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Celera Revenues Drop 21 Percent in Q2

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Celera's second-quarter revenues dropped almost 21 percent, it reported after the close of market on Tuesday, missing consensus Wall Street estimates.

For the three months ended June 26, Celera recorded $32.6 million in revenues, down from $41.4 million in Q2 2009, and short of the $36 million expected by analysts.

In a statement, CEO Kathy Ordoñez called the quarter "a challenging period for us as revenues declined with lower than expected sample volumes at Berkeley HeartLab," where the company's clinical laboratory testing service is based.

That business posted revenues of $19.6 million for the quarter, down from $25.2 million a year ago as sample volume shrank by 23 percent year over year, the company said. Sample volumes were impacted adversely by competitive pressures, including the loss of business from accounts that were serviced by former BHL employees.

In April, Celera announced a $7 million settlement with Health Diagnostic Laboratory and other defendants that BHL filed earlier this year alleging HDL and former BHL employees — who resigned from BHL on Jan. 1, then began working for HDL — had solicited BHL's client healthcare providers to refer patients to HDL.

The Lab Services revenues do not include abut $1.9 million for additional testing on samples previously received and processed by BHL, Celera said, and the company 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."

The review includes similar orders received in earlier periods that total about $100,000 in Q1 2010, $600,000 in 2009, and $1.4 million in 2008.

In a conference call following the earnings release, Ordoñez added that the Lab Services business is seeing "increased competitive pressures, particularly among smaller laboratories in the cardiovascular testing space," which have taken a variety of strategies to increase their market share, including limiting or eliminating patient responsibility in paying for testing services. "We're urgently assessing how best to respond to these competitive pressures and regain market share," she said.

Product revenues, comprising Celera's molecular diagnostics products business, rose to $10.9 million from $9.7 million a year ago as sales of both Celera-manufactured products distributed by Abbott Molecular and royalties from the sales of RealTime assays used on Abbott's m2000 system increased.

During the conference call, Ordoñez said that Celera has had "multiple" meetings with the US Food and Drug Administration on its KIF6 test for cardiovascular risk and statin benefit. The company plans to file for pre-market approval for the test, and is currently preparing a packet for pre-submission to the FDA.

Celera's third reporting segment, called 'corporate,' saw revenues fall to $2.1 million from $6.5 million from Q2 2009 due to lower licensing revenue.

The firm's net loss for the quarter decreased more than five-fold to $6.1 million, or $0.07 per share on a GAAP basis, compared to a loss of $31.7 million, or $0.39 per share, from a year ago.

On a non-GAAP basis, the net loss was $0.08 per share, down from $0.23 per share a year ago, which missed analyst estimates of a loss of $0.06 per share.

Q2 2010 results included a pre-tax cash benefit of $2.8 million for legal and insurance settlements, Celera said, while Q2 2009 results included certain items that increased its net loss by $12.6 million and included a pre-tax charge of $15.7 million for non-cash intangible asset impairment.

During the second quarter, R&D spending declined to $6.4 million from $7.4 million a year ago, due primarily to the completion of certain projects, the company said, while SG&A costs receded to $21.9 million from $41.1 million.

As of June 26, Celera had cash and short-term investments of approximately $323 million, it said.

For full-year 2010, the firm anticipates between $25 million and $30 million in R&D costs, unchanged from prior guidance. Guidance for SG&A spending was lowered and is now anticipated to fall between $85 million and $95 million, down from earlier guidance of $90 million to $100 million.

For full-year 2010, Celera lowered its revenue guidance to between $135 million and $145 million from an earlier estimate of between $145 million and $155 million. It also widened guidance on its net loss for full-year 2010 to between $20 million and $25 million, or $0.25 per share and $0.30 per share on a non-GAAP basis, compared to a prior outlook of $12 million and $17 million, or $0.15 per share and $0.21 per share.

Celera said it expects cash and short-term investment to be between $310 million and $320 million at the end of the year, unchanged from prior outlook.

In early Wednesday trading on the Nasdaq, shares of Celera were down around 2 percent at $6.73.