticipate this process will be in place with some or our key distributors in 2003.
"Our strategy remains on track for delivering long-term sales growth and margin improvement by growing revenues overseas and in the U.S.," said Mr. Kay. "In the near term, we look forward to continued robust demand in Japan for our RapidVue(R) Influenza test where our distribution partner is currently anticipating significant growth compared with last year. Quidel's product is one of the earliest influenza diagnostic tests for use in the physician office available in Japan. We also look forward to our first season of selling our QuickVue(R) Dipstick Strep A test in Japan," commented Mr. Kay.
In the U.S., Quidel will continue to grow sales of the QuickVue(R) Influenza test in physician offices and alternate-care sites, and will enter into the hospital acute care market in the fourth quarter of 2002.
Quidel expects to make gains in penetrating the urinalysis testing market and expanding its QuickVue(R) brand with initial shipments in the fourth quarter of 2002 of the UrinQuick(TM) Urine Chemistry Analyzer in the U.S. Also, Quidel is continuing to automate manufacturing of the lateral flow product line, while making progress in bringing to market additional products utilizing its proprietary LTF(TM) (Layered Thin Film) technology platform.
Year-to-Date Financial Results
Total revenues for the nine months ended September 30, 2002 were $53.5 million, up slightly from $52.5 million for the nine months ended September 30, 2001. On a pre-tax basis, earnings for the nine months ended September 30, 2002 were $1.2 million, or $0.04 per share, compared with pre-tax earnings of $0.7 million, or $0.02 per share, for the nine months ended September 30, 2001. Gross margin on net sales for the nine months ended September 30, 2002 was 48%, compared with 51% for the nine months ended September 30, 2001. On a net basis, current year-to-date earnings were $0.7 million, or $0.02 per share, on a fully diluted basis, compared with a net loss of $0.5 million, or $0.02 per share, on a fully diluted basis, for the nine months ended September 30, 2001.
Financial Guidance for Fourth Quarter
Quidel currently expects fourth quarter 2002 total revenues to be approximately $21.0-$22.0 million. Quidel expects to report fourth quarter 2002 pre-tax EPS in the range of $0.03 to $0.07 per share, on a fully diluted basis, and after-taxes, assuming a 41% tax rate, earnings in the range of $0.02 to $0.04 per share, on a fully diluted basis.
Conference Call Information
Quidel management will host a conference call to discuss third quarter results today, October 30, 2002, beginning at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). To participate via telephone, please call 888/803-7396 from the U.S., or 706/634-1052 for international callers. A telephone replay will be available for two days by dialing 800/642-1687 from the U.S., or 706/645-9291 for international callers, and entering reservation number 6000865. The conference call will be broadcast live over the Internet at www.quidel.com. A replay also will be available on Quidel's Web site for 14 days.
Quidel Corporation, a worldwide company helping women and their families live healthy lives, discovers, develops, manufactures and markets rapid point-of-care diagnostic tests for detection of medical conditions and illnesses. These products provide accurate, rapid and cost-effective diagnostic information for acute and chronic conditions associated with women's health in areas such as reproduction and diseases of the elderly. Quidel also provides point-of-care diagnostics for infectious diseases, including influenza A and B, Strep throat, H. pylori infection, chlamydia, infectious mononucleosis and infectious vaginitis. Quidel's products are sold to healthcare professionals for use in physician offices, clinical laboratories and pharmacies, and to consumers through organizations that provide private label, store brand products. These tests provide diagnostic information that enables rapid treatment and improves health outcomes, lowers costs and increases patient satisfaction. For more information, please visit Quidel's Web site at http://www.quidel.com.
This press release contains forward-looking statements within the meaning of the federal securities laws that involve material risk 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. As such, no forward-looking statement can be guaranteed. Differences in operating results may arise as a result of a number of factors including, without limitation, seasonality, adverse changes in the competitive and economic conditions in domestic and international markets, actions of our major distributors, manufacturing and production delays or difficulties, adverse actions or delays in product reviews by the FDA and the lower acceptance of our new products than forecast. 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" and in other sections of our Form 10-K for year ended December 31, 2001, and in other reports and registration statements that we file with the Securities and Exchange Commission 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 presentation. We undertake no obligation to publicly release the results of any revision of the forward-looking statements.
QUIDEL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) Three months ended Nine months ended September 30 September 30 2002 2001 2002 2001 (unaudited) Net sales $14,126 $16,117 $52,253 $51,185 Research contract, license and royalty income 382 451 1,256 1,317 Total revenues 14,508 16,568 53,509 52,502 Cost of sales 7,903 8,072 27,033 25,250 Research and development 1,644 1,484 4,747 4,827 Sales and marketing 4,366 3,374 12,171 10,765 General and administrative 1,963 1,917 6,407 6,540 Restructuring - - - 550 Amortization of intangibles 483 1,099 1,460 3,187 Total costs and expenses 16,359 15,946 51,818 51,119 Earnings (loss) from operations (1,851) 622 1,691 1,383 Interest expense 238 328 722 1,010 Interest income (3) (2) (9) (43) Other, net (86) (78) (251) (262) Total other expense 149 248 462 705 Earnings (loss) before income taxes (2,000) 374 1,229 678 Income tax expense (811) 449 504 1,202 Net earnings (loss) $(1,189) $(75) $725 $(524) Earnings (loss) per share before income taxes - basic and diluted $(0.07) $0.01 $0.04 $0.02 Net earnings (loss) per share - basic $(0.04) $(0.00) $0.03 $(0.02) Net earnings (loss) per share - diluted $(0.04) $(0.00) $0.02 $(0.02) Weighted shares used in basic per share calculation 28,850 28,302 28,802 28,202 Weighted shares used in diluted per share calculation 28,850 30,631 29,912 30,530 Gross profit as a % of net sales 44% 50% 48% 51% Research and development as a % of net sales 12% 9% 9% 9% Sales and marketing as a % of net sales 31% 21% 23% 21% General and administrative as a % of net sales 14% 12% 12% 13% Condensed balance sheet data (in thousands): 9/30/02 12/31/01 (unaudited) (audited) Cash and cash equivalents $4,885 $3,396 Working capital 21,435 17,790 Total assets 79,068 82,393 Long term obligations 10,314 10,654 Stockholders' equity 62,416 60,409CONTACT:
Paul E. Landers, 858/552-7962
Lippert/Heilshorn & Associates
Bruce Voss/Ina McGuinness, 310/691-7100