0001193125-14-028458.txt : 20140130 0001193125-14-028458.hdr.sgml : 20140130 20140130161156 ACCESSION NUMBER: 0001193125-14-028458 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20140130 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20140130 DATE AS OF CHANGE: 20140130 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CEPHEID CENTRAL INDEX KEY: 0001037760 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY ANALYTICAL INSTRUMENTS [3826] IRS NUMBER: 770441625 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-30755 FILM NUMBER: 14560907 BUSINESS ADDRESS: STREET 1: 904 CARIBBEAN DRIVE CITY: SUNNYVALE STATE: CA ZIP: 94089 BUSINESS PHONE: 4085414191 MAIL ADDRESS: STREET 1: 904 CARIBBEAN DRIVE CITY: SUNNYVALE STATE: CA ZIP: 94089 8-K 1 d666747d8k.htm 8-K 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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) January 30, 2014

 

 

CEPHEID

(Exact name of Registrant as specified in its charter)

 

 

 

California   000-30755   77-0441625

(State or other jurisdiction

of incorporation)

  

(Commission

file number)

  

(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 obligations of the registrant under any of the following provisions (see General Instruction A.2 below):

 

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

 

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

 

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

 

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

 

 

 

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, as amended (the “Securities Act”), nor shall they be deemed incorporated by reference in any filing with the Securities and Exchange Commission under the Securities Act of 1934, as amended, or the Securities Act, except as shall be expressly set forth by specific reference to such filing.

On January 30, 2014, Cepheid issued a press release announcing its financial results for the fourth quarter and fiscal year ended December 31, 2013 and certain other information. The press release is attached to this report as Exhibit 99.01.

In the press release and during a conference call and webcast regarding Cepheid’s quarterly results, Cepheid supplemented its reported GAAP financial information with non-GAAP measures that do not include employee stock-based compensation expense, amortization of purchased intangible assets, a restructuring in the quarter ended December 31, 2013, a tax benefit related to an intercompany intellectual property transaction in the quarter ended March 31, 2012, and litigation settlement expenses in the quarter ended September 30, 2012. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with GAAP. Cepheid’s management uses the non-GAAP information internally to evaluate its ongoing business, continuing operational performance and cash requirements, and believes these non-GAAP measures are useful to investors as they provide a basis for evaluating Cepheid’s cash requirements and additional insight into the underlying operating results and Cepheid’s ongoing performance in the ordinary course of its operations.

These non-GAAP measures may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Cepheid believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with its results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Cepheid’s results of operations in conjunction with the corresponding GAAP measures.

As described above, Cepheid excludes the following items from one or more of its non-GAAP measures when applicable:

Employee Stock-based Compensation Expense. These expenses consist primarily of expenses for employee stock options and employee restricted stock under ASC 718 (formerly SFAS 123(R)). Cepheid excludes employee stock-based compensation expenses from its non-GAAP measures primarily because they are non-cash expenses that Cepheid does not believe are reflective of ongoing operating results in the period incurred. Further, as Cepheid applies ASC 718, it believes that it is useful to investors to understand the impact of the application of ASC 718 on its results of operations.

Amortization of Purchased Intangible Assets. Cepheid incurs amortization of purchased intangible assets in connection with acquisitions. Cepheid excludes these items because these expenses are not reflective of ongoing operating results in the period incurred. These amounts arise from Cepheid’s prior acquisitions and have no direct correlation to the operation of Cepheid’s business.

Restructuring. Cepheid excluded a restructuring charge and impairment of certain assets totaling $4.4 million in the fourth quarter of 2013. In connection with Cepheid’s preparation of its annual operating plan, whereby Cepheid routinely assesses its investments to align its operations with its highest

 

2

potential opportunities, Cepheid terminated a small international research team, eliminated a non-GeneXpert clinical product line acquired in a 2007 acquisition, including the impairment of an intangible asset of approximately $1.1 million and the write-down of approximately $0.2 million of inventory, and wrote-off certain manufacturing capital assets totaling approximately $1.3 million that management concluded will not be utilized and therefore have no future realizable value. Cepheid excluded this item as it believes it was non-recurring in nature, and does not have a direct impact on the operation of Cepheid’s core business.

Tax Benefit Related to Intercompany Intellectual Property (IP) Transaction. Cepheid excluded a tax benefit related to an intercompany IP transaction from its results for non-GAAP net loss for the first quarter ended March 31, 2012. Cepheid excluded this item as it believes it is non-recurring in nature, and does not have a direct impact on the operation of Cepheid’s core business.

Litigation Settlement Expenses. These expenses consisted primarily of expenses related to the settlement of Cepheid’s litigation with Abaxis. This allocation was determined in accordance with ASC 450, Accounting for Contingencies (formerly SFAS No. 5), and ASC 605-25 (formerly EITF 00-21) using the concepts of fair value based on the past and estimated future revenue streams related to the products covered by the patents previously under dispute. Specifically, the amount recorded in the consolidated income statement as Litigation settlement in the three months ended September 30, 2012 represented the fair value of the royalty paid on past revenue streams and the residual amount after allocating value to the future revenue streams. Cepheid excluded this item as it believes it was non-recurring in nature, and does not have a direct impact on the operation of Cepheid’s core business.

 

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit No.

   

Exhibit Title

99.01    Press release dated January 30, 2014

 

3

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: January 30, 2014     By:  

/s/ Andrew D. Miller

      Name:   Andrew D. Miller
      Title:   Executive Vice President, Chief Financial Officer

 

4

Exhibit List

 

Exhibit No.

   

Exhibit Title

99.01    Press release dated January 30, 2014

 

5

EX-99.01 2 d666747dex9901.htm EX-99.01 EX-99.01

Exhibit 99.01

 

     CONTACTS:          
   For Media Inquiries:    For Investor Inquiries:   
LOGO   

Jared Tipton

Cepheid Corporate Communications

Tel: (408) 400 8377

communications@cepheid.com

 

    Jacquie Ross, CFA

Cepheid Investor Relations

Tel: (408) 400 8329

investor.relations@cepheid.com

   

Cepheid

904 Caribbean Drive

Sunnyvale, CA 94089

Telephone: (408) 541 4191

Fax: (408) 541 4192

         

CEPHEID REPORTS FOURTH QUARTER AND FULL YEAR 2013 RESULTS

Record Commercial GeneXpert® System Placements and Strong Commercial Reagent Growth Highlight

Building Momentum as Xpert® Test Menu Expands

SUNNYVALE, California, January 30, 2014 – Cepheid (Nasdaq: CPHD) today reported revenue for the fourth quarter of 2013 of $113.3 million. Net loss was $10.3 million, or $(0.15) per share, which compares to revenue of $92.4 million and net income of $5.6 million, or $0.08 per share, in the fourth quarter of 2012. Fourth quarter results for 2013 included a $4.4 million, or $0.06 per share, charge primarily associated with a small, non-core restructuring and impairment of certain assets resulting from a realignment of operations.

Excluding stock compensation expenses, the restructuring expense (which includes an impairment of certain assets), and amortization of acquired purchased intangible assets, non-GAAP net income for the fourth quarter of 2013 was $2.3 million, or $0.03 per share. This compares to a non-GAAP net income of $14.2 million, or $0.20 per share, in the fourth quarter of 2012.

Fiscal 2013 Overview

For the year ended December 31, 2013, Cepheid reported revenue of $401.3 million which compares to revenue of $331.2 million in 2012. Net loss for the year was $18.0 million, or $(0.27) per share, which compares to net loss of $20.0 million, or $(0.30) per share, in 2012 which included a charge of $15.1 million, or $0.23 per share, associated with a litigation settlement.

Excluding stock compensation expenses, the restructuring expense (which includes impairment of certain assets), and amortization of acquired purchased intangible assets, non-GAAP net income for the year was $17.9 million, or $0.26 per share. This compares to a non-GAAP net income of $21.8 million, or $0.31 per share, for the full year 2012, which excluded stock compensation expenses, the amortization of purchased intangible assets, a litigation settlement and a tax benefit related to an intercompany intellectual property transaction.

“Clinical test revenue grew 25% in 2013, with notable strength in our Commercial Clinical Xpert reagents which grew 22%,” said John Bishop, Cepheid’s Chairman and Chief Executive Officer. “We also placed a record number of GeneXpert systems in 2013, with strength in both our commercial and HBDC businesses, demonstrating the impact of our rapidly expanding Xpert test menu and global sales footprint.”

Continued Bishop, “Adoption of our high throughput Infinity system increased with a record 52 shipments in 2013, including 23 in the fourth quarter, further highlighting Cepheid’s position as a platform consolidator within the molecular diagnostics market. With a menu of 14 tests and growing, we believe the innovative GeneXpert system is the most compelling choice for labs of all sizes looking to leverage accurate and fast diagnostics without the costs and complexities traditionally associated with molecular technologies.”

Operational Overview

 

  •   Fourth quarter of 2013 total Clinical sales of $101.0 million grew 23% from $82.2 million in the fourth quarter of 2012. For the year ended December 31, 2013, total Clinical sales of $359.9 million grew 26% from $286.3 million in 2012.

 

  •   By industry, sales were, in millions:

 

     Three Months Ended December 31,     Full Year Ended December 31,  
     2013      2012      Change     2013      2012      Change  

Clinical Systems

    $ 20.2       $ 13.4         51 %    $ 67.0       $ 52.8         27 % 

Clinical Reagents

      80.8         68.8         17 %      292.9         233.5         25 % 
  

 

 

     

 

 

       

 

 

     

 

 

     

Total Clinical

      101.0         82.2         23 %      359.9         286.3         26 % 

Non-Clinical

      12.3         10.2         20 %      41.4         44.9         -8 % 
  

 

 

     

 

 

       

 

 

     

 

 

     

Total Sales

    $ 113.3       $ 92.4         23 %    $ 401.3       $ 331.2         21 % 
  

 

 

     

 

 

       

 

 

     

 

 

     

 

  •   By geography, sales were, in millions:

 

     Three Months Ended December 31,     Full Year Ended December 31,  
     2013      2012      Change     2013      2012      Change  

North America

                 

Clinical

    $ 58.6       $ 54.3         8 %    $ 212.4       $ 190.0         12 % 

Other

      11.1         8.8         26 %      37.0         38.6         -4 % 
  

 

 

     

 

 

       

 

 

     

 

 

     

Total North America

      69.7         63.1         10 %      249.4         228.6         9 % 

International

                 

Clinical

      42.4         27.8         52 %      147.5         96.3         53 % 

Other

      1.2         1.5         -21 %      4.4         6.3         -30 % 
  

 

 

     

 

 

       

 

 

     

 

 

     

Total International

      43.6         29.3         49 %      151.9         102.6         48 % 
  

 

 

     

 

 

       

 

 

     

 

 

     

Total Sales

    $ 113.3       $ 92.4         23 %    $ 401.3       $ 331.2         21 % 
  

 

 

     

 

 

       

 

 

     

 

 

     

 

  •   Commercial sales, including Clinical and Non-Clinical & Other, were $95.5 million in the fourth quarter of 2013 and $335.6 million for the full year 2013. Sales to High Burden Developing Countries (HBDC) in the fourth quarter of 2013 were $17.8 million and $65.7 million for the full year 2013.

 

  •   During the fourth quarter of 2013, Cepheid placed a record total of 205 GeneXpert systems in its commercial Clinical business. Additionally, Cepheid placed a total of 178 GeneXpert systems as part of its High Burden Developing Country (HBDC) program. For the year ended December 31, 2013, Cepheid placed a total of 619 GeneXpert systems in its commercial Clinical business and an additional 1,055 GeneXpert systems as part of its HBDC program. As of December 31, 2013, a cumulative total of 5,509 GeneXpert systems have been placed worldwide.

 

  •   GAAP gross margin on sales was 47% and non-GAAP gross margin on sales was 50% in the fourth quarter of 2013, which compares to 54% and 56%, respectively, in the fourth quarter of 2012. GAAP gross margin on sales was 48% and non-GAAP gross margin on sales was 50% for the full year 2013, which compares to 54% and 55%, respectively, for the full year 2012.

 

  •   Cash, cash equivalents and investments were $84.7 million as of December 31, 2013.

 

  •   DSO was 42 days.

Business Outlook

For the fiscal year ending December 31, 2014, the Company expects:

 

  •   Total revenue to be in the range of $446 to $461 million;

 

  •   Net loss in the range of $(0.26) to $(0.21) per share;

 

  •   Non-GAAP net income in the range of $0.24 to $0.29 per share.

Expected non-GAAP net income excludes approximately $33 million related to stock compensation expense and approximately $3 million related to the amortization of purchased intangible assets. The fully diluted share count for the year is expected to be approximately 69 million in the case of a net loss, and approximately 73 million shares in the case of net income.

The following table reconciles net income (loss) per share to the non-GAAP net income per share range:

 

     Guidance Range for Year  
     Ending December 31, 2014  
     Low     High  

Net Income (Loss) Per Share

    $ (0.26 )    $ (0.21 ) 

Stock Compensation Expense

      (0.46 )      (0.46 ) 

Amortization of Purchased Intangible Assets

      (0.04 )      (0.04 ) 
  

 

 

    

 

 

  

Non-GAAP Measure of Net Income Per Share

    $ 0.24      $ 0.29   

Accessing Cepheid’s Fourth Quarter and Full Year 2013 Results Conference Call

The Company will host a management presentation at 2 p.m. Pacific Time on Thursday, January 30, 2014, to discuss the results. To access the live webcast, please visit Cepheid’s website at http://ir.cepheid.com at least 15 minutes before the scheduled start time to download any necessary audio or plug-in software. A replay of the webcast will be available shortly following the call and will remain available for at least 90 days.

About Cepheid

Based in Sunnyvale, Calif., Cepheid (Nasdaq: CPHD) is a leading molecular diagnostics company that is dedicated to improving healthcare by developing, manufacturing, and marketing accurate yet easy-to-use molecular systems and tests. By automating highly complex and time-consuming manual procedures, the Company’s solutions deliver a better way for institutions of any size to perform sophisticated genetic testing for organisms and genetic-based diseases. Through its strong molecular biology capabilities, the Company is focusing on those applications where accurate, rapid, and actionable test results are needed most, such as managing infectious diseases and cancer. For more information, visit http://www.cepheid.com.

Use of Non-GAAP Measures

The Company has supplemented its reported GAAP financial information with non-GAAP measures that do not include employee stock-based compensation expense, amortization of purchased intangible assets, a restructuring in the quarter ended December 31, 2013, a tax benefit related to an intercompany intellectual property transaction in the quarter ended March 31, 2012, and litigation settlement expenses in the quarter ended September 30, 2012. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with U.S. GAAP. The Company’s management uses the non-GAAP information internally to evaluate its ongoing business, continuing operational performance and cash requirements, and believes these non-GAAP measures are useful to investors as they provide a basis for evaluating the Company’s cash requirements and additional insight into the underlying operating results and the Company’s ongoing performance in the ordinary course of its operations.

These non-GAAP measures may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. The Company believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with its results of operations as determined in accordance with U.S. GAAP and that these measures should only be used to evaluate the Company’s results of operations in conjunction with the corresponding GAAP measures.

As described above, the Company excludes the following items from one or more of its non-GAAP measures when applicable:

Employee Stock-based Compensation Expense. These expenses consist primarily of expenses for employee stock options and employee restricted stock under ASC 718 (formerly SFAS 123(R)). The Company excludes employee stock-based compensation expenses from its non-GAAP measures primarily because they are non-cash expenses that the Company does not believe are reflective of ongoing operating results in the period incurred. Further, as the Company applies ASC 718, it believes that it is useful to investors to understand the impact of the application of ASC 718 on its results of operations.

Amortization of Purchased Intangible Assets. The Company incurs amortization of purchased intangible assets in connection with acquisitions. The Company excludes these items because these expenses are not reflective of ongoing operating results in the period incurred. These amounts arise from the Company’s prior acquisitions and have no direct correlation to the operation of the Company’s business.

Restructuring. The Company excluded a restructuring charge and impairment of certain assets totaling $4.4 million in the fourth quarter of 2013. In connection with the Company’s preparation of its annual operating plan, whereby the Company routinely assesses its investments to align its operations with its highest potential opportunities, the Company terminated a small international research team, eliminated a non-GeneXpert clinical product line acquired in a 2007 acquisition, including the impairment of an intangible asset of approximately $1.1 million and the write-down of approximately $0.2 million of inventory, and wrote-off certain manufacturing capital assets totaling approximately $1.3 million that management concluded will not be utilized and therefore have no future realizable value. The Company excluded this item as it believes it was non-recurring in nature, and does not have a direct impact on the operation of the Company’s core business.

Tax Benefit Related to Intercompany Intellectual Property (IP) Transaction. The Company excluded a tax benefit related to an intercompany IP transaction from its results for non-GAAP net loss for the quarter ended March 31, 2012. The Company excluded this item as it believes it was non-recurring in nature, and does not have a direct impact on the operation of the Company’s core business.

Litigation Settlement Expenses. These expenses consisted primarily of expenses related to the settlement of the Company’s litigation with Abaxis. This allocation was determined in accordance with ASC 450, Accounting for Contingencies (formerly SFAS No. 5), and ASC 605-25 (formerly EITF 00-21) using the concepts of fair value based on the past and estimated future revenue streams related to the products covered by the patents previously under dispute. Specifically, the amount recorded in the consolidated income statement as Litigation settlement in the quarter ended September 30, 2012 represented the fair value of the royalty paid on past revenue streams and the residual amount after allocating value to the future revenue streams. The Company excluded this item as it believes it was non-recurring in nature, and does not have a direct impact on the operation of the Company’s core business.

Forward-Looking Statements

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, future revenues and future net loss/income and profitability, including on a non-GAAP basis, and the breadth and speed of test menu expansion. 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: long sales cycles and variability in systems placements and reagent pull-through in the Company’s HBDC program; our success in increasing commercial and HBDC sales and the effectiveness of our sales personnel; the relative mix of commercial and HBDC sales; the performance and market acceptance of new products; sufficient customer demand, customer confidence in product availability and available

customer budgets for our customers; our ability to develop new products and complete clinical trials successfully in a timely manner for new products; uncertainties related to the FDA regulatory and international regulatory processes; the level of testing at clinical customer sites, including for Healthcare Associated Infections (HAIs); the Company’s ability to successfully introduce and sell products in clinical markets other than HAIs; the rate of environmental biothreat testing conducted by the USPS, which will affect the amount of consumable products sold to the USPS; unforeseen supply, development and manufacturing problems; our ability to manage our inventory levels; our ability to successfully complete and bring on additional manufacturing lines; the potential need for additional intellectual property licenses for tests and other products and the terms of such licenses; the Company’s reliance on distributors in some regions to market, sell and support its products; the occurrence of unforeseen expenditures, acquisitions or other transactions; costs associated with litigation; the impact of competitive products and pricing; the Company’s 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, its most recent Quarterly Report on Form 10-Q, 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 TABLES FOLLOW

CEPHEID

CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

 

     Three Months Ended      Years Ended  
     December 31,      December 31,  
     2013     2012      2013     2012  

Sales:

          

System and other sales

    $ 22,263      $ 16,876       $ 76,763      $ 65,111   

Reagent and disposable sales

      90,998        75,557         324,529        266,101   
  

 

 

    

 

 

     

 

 

    

 

 

  

Total sales

      113,261        92,433         401,292        331,212   

Costs and operating expenses:

          

Cost of product sales

      60,483        42,896         207,933        153,365   

Collaboration profit sharing

      2,567        1,416         7,512        7,183   

Research and development

      25,340        17,299         80,197        71,673   

Sales and marketing

      21,922        16,294         79,941        61,907   

General and administrative

      12,854        9,470         41,719        43,298   

Litigation Settlement

      —          —           —          15,110   
  

 

 

    

 

 

     

 

 

    

 

 

  

Total costs and operating expenses

      123,166        87,375         417,302        352,536   
  

 

 

    

 

 

     

 

 

    

 

 

  

Income (loss) from operations

      (9,905 )      5,058         (16,010 )      (21,324 ) 

Other income (expense), net

      (264 )      241         (807 )      (4 ) 
  

 

 

    

 

 

     

 

 

    

 

 

  

Income (loss) before income taxes

      (10,169 )      5,299         (16,817 )      (21,328 ) 

Benefit from (provision for) income taxes

      (148 )      345         (1,148 )      1,285   
  

 

 

    

 

 

     

 

 

    

 

 

  

Net income (loss)

    $ (10,317 )    $ 5,644       $ (17,965 )    $ (20,043 ) 
  

 

 

    

 

 

     

 

 

    

 

 

  

Basic net income (loss) per share

    $ (0.15 )    $ 0.09       $ (0.27 )    $ (0.30 ) 
  

 

 

    

 

 

     

 

 

    

 

 

  

Diluted net income (loss) per share

    $ (0.15 )    $ 0.08       $ (0.27 )    $ (0.30 ) 
  

 

 

    

 

 

     

 

 

    

 

 

  

Shares used in computing basic net income (loss) per share

      68,230        66,370         67,485        65,812   
  

 

 

    

 

 

     

 

 

    

 

 

  

Shares used in computing diluted net income (loss) per share

      68,230        68,787         67,485        65,812   
  

 

 

    

 

 

     

 

 

    

 

 

  

CEPHEID

CONDENSED CONSOLIDATED UNAUDITED BALANCE SHEETS

(in thousands)

 

     December     December  
     31, 2013     31, 2012  
ASSETS     

Current assets:

     

Cash and cash equivalents

    $ 66,072      $ 95,779   

Short-term investments

      8,837        —     

Accounts receivable, net

      52,202        43,999   

Inventory

      103,866        70,114   

Prepaid expenses and other current assets

      13,037        9,448   
  

 

 

    

 

 

  

Total current assets

      244,014        219,340   

Property and equipment, net

      84,886        54,830   

Investments

      9,820        —     

Other non-current assets

      958        913   

Intangible assets, net

      15,245        18,767   

Goodwill

      39,681        37,694   
  

 

 

    

 

 

  

Total assets

    $ 394,604      $ 331,544   
  

 

 

    

 

 

  
LIABILITIES AND SHAREHOLDERS’ EQUITY     

Current liabilities:

     

Accounts payable

    $ 52,609      $ 33,701   

Accrued compensation

      22,009        16,540   

Accrued royalties

      5,245        7,992   

Accrued and other liabilities

      7,246        4,235   

Current portion of deferred revenue

      8,183        9,599   

Current portion of notes payable

      194        183   
  

 

 

    

 

 

  

Total current liabilities

      95,486        72,250   

Long-term portion of deferred revenue

      3,424        1,156   

Notes payable, less current portion

      1,479        1,685   

Other liabilities

      8,975        8,911   
  

 

 

    

 

 

  

Total liabilities

      109,364        84,002   
  

 

 

    

 

 

  

Shareholders’ equity:

     

Common stock

      383,379        355,867   

Additional paid-in capital

      145,900        117,217   

Accumulated other comprehensive income (loss)

      (476 )      56   

Accumulated deficit

      (243,563 )      (225,598 ) 
  

 

 

    

 

 

  

Total shareholders’ equity

      285,240        247,542   
  

 

 

    

 

 

  

Total liabilities and shareholders’ equity

    $ 394,604      $ 331,544   
  

 

 

    

 

 

  

CEPHEID

CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS

(in thousands)

 

     Years Ended  
     December 31,  
     2013     2012  

Cash flows from operating activities:

     

Net loss

    $ (17,965 )    $ (20,043 ) 

Adjustments to reconcile net loss to net cash provided by operating activities:

     

Depreciation and amortization of property and equipment

      17,769        13,446   

Amortization of intangible assets

      5,418        4,965   

Impairment of terminated patent license, acquired intangible assets and property and

      2,855        1,399   

Unrealized exchange differences

      419        —     

Stock-based compensation related to employees and consulting services rendered

      27,635        24,496   

Changes in operating assets and liabilities:

     

Accounts receivable

      (6,960 )      (6,443 ) 

Inventory

      (32,638 )      (5,105 ) 

Prepaid expenses and other current assets

      (5,263 )      (2,714 ) 

Other non-current assets

      150        (172 ) 

Accounts payable and other current liabilities

      17,334        (5,740 ) 

Accrued compensation

      5,421        (1,736 ) 

Deferred revenue

      837        575   
  

 

 

    

 

 

  

Net cash provided by operating activities

      15,012        2,928   

Cash flows from investing activities:

     

Capital expenditures

      (47,526 )      (23,150 ) 

Cash paid for intangible asset

      —          (2,140 ) 

Cash paid for technology licenses

      (1,125 )      —     

Cost of acquisitions, net

      (3,669 )      (24,021 ) 

Proceeds from maturities and sales of marketable securities and investments

      3,850        —     

Purchases of marketable securities and investments

      (22,511 )      —     
  

 

 

    

 

 

  

Net cash used in investing activities

      (70,981 )      (49,311 ) 

Cash flows from financing activities:

     

Net proceeds from the issuance of common shares and exercise of stock options

      27,512        27,079   

Proceeds from notes payable

      —          156   

Principal payment of notes payable

      (874 )      (72 ) 
  

 

 

    

 

 

  

Net cash provided by financing activities

      26,638        27,163   

Effect of exchange rate change on cash

      (376 )      (9 ) 
  

 

 

    

 

 

  

Net increase (decrease) in cash and cash equivalents

      (29,707 )      (19,229 ) 

Cash and cash equivalents at beginning of period

      95,779        115,008   
  

 

 

    

 

 

  

Cash and cash equivalents at end of period

    $ 66,072      $ 95,779   
  

 

 

    

 

 

  

CEPHEID

RECONCILIATION OF GAAP TO NON-GAAP MEASURES (UNAUDITED)

(in thousands, except per share data)

 

     Three Months Ended     Years Ended  
     December 31,     December 31,  
     2013     2012     2013     2012  

Cost of sales

    $ 60,483      $ 42,896      $ 207,933      $ 153,365   

Stock compensation expense

      (1,084 )      (808 )      (2,927 )      (3,037 ) 

Restructuring charge including impairment of intangibles

      (2,651 )      (1,038 )      (2,651 )      (1,038 ) 

Amortization of purchased intangible assets

      (345 )      (527 )      (2,349 )      (1,525 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Non-GAAP measure of cost of sales

    $ 56,403      $ 40,523      $ 200,006      $ 147,765   

Gross margin on sales per GAAP

      47 %      54 %      48 %      54 % 

Gross margin on sales per Non-GAAP

      50 %      56 %      50 %      55 % 

Operating expenses

    $ 60,116      $ 43,063      $ 201,857      $ 176,878   

Stock compensation expense

      (6,534 )      (5,756 )      (24,708 )      (21,415 ) 

Restructuring charge including impairment of intangibles

      (1,783 )      (328 )      (1,783 )      (328 ) 

Amortization of purchased intangible assets

      (458 )      (376 )      (1,715 )      (1,452 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Non-GAAP measure of operating expenses

    $ 51,341      $ 36,603      $ 173,651      $ 153,683   

Income (loss) from operations

    $ (9,905 )    $ 5,058      $ (16,010 )    $ (21,324 ) 

Stock compensation expense

      7,618        6,564        27,635        24,452   

Amortization of purchased intangible assets

      803        903        4,064        2,977   

Restructuring charge including impairment of intangibles

      4,434        1,366        4,434        1,366   

Litigation settlement

      —          —          —          15,110   
  

 

 

    

 

 

    

 

 

    

 

 

  

Non-GAAP measure of income from operations

    $ 2,950      $ 13,891      $ 20,123      $ 22,581   

Net income (loss)

    $ (10,317 )    $ 5,644      $ (17,965 )    $ (20,043 ) 

Stock compensation expense

      7,618        6,564        27,635        24,452   

Amortization of purchased intangible assets

      803        903        4,064        2,977   

Restructuring charge including impairment of intangibles

      4,201        1,093        4,201        1,093   

Litigation settlement

      —          —          —          15,110   

Tax benefit related to intercompany IP transaction

      —          —          —          (1,815 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Non-GAAP measure of net income

    $ 2,305      $ 14,204      $ 17,935      $ 21,774   

Basic net income (loss) per share

    $ (0.15 )    $ 0.09      $ (0.27 )    $ (0.30 ) 

Stock compensation expense

      0.11        0.09        0.41        0.37   

Amortization of purchased intangible assets

      0.01        0.01        0.06        0.04   

Restructuring charge including impairment of intangibles

      0.06        0.02        0.07        0.02   

Litigation settlement

      —          —          —          0.23   

Tax benefit related to intercompany IP transaction

      —          —          —          (0.03 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Non-GAAP measure of net income per share

    $ 0.03      $ 0.21      $ 0.27      $ 0.33   

Diluted net income (loss) per share

    $ (0.15 )    $ 0.08      $ (0.27 )    $ (0.30 ) 

Stock compensation expense

      0.11        0.09        0.41        0.35   

Amortization of purchased intangible assets

      0.01        0.01        0.06        0.04   

Restructuring charge including impairment of intangibles

      0.06        0.02        0.06        0.02   

Litigation settlement

      —          —          —          0.23   

Tax benefit related to intercompany IP transaction

      —          —          —          (0.03 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Non-GAAP measure of net income per share

    $ 0.03      $ 0.20      $ 0.26      $ 0.31   

Shares used in computing basic net income (loss) per share

      68,230        66,370        67,485        65,812   

Shares used in computing diluted net income (loss) per share

      70,644        69,376        69,928        69,700   
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