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Cepheid Reports 21 Percent Uptick in Q2 Revenues

NEW YORK (GenomeWeb) — Cepheid reported after the close of the market Thursday a 21 percent increase in second quarter revenues as it placed a record number of GeneXpert diagnostic systems during the period.

For the three months ended June 30, Cepheid logged revenues of $116.5 million compared to $96.0 million in Q2 2014, narrowly beating the average Wall Street estimate of $115.6 million.

Clinical systems revenue jumped 70 percent to $28.3 million from $16.7 million, while clinical reagents revenue grew 17 percent to $83.0 million from $70.8 million. Meantime, non-clinical and other revenue slumped 39 percent to $5.2 million from $8.5 million in the year-ago period.

The Sunnyvale, Calif.-based molecular diagnostics firm installed a total of 1,084 GeneXpert systems in Q2, more systems than the company placed in all of 2012, CEO John Bishop noted in a statement. This included 158 systems placed through its commercial clinical business and 926 platforms through its high-burden developing country business.

In a conference call Thursday recapping the firm's earnings, CEO John Bishop noted that the 926 systems shipped through the HBDC program included 774 systems associated with an order to China supported by the Global Fund to Fight AIDS, Tuberculosis, and Malaria. Cepheid disclosed this order, as well as the fact that its Xpert TB test received Chinese Food and Drug Administration clearance, during its first quarter earnings call in April.

Bishop also said during Thursday's call that the company placed 158 GeneXpert systems, including 11 Infinity systems, through its commercial clinical business.

"North American placements were at the lower end of our target range due to typical variability," Bishop said, but added that this was "more than offset by very strong reagent performance.

"Interestingly, while Q2's 46 systems in North America compares to 51 in the first quarter, we actually shipped a meaningfully larger number of modules in the second quarter than we did in the first," Bishop said. "This was in large part driven by the placement of nine Infinity Systems in North America in the second quarter compared to five in the first quarter."

Updating the company's Xpert test menu pipeline, Bishop said that Cepheid now has 17 Xpert tests available internationally, 14 in the US, and 12 tests in active development. These include Xpert Flu-RSV, which the company expects to submit soon to the US Food and Drug Administration with a targeted CE-IVD release this quarter and global launch this year.

In addition, Cepheid hopes to launch Xpert Trichomonas ex-US in Q3 of this year with a US regulatory submission planned for Q1 2015; Xpert Norovirus in the US and Xpert HIV viral load ex-US near the end of this year; and Xpert HIV qualitative and Hepatitis C viral load ex-US in the first half of 2015.

Cepheid reported a net loss for the quarter of $9.8 million, or $.14 per share, compared to a net loss of $6.6 million, or $.10 per share, in Q2 2013. On a non-GAAP basis, Q2 net income was $2.3 million, or $.03 per share, compared to net income of $1.2 million, or $.02 per share, in the year-ago period. On average, analysts had expected a net loss of $.14 per share.

In the second quarter Cepheid's R&D expenses totaled $24 million, an approximately 29 percent increase from $18.6 million in Q2 2013. Meantime, the company's SG&A expenses rose 31 percent to $37.8 million from $28.7 million.

Cepheid ended the quarter with cash, cash equivalents, and investments totaling $385 million.

The firm updated its full-year 2014 guidance to total revenue in the range of $452 million to $461 million, having stated revenues of $446 million for the lower end of that guidance following its Q1 2014 earnings. Cepheid also said that its net loss is expected to be in a range from $.54 to $.51 per share, having previously anticipated a net loss of $.43 to $.38 per share. On a non-GAAP basis, it expects EPS of $.10 to $.13.

In Friday morning trade on the Nasdaq, shares of Cepheid dropped around 9 percent to $42.22.

Piper Jaffray analyst William Quirk said in a note this morning that investors would likely focus on the firm's commercial clinical reagent revenue, which despite growing around 12 percent to $69.9 million fell short of expectations.