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Celera Posts 21 Percent Q3 Revenue Decline, Will Cut 50 Jobs

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Celera reported after the close of the market Wednesday that its third-quarter revenues had dropped 21 percent year over year, with declines across all of its reporting segments, and announced a restructuring program that will include job cuts.

The Alameda, Calif.-based molecular diagnostics and pharmacogenomics firm reported total revenues of $31.5 million for the three-month period ended Sept. 25, 2010, compared to revenues of $40 million for the third quarter of 2009. Analysts' conensus estimate for the quarter was $35.6 million.

Celera's lab services business, Berkeley HeartLab, had revenues of $20.4 million for the quarter, down 16 percent from $24.2 million year over year; product revenue decreased 9 percent to $9.1 million from $10 million; and corporate revenue fell 66 percent to $2 million from $5.8 million.

Celera CEO Kathy Ordoñez said during a conference call following the release of the results that the quarter was a "challenging period" for the company. She said revenues for the Berkeley HeartLab business were hurt by lower sample volume, down 22 percent year over year, but were partially offset by a higher average price per sample as newer, high-value tests were ordered by physicians.

Berkeley HeartLab has continued to struggle since the firm lost certain members of its sales staff to a competing test services firm. Celera sued the former employees and the firm that hired them, Health Diagnostic Laboratory, and eventually settled the suit for at least $7 million. The result of those employees leaving Berkeley HeartLab also was felt in the second quarter, when the firm reported a year-over-year 21 percent sales decline.

Adding to these issues, Ordoñez said, "We saw reduced healthcare spending and patients appeared to be making fewer physician visits, with a lower volume of laboratory testing as a result." But, she noted, that the firm is encouraged by the number of tests being sold into new physician accounts.

Celera posted a net loss of $8.5 million, or $.10 per share, for the quarter, compared to a net loss of $7.4 million, or $.09 per share, for Q3 2009. On a non-GAAP basis, its net loss was $5.8 million, or $.07 per share, versus $300,000, or break-even on a per share basis, for the 2009 third quarter. Analysts had estimated a loss per share of $.05.

The firm's R&D spending declined slightly to $6.1 million from $6.2 million, and its SG&A spending fell 9 percent to $20.6 million from $22.6 million.

As of the end of the quarter, Celera had cash and short-term investments of approximately $316 million.

In an effort to move Celera back toward profitability, the firm said today that it is undertaking a restructuring, which will reduce headcount by approximately 50 full-time positions, or 9 percent of its total work force. In addition, the firm is realigning resources at Berkeley HeartLab with current revenues.

Ordoñez said on the call that she expects these and other cost-cutting measures to save Celera around $10 million in 2011.

Celera lowered its revenues guidance for full-year 2010 to a range of between $129 million and $134 million from a previous range of between $135 million and $145 million.

"While we’re tracking to more than double revenues from our cardiovascular genetic tests, the weakness in sample volume has made us more cautious about our full-year outlook, and we have reduced 2010 guidance accordingly," Ordoñez said in a statement accompanying the financial results.

In early Thursday trade on the Nasdaq, shares of Celera were down 7 percent at $5.41.

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