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Cepheid's Q2 Revenues Jump 35 Percent; Shares Soar

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Cepheid reported after the close of the market Thursday that its second-quarter revenues increased 35 percent as sales of its clinical systems climbed 53 percent year over year.

The Sunnyvale, Calif.-based molecular diagnostics firm brought in total revenues of $67 million for the three-month period ended June 30, compared to $49.6 million for the second quarter of 2010. It easily beat analysts' consensus estimate for revenues of $61 million.

In early Friday trade, Cepheid's shares soared on the Nasdaq, rising 20 percent to $38.07.

The firm's clinical systems sales were $13.2 million, up from $8.6 million for Q2 2010, while its clinical reagents sales jumped to $44.1 million from $31.6 million. Total systems sales for the quarter were $14.1 million versus $9.8 million, and total reagent and disposable sales were $49.5 million versus $38.8 million year over year.

Cepheid CEO John Bishop noted in a press release accompanying the results that the firm now has 11 Xpert molecular tests on the US market and 12 available in international markets.

During a conference call following the release of the results, Bishop said that the firm placed a record 79 of its GeneXpert systems in North America, helped somewhat by its distribution agreement with Labsco. The agreement, which was announced last month, targets nearly 4,000 hospitals in the US with fewer than 150 beds each. But, even excluding systems sold by Labsco, Bishop said the firm had the best quarter selling systems in the US in two years.

He added that the firm placed 69 of its systems in Europe during the quarter. Bishop said that even though capital is tighter in the Southern European countries, Cepheid's sales continue to do well there, particularly in Italy.

The firm also placed 38 systems through its high-burden developing countries program.

In total, Cepheid has now placed 2,224 of its GeneXpert systems worldwide.

Cepheid posted net income of $1.8 million, or $.03 per share, compared to a net loss of $1.8 million, or $.03 per share, for Q2 2010. It marked the third consecutive quarter of GAAP profitability for the firm.

Cepheid's non-GAAP net income — which excludes amortization of purchased intangible assets and employee stock-based compensation expense — was $7.2 million, or $.11 per share. Analysts had expected a loss of $.02 per share.

The firm's R&D spending increased 36 percent to $13.9 million from $10.2 million, and its SG&A spending rose 38 percent to $20.8 million from $15.1 million.

Cepheid finished the quarter with $98.3 million in cash and cash equivalents.

The firm expects to report full-year revenues of between $265 million and $270 million, up from an earlier guidance of $245 million to $255 million, with EPS of between $.08 and $.11.

Following the conference call, several investment banks raised their target price for Cepheid's shares and increased their revenue estimates to fall within the range provided by the firm. Jefferies and Baird both upped the target price on Cepheid's shares to $37, while Goldman Sachs increased its target to $36, Oppenheimer increased its target to $38, and Raymond James increased its target to $40.

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