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Cepheid's Q1 Revenues Increase 19 Percent

NEW YORK (GenomeWeb News) – Cepheid reported after the close of the market Thursday that its first-quarter revenues rose 19 percent year over year as reagent and disposable sales increased 22 percent.

The Sunnyvale, Calif.-based firm said that total revenues came in at $91.9 million, up from $77.3 million a year ago, and topping the average analyst estimate of $89.1 million.

Reagent and disposable sales shot up to $75.9 million from $62.1 million a year ago, while system and other sales increased 5 percent to $16.0 million from $15.2 million a year ago.

Cepheid said that it installed a total of 125 GeneXpert systems in its commercial clinical business in the first quarter. As part of its High Burden Developing Country program, Cepheid also placed 157 GeneXpert systems in the quarter. As of the end of the quarter, a cumulative total of 4,117 GeneXpert systems had been placed worldwide, including the HBDC systems.

"Of note, in a competitive win, 12 of these North American systems were part of a single deal with a multi-hospital [network] primarily to standardize their [hospital-acquired infections] testing," Cepheid Chairman and CEO John Bishop said on a conference call following the release of the results. "Given the scale of this relationship, we placed these systems as part of a reagent rental contract, so there is no reported revenue this quarter for 12 of the GeneXperts included in our system count."

According to Bishop, the largest dollar contributors to year-over-year growth were the firm's HAI portfolio, Xpert Flu, and Xpert CT/NG.

He said that Cepheid began shipping its CT/NG assay, a test that rapidly detects and differentiates chlamydia and Neisseria gonorrhoeae which was cleared by the US Food and Drug Administration at the end of 2012, late in the first quarter. By the end of the quarter, around 10 percent of Cepheid's North American installed base, or more than 130 customers, were already using or validating the Xpert CT/NG, said Bishop.

"Excluding MRSA, this is the fastest uptake of a new product that we've seen, far exceeding our early success with Xpert C. diff in early 2009," he added.

Cepheid had net income of $313,000, or break-even on an EPS basis, in the first quarter, compared to a net loss of $5.5 million, or $.08 per share, a year ago. On a non-GAAP basis, EPS was $.11. On average, analysts had expected a net loss of $.02 per share.

The firm's R&D expenses in the quarter were cut to $17.7 million, down 20 percent from $22.1 million. Its SG&A costs increased 13 percent to $28.9 million from $25.6 million.

"This was a solid start to 2013 for Cepheid with strong performance in our commercial clinical reagents driven both by broader test menu utilization by our installed base of more than 3,000 commercial GeneXpert system customers globally and by new customer adoption," Bishop said in a statement.

He noted on the call that Cepheid acquired its Italian distributor during the first quarter. "We are enthusiastic about the opportunity in Italy since it is the third largest IVD market in the region, with particular interest in CT/NG, C. diff, and TB," said Bishop.

He also noted that the Xpert MTB/RIF test was approved in India during the quarter, and "we continue to pursue a number of other tests relevant in the Asia Pacific area more broadly."

In addition, the firm is establishing offices in Singapore, India, and Brazil. "We're confident that our international expansion will be a meaningful contributor to Cepheid's growth in the years ahead," said Bishop.

Cepheid ended the quarter with $102.0 million in cash and cash equivalents.

For full-year 2013 the firm gave revenue guidance of between $375 million and $385 million, with net income between a loss of $.05 per share and a profit of $.01 per share. On a non-GAAP basis, EPS is expected to be between $.41 and $.46.

The firm's non-GAAP income for the year is expected to exclude about $29 million related to stock compensation expenses and $4 million related to the amortization of acquired intangibles, Cepheid said.

In Friday morning trade on the Nasdaq, shares of Cepheid climbed 6 percent to $38.29.

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