NEW YORK (GenomeWeb News) – Cepheid's revenues grew 21 percent year over year during the second quarter, the Sunnyvale, Calif.-based firm reported after the close of the market on Thursday.
For the three months ended June 30, total revenues came in at $81.0 million, compared to $67.0 million a year ago. Wall Street analysts had expected revenues of $82.7 million.
Pacing revenue growth was reagent and disposable sales growth to $63.9 million from $49.5 million a year ago, a 29 percent increase. System sales increased 3 percent to $14.5 million from $14.1 million.
Total product sales for the second quarter increased to $78.5 million from $63.6 million, a 23 percent increase, as clinical sales increased 22 percent year over year and non-clinical sales spiked 40 percent, Cepheid said.
During the quarter, Cepheid placed 271 GeneXpert systems, bringing the total installed base to 3,350 placements, CEO John Bishop said in a statement, adding "it is clear that the benefits of our innovative system and our growing menu of Xpert tests continue to drive broad adoption of our GeneXpert system."
The firm's chlamydia/gonorrhea test was submitted to the US Food and Drug Administration in June he said, "and we have been very encouraged by early customer feedback" following the launch of the test in Europe.
Other revenues not related to product sales slid 24 percent to $2.6 million from $3.4 million.
On a conference call following the release of the earnings results, Bishop said that revenues related to the company's High Burden Developing Country program were flat sequentially and were "several million" dollars less than had been expected. He cited two reasons for the shortfall. First, about $1.7 million of HBDC system revenue could not be recognized despite receipt and acceptance by a customer because of an additional agreement to transport systems from the customer's warehouse to the customer's laboratory site for installation.
Second, because of a "premature" announcement of a possible reduction in price of Cepheid's HBDC test, many customers delayed their orders. In June global non-profit health advocacy organization Unitaid said its board had approved $30 million in funding to increase access to Cepheid's Xpert MTB/RIF diagnostic test for tuberculosis in resource-poor nations. As a result, Cepheid was expected to reduce the price of the Xpert MTB/RIF diagnostic cartridges.
Bishop said today that those two factors combined negatively impacted revenue by about $3 million in the quarter.
Speaking about tests in the company's pipeline, Bishop said that Cepheid has 14 tests in active development. Within that, tests for HPV, HBV, HIV, HCV, vaginitis, and CLIA-waived flu "remain on track" with previously announced timelines.
At an investor conference last month, Bishop said that by 2017 the company expects to have a total of 42 tests available globally.
The firm's R&D spending in the quarter totaled $16.1 million, up 16 percent from $13.9 million a year ago, while SG&A costs increased 25 percent to $26.1 million from $20.8 million.
Cepheid posted a profit of $1.13 million, or $.02 per share, down from $1.83 million, or $.03 per share, a year ago. On a non-GAAP basis, EPS was $.11. Wall Street consensus called for EPS of $.02.
The company said that as of June 30, it had $97.3 million in cash and cash equivalents.
For full-year 2012, Cepheid gave revenue guidance of between $333 million and $347 million in revenues, and lowered EPS guidance to between break-even and $.04 from a previous guidance of $.12 to $.17. Its non-GAAP EPS is expected to be in the range of $.38 and $.42, down from a previous range of $.50 to $.55.
"Looking forward, we continue to expect sales of our Xpert MTB/RIF test to grow to volumes in the millions in the next several years," Bishop said. "However, we do expect that certain features of the HBDC program could slow our progress on overall profitability goals in the immediate-term. Coupled with a number of macro factors, namely less favorable currency rates and potentially lengthening capital sales cycles as we approach elections here in the United States, we are taking a more cautious view for the remainder of the year."
Bishop said on the conference call that the recent US Supreme Court decision upholding the Patient Protection and Affordable Care Act could delay decisions by hospital administrators to make capital equipment purchases.
In early morning trading on Friday, Cepheid shares took a beating on the lowered EPS guidance and cautious outlook. The company's shares were down 20 percent to $35.06 on the Nasdaq.
Several analysts lowered their estimates on the company, but maintained positive opinions of Cepheid's longer-term business prospects.
Jon Wood of Jefferies, for example, lowered his full-year 2012 EPS forecast to $.03 from $.15 and 2013 estimated EPS to $.50 from $.55.
"[G]iven a bevy of significant pipeline catalysts approaching in 2H12 / 2013, which, when combined with CPHD's rapidly expanding installed base, should yield greater profit margin leverage over the coming periods," he said in a research note today.