NEW YORK (GenomeWeb News) – Cepheid reported after the close of the market Thursday that its fourth-quarter revenues increased 19 percent on strong consumables sales. The firm also turned a profit, which was not expected by Wall Street.
Cepheid brought in total revenues of $58.7 million for the three months ended Dec. 31, compared to revenues of $49.2 million for the fourth quarter of 2009. Analysts, on average, had expected $56.1 million.
The firm's systems sales declined 21 percent to $13.2 million from $15.5 million, but its reagent and disposables sales rose sharply to $43 million from $32.7 million, up 31 percent. Its clinical sales were up 30 percent year over year to $46.4 million from $35.6 million.
Cepheid said that it placed 130 GeneXpert systems and 793 modules during the quarter.
Cepheid posted net income of $1.3 million, or $.02 per share, compared to a net loss in last year's Q4 of $4.2 million, or $.07 per share. On a non-GAAP basis, Cepheid had Q4 EPS of $.09 versus EPS of $.03 for the comparable period of 2009. Wall Street expected the firm to post a loss of $.02 per share.
The firm's R&D expenses increased 18 percent to $11.7 million from $9.9 million, and its SG&A spending rose around 28 percent to $17.6 million from $13.8 million.
Cepheid CEO John Bishop said during a conference call following the release of the results that a combination of rapid adoption of its GeneXpert platform, cost-control initiatives, and the phase out of certain PCR royalties enabled the firm to produce record revenues, gross margin, operating margin, and bottom-line performance. He also noted that the firm was GAAP-profitable for the quarter for the first time in its history.
"We believe the growth rate of our clinical business continues to be the highest in the molecular market," Bishop added.
Bishop noted that the firm now sells nine FDA-cleared tests in the US and 12 outside of the US.
"As our test menu continues to expand, [we] expect to see our clinical revenues increasingly diversity beyond our flagship MRSA business," he said. "That said, MRSA has been and will continue to be an important contributor to clinical reagent growth." He noted that MRSA surveillance revenues grew more than 20 percent in 2010.
Among the tests in its pipeline, Cepheid submitted its Xpert flu panel, which detects and differentiates flu A, flu B, and 2009 H1N1, with the US Food and Drug Administration in December, Bishop noted during the call. However, he noted that the firm is being cautious in factoring in revenues for the test into its guidance for 2011.
Cepheid also expects a modest revenues contribution from its High Burden Developing Countries Tuberculosis B program. The firm's Xpert MTB/RIF test was launched in April 2009. It was developed in collaboration with the Foundation for Innovative New Diagnostics (FIND) and the University of Medicine and Dentistry of New Jersey, and it was recently endorsed by the World Health Organization.
Bishop also announced during the call that FIND has agreed to contribute $5 million to help accelerate development of Cepheid's Xpert HIV viral load test, which will serve as "an important companion test to many TB [test] customers."
For full-year 2010, Cepheid generated revenues of $212.5 million, up from $170.6 million for 2009. Its systems sales increased year over year to $46.4 million from $43 million, while its reagents and other disposables sales jumped to $160.5 million from $122.2 million. Its clinical sales jumped 40 percent to $162.5 million from $115.9 million.
The firm placed a total of 485 GeneXpert systems in 2010 along with 2,614 modules.
Cepheid's net loss for the year was $5.9 million, or $.10 per share, compared to a net loss of $22.5 million, or $.39 per share, for 2009.
Its R&D expenses rose to $42.5 million from $39.3 million, and its SG&A spending increased to $63.4 million from $50.4 million.
Cepheid finished the quarter with $79.5 million in cash and cash equivalents.
The firm expects 2011 revenues to be between $245 million and $255 million, and net income ranging from a loss of $.01 per share to a profit of $.04 per share on a GAAP basis.
In early Friday trade on the Nasdaq, shares of Cepheid were down one percent at $23.95.