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Cepheid Q2 Revenues Rise 14 Percent; Shares Fall on Q3 Guidance

NEW YORK (GenomeWeb) – Cepheid said after the close of the market Thursday that its second quarter revenues grew 14 percent year over year.

The firm reported total revenues of $132.5 million for the quarter ended June 30, up from $116.5 million in the comparable quarter a year ago, and besting the average analyst estimate of $130.7 million.

Clinical systems revenue was down 23 percent to $21.8 million from $28.3 million, while clinical reagents revenue was up 24 percent to $103.2 million from $83 million. Non-clinical and other revenue grew 45 percent $7.5 million from $5.2 million.

Despite the revenue growth, shares of Cepheid fell in Friday morning trade after the firm provided third quarter guidance that was below Wall Street expectations.

The Sunnyvale, California-based molecular diagnostics firm placed a total of 270 GeneXpert systems in its commercial clinical business, and 312 systems as part of the firm's high-burden developing countries (HBDC) program. The company said it has now placed a cumulative total of 8,903 GeneXpert systems worldwide.

"In North America we placed 43 systems, including five Infinity [systems], two of which went to VA customers," John Bishop, Cepheid's chairman and CEO, noted on a conference call recapping the earnings. He added that 34 of the new placements went to new customers and nine went to existing customers who added incremental systems.

The lower systems revenue, meanwhile, was related to variability in the HBDC program, with a delayed shipment of 300 GeneXpert systems to India in the second quarter. This was offset, however, by a 30 percent increase in HBDC reagents shipped versus the year-ago period, with about 1.6 million Xpert MTB/RIF cartridges shipped during the quarter, Bishop said.

Cepheid reported a net loss for the quarter of $16.7 million, or $.23 per share, compared to a net loss of $9.8 million, or $.14 per share, in Q2 2014. On a non-GAAP basis, its second quarter net loss was $4.5 million, or $.06 per share.

The company's R&D expenses totaled $28.1 million, up about 17 percent from $24 million in the year-ago period, while SG&A expenses rose nearly 18 percent to $44.4 million from $37.8 million.

Cepheid ended the quarter with $110.6 million in cash and cash equivalents, and $189.4 million in short-term investments.

Cepheid officials said they expect third quarter revenues to be between $125 million and $128 million, below Wall Street's consensus estimate of $136 million. "In terms of the more typical distribution of revenue throughout the year, this is a slightly lighter third quarter than we have seen in the past at about 23 percent of full-year revenue compared to 25 percent for the last two years," Ilan Daskal, Cepheid's CFO, said on the call.

Cepheid also tweaked its FY 2015 revenue guidance to a range of $544 to $553 million from a previous range of $542 to $553.

In Friday morning trade on the Nasdaq, shares of Cepheid were down 12 percent at $55.49.

ISI analyst Vijay Kumar downgraded Cepheid's stock to Sell and cut his price target from $58 to $53.50 following the conference call.