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Alere Reports 1 Percent Q4 Revenue Decline

NEW YORK (GenomeWeb) – Medical diagnostics firm Alere today reported that its fourth quarter revenues fell 1 percent year over year, but increased 2 percent on an organic basis driven by strong international growth.

For the quarter ended Dec. 31, 2014, Alere reported revenue of $666.9 million compared to $673.2 million in Q4 2013, and ahead of the consensus analysts' estimate of $660.7 million.

In Q4, sales of infectious disease diagnostic products, Alere's largest segment, edged up slightly to $203.5 million from $202.9 million in the year-ago period. Sales of its toxicology testing products declined to $149.2 million from $151.3 million, while cardiology diagnostics were down to $109.7 million from $113.6 million, and diabetes diagnostics dropped to $46.1 million from $197.5 million. Sales of other diagnostics products were $90.3 million, up from $85.5 million in Q4 2013.

Divestiture of the company's Alere Health business to Optum and sales of some smaller assets netted proceeds to the company of approximately $650 million, Alere President and CEO Namal Nawana said on an earnings call this morning.

"These net proceeds from divestitures were used exclusively to decrease our debt and therefore lower our interest expense and leverage ratio," Nawana said.

The Waltham, Mass.-based firm also achieved it's commitment to reduce it's cost base $100 million over its Q2 2014 run rate, separate from the already-completed divestitures, he said.

Alere reported a Q4 net loss of $23.1 million, or $.34 per share, compared to a net loss of $3.7 million, or $.11 per share, for Q4 2013. On an adjusted basis, it had Q4 2014 earnings per share of $.66, above the average Wall Street estimate of $.59. Its adjusted EPS for Q4 2013 was $.68.

The company reported a 22 percent decrease in R&D from $38.3 million to $30.0 million, as well as an 8 percent decrease in SG&A from $258.0 million to $237.8 million. This decrease was attributable to its early January divesture of Alere Health and continued divesture of other non-core assets.

For FY 2014, the firm reported revenues of $2.59 billion, down from $2.62 billion for FY 2013 and below the average Wall Street estimate of $2.81 billion.

Alere reported a net loss for the year of $165.1 million, or $2.25 per share, compared to a net loss of $71.3 million, or $1.13 per share, for FY 2013. On an adjusted basis, its EPS for the year was $2.07, down from $2.41 in FY 2013 but matching analysts' consensus estimate.

The firm's annual R&D spending was $144.8 million, a decrease from $159.1 million in FY 2013, and its SG&A costs were $975.9 million versus $997.8 million year over year.

"Our R&D budget will be no more than $120 million in 2015, and we are substantially below that spend rate in Q4 2014 as we restructured our organization, closing or announcing the closing of multiple facilities in the UK and Israel," Nawana said.

Alere recently obtained a CLIA waiver for its Alere i molecular platform, which marks "the first ever CLIA waiver of a molecular diagnostics platform," Nawana noted. The platform was waived along with an influenza A/B assay, and the firm now anticipates rapid menu expansion, entering clinical trials or agency approval processes for a Step A, chlamydia, C. difficile, and RSV tests on the platform this year.

"Molecular diagnostics at the point of care is something that is transformational in diagnostics, and we're focused around really moving toward that area," Nawana said. He added that the company's Alere q platform, a quantitative isothermal platform that received the CE-IVD mark last July, will have a limited launch this year for early molecular diagnosis of HIV in Africa. 

The company had a number of lateral flow patents expire in the US in early 2015. "The expiration of those does present a headwind to us in 2015 of $10 million year over year with those dropping out and no longer producing royalties," CFO Dave Teitel said on the call.

Alere finished the year with $378.5 million cash and cash equivalents, $37.6 million in restricted cash, and $259,000 in marketable securities.

In late Tuesday morning trade on the New York Stock Exchange, shares of Alere were up around 5 percent at $42.36.