Company Enters Into $100 Million Accelerated Stock Repurchase Agreement
SAN DIEGO, Oct. 26 /PRNewswire-FirstCall/ -- Biosite(R) Incorporated
(Nasdaq: BSTE) today reported financial results for the third quarter of
2006 and discussed preliminary guidance for the fourth quarter of 2006 and
preliminary revenue guidance for 2007. The Company also provided an
overview of several potential new products for which clinical trials are
planned in 2007. In addition, Biosite has entered into an accelerated stock
repurchase agreement to buy back $100 million of its common stock.
Key Financial Results
* Revenues for the third quarter of 2006 totaled $74.6 million, a
7 percent increase from $69.7 million in the comparable period of 2005.
Year over year, BNP sales increased 4 percent, while sales of Biosite's
other cardiovascular products increased 33 percent. Combined revenue
from physician office laboratories and international markets grew
22 percent year over year.
* For the third quarter of 2006, GAAP diluted earnings per share was
$0.49 and Non-GAAP diluted earnings per share was $0.74. By comparison,
in the third quarter of 2005 the Company's diluted earnings per share
was $0.68.
Non-GAAP results exclude the impact of FAS 123R, Share-Based Payment,
which relates to the expensing of non-cash stock-based compensation,
such as stock options. The Company adopted FAS 123R as of
January 1, 2006 on a modified prospective basis. See the tables
included at the end of this release for a reconciliation of Non-GAAP
financial results to GAAP financial results. See also, "About Non-GAAP
Financial Measures" below.
* GAAP operating income for the third quarter of 2006 was $14.3 million.
Non-GAAP operating income for the third quarter of 2006 was
$20.6 million. In the comparable period of 2005, operating income was
$19.6 million.
* Cash generated from operations was $66.8 million in the first nine
months of 2006 and $29.2 million in the third quarter of 2006, which
was a 39 percent increase over the third quarter of 2005.
Following are financial highlights pertaining to revenues and cash flow
for the three and nine months ended September 30, 2006 and 2005:
($ in 000's)
Three months ended Nine months ended
9/30/06 9/30/05 Change 9/30/06 9/30/05 Change
Triage(R) BNP
Test sales $45,531 $43,892 4% $148,773 $142,721 4%
Other
cardiovascular
product sales 14,279 10,753 33% 39,651 27,961 42%
Other product
sales 13,301 14,243 (7%) 39,216 40,600 (3%)
Total product
sales 73,111 68,888 6% 227,640 211,282 8%
Total revenues 74,642 69,668 7% 231,741 215,278 8%
Cash flow from
operations $29,219 $20,947 39% $66,809 $79,341 (16%)
Cash used for
stock
repurchases -- -- 30,000 --
9/30/06 12/31/05 Change
Cash and
marketable
securities
balance $159,078 $132,412 20%
"In the third quarter we experienced a slow down in BNP test
utilization among our U.S. hospital customers that was lower than our
expectations, but appears to be consistent with quarterly fluctuations we
have seen in prior years," said Kim Blickenstaff, Biosite's chairman and
chief executive officer. "While near term growth prospects in the BNP
testing market have declined due to high penetration levels, our latest
annual survey of more than 3,000 U.S. hospitals and other recent market
surveys lead us to believe we are maintaining our strong franchise. This
will be important to our future efforts to launch new products.
"In terms of our prospects for 2007, we expect our other cardiovascular
products, U.S. physician office and international markets to be key sources
of sales growth next year. However, currently these revenue bases are
relatively small so they may have only a limited impact on overall growth
in 2007. We continue to believe that the key to restoring our growth rates
lies with new products, and therefore we will focus on advancing the most
important opportunities in 2007."
Financial Guidance Update
Commenting on expectations for 2006, Biosite management decreased its
2006 total revenue target to $308 million from $316 million. The Company
has also updated its Non-GAAP diluted earnings per share target from $3.30
to $3.19. Biosite's GAAP diluted earnings per share target is $2.18. For
2007, Biosite management said its total revenue target is $326 million, a 6
percent increase over 2006.
"Biosite has reached an important stage in its evolution. Our core
business remains stable, and we are generating substantial levels of cash,
though growth has temporarily slowed while we work toward the
commercialization of new products," said Blickenstaff. "We believe that
returning value to stockholders through a stock repurchase program that is
accretive to earnings per share, along with funding key product development
initiatives that will fuel long term growth are good uses of our cash at
this time."
See the Biosite Incorporated Guidance Data table included at the end of
this release for additional details regarding the Company's financial
guidance data, a reconciliation of Non-GAAP financial guidance to GAAP
financial guidance and a description of certain factors that could affect
the Company's actual financial results. See also, "About Non-GAAP Financial
Measures" below.
Stock Repurchase Program
Biosite today announced that its board of directors approved an
increase in the Company's stock repurchase program, raising the amount of
stock that the Company is authorized to repurchase over the next 12 months
to $100 million from $50 million. In connection with this stock repurchase
program, the Company has entered into a privately negotiated transaction
with Goldman, Sachs & Co. to repurchase $100 million of its common stock.
Based on Biosite's closing stock price on October 25, 2006, the $100
million share repurchase authorization represents approximately 12 percent
of the Company's total market capitalization.
Biosite will immediately pay Goldman Sachs $100 million and will
receive a substantial majority of the shares to be delivered under the
agreement within approximately five weeks. The agreement includes collar
provisions that establish the minimum and maximum numbers of shares to be
repurchased. The specific number of shares to be repurchased is generally
based on the volume-weighted average share price of the Company's common
shares during the six- to nine-month term of the accelerated repurchase
agreement, subject to collar limits. All of the repurchased shares will be
retired.
The board of directors may authorize additional amounts for the stock
repurchase program depending on prevailing market conditions, available
cash resources and other factors. Future repurchases of stock may be made
in the open market, in privately negotiated transactions, or through the
use of derivative securities or arrangements.
"We are increasingly excited by the number of highly innovative
products in our research and development pipeline, which resulted from our
Biosite Discovery and licensing activities over the past several years,"
said Blickenstaff. "These represent significant advances in diagnostic
medicine for a variety of critical disease states and underscore the value
of our commitment to research.
"In assessing this potential for our business and pipeline, we believe
Biosite shares are substantially undervalued and represent a very
attractive investment at current price levels. Our announced share
repurchase program is a tangible demonstration of our confidence in our
future potential. We are pleased that our strong balance sheet and history
of free cash flow, which reflect the success of our business model, allow
us to make this commitment at this time."
Research and Development
In the area of research and development, Biosite reported that it has
continued to advance activities related to its top priority product
initiatives: the Triage Sepsis Panel, intended to aid in the diagnosis of
sepsis, a test to aid in the diagnosis of acute kidney injury, and next
generation products based on the Triage Cardio Profiler(R) Panel, a product
currently used to aid in the evaluation of chest pain patients. Clinical
trials intended to support regulatory submissions for these products are
expected to commence in 2007.
Also in the third quarter of 2006, Biosite continued development of a
protocol for a clinical trial aimed at supporting submission of a filing
seeking regulatory approval to market the Triage Stroke Panel in the United
States. Other activities included site selection activities and
preparations for a pilot study that is expected to take place in 2007.
"With more than 3,000 hospital customers, we have built an impressive
installed base of business in the United States and have a pipeline of
promising products," said Ken Buechler, Biosite's president and chief
scientific officer. "We believe our product pipeline has the potential to
deliver significant growth in the future, but to make it happen we must
focus our resources on a few key opportunities. We will maintain our
development activities on a variety of other programs, but will not raise
their priority until we execute on our top priority product initiatives."
About Biosite(R) Incorporated
Biosite Incorporated is a leading bio-medical company commercializing
proteomics discoveries for the advancement of medical diagnosis. The
Company's products contribute to improvements in medical care by aiding
physicians in the diagnosis of critical diseases and health conditions.
Biosite's Triage(R) rapid diagnostics are used in more than 50 percent of
U.S. hospitals and in more than 60 international markets. Information on
Biosite can be found at http://www.biosite.com.
Investor Conference Call
Biosite will host an investor conference call to discuss financial
results and research and development progress. The call will take place
today, October 26, 2006, at 1:30 p.m. PDT. A live webcast of the call can
be accessed via the Internet at http://www.biosite.com. The phone number for U.S.
callers is (866) 362-4831 and international callers is (617) 597-5347. The
conference call code for the live call is 70356502. The call will be
archived on the Biosite website for at least 21 days. The phone replay
number is (888) 286-8010. International callers, please dial (617)
801-6888. Please reference the conference call code 34186056.
About Non-GAAP Financial Measures
This press release contains financial results and guidance that
excludes the effects of FAS 123R, Share-Based Payment, which relates to
stock-based compensation, and is not in accordance with U.S. generally
accepted accounting principles (GAAP). The Company believes that this
Non-GAAP financial measure provides meaningful supplemental information to
both management and investors that is indicative of the Company's core
operating results and facilitates comparison of operating results across
reporting periods. The Company uses this Non-GAAP measure when evaluating
its financial results as well as for internal resource management, planning
and forecasting purposes. This Non-GAAP measure should not be viewed in
isolation from or as a substitute for the Company's financial results or
guidance in accordance with GAAP. Assumptions regarding the valuation of
stock-based compensation and the timing of events, such as the issuance of
new stock-based compensation awards and the realization of tax benefits,
may differ from actual results. For more information, please see the
guidance table included at the end of this release.
Forward Looking Statements
This press release contains forward-looking statements that involve
risks and uncertainties that could cause actual results to differ
materially from any future results, performance or achievements expressed
or implied by such statements. Examples of forward-looking statements are
financial targets and growth objectives and also include but are not
limited to statements that are preceded by, followed by, or that include
the words "will"; "believes"; "should"; "intend"; "anticipates"; "plans";
"expects"; "estimates"; or similar statements. Forward-looking statements
in this press release include statements regarding the Company's expected
financial performance for the 2006 and 2007 fiscal years, such as
anticipated revenues and earnings per share, the Company's ability to
maintain market share for BNP testing, the Company's plans to complete the
development of the Triage Sepsis Panel, an acute kidney injury test and
next generation Triage Cardio Profiler products, and commence related
clinical trials for these potential products and the Triage Stroke Panel
when expected, as well as the Company's ability to launch new products when
anticipated. Risks and uncertainties include risks associated with
Biosite's ability to commence and complete clinical trials as currently
planned; Biosite's ability to adequately respond to the U.S. Food & Drug
Administration's questions regarding the pending 510(k) filing for MPO;
Biosite's ability to complete the development of a satisfactory Protein C
test; Biosite's ability to obtain regulatory approvals and complete other
pre-market activities needed to launch new products as currently planned,
including the MPO test, a sepsis panel, a panel for acute kidney injury and
a Protein C test; Biosite's ability to effectively promote and market
acceptance of any new products; the continued growth of the BNP market
generally, including the physician office market; the Company's ability to
effectively expand sales activities outside the United States; and other
risks associated with changing market conditions and the effect of
competition from companies with greater capital and resources, including
the impact on market pricing for BNP testing generally. Other risks that
should be considered are detailed in the Company's most recent Annual
Report on Forms 10-K and 10-Q and other SEC filings. The Company disclaims,
however, any intent or obligation to update these forward-looking
statements. Copies of the Company's SEC filings are available from the
Investor Relations department or from the Company's website.
Biosite(R), Cardio Profiler(R), Triage(R) and New Dimensions in
Diagnosis(R) are registered trademarks of Biosite Incorporated.
Biosite Incorporated
Unaudited Statements of Income Data - GAAP
(in thousands, except per share data and margins)
Three months ended Nine months ended
September 30, September 30,
2006 2005 % Change 2006 2005 % Change
Total revenues:
Product sales $73,111 $68,888 6% $227,640 $211,282 8%
Contract
revenue 1,531 780 96% 4,101 3,996 3%
Total
revenues 74,642 69,668 7% 231,741 215,278 8%
Gross margin on
product sales 68% 70% 69% 70%
Operating
expenses:
Cost of
product
sales 23,694 20,900 13% 70,236 64,155 9%
Selling,
general
and
administrative 24,107 17,858 35% 72,909 54,930 33%
Research and
development 12,512 10,549 19% 39,354 31,509 25%
License and
patent disputes -- 788 (100%) 3,142 1,340 134%
Total operating
expenses 60,313 50,095 20% 185,641 151,934 22%
Operating income 14,329 19,573 (27%) 46,100 63,344 (27%)
Operating income
as % of total
revenue 19% 28% 20% 29%
Interest and
other income,
net 1,312 1,095 20% 3,554 1,669 113%
Income before
provision for
income taxes 15,641 20,668 (24%) 49,654 65,013 (24%)
Provision for
income taxes (6,600) (8,099) (19%) (20,134) (24,680) (18%)
Net income $9,041 $12,569 (28%) $29,520 $40,333 (27%)
Diluted earnings
per share $0.49 $0.68 (28%) $1.60 $2.19 (27%)
Diluted shares
used in
calculating
per share
amounts 18,282 18,596 18,395 18,394
Share-based compensation expense for stock options and the employee stock
purchase plan recorded in accordance with FAS 123R for continuing
operations:
Cost of
product
sales $867 $-- $1,870 $--
Selling,
general and
administrative 3,674 -- 11,523 --
Research and
development 1,702 -- 5,299 --
Subtotal $6,243 $-- $18,692 $--
Tax benefit (1,866) -- (5,283) --
Total $4,377 $-- $13,409 $--
Biosite Incorporated
Unaudited Statements of Income Data - Non-GAAP
(in thousands, except per share data and margins)
NOTE: Non-GAAP results exclude the impact of FAS 123R, which relates to
the expensing of non-cash stock-based compensation
Three months ended Nine months ended
September 30, September 30,
2006 2005 % Change 2006 2005 % Change
Total revenues:
Product sales $73,111 $68,888 6% $227,640 $211,282 8%
Contract
revenue 1,531 780 96% 4,101 3,996 3%
Total
revenues 74,642 69,668 7% 231,741 215,278 8%
Gross margin on
product sales 69% 70% 70% 70%
Operating
expenses:
Cost of
product
sales 22,827 20,900 9% 68,366 64,155 7%
Selling,
general
and
administrative 20,433 17,858 14% 61,386 54,930 12%
Research and
development 10,810 10,549 2% 34,055 31,509 8%
License and
patent disputes -- 788 (100%) 3,142 1,340 134%
Total operating
expenses 54,070 50,095 8% 166,949 151,934 10%
Operating income 20,572 19,573 5% 64,792 63,344 2%
Operating income
as % of total
revenue 28% 28% 28% 29%
Interest and
other income,
net 1,312 1,095 20% 3,554 1,669 113%
Income before
provision for
income taxes 21,884 20,668 6% 68,346 65,013 5%
Provision for
income taxes (8,466) (8,099) 5% (25,417) (24,680) 3%
Net income $13,418 $12,569 7% $42,929 $40,333 6%
Diluted earnings
per share $0.74 $0.68 9% $2.36 $2.19 8%
Diluted shares
used in
calculating
per share
amounts 18,017 18,596 18,154 18,394
Biosite Incorporated
Unaudited Reconciliation of Consolidated Statements of Income
Data - Non-GAAP to Consolidated Statements of Income Data - GAAP
(in thousands, except per share data and margins)
Three months ended Three months ended
September 30, 2006 September 30, 2005
Non-GAAP Adjmts GAAP Non-GAAP Adjmts GAAP
Total revenues:
Product
sales $73,111 $-- $73,111 $68,888 $-- $68,888
Contract
revenue 1,531 -- 1,531 780 -- 780
Total
revenues 74,642 -- 74,642 69,668 -- 69,668
Gross margin on
product sales 69% (1%) 68% 70% 0% 70%
Operating
expenses:
Cost of
product
sales 22,827 867[a] 23,694 20,900 -- 20,900
Selling,
general and
administrative 20,433 3,674[a] 24,107 17,858 -- 17,858
Research and
development 10,810 1,702[a] 12,512 10,549 -- 10,549
License and
patent disputes -- -- -- 788 -- 788
Total
operating
expenses 54,070 6,243 60,313 50,095 -- 50,095
Operating income 20,572 (6,243) 14,329 19,573 -- 19,573
Operating income
as % of total
revenue 28% (9%) 19% 28% 0% 28%
Interest and
other income,
net 1,312 -- 1,312 1,095 -- 1,095
Income before
provision for
income taxes 21,884 (6,243) 15,641 20,668 -- 20,668
Provision for
income taxes (8,466) 1,866[a] (6,600) (8,099) -- (8,099)
Net income $13,418 $(4,377) $9,041 $12,569 $-- $12,569
Diluted earnings
per share $0.74 $(0.25) $0.49 $0.68 $-- $0.68
Diluted shares
used in
calculating per
share amounts 18,017 265 18,282 18,596 -- 18,596
[a] - Adjustments to exclude from Non-GAAP financial measures the impact
of FAS 123R, which relates to the expensing of non-cash stock-based
compensation, beginning the first quarter of 2006.
Biosite Incorporated
Unaudited Reconciliation of Consolidated Statements of Income
Data - Non-GAAP to Consolidated Statements of Income Data - GAAP
(in thousands, except per share data and margins)
Nine months ended Nine months ended
September 30, 2006 September 30, 2005
Non-GAAP Adjmts GAAP Non-GAAP Adjmts GAAP
Total revenues:
Product
sales $227,640 $-- $227,640 $211,282 $-- $211,282
Contract
revenue 4,101 -- 4,101 3,996 -- 3,996
Total
revenues 231,741 -- 231,741 215,278 -- 215,278
Gross margin on
product sales 70% (1%) 69% 70% 0% 70%
Operating
expenses:
Cost of
product
sales 68,366 1,870[a] 70,236 64,155 -- 64,155
Selling,
general and
administrative 61,386 11,523[a] 72,909 54,930 -- 54,930
Research and
development 34,055 5,299[a] 39,354 31,509 -- 31,509
License and
patent disputes 3,142 -- 3,142 1,340 -- 1,340
Total
operating
expenses 166,949 18,692 185,641 151,934 -- 151,934
Operating income 64,792 (18,692) 46,100 63,344 -- 63,344
Operating income
as % of total
revenue 28% (8%) 20% 29% 0% 29%
Interest and
other income,
net 3,554 -- 3,554 1,669 -- 1,669
Income before
provision for
income taxes 68,346 (18,692) 49,654 65,013 -- 65,013
Provision for
income taxes (25,417) 5,283[a] (20,134) (24,680) -- (24,680)
Net income $42,929 $(13,409) $29,520 $40,333 $-- $40,333
Diluted earnings
per share $2.36 $(0.76) $1.60 $2.19 $-- $2.19
Diluted shares
used in
calculating per
share amounts 18,154 241 18,395 18,394 -- 18,394
[a] - Adjustments to exclude from Non-GAAP financial measures the impact
of FAS 123R, which relates to the expensing of non-cash stock-based
compensation, beginning the first quarter of 2006.
Biosite Incorporated
Selected Product Data
(in thousands, except margins and %'s)
Sales by
Product:
Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006
Triage(R)
Drugs of
Abuse
Products $10,283 $11,341 $12,408 $11,018 $11,547 $10,464 $11,444
Triage
Cardiac
Panel 5,985 6,439 7,142 6,629 6,616 7,188 6,902
Triage
BNP Tests 49,771 49,058 43,892 46,893 52,564 50,678 45,531
Triage
Profiler
Products 1,946 2,226 2,852 3,465 4,036 4,598 5,735
Triage
D-Dimer
Test 131 481 757 1,489 1,417 1,450 1,616
Triage
Parasite
Panel 255 283 355 269 286 337 377
Triage C.
difficile
Panel 1,349 1,377 942 988 1,029 1,088 1,022
Triage
Meters 776 693 538 724 625 539 458
Triage
Stroke
Panel (EU) -- -- 2 15 37 30 26
Total
Product
Sales $70,496 $71,898 $68,888 $71,490 $78,157 $76,372 $73,111
Inter-
national
Sales:
Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006
Inter-
national
Sales as
% of
Product
Sales 13% 12% 12% 13% 14% 15% 14%
BNP
Inter-
national
Sales as
% of BNP
Total
Sales 10% 9% 9% 10% 11% 11% 10%
Margin by
Product
Type
(a), (b):
Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006
Triage
Drugs of
Abuse
Product
Line 82% 78% 82% 81% 79% 77% 73%
Triage
Cardio-
vascular
Product
Line
(incl. BNP) 72% 69% 69% 70% 71% 70% 68%
(a) These margins do not include all products. The Triage Meters, Triage
Micro Product Line and Triage Stroke Panel are not included.
(b) Includes the impact of FAS 123R, which relates to the expensing of
non-cash stock-based compensation, beginning the first quarter of
2006.
Biosite Incorporated
Unaudited Balance Sheet Data - GAAP
(in thousands)
September 30, December 31,
2006 2005
Unaudited
Assets
Cash, cash equivalents & marketable
securities $159,078 $132,412
Accounts receivable 30,997 30,303
Inventories 31,871 32,627
Other current assets 8,908 9,422
Total current assets 230,854 204,764
Property, equipment and leasehold
improvements, net 158,218 151,018
Patents and license rights, net 9,828 4,764
Other assets 12,958 7,380
Total assets $411,858 $367,926
Liabilities and Stockholders' Equity
Current liabilities $50,902 $39,104
Long-term liabilities 9,152 13,457
Stockholders' equity 351,804 315,365
Total liabilities and stockholders'
equity $411,858 $367,926
Biosite Incorporated
Guidance Data
(in thousands, except per share data, margins and %'s)
The financial guidance provided below is an estimate based on information
available as of October 26, 2006. The Company's future performance and
financial results are subject to risks and uncertainties, and actual
results could differ materially from the guidance set forth below. Some
of the factors that could affect the Company's actual financial results
are stated above in the section entitled "Forward Looking Statements" and
in the Company's filings with the SEC. The Company assumes no obligation
to update the guidance set forth below.
Three months ended December 31, 2006
Non-GAAP Estimate Adjustments (a) GAAP Estimate
Triage(R) BNP product
sales $48,000 -- $48,000
Total product sales $75,500 -- $75,500
Total revenues $76,500 -- $76,500
International product
sales % of Total
product sales 16.0% -- 16.0%
Gross margin on
product sales 69.5% (1.0%)(b) 68.5%
Operating expenses
(excl. Cost of sales)
% of Revenue 40.0% 7.0%(b) 47.0%
Operating income as
% of total revenues 29.5% (8.0%)(b) 21.5%
Diluted earnings per share $0.83 $(0.25)(b) $0.58
Income tax rate 38.5% 3.0%(b) 41.5%
Cash flow from operations $15,000 -- $15,000
Year ended December 31, 2006
Non-GAAP Estimate Adjustments (a) GAAP Estimate
Triage BNP product
sales $196,500 -- $196,500
Total product sales $303,000 -- $303,000
Total revenues $308,000 -- $308,000
International sales
% of total sales 15.0% -- 15.0%
Gross margin on
product sales 70.0% (1.0%)(b) 69.0%
Operating expenses
(excl. Cost of sales)
% of revenues 42.0% 7.0%(b) 49.0%
Operating income as
% of total revenues 28.5% (8.0%)(b) 20.5%
Diluted earnings per share $3.19 $(1.01)(b) $2.18
Income tax rate 37.5% 3.5%(b) 41.0%
Cash flow from operations $80,000 -- $80,000
Year ended December 31, 2007
Non-GAAP Estimate Adjustments (a) GAAP Estimate
Total revenues $326,000 -- $326,000
(a) These adjustments reconcile the Company's non-GAAP financial guidance
to its GAAP financial guidance for the next quarter and full year
2006 and the full year 2007. See the section entitled "About Non-GAAP
Financial Measures" above.
(b) Reflects the estimated non-cash compensation expense attributable to
stock-based compensation awards including stock options and employee
stock purchase plan shares and their estimated impact on income taxes
and diluted shares used in calculating EPS. This amount reflects the
total estimated expense from the application of FAS 123R, which the
Company adopted in the first quarter of 2006.
SOURCE Biosite Incorporated
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Related links:
http://www.biosite.com
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CONTACT:
Nadine Padilla, VP, Corporate & Investor
Relations of Biosite Incorporated, +1-858-805-2820,
npadilla@biosite.com
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