Acquisitions Double Celera's Revenue

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Celera's (CRA Quote) Q1 FY09 revenue more than doubled to $45.81 million from $16.14 million during Q1 FY08, benefiting from the revenue from Berkeley HeartLab (BHL) and Atria Genetics, which were acquired during Q4 FY07. Excluding revenues from these acquisitions, Celera's net revenues for the latest quarter were $12.90 million.

Segment-wise, Lab service contributing 65.7% to the revenue stood at $30.10 million, consisting of sales made by BHL. Products revenue surged 123.4% to $10.50 million, driven by sales of Atria HLA products and a higher equalization payment from Abbott. Corporate segment, which includes revenues from royalties, licenses, funded collaborations and others, declined 54.4% to $5.20 million. Total end-user alliance sales were $39.40 million, an increase of 58.2% from $24.90 million in the prior year's quarter.

Celera's gross profit margin for the latest first quarter deteriorated 1,566 basis points to 71.50% from 87.16%, as higher revenue was offset by a significant rise in cost of sales to $14.60 million from $3.10 million a year ago. Selling, general, and administrative expenses rose to $25.20 million from $8.10 million, due to the inclusion of BHL expenses. Research and development expenses declined to $8.00 million from $10.70 million, due to a reduction in spending in discovery research and projects associated with the Abbott alliance. Subsequently, operating margin improved to a negative 9.80% from a negative 35.94% in the prior year's quarter. Finally, the company swung to a net loss of $7.01 million or $0.09 per share compared to a net profit of $0.67 million or $0.01 per share. The latest quarterly results included short-term investment impairment loss of $3.20 million, amortization of purchased intangible assets of $2.50 million, and employee-related charges of $1.80 million. Excluding one-time items, adjusted net income was $0.50 million or $0.01 per share.

Cash and cash equivalents at the end of Q1 FY09 declined 42.2% to $316.99 million from $548.14 million. However, a quick ratio of 12.98 indicates the company's ability to cover any short-term cash requirements. Total debt marginally increased to $0.10 million from zero. Shareholders' equity declined 19.7% to $612.83 million from $762.94 million. However, the debt-to-equity ratio remained zero. Meanwhile, return on assets worsened to a negative 16.69% from a negative 1.54%. Return on equity widened to a negative 18.23% from a negative 1.58%.

During the quarter under review, the company appointed Christopher Hall as chief business officer of BHL. In addition, Celera and research collaborators at Brigham and Women's Hospital published data on atherosclerosis and a variant of the LPA gene associated with a two-fold higher risk of major cardiovascular events (myocardial infarction, ischemic stroke and cardiovascular death).

Looking forward, the company expects its second half of calendar 2008 (ended December 27, 2008) revenue to be in the range of $89.00 million to $93.00 million, while earnings on a non-GAAP basis is forecasted to be in the range of $0.01 to $0.02 per share.

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