NEW YORK (GenomeWeb News) – Cepheid reported after the close of the market Thursday that its third-quarter revenues jumped 25 percent and its non-GAAP net income more than doubled on strong clinical sales.
The Sunnyvale, Calif.-based molecular diagnostics firm brought in total revenues of $70.2 million for the three months ended Sept. 30, compared to $56.1 million for the third quarter of 2010. It beat analysts' consensus estimate for revenues of $68.3 million.
Cepheid's systems sales were $14.7 million versus $12.5 million for Q3 2010, and its reagents and disposable sales were $52.6 million compared to $42.4 million.
Its clinical sales jumped 33 percent to $59.6 million from $44.8 million year over year, while non-clinical sales dropped 24 percent to $7.7 million from $10.1 million.
Revenues from hospital-acquired infection tests rose 30 percent year over year, company officials said on a conference call following the release of the results, led by MRSA and C. difficile. They also noted that around 70 percent of US customers are now validating or using at least two of Cepheid's tests and 40 percent are using or validating at least three tests.
"Based on our Q3 results, our MRSA surveillance tests … now represent close to a $100 million business on an annualized basis, which compared to the $47 million we reported for this business back in 2008," Cepheid CEO John Bishop said on the call.
"In the US nearly one-half of the 6,000 hospitals have yet to introduce an MRSA surveillance program — and of the half that do have a surveillance program today, only one-third have realized the economic and patient care benefits associated with molecular," he said. "So we continue to believe that the bulk of the MRSA opportunity lies ahead of us both in the US and even more so internationally."
Cepheid said that it installed 122 GeneXpert systems in the quarter in its clinical business. In addition, it placed 141 of the systems as part of its High Burden Developing Country program.
Cepheid posted net income of $1.9 million, or $.03 per share, for the quarter, compared to a net loss of $1.1 million, or $.02 per share, for the third quarter of 2010. On a non-GAAP basis, the firm's net income was $7.6 million, or $.11 per share, up from $3.7 million, or $.06 per share.
Analysts, on average, had expected EPS of $.02.
Cepheid's R&D costs climbed 38 percent to $15.2 million from $11 million year over year, while SG&A spending also rose 38 percent to $22.2 million from $16.1 million.
It finished the quarter with $110.8 million in cash and cash equivalents.
Cepheid noted in a statement that has terminated the remainder of its PCR license from Roche after determining that the patents remaining under the license are not pertinent to its future business plans. As a result of the termination it will take a one-time charge in the fourth quarter of $5.4 million to reflect amortization of the up-front license fee.
The firm expects to report full-year 2011 revenues of between $269 million and $272 million, up from previous guidance of $256 million to $270 million. It expects EPS to be between $.00 and $.03 and non-GAAP EPS of $.41 to $.44.
Last month at the UBS Global Life Sciences Conference in New York Cepheid CFO Andrew Miller provided an update on the firm's ambitious plans for rolling out new molecular tests over the next five years, targeting 47 tests on the market globally by 2016.
On the call Thursday evening, Bishop reiterated some of the timelines for upcoming product launches. Cepheid expects its Chlamydia trachomatis/Neisseria gonorrhoeae test to be launched as CE/IVD product in the first half of 2012 followed by a US launch in the second half of the year. It's targeting 2012 US launches for its BCR/ABL test and a CLIA-waived Xpert Staphylococcus aureus test.
Despite the strong results, shares of Cepheid were down 7 percent at $35.91 in early Friday trade on the Nasdaq.
In a research note this morning Raymond James analyst Nicholas Jansen wrote, "[W]e believe shares were likely priced for more pronounced growth, and as a result, the mixed number of North American placements and the sequential dip in European reagent revenue (although both consistent with normal variability) may lead to modest pressure on shares in morning trade."