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Gen-Probe's Q3 Revenues Rise 8 Percent

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Gen-Probe reported after the close of the market Thursday that its third-quarter revenues increased 8 percent year over year but fell short of expectations.

The San Diego-based molecular diagnostics firm generated total revenues of $132.6 million for the three months ended Sept. 30, compared to revenues of $122.7 million for the third quarter of 2009. The top-line figure fell short of analysts' consensus estimate of $135.3 million.

Its clinical diagnostics sales were up 8 percent at $74.9 million from $69.6 million, while its blood screening products increased 11 percent to $50.3 million from $45.4 million. Research products and services declined 21 percent to $3.1 million from $3.9 million.

The firm's product sales were up 8 percent to $128.3 million from $119 million in Q3 2009, short of the firm's expectations.

"Although our competitive positions, market shares, and pricing are solid, softness in healthcare weighed on our third-quarter results more than in prior periods and caused products sales to finish about one percent short of our expectations," Gen-Probe President and CEO Carl Hull said during a conference call following the release of the results. He added that growth would be higher in a "normal" macroeconomic environment.

"We believe the external environment is basically stable today, and therefore continue to have confidence in Gen-Probe's trajectory as we see increasing benefit from our pipeline, especially Panther in Europe and trichomonas in the US within three to six months," Hull added.

Gen-Probe is expected to launch its Panther system, a fully-automated system for the blood-screening market, around the end of this year. While the trichomonas molecular assay cited by Hull is among the firm's upcoming market introductions.

Hull noted in a statement that Gen-Probe has filed four products with the US Food and Drug Administration for regulatory clearance this year and anticipates filing for clearance of its Aptima HPV test next month.

"All our major R&D projects remain on track," said Hull during the call.

Gen-Probe's net income for the quarter was $27.4 million, or $.56 per share, compared to $22.2 million, or $.44 per share. On an adjusted basis, its Q3 2010 EPS was $.57, easily beating Wall Street estimates of $.50, due primarily to lower than expected SG&A spending.

The firm's R&D spending was nearly flat with the prior year's third quarter at $27.4 million versus $27.5 million. Its SG&A spending declined 11 percent to $25.4 million from $28.7 million, due partially to a $2.9 million arbitration award from Qiagen, which covered attorneys' fees and costs related to the firms' dispute over human papillomavirus tests.

Gen-Probe finished the quarter with $467.5 million in cash, cash equivalents, and marketable securities.

The firm also lowered its revenue guidance for full-year 2010 to a range of between $541 million and $546 million from a previous range of between $545 million and $562 million. It also updated its EPS guidance for the year to a range of between $2.11 and $2.14 from a range of between $2.07 and $2.20.

In a research note published last night, Mizuho Securities USA analyst Peter Lawson wrote, "Overall, we feel the quarter was affected by a series of typically inconsequential events that should not distract from the unblemished bottom-line execution, superior profitability, and near-term delivery on the pipeline – notably the European launch of Panther instrument at the end of the year."

In early Friday trade on the Nasdaq, shares of Gen-Probe were down 2 percent at $48.11.

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