Alere's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Alere, Inc. (ALR)

Q1 2012 Earnings Conference Call

April 30, 2012, 08:30 a.m. ET

Executives

Doug Guarino - Director, Corporate Relations

Ron Zwanziger - Chairman and CEO

David Teitel - CFO

Analysts

Dan Leonard - Leerink Swann

John Putnam - Capstone Investments

Greg Simpson - Wunderlich Securities

Eric Criscuolo - Mizuho Securities

Zarak Khurshid - Wedbush Securities

Jeff Frelick - Canaccord Genuity

Jeff - Goldman Sachs

Nicholas Jansen - Raymond James

Presentation

Operator

Good morning and welcome to the Alere Inc. Conference Call to discuss First Quarter 2012 Results. All participants will be in listen-only mode. (Operator Instructions) Please note this event is being recorded.

I’d now like to turn the conference over to Mr. Doug Guarino, Director of Corporate Relations. Please go ahead sir.

Doug Guarino

Thank you, Denise, and good morning and welcome to the Alere conference call to discuss our results for the quarter ended March 31, 2012. We are joined today by Ron Zwanziger, Chairman and CEO; and David Teitel, CFO.

Before we get to that discussion I’d first like to draw your attention to the fact that certain matters discussed in this conference call will constitute forward-looking statements within the meaning of the U.S. Securities laws. These statements reflect our current view of the respected future events or financial performance and are based on management’s current assumptions and information currently available.

Actual results and the timing of certain events could differ materially from those projected or contemplated by the forward-looking statements due to numerous factors including without limitation our ability to successfully acquire and integrate our acquisitions and to recognize the expected benefit that restructuring and new business activities. Our exposure to changes in interest rates and foreign currency exchange rates; our ability to successfully develop and commercialize products, the market acceptance of our products; continued acceptance of Health Management services by payers, providers and patients; our ability to develop enhanced Health Management programs through the integrated use of innovative diagnostic and monitoring devices and to recognize the expected benefits of this strategy; the impact of healthcare reform legislation as well as future reform initiative; the content and timing of regulatory decisions and actions including the results of FDA inspections as well as the impact of changes in reimbursement policy and budgetary constraint, both in the United States and abroad. The effective pending and future legal proceedings and our financial performance, and the risks and uncertainties described in our periodic reports filed with the Securities and Exchange Commission including our From 10-K for the year ended December 31, 2011 as well as in our quarterly reports on Form 10-Q.

Our company undertakes no obligation to update forward-looking statements. Additionally, please note that during this call, we may discuss non-GAAP financial measures. For each non-GAAP financial measure discussed, the presentation of the most directly comparable GAAP financial measure and a reconciliation of the differences between the non-GAAP financial measure discussed and the most directly comparable GAAP financial measure is available on the company’s website at Alere.com.

And with that let me turn the call over to Alere Chairman and CEO, Ron Zwanziger. Ron?

Ron Zwanziger

Thanks Doug and good morning everyone. We are pleased to report a strong first quarter results highlighted by strength in both revenues and earnings, organic growth and our professional diagnostic business was particularly good at 6.9%.

New product sales continue to increase achieving 13.7 million in the first quarter with particular traction in Europe and Asia. We expect this trend to continue and anticipate that our new platform achieves increased medical adoption, their underlying consumable sales will drive and expanding organic growth rate over the next several years.

Another favorable trend in the first quarter was improved predictability and stabilization of our Health Management unit which posted a sequential increase in revenues for the first time since the third quarter of 2010, while institutions predict the consisting growth trend in Health Management we are seeing increased customer interest of added business in the first quarter. Therefore, we are cautiously optimistic that revenues in this segment will at least remain flat during the rest of the year and notable improvement over 2011.

Although we previously reported challenging fourth quarter in Europe and a higher risk in the region entering 2012, European sales in the first quarter held up relatively well although margins are sharply lower relative to year ago. We continue to watch trends in Europe and expect issues to arise as a result of budgetary problem in many countries. The Asia Pacific region, however, continue to perform well primarily driven by growth of higher margins, cardiology products in China, over the past few years we have had some step backs in approval delays there, which negatively impacted our cardiology business and the resumption of product sales growth there represents a promising development.

Sales were excellent for the third consecutive quarter of more than 50% from the first quarter of last year; this trend was driven primarily by high sales of cardiology and Infectious Disease diagnostic including a strong flu season.

Overall, Asia has performed very well for us over the past year when we expect it to continue through the remainder of the year. Two of our recently acquired diabetes related companies Axis-Shield and Arriva are in the price of being integrated. We are continuing to review opportunities in the area with the intend of establishing novel approaches to the management of individuals with diabetes which will help, which we expect will yield better outcomes from both the individual and the payer, future M&A activities likely to be heavily weighted towards this area and secondarily towards our toxicology business which is performing very well.

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