By Kirell Lakhman
Celera's Berkeley HeartLab endured another down quarter for the three months ended June 30 as receipts for the lab business plummeted 22 percent to 19.6 million from $25.2 million year over year.
The decline, which forced the company to cut its 2010 revenue outlook, was blamed on a 23-percent decline in sample volume, which was "adversely impacted by competitive pressures."
These included "the loss of business from accounts serviced by former BHL sales representatives identified in the now settled litigation with Health Diagnostics Laboratory," Celera said in a statement yesterday.
As I reported in April, HDL will pay BHL $7 million to settle the suit, which accused it of stealing customer accounts and trade secrets.
"The second quarter of 2010 was a challenging period for us as revenues declined with lower than expected sample volumes at Berkeley HeartLab," Celera CEO Kathy Ordonez said in the statement. "A weakness in sample volume at BHL through the first half has made us more cautious about our full-year outlook. ..."
Indeed, the decline in second-quarter receipts follows a 39-percent plunge in first-quarter revenue, which Celera blamed on lower sample volume that was due in part to the HDL scandal.
However, Celera noted that the drop-off in second-quarter revenue "does not include approximately $1.9 million for additional testing performed on samples previously received and processed by BHL."
The company said it "is reviewing the orders for this additional testing to determine whether they support payor requirements for amounts billed to, and reimbursement received from, federal health care programs and others."
Celera also plans to review "similar orders in earlier periods, which totaled around $100,000 in the first quarter, approximately $600,000 in 2009, and roughly $1.4 million in 2008.
Besides its BHL subsidiary, Celera operates a molecular diagnostic-products business, most of whose revenue comes from distribution and royalty agreements with Abbott Molecular, a subsidiary of Abbott Labs.
Revenue from that business increased 12 percent to $10.9 million from $9.7 million year over year. Celera said the increase was the result of increases in both the sale of Celera-manufactured products distributed by Abbott and royalties from sales of RealTime assays used on its m2000 system.
Declining testing volumes also forced Celera to cut by 6.6 percent its 2010 revenue outlook to between $135 million and $145 million from its previous guidance of between $145 million and $155 million.
The company blamed the cut on "a number of factors, including acceptance and utilization of [BHL's] testing services and diagnostic products, reimbursement practices, economic pressures and the healthcare system generally, and competitive pressures, including disruption to the business as a result of the departure of sales representatives identified in the now settled HDL litigation."
Meantime, companywide revenue during the second quarter slid 21 percent to $32.6 million from $41.4 million in the year-ago period. Net loss during the quarter shrank 80 percent to $6.1 million from $31.7 million year over year.
Celera had around $323 million in cash and short-term investments as of June 26.
The second-quarter report comes one month after BHL launched a CYP2C19 LDT designed to identify carriers of mutations that affect an individual's ability to metabolize the anticoagulant Plavix. In April Celera said BHL "expect[s] to launch" the assay during the third quarter.
As I wrote during the firm's first-quarter results, the decision to launch the test was a smart play considering FDA's decision in February to include a black box warning with the drug claiming that certain mutations can place some patients at increased risk for heart attack and stroke.
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