8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 7, 2007

CEPHEID

(Exact name of Registrant as specified in its charter)

California
(State or other jurisdiction of
incorporation) 000-0030755
(Commission file number) 77-0441625
(I.R.S. Employer Identification
No.)

904 Caribbean Drive, Sunnyvale, CA            94089

(Address of principal executive offices)            (Zip Code)

(408) 541-4191

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report.)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	Item 2.02      Results of Operations and Financial Condition.
	Item 9.01      Financial Statements and Exhibits.
SIGNATURES
Exhibit Index
EXHIBIT 99.01

Item 2.02      Results of Operations and Financial Condition.

     The information in this report and the exhibit attached hereto are being furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall they be deemed incorporated by reference in any filing with the Securities and Exchange Commission under the Securities Act of 1934 or the Securities Act of 1933, except as shall be expressly set forth by specific reference to such filing.

     On August 7, 2007, Cepheid issued a press release announcing its financial results for the quarter ended June 30, 2007 and certain other information. The press release is attached to this report as Exhibit 99.01.

Item 9.01      Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Exhibit Title
99.01	Press released dated August 7, 2007.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Cepheid
Date: August 7, 2007	By:	/s/ John L. Bishop
		Name:	John L. Bishop
		Title:	Chief Executive Officer

Exhibit Index

Exhibit No.	Exhibit Title
99.01	Press release dated August 7, 2007.

EX-99.01

Exhibit 99.1

Cepheid Reports Second Quarter 2007 Results

SUNNYVALE, CALIF. — August 7, 2007—Cepheid (NASDAQ: CPHD) today announced financial results for the second quarter ended June 30, 2007. Key results for the second quarter 2007 include:

• Total revenues of $27.2 million, a 37 percent increase from $19.8 million in the second quarter of 2006.

• Clinical product sales of $10.6 million, a 165 percent increase from $4.0 million in the second quarter of 2006.

• Total product sales of $23.6 million, a 25 percent increase from $18.9 million in the second quarter of 2006.

• Gross margins on product sales of 42 percent compared to 39 percent in the second quarter of 2006 (both excluding stock compensation expense and the amortization of acquired intangibles).

• Net loss, excluding stock compensation expense and the amortization of acquired intangibles of $2.7 million, or $0.05 per share, compared to $5.1 million, or $0.09 per share, in the second quarter 2006.

Total revenues of $27.2 million for the second quarter of 2007 included $23.6 million of total product sales and $3.6 million from contracts, grants and research revenue. Other revenue is driven largely by reimbursement for R&D collaborations, including partnerships to develop assays for Tuberculosis with FIND, Avian Flu and flu A/B with the Centers for Disease Control and Prevention (CDC), and hemostasis with Instrumentation Laboratories.

Total product sales for the second quarter ended June 30, 2007 increased 25 percent to $23.6 million from $18.9 million for the second quarter 2006. The increase in product sales for the second quarter 2007 reflects a 165 percent increase in clinical product sales and a 43 percent increase in industrial sales, partially offset by a 26 percent decrease in biothreat sales, compared to the second quarter of 2006.

Sales by Market (millions)

	Q2 2007		Q2 2007		Q2 2006		Q2 2006
	Total Sales		Percent of Total Sales		Total Sales		Percent of Total Sales
Clinical	$	10.6		45	$	4.0		21
Industrial	$	4.0		17	$	2.8		15
Biothreat	$	9.0		38	$	12.1		64

- More-

Q2 2007 Earnings Announcement
August 7, 2007
Page 2 of 8

The increase in clinical sales was driven by market adoption of both the GeneXpert^® System and the Company’s menu of available tests, specifically the Xpert^™ MRSA product. Nationwide Hospital Acquired Infection (HAI) initiatives have contributed to the market traction the Company is experiencing, the most publicized of which is the Veterans Administration (VA) initiative. Cepheid continues to experience success within the VA hospital group. Currently, approximately 40 percent of the Company’s Xpert MRSA business is with VA hospitals, with the remaining amounts coming from other hospitals.

The increase in industrial sales resulted from increased government research funding and the increased presence that the addition of a new distributor offered in the U.S. industrial market. The decrease in biothreat sales resulted from a planned decrease in the purchase price of Anthrax cartridges to the United States Postal Service (USPS), in conjunction with an anticipated five-year purchase agreement currently in negotiation, and a shift in the quarterly purchase volume.

Gross margin on product sales was 41 percent for the second quarter of 2007 compared to 38 percent for the second quarter of 2006. Gross margin on product sales, without stock compensation expense and the amortization of acquired intangibles, was 42 percent for the second quarter of 2007 compared to 39 percent for the second quarter of 2006. The increase in gross margin was largely due to a higher percentage of sales realized in the clinical market worldwide.

Net loss for the second quarter of 2007 was approximately $5.2 million, or $0.10 per share, as compared to a net loss of approximately $7.0 million, or $0.13 per share, for the second quarter 2006. Net loss for the second quarter of 2007, adjusted for stock compensation expense and the amortization of acquired intangibles, was $2.7 million, or $0.05 per share, for the second quarter of 2007 as compared to $5.1 million, or $0.09 per share, for the second quarter of 2006. See the attached table for a reconciliation of GAAP and Non-GAAP amounts.

“The increase in clinical product sales during the second quarter reflects growing market traction for on-demand molecular diagnostics, particularly with the adoption of the Xpert MRSA test,” said John Bishop, Cepheid’s Chief Executive Officer. “Our expanding menu of tests, combined with the modular GeneXpert System that is adaptable for high- and low-volume needs, is broadening the customer base that can benefit from molecular diagnostics.”

Second Quarter 2007 and Recent Business Highlights

Following the launch of the Xpert MRSA test in the second quarter 2007, the Company moved to expand its U.S. sales and field service support organization, bringing the total to 28 sales and field service support personnel. Additionally, in order to increase its systems manufacturing capacity, the Company increased its facility square footage in Sunnyvale through the lease of a third building.

The Company signed a non-exclusive agreement with VWR International during the quarter to further support the U.S. industrial market. Under the terms of the agreement, VWR International will distribute the SmartCycler^® System, SmartMix^® HM master mix, and associated accessories to industrial customers in the U.S.

Q2 2007 Earnings Announcement
August 7, 2007
Page 3 of 8

In July, Cepheid introduced a number of new products at the American Association for Clinical Chemistry (AACC) Annual Meeting. These included the announcement of the GeneXpert Infinity Series, which includes 48 and 72 module systems with 24/7 robotic cartridge handling that will automatically load and unload test cartridges. The Infinity high-volume models are expected to be available in mid-2009.

Cepheid also announced that the entire GeneXpert family of systems will incorporate six color multiplex capabilities beginning in January 2008. Six color multiplexing will enable the ability to simultaneously test for up to 60 unrelated targets in a single test cartridge. Beginning in January 2008, all GeneXpert Systems will also include new Laboratory Information System (LIS) software for data output to central lab systems. The LIS software will also be available for purchase separately for application to existing GeneXpert four color systems.

The Company also announced the U.S. availability of a new line of research use only (RUO) products for Cytomegalovirus (CMV), Epstein-Barr Virus (EBV), and Varicella Zoster Virus (VZV).

2007 Outlook
Based upon its success in the clinical market, the Company is raising its forward-looking financial guidance for product sales in 2007.

• Product sales are expected to be in the range of $105 million to $108 million.

• Other revenues are expected to remain in the range of $12 million to $15 million.

• On a consolidated basis, the Company expects 2007 total revenues to be in the range of $117 million to $123 million.

• The GAAP net loss for 2007, including the effect of stock compensation expense and the amortization of acquired intangibles, is expected to be in the range of $19 million to $22 million, or $0.34 to $0.40 per share based on expected weighted average shares outstanding of 55.6 million.

• In view of incremental increases in Sales and Marketing expenditures, the net loss, not including the effect of stock compensation expense and the amortization of acquired intangibles for 2007, is expected to remain in the range of $8 million to $11 million or $0.14 to $0.20 per share based on the same number of weighted average shares outstanding.

• The Company expects its quarterly operating results to continue to show a trend towards profitability in the second half of 2007 and currently expects to be profitable for the entire year of 2008, excluding stock compensation expense and the amortization of acquired intangibles.

Conference Call Information
Cepheid’s CEO, John Bishop, and Senior V.P. and CFO, John Sluis will host the conference call today at 4:30 pm Eastern Time to discuss Cepheid’s financial results and business highlights. Interested participants and investors may access the teleconference call by dialing 800-901-5218 (U.S./Canada) or 617-786-4511 (international), participant code 58587089. A telephonic replay will be available for seven days beginning at 6:30 p.m. Eastern Time today. Access numbers for this replay are 888-286-8010 (U.S./Canada) and 617-801-6888 (international); participant code 37880201.

The webcast of the call can be accessed on the Investor section of Cepheid’s Web site at www.cepheid.com. Web participants are encouraged to go to the Web site at least 15 minutes prior to the start of the call to register, download, and install any necessary audio software. After the live webcast, a replay will remain available in the Investors section of Cepheid’s Web site for 90 days.

Q2 2007 Earnings Announcement
August 7, 2007
Page 4 of 8

About Cepheid
Cepheid (NASDAQ: CPHD), based in Sunnyvale, Calif., is an on-demand molecular diagnostics company that develops, manufactures, and markets fully-integrated systems for genetic analysis in the clinical, industrial and biothreat markets. The Company’s systems enable rapid, sophisticated genetic testing for organisms and genetic-based diseases by automating otherwise complex manual laboratory procedures. Cepheid’s easy-to-use systems integrate a number of complicated and time-intensive steps, including sample preparation, DNA amplification and detection, which enable the analysis of complex biological samples in its proprietary test cartridges. Through its strong molecular biology capabilities, the Company is focusing on those applications where rapid molecular testing is particularly important, such as identifying infectious disease and cancer in the clinical market; food, agricultural, and environmental testing in the industrial market; and identifying bio-terrorism agents in the biothreat market. See www.cepheid.com for more information.

This press release contains forward-looking statements that are not purely historical regarding Cepheid’s or its management’s intentions, beliefs, expectations and strategies for the future, including those relating to potential growth in clinical products sales, the status of government funding, timing of future product releases, future revenues and demand for certain test products, future net losses and profitability, other future operating results, the status of the USPS BDS program and collaboration and product development efforts. Because such statements deal with future events, they are subject to various risks and uncertainties, and actual results could differ materially from the Company’s current expectations. Factors that could cause actual results to differ materially include risks and uncertainties such as those relating to: our success in increasing direct sales, and the effectiveness of new sales personnel; the performance and market acceptance of products; sufficient customer demand; our ability to complete clinical trials successfully in a timely manner for products to be marketed in clinical markets; uncertainties related to the FDA regulatory and European regulatory processes; the scope of actual USPS funding in the future; the rate of environmental testing using the BDS conducted by the USPS, which will affect the amount of consumable products sold; the fact that future levels of government funding are inherently uncertain; unforeseen development and manufacturing problems; the need for additional licenses for new tests and other products and the terms of such licenses; lengthy sales cycles in certain markets; the Company’s reliance on distributors in some regions to market, sell and support our products; the occurrence of unforeseen expenditures, acquisitions or other transactions; the impact of acquisitions; unforeseen issues relating to acquisitions; the impact of competitive products and pricing; our ability to manage geographically-dispersed operations; and underlying market conditions worldwide. Readers should also refer to the section entitled “Risk Factors” in Cepheid’s Annual Report on Form 10-K for 2006 and its other reports filed with the Securities and Exchange Commission.

All forward-looking statements and reasons why results might differ included in this release are made as of the date of this press release, based on information currently available to Cepheid, and Cepheid assumes no obligation to update any such forward-looking statement or reasons why results might differ.

# # #

(FINANCIAL STATEMENTS FOLLOW)

Q2 2007 Earnings Announcement
August 7, 2007
Page 5 of 8

CEPHEID

CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS
(in thousands, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2007			2006			2007			2006
Revenues:
Instrument sales	$	9,394		$	4,030		$	16,231		$	8,568
Reagent and disposable sales		14,190			14,852			29,420			29,586
Total product sales		23,584			18,882			45,651			38,154
Contract revenues		1,894			677			3,784			1,288
Grant and government sponsored research revenue		1,695			288			3,282			566
Total revenues		27,173			19,847			52,717			40,008
Costs and operating expenses:
Cost of product sales		13,879			11,683			27,756			23,076
Collaboration profit sharing		2,731			3,843			6,228			7,654
Research and development		7,439			5,807			14,361			11,636
Selling, general and administrative		9,105			6,921			17,533			13,067
Total costs and operating expenses		33,154			28,254			65,878			55,433
Loss from operations		(5,981	)		(8,407	)		(13,161	)		(15,425	)
Other income, net		740			1,365			1,767			1,711
Net loss	$	(5,241	)	$	(7,042	)	$	(11,394	)	$	(13,714	)
Basic and diluted net loss per share	$	(0.10	)	$	(0.13	)	$	(0.21	)	$	(0.28	)
Shares used in computing basic and diluted net loss per share		55,149			54,518			55,081			49,758

Q2 2007 Earnings Announcement
August 7, 2007
Page 6 of 8

CEPHEID

CONDENSED CONSOLIDATED UNAUDITED BALANCE SHEETS
(in thousands)

				December 31,
	June 30, 2007			2006
ASSETS
Current assets:
Cash and cash equivalents	$	7,176		$	17,186
Marketable securities		38,250			77,750
Accounts receivable, net		23,592			15,246
Inventory		17,602			10,240
Prepaid expenses and other current assets		2,473			1,390
Total current assets		89,093			121,812
Property and equipment, net		15,831			14,097
Restricted cash		661			661
Other non-current assets		331			666
Intangible assets and goodwill		57,264			30,425
Total assets	$	163,180		$	167,661
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	11,096		$	8,977
Accrued compensation		4,999			3,319
Accrued royalties		4,122			3,516
Accrued collaboration profit sharing		1,762			3,497
Accrued other liabilities		4,310			4,107
Accrued expense for patent-related matter		—			3,350
Current portion of deferred revenue		5,486			3,913
Current portion of license fees payable		—			447
Current portion of equipment financing		59			313
Current portion of note payable		4			11
Total current liabilities		31,838			31,450
Long-term portion of deferred revenue		3,244			2,663
Long-term portion of equipment financing		—			3
Long-term portion of note payable		2			41
Deferred rent		806			798
Total liabilities		35,890			34,955
Shareholders’ equity:
Common stock		252,655			251,132
Additional paid-in capital		19,583			15,065
Accumulated other comprehensive loss		(68	)		(5	)
Accumulated deficit		(144,880	)		(133,486	)
Total shareholders’ equity		127,290			132,706
Total liabilities and shareholders’ equity	$	163,180		$	167,661

Q2 2007 Earnings Announcement
August 7, 2007
Page 7of 8

	Three months ended						Six months ended
Table A - GAAP vs. Non GAAP Measures	June 30,						June 30,
	2007			2006			2007			2006
Total Product Sales	$	23,584		$	18,882		$	45,651		$	38,154
Total Revenues	$	27,173		$	19,847		$	52,717		$	40,008
Cost of product sales	$	13,879		$	11,683		$	27,756		$	23,076
Stock compensation expense		(36	)		(204	)		(302	)		(378	)
Amortization of acquired inventory step-up in basis		(106	)		—			(170	)		—
Amortization of purchased intangible assets		(164	)		—			(367	)		—
Non-GAAP measure of cost of goods sold	$	13,573		$	11,479		$	26,917		$	22,698
Gross Margin on Product Sales per GAAP		41	%		38	%		39	%		40	%
Gross Margin on ProductSales per Non-GAAP		42	%		39	%		41	%		41	%
Gross Margin on Total Revenues per GAAP		49	%		41	%		47	%		42	%
Gross Margin on Total Revenues per Non-GAAP		50	%		42	%		49	%		43	%
Research and development	$	7,439		$	5,807		$	14,361		$	11,636
Stock compensation expense		(1,047	)		(725	)		(1,791	)		(1,318	)
Non-GAAP measure of cost of research and development	$	6,392		$	5,082		$	12,570		$	10,318
Non-GAAP R&D measure as percent of Total Revenues		24	%		26	%		24	%		26	%
Selling, general and administrative	$	9,105		$	6,921		$	17,533		$	13,067
Stock compensation expense		(1,215	)		(985	)		(2,206	)		(1,941	)
Non-GAAP measure of cost of selling, general and administrative	$	7,890		$	5,936		$	15,327		$	11,126
Non-GAAP SG&A measure as percent of Total Revenues		29	%		30	%		29	%		28	%
Net Loss	$	(5,241	)	$	(7,042	)	$	(11,394	)	$	(13,714	)
Stock compensation expense		2,298			1,914			4,299			3,637
Amortization of acquired inventory step-up in basis		106			—			170			—
Amortization of purchased intangible assets		164			—			367			—
Non-GAAP measure of Net Loss	$	(2,673	)	$	(5,128	)	$	(6,558	)	$	(10,077	)
Basic and diluted net loss per share	$	(0.095	)	$	(0.129	)	$	(0.207	)	$	(0.276	)
Stock compensation expense	$	0.042		$	0.035		$	0.078		$	0.073
Amortization of acquired inventory step-up in basis	$	0.002		$	—		$	0.003		$	—
Amortization of purchased intangible assets	$	0.003		$	—		$	0.007		$	—
Non-GAAP measure of Net Loss	$	(0.048	)	$	(0.094	)	$	(0.119	)	$	(0.203	)
Shares used in computing basic and diluted net loss per share		55,149			54,518			55,081			49,758

Q2 2007 Earnings Announcement
August 7, 2007
Page 8 of 8

Table B - Instrument and Reagent Sales Mix	Three months ended						Six months ended
	June 30,						June 30,
	2007			2006			2007			2006
Product Sales
Instrument sales	$	9,394		$	4,030		$	16,231		$	8,568
Reagent and disposable sales		14,190			14,852			29,420			29,586
Total product sales	$	23,584		$	18,882		$	45,651		$	38,154
Percent of Product Sales
Instruments		40	%		21	%		36	%		22	%
Reagents and disposables		60	%		79	%		64	%		78	%
Total product sales		100	%		100	%		100	%		100	%

Table C - Geographic Sales Mix	Three months ended						Six months ended
	June 30,						June 30,
	2007			2006			2007			2006
Percent of Instrument and service sales
US & ROW		73	%		72	%		67	%		73	%
Europe		27	%		28	%		33	%		27	%
Total Instrument and Service Sales		100	%		100	%		100	%		100	%
Percent of reagent and disposable sales (including USPS)
US & ROW		82	%		98	%		87	%		98	%
Europe		18	%		2	%		13	%		2	%
Total Reagent and Disposable Sales		100	%		100	%		100	%		100	%
Percent of Reagent and Disposable Sales (without USPS)
US & ROW		51	%		89	%		59	%		90	%
Europe		49	%		11	%		41	%		10	%
Total Reagent and Disposable Sales		100	%		100	%		100	%		100	%
Percent of Total Product Sales (including USPS)
US & ROW		78	%		92	%		80	%		93	%
Europe		22	%		8	%		20	%		7	%
Total Product Sales (including USPS)		100	%		100	%		100	%		100	%
Percent of Total Product Sales (without USPS)
US & ROW		64	%		79	%		63	%		80	%
Europe		36	%		21	%		37	%		20	%
Total Reagent and Disposable Sales		100	%		100	%		100	%		100	%