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Quidel Reports Third Quarter 2010 Results

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A live webcast of the call can be accessed at www.quidel.com, and the Web site replay will be available for 14 days. The telephone replay will be available for 48 hours beginning at 8:00 p.m. Eastern Time (5:00 p.m. Pacific Time) today by dialing (888) 286-8010 from the U.S., or (617) 801-6888 for international callers, and entering pass code 82884944.

About Quidel Corporation

Quidel Corporation serves to enhance the health and well being of people around the globe through the development of diagnostic solutions that can lead to improved patient outcomes and provide economic benefits to the healthcare system. Marketed under the leading brand names QuickVue®, D 3® Direct Detection and Thyretain™, Quidel's products aid in the detection and diagnosis of many critical diseases and conditions, including influenza, respiratory syncytial virus, Strep A, herpes, pregnancy, thyroid disease and fecal occult blood. Quidel's research and development engine is also developing a continuum of diagnostic solutions from advanced lateral-flow and direct fluorescent antibody to molecular diagnostic tests to further improve the quality of healthcare in physicians' offices and hospital and reference laboratories. For more information about Quidel's comprehensive product portfolio, visit www.quidel.com and Diagnostic Hybrids at www.dhiusa.com.

This press release contains forward-looking statements within the meaning of the federal securities laws that involve material risks, assumptions and uncertainties. Many possible events or factors could affect our future financial results and performance, such that our actual results and performance may differ materially from those that may be described or implied in the forward-looking statements. As such, no forward-looking statement can be guaranteed. Differences in actual results and performance may arise as a result of a number of factors including, without limitation, seasonality, the timing of onset, length and severity of cold and flu seasons, the level of success in executing on our strategic initiatives, our reliance on sales of our influenza diagnostic tests, uncertainty surrounding the detection of novel influenza viruses involving human specimens, our ability to develop new products and technology, adverse changes in the competitive and economic conditions in domestic and international markets, our reliance on and actions of our major distributors, technological changes and uncertainty with research and technology development, including any future molecular-based technology, the medical reimbursement system currently in place and future changes to that system, manufacturing and production delays or difficulties, adverse regulatory actions or delays in product reviews by the U.S. Food and Drug Administration (the “FDA”), compliance with FDA and environmental regulations, our ability to meet unexpected increases in demand for our products, our ability to execute our growth strategy, including the integration of new companies or technologies, disruptions in the global capital and credit markets, our ability to hire key personnel, intellectual property, product liability, environmental or other litigation, potential required patent license fee payments not currently reflected in our costs, adverse changes in our international markets, including as a result of currency fluctuations, political instability or new or increased tariffs, potential inadequacy of booked reserves and possible impairment of goodwill, and lower-than-anticipated sales or market penetration of our new products. Forward-looking statements typically are identified by the use of terms such as "may," "will," "should," "might," "expect," "anticipate," "estimate," and similar words, although some forward-looking statements are expressed differently. The risks described under "Risk Factors" in reports and registration statements that we file with the Securities and Exchange Commission from time to time should be carefully considered. You are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date of this press release. We undertake no obligation to publicly release the results of any revision or update of the forward-looking statements, except as required by law.
QUIDEL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
AND RECONCILIATION OF NON-GAAP ADJUSTMENTS (1)
(In thousands, except per share data; unaudited)
             
 
Three months ended Three months ended
September 30, 2010 September 30, 2009
GAAP   Adjustments   Non-GAAP GAAP   Adjustments   Non-GAAP
 
Total revenues $ 28,225 $ - $ 28,225 $ 56,152 $ - $ 56,152
 
Cost of sales (excludes amortization of intangible assets) 12,807 - 12,807 17,670 - 17,670
 
Research and development 6,148 - 6,148 3,157 - 3,157
Sales and marketing 5,797 - 5,797 6,400 - 6,400
General and administrative 4,759 - 4,759 4,325 - 4,325
Amortization of intangible assets from acquired businesses 1,624 (1,624 ) (2) - - - -
Amortization of intangible assets from licensed technology 324 - 324 345 - 345
Business acquisition and integration costs   115     (115 ) (3)   -     -     -   -  
 
Total costs and expenses   31,574     (1,739 )   29,835     31,897     -   31,897  
 
Operating (loss) income (3,349 ) 1,739 (1,610 ) 24,255 - 24,255
 
Interest expense (645 ) - (645 ) (148 ) - (148 )
Interest income 15 - 15 53 - 53
Other expense   -     -     -     (5 )   -   (5 )
 
Total other expense   (630 )   -     (630 )   (100 )   -   (100 )
 
(Loss) income before income taxes (3,979 ) 1,739 (2,240 ) 24,155 - 24,155
 
Income tax expense (benefit)   1,882     (2,495 ) (4)   (613 )   9,215     -   9,215  
 
Net (loss) income $ (5,861 ) $ 4,234   $ (1,627 ) $ 14,940   $ - $ 14,940  
 
Basic and diluted (loss) earnings per share: $ (0.21 ) $ (0.06 ) $ 0.50 $ 0.50
 
Weighted shares used in basic per share calculation 28,183 28,183 29,713 29,713
Weighted shares used in diluted per share calculation 28,183 28,183 30,149 30,149
 
Gross profit as a % of total revenues 55 % 55 % 69 % 69 %
Research and development as a % of total revenues 22 % 22 % 6 % 6 %
Sales and marketing as a % of total revenues 21 % 21 % 11 % 11 %
General and administrative as a % of total revenues 17 % 17 % 8 % 8 %
 
(1) The Company reports Non-GAAP results which primarily excludes certain acquisition related costs to provide a supplemental comparison of the results of operations.
(2) Add back amortization of acquired intangibles
(3) Add back business acquisition and integration costs
(4) The Company's marginal tax rate is approximately 40% and has been applied to Non-GAAP adjustments. In addition, the Company adjusted the income tax benefit for the three months ended September 30, 2010 to reflect the expected annual effective tax rate of 32.9%.
 
Condensed balance sheet data (in thousands):   9/30/10     12/31/09  
 
Cash, cash equivalents and marketable securities $ 7,229 $ 93,002
Accounts receivables 12,862 9,717
Inventory 19,263 15,038
Total assets 213,463 166,345
Long term debt 80,188 6,527
Stockholders' equity 111,194 126,450
 
QUIDEL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
AND RECONCILIATION OF NON-GAAP ADJUSTMENTS (1)
(In thousands, except per share data; unaudited)
               
 
Nine months ended Nine months ended
September 30, 2010 September 30, 2009
GAAP   Adjustments   Non-GAAP GAAP   Adjustments   Non-GAAP
 
Total revenues $ 81,630 $ - $ 81,630 $ 97,685 $ - $ 97,685
 
Cost of sales (excludes amortization of intangible assets) 37,678 - 37,678 36,169 - 36,169
Amortization of inventory fair value adjustment from acquisition   1,118     (1,118 ) (2)   -     -     -     -  
Total cost of sales (excludes amortization of intangible assets) 38,796 (1,118 ) 37,678 36,169 - 36,169
 
Research and development 18,772 - 18,772 9,003 - 9,003
Sales and marketing 18,068 - 18,068 16,538 - 16,538
General and administrative 13,792 - 13,792 12,125 - 12,125
Amortization of intangible assets from acquired businesses 3,743 (3,743 ) (3) - - - -
Amortization of intangible assets from licensed technology 972 - 972 1,040 - 1,040
Business acquisition and integration costs, and restructuring charges   2,181     (2,181 ) (4)   -     2,038     (2,038 ) (4)   -  
 
Total costs and expenses   96,324     (7,042 )   89,282     76,913     (2,038 )   74,875  
 
Operating (loss) income (14,694 ) 7,042 (7,652 ) 20,772 2,038 22,810
 
Interest expense (1,655 ) - (1,655 ) (459 ) - (459 )
Interest income 195 - 195 299 - 299
Other expense   -     -     -     (5 )   -     (5 )
 
Total other expense   (1,460 )   -     (1,460 )   (165 )   -     (165 )
 
(Loss) income before income taxes (16,154 ) 7,042 (9,112 ) 20,607 2,038 22,645
 
Income tax (benefit) expense   (5,309 )   2,817   (5)   (2,492 )   7,831     815   (5)   8,646  
 
Net (loss) income $ (10,845 ) $ 4,225   $ (6,620 ) $ 12,776   $ 1,223   $ 13,999  
 
Basic and diluted (loss) earnings per share: $ (0.38 ) $ (0.23 ) $ 0.42 $ 0.46
 
Weighted shares used in basic per share calculation 28,362 28,362 30,151 30,151
Weighted shares used in diluted per share calculation 28,362 28,362 30,547 30,547
 
Gross profit as a % of total revenues 52 % 54 % 63 % 63 %
Research and development as a % of total revenues 23 % 23 % 9 % 9 %
Sales and marketing as a % of total revenues 22 % 22 % 17 % 17 %
General and administrative as a % of total revenues 17 % 17 % 12 % 12 %
 
(1) The Company reports Non-GAAP results which primarily excludes certain acquisition related costs to provide a supplemental comparison of the results of operations.
(2) Add back fair value amortization of inventory write-up associated with the acquisition of DHI
(3) Add back amortization of acquired intangibles
(4) Add back business acquisition and integration costs and restructuring charges
(5) The Company's marginal tax rate is approximately 40% and has been applied to Non-GAAP adjustments

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