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Quidel Reports Fourth Quarter And Full Year 2010 Results

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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 molecular-based technology, the medical reimbursement system currently in place and future changes to that system, manufacturing and production delays or difficulties, adverse actions or delays in product reviews by the U.S. Food and Drug Administration (the “FDA”), our ability to comply with FDA, environmental and other regulations, our ability to meet unexpected increases in demand for our products, our ability to execute our 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, potential inadequacy of booked reserves and possible impairment of goodwill, and lower-than-anticipated acceptance, 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 SEC 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
December 31, 2010 December 31, 2009
GAAP   Adjustments   Non-GAAP GAAP   Adjustments   Non-GAAP
 
Total revenues $ 31,709 $ - $ 31,709 $ 66,597 $ - $ 66,597
 
Cost of sales (excludes amortization of intangible assets) 13,811 - 13,811 19,049 - 19,049
 
Research and development 5,799 - 5,799 3,523 - 3,523
Sales and marketing 5,904 - 5,904 6,809 - 6,809
General and administrative 4,679 - 4,679 4,658 - 4,658
Amortization of intangible assets from acquired businesses 1,623 (1,623 ) (2) - - - -
Amortization of intangible assets from licensed technology 393 - 393 324 - 324
Business acquisition and integration costs   95     (95 ) (3)   -     457     (457 ) (3)   -  
 
Total costs and expenses   32,304     (1,718 )   30,586     34,820     (457 )   34,363  
 
Operating (loss) income (595 ) 1,718 1,123 31,777 457 32,234
 
Interest expense (690 ) - (690 ) (308 ) - (308 )
Interest income 19 - 19 69 - 69
Other expense   -     -     -     4     -     4  
 
Total other expense   (671 )   -     (671 )   (235 )   -     (235 )
 
(Loss) income before income taxes (1,266 ) 1,718 452 31,542 457 31,999
 
Income tax (benefit) expense   (840 )   687   (4)   (153 )   11,435     183     11,618  
 
Net (loss) income $ (426 ) $ 1,031   $ 605   $ 20,107   $ 274   $ 20,381  
 
Basic (loss) earnings per share: $ (0.02 ) $ 0.02 $ 0.68 $ 0.69
Diluted (loss) earnings per share: $ (0.02 ) $ 0.02 $ 0.67 $ 0.68
 
Weighted shares used in basic per share calculation 28,192 28,192 29,460 29,460
Weighted shares used in diluted per share calculation 28,192 28,192 29,930 29,930
 
Gross profit as a % of total revenues 56 % 56 % 71 % 71 %
Research and development as a % of total revenues 18 % 18 % 5 % 5 %
Sales and marketing as a % of total revenues 19 % 19 % 10 % 10 %
General and administrative as a % of total revenues 15 % 15 % 7 % 7 %
 
(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.
 
Condensed balance sheet data (in thousands):   12/31/10     12/31/09  
 
Cash, cash equivalents and marketable securities $ 6,788 $ 93,002
Accounts receivables 13,477 9,717
Inventory 17,707 15,038
Total assets 214,593 166,345
Long term debt 79,774 6,527
Stockholders' equity 112,521 126,450
 
QUIDEL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
AND RECONCILIATION OF NON-GAAP ADJUSTMENTS (1)
(In thousands, except per share data; unaudited)
           
 
Twelve months ended Twelve months ended
December 31, 2010 December 31, 2009
GAAP   Adjustments   Non-GAAP GAAP   Adjustments   Non-GAAP
 
Total revenues $ 113,339 $ - $ 113,339 $ 164,282 $ - $ 164,282
 
Cost of sales (excludes amortization of intangible assets) 51,489 - 51,489 55,218 - 55,218
Amortization of inventory fair value adjustment from acquisition   1,118     (1,118 ) (2)   -     -     -     -  
Total cost of sales (excludes amortization of intangible assets) 52,607 (1,118 ) 51,489 55,218 - 55,218
 
Research and development 24,571 - 24,571 12,526 - 12,526
Sales and marketing 23,972 - 23,972 23,347 - 23,347
General and administrative 18,471 - 18,471 16,783 - 16,783
Amortization of intangible assets from acquired businesses 5,366 (5,366 ) (3) - - - -
Amortization of intangible assets from licensed technology 1,365 - 1,365 1,364 - 1,364
Business acquisition and integration costs, and restructuring charges   2,276     (2,276 ) (4)   -     2,495     (2,495 ) (4)   -  
 
Total costs and expenses   128,628     (8,760 )   119,868     111,733     (2,495 )   109,238  
 
Operating (loss) income (15,289 ) 8,760 (6,529 ) 52,549 2,495 55,044
 
Interest expense (2,345 ) - (2,345 ) (767 ) - (767 )
Interest income 214 - 214 372 - 372
Other expense   -     -     -     (5 )   -     (5 )
 
Total other expense   (2,131 )   -     (2,131 )   (400 )   -     (400 )
 
(Loss) income before income taxes (17,420 ) 8,760 (8,660 ) 52,149 2,495 54,644
 
Income tax (benefit) expense   (6,149 )   3,504   (5)   (2,645 )   19,266     998   (5)   20,264  
 
Net (loss) income $ (11,271 ) $ 5,256   $ (6,015 ) $ 32,883   $ 1,497   $ 34,380  
 
Basic (loss) earnings per share: $ (0.39 ) $ (0.21 ) $ 1.10 $ 1.15
Diluted (loss) earnings per share: $ (0.39 ) $ (0.21 ) $ 1.08 $ 1.13
 
Weighted shares used in basic per share calculation 28,582 28,582 29,964 29,964
Weighted shares used in diluted per share calculation 28,582 28,582 30,418 30,418
 
Gross profit as a % of total revenues 54 % 55 % 66 % 66 %
Research and development as a % of total revenues 22 % 22 % 8 % 8 %
Sales and marketing as a % of total revenues 21 % 21 % 14 % 14 %
General and administrative as a % of total revenues 16 % 16 % 10 % 10 %
 
(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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