Company Enters Into $100 Million Accelerated Stock Repurchase
Agreement SAN DIEGO, Oct. 26 /PRNewswire-FirstCall/ -- Biosite(R)
Incorporated (NASDAQ:BSTE) today reported financial results for the
third quarter of 2006 and discussed preliminary guidance for the
fourth quarter of 2006 and preliminary revenue guidance for 2007.
The Company also provided an overview of several potential new
products for which clinical trials are planned in 2007. In
addition, Biosite has entered into an accelerated stock repurchase
agreement to buy back $100 million of its common stock. Key
Financial Results * Revenues for the third quarter of 2006 totaled
$74.6 million, a 7 percent increase from $69.7 million in the
comparable period of 2005. Year over year, BNP sales increased 4
percent, while sales of Biosite's other cardiovascular products
increased 33 percent. Combined revenue from physician office
laboratories and international markets grew 22 percent year over
year. * For the third quarter of 2006, GAAP diluted earnings per
share was $0.49 and Non-GAAP diluted earnings per share was $0.74.
By comparison, in the third quarter of 2005 the Company's diluted
earnings per share was $0.68. Non-GAAP results exclude the impact
of FAS 123R, Share-Based Payment, which relates to the expensing of
non-cash stock-based compensation, such as stock options. The
Company adopted FAS 123R as of January 1, 2006 on a modified
prospective basis. See the tables included at the end of this
release for a reconciliation of Non-GAAP financial results to GAAP
financial results. See also, "About Non-GAAP Financial Measures"
below. * GAAP operating income for the third quarter of 2006 was
$14.3 million. Non-GAAP operating income for the third quarter of
2006 was $20.6 million. In the comparable period of 2005, operating
income was $19.6 million. * Cash generated from operations was
$66.8 million in the first nine months of 2006 and $29.2 million in
the third quarter of 2006, which was a 39 percent increase over the
third quarter of 2005. Following are financial highlights
pertaining to revenues and cash flow for the three and nine months
ended September 30, 2006 and 2005: ($ in 000's) Three months ended
Nine months ended 9/30/06 9/30/05 Change 9/30/06 9/30/05 Change
Triage(R) BNP Test sales $45,531 $43,892 4% $148,773 $142,721 4%
Other cardiovascular product sales 14,279 10,753 33% 39,651 27,961
42% Other product sales 13,301 14,243 (7%) 39,216 40,600 (3%) Total
product sales 73,111 68,888 6% 227,640 211,282 8% Total revenues
74,642 69,668 7% 231,741 215,278 8% Cash flow from operations
$29,219 $20,947 39% $66,809 $79,341 (16%) Cash used for stock
repurchases -- -- 30,000 -- 9/30/06 12/31/05 Change Cash and
marketable securities balance $159,078 $132,412 20% "In the third
quarter we experienced a slow down in BNP test utilization among
our U.S. hospital customers that was lower than our expectations,
but appears to be consistent with quarterly fluctuations we have
seen in prior years," said Kim Blickenstaff, Biosite's chairman and
chief executive officer. "While near term growth prospects in the
BNP testing market have declined due to high penetration levels,
our latest annual survey of more than 3,000 U.S. hospitals and
other recent market surveys lead us to believe we are maintaining
our strong franchise. This will be important to our future efforts
to launch new products. "In terms of our prospects for 2007, we
expect our other cardiovascular products, U.S. physician office and
international markets to be key sources of sales growth next year.
However, currently these revenue bases are relatively small so they
may have only a limited impact on overall growth in 2007. We
continue to believe that the key to restoring our growth rates lies
with new products, and therefore we will focus on advancing the
most important opportunities in 2007." Financial Guidance Update
Commenting on expectations for 2006, Biosite management decreased
its 2006 total revenue target to $308 million from $316 million.
The Company has also updated its Non-GAAP diluted earnings per
share target from $3.30 to $3.19. Biosite's GAAP diluted earnings
per share target is $2.18. For 2007, Biosite management said its
total revenue target is $326 million, a 6 percent increase over
2006. "Biosite has reached an important stage in its evolution. Our
core business remains stable, and we are generating substantial
levels of cash, though growth has temporarily slowed while we work
toward the commercialization of new products," said Blickenstaff.
"We believe that returning value to stockholders through a stock
repurchase program that is accretive to earnings per share, along
with funding key product development initiatives that will fuel
long term growth are good uses of our cash at this time." See the
Biosite Incorporated Guidance Data table included at the end of
this release for additional details regarding the Company's
financial guidance data, a reconciliation of Non-GAAP financial
guidance to GAAP financial guidance and a description of certain
factors that could affect the Company's actual financial results.
See also, "About Non-GAAP Financial Measures" below. Stock
Repurchase Program Biosite today announced that its board of
directors approved an increase in the Company's stock repurchase
program, raising the amount of stock that the Company is authorized
to repurchase over the next 12 months to $100 million from $50
million. In connection with this stock repurchase program, the
Company has entered into a privately negotiated transaction with
Goldman, Sachs & Co. to repurchase $100 million of its common
stock. Based on Biosite's closing stock price on October 25, 2006,
the $100 million share repurchase authorization represents
approximately 12 percent of the Company's total market
capitalization. Biosite will immediately pay Goldman Sachs $100
million and will receive a substantial majority of the shares to be
delivered under the agreement within approximately five weeks. The
agreement includes collar provisions that establish the minimum and
maximum numbers of shares to be repurchased. The specific number of
shares to be repurchased is generally based on the volume-weighted
average share price of the Company's common shares during the six-
to nine-month term of the accelerated repurchase agreement, subject
to collar limits. All of the repurchased shares will be retired.
The board of directors may authorize additional amounts for the
stock repurchase program depending on prevailing market conditions,
available cash resources and other factors. Future repurchases of
stock may be made in the open market, in privately negotiated
transactions, or through the use of derivative securities or
arrangements. "We are increasingly excited by the number of highly
innovative products in our research and development pipeline, which
resulted from our Biosite Discovery and licensing activities over
the past several years," said Blickenstaff. "These represent
significant advances in diagnostic medicine for a variety of
critical disease states and underscore the value of our commitment
to research. "In assessing this potential for our business and
pipeline, we believe Biosite shares are substantially undervalued
and represent a very attractive investment at current price levels.
Our announced share repurchase program is a tangible demonstration
of our confidence in our future potential. We are pleased that our
strong balance sheet and history of free cash flow, which reflect
the success of our business model, allow us to make this commitment
at this time." Research and Development In the area of research and
development, Biosite reported that it has continued to advance
activities related to its top priority product initiatives: the
Triage Sepsis Panel, intended to aid in the diagnosis of sepsis, a
test to aid in the diagnosis of acute kidney injury, and next
generation products based on the Triage Cardio Profiler(R) Panel, a
product currently used to aid in the evaluation of chest pain
patients. Clinical trials intended to support regulatory
submissions for these products are expected to commence in 2007.
Also in the third quarter of 2006, Biosite continued development of
a protocol for a clinical trial aimed at supporting submission of a
filing seeking regulatory approval to market the Triage Stroke
Panel in the United States. Other activities included site
selection activities and preparations for a pilot study that is
expected to take place in 2007. "With more than 3,000 hospital
customers, we have built an impressive installed base of business
in the United States and have a pipeline of promising products,"
said Ken Buechler, Biosite's president and chief scientific
officer. "We believe our product pipeline has the potential to
deliver significant growth in the future, but to make it happen we
must focus our resources on a few key opportunities. We will
maintain our development activities on a variety of other programs,
but will not raise their priority until we execute on our top
priority product initiatives." About Biosite(R) Incorporated
Biosite Incorporated is a leading bio-medical company
commercializing proteomics discoveries for the advancement of
medical diagnosis. The Company's products contribute to
improvements in medical care by aiding physicians in the diagnosis
of critical diseases and health conditions. Biosite's Triage(R)
rapid diagnostics are used in more than 50 percent of U.S.
hospitals and in more than 60 international markets. Information on
Biosite can be found at http://www.biosite.com/. Investor
Conference Call Biosite will host an investor conference call to
discuss financial results and research and development progress.
The call will take place today, October 26, 2006, at 1:30 p.m. PDT.
A live webcast of the call can be accessed via the Internet at
http://www.biosite.com/. The phone number for U.S. callers is (866)
362-4831 and international callers is (617) 597-5347. The
conference call code for the live call is 70356502. The call will
be archived on the Biosite website for at least 21 days. The phone
replay number is (888) 286-8010. International callers, please dial
(617) 801-6888. Please reference the conference call code 34186056.
About Non-GAAP Financial Measures This press release contains
financial results and guidance that excludes the effects of FAS
123R, Share-Based Payment, which relates to stock-based
compensation, and is not in accordance with U.S. generally accepted
accounting principles (GAAP). The Company believes that this
Non-GAAP financial measure provides meaningful supplemental
information to both management and investors that is indicative of
the Company's core operating results and facilitates comparison of
operating results across reporting periods. The Company uses this
Non-GAAP measure when evaluating its financial results as well as
for internal resource management, planning and forecasting
purposes. This Non-GAAP measure should not be viewed in isolation
from or as a substitute for the Company's financial results or
guidance in accordance with GAAP. Assumptions regarding the
valuation of stock-based compensation and the timing of events,
such as the issuance of new stock-based compensation awards and the
realization of tax benefits, may differ from actual results. For
more information, please see the guidance table included at the end
of this release. Forward Looking Statements This press release
contains forward-looking statements that involve risks and
uncertainties that could cause actual results to differ materially
from any future results, performance or achievements expressed or
implied by such statements. Examples of forward-looking statements
are financial targets and growth objectives and also include but
are not limited to statements that are preceded by, followed by, or
that include the words "will"; "believes"; "should"; "intend";
"anticipates"; "plans"; "expects"; "estimates"; or similar
statements. Forward-looking statements in this press release
include statements regarding the Company's expected financial
performance for the 2006 and 2007 fiscal years, such as anticipated
revenues and earnings per share, the Company's ability to maintain
market share for BNP testing, the Company's plans to complete the
development of the Triage Sepsis Panel, an acute kidney injury test
and next generation Triage Cardio Profiler products, and commence
related clinical trials for these potential products and the Triage
Stroke Panel when expected, as well as the Company's ability to
launch new products when anticipated. Risks and uncertainties
include risks associated with Biosite's ability to commence and
complete clinical trials as currently planned; Biosite's ability to
adequately respond to the U.S. Food & Drug Administration's
questions regarding the pending 510(k) filing for MPO; Biosite's
ability to complete the development of a satisfactory Protein C
test; Biosite's ability to obtain regulatory approvals and complete
other pre-market activities needed to launch new products as
currently planned, including the MPO test, a sepsis panel, a panel
for acute kidney injury and a Protein C test; Biosite's ability to
effectively promote and market acceptance of any new products; the
continued growth of the BNP market generally, including the
physician office market; the Company's ability to effectively
expand sales activities outside the United States; and other risks
associated with changing market conditions and the effect of
competition from companies with greater capital and resources,
including the impact on market pricing for BNP testing generally.
Other risks that should be considered are detailed in the Company's
most recent Annual Report on Forms 10-K and 10-Q and other SEC
filings. The Company disclaims, however, any intent or obligation
to update these forward-looking statements. Copies of the Company's
SEC filings are available from the Investor Relations department or
from the Company's website. Biosite(R), Cardio Profiler(R),
Triage(R) and New Dimensions in Diagnosis(R) are registered
trademarks of Biosite Incorporated. Biosite Incorporated Unaudited
Statements of Income Data - GAAP (in thousands, except per share
data and margins) Three months ended Nine months ended September
30, September 30, 2006 2005 % Change 2006 2005 % Change Total
revenues: Product sales $73,111 $68,888 6% $227,640 $211,282 8%
Contract revenue 1,531 780 96% 4,101 3,996 3% Total revenues 74,642
69,668 7% 231,741 215,278 8% Gross margin on product sales 68% 70%
69% 70% Operating expenses: Cost of product sales 23,694 20,900 13%
70,236 64,155 9% Selling, general and administrative 24,107 17,858
35% 72,909 54,930 33% Research and development 12,512 10,549 19%
39,354 31,509 25% License and patent disputes -- 788 (100%) 3,142
1,340 134% Total operating expenses 60,313 50,095 20% 185,641
151,934 22% Operating income 14,329 19,573 (27%) 46,100 63,344
(27%) Operating income as % of total revenue 19% 28% 20% 29%
Interest and other income, net 1,312 1,095 20% 3,554 1,669 113%
Income before provision for income taxes 15,641 20,668 (24%) 49,654
65,013 (24%) Provision for income taxes (6,600) (8,099) (19%)
(20,134) (24,680) (18%) Net income $9,041 $12,569 (28%) $29,520
$40,333 (27%) Diluted earnings per share $0.49 $0.68 (28%) $1.60
$2.19 (27%) Diluted shares used in calculating per share amounts
18,282 18,596 18,395 18,394 Share-based compensation expense for
stock options and the employee stock purchase plan recorded in
accordance with FAS 123R for continuing operations: Cost of product
sales $867 $-- $1,870 $-- Selling, general and administrative 3,674
-- 11,523 -- Research and development 1,702 -- 5,299 -- Subtotal
$6,243 $-- $18,692 $-- Tax benefit (1,866) -- (5,283) -- Total
$4,377 $-- $13,409 $-- Biosite Incorporated Unaudited Statements of
Income Data - Non-GAAP (in thousands, except per share data and
margins) NOTE: Non-GAAP results exclude the impact of FAS 123R,
which relates to the expensing of non-cash stock-based compensation
Three months ended Nine months ended September 30, September 30,
2006 2005 % Change 2006 2005 % Change Total revenues: Product sales
$73,111 $68,888 6% $227,640 $211,282 8% Contract revenue 1,531 780
96% 4,101 3,996 3% Total revenues 74,642 69,668 7% 231,741 215,278
8% Gross margin on product sales 69% 70% 70% 70% Operating
expenses: Cost of product sales 22,827 20,900 9% 68,366 64,155 7%
Selling, general and administrative 20,433 17,858 14% 61,386 54,930
12% Research and development 10,810 10,549 2% 34,055 31,509 8%
License and patent disputes -- 788 (100%) 3,142 1,340 134% Total
operating expenses 54,070 50,095 8% 166,949 151,934 10% Operating
income 20,572 19,573 5% 64,792 63,344 2% Operating income as % of
total revenue 28% 28% 28% 29% Interest and other income, net 1,312
1,095 20% 3,554 1,669 113% Income before provision for income taxes
21,884 20,668 6% 68,346 65,013 5% Provision for income taxes
(8,466) (8,099) 5% (25,417) (24,680) 3% Net income $13,418 $12,569
7% $42,929 $40,333 6% Diluted earnings per share $0.74 $0.68 9%
$2.36 $2.19 8% Diluted shares used in calculating per share amounts
18,017 18,596 18,154 18,394 Biosite Incorporated Unaudited
Reconciliation of Consolidated Statements of Income Data - Non-GAAP
to Consolidated Statements of Income Data - GAAP (in thousands,
except per share data and margins) Three months ended Three months
ended September 30, 2006 September 30, 2005 Non-GAAP Adjmts GAAP
Non-GAAP Adjmts GAAP Total revenues: Product sales $73,111 $--
$73,111 $68,888 $-- $68,888 Contract revenue 1,531 -- 1,531 780 --
780 Total revenues 74,642 -- 74,642 69,668 -- 69,668 Gross margin
on product sales 69% (1%) 68% 70% 0% 70% Operating expenses: Cost
of product sales 22,827 867[a] 23,694 20,900 -- 20,900 Selling,
general and administrative 20,433 3,674[a] 24,107 17,858 -- 17,858
Research and development 10,810 1,702[a] 12,512 10,549 -- 10,549
License and patent disputes -- -- -- 788 -- 788 Total operating
expenses 54,070 6,243 60,313 50,095 -- 50,095 Operating income
20,572 (6,243) 14,329 19,573 -- 19,573 Operating income as % of
total revenue 28% (9%) 19% 28% 0% 28% Interest and other income,
net 1,312 -- 1,312 1,095 -- 1,095 Income before provision for
income taxes 21,884 (6,243) 15,641 20,668 -- 20,668 Provision for
income taxes (8,466) 1,866[a] (6,600) (8,099) -- (8,099) Net income
$13,418 $(4,377) $9,041 $12,569 $-- $12,569 Diluted earnings per
share $0.74 $(0.25) $0.49 $0.68 $-- $0.68 Diluted shares used in
calculating per share amounts 18,017 265 18,282 18,596 -- 18,596
[a] - Adjustments to exclude from Non-GAAP financial measures the
impact of FAS 123R, which relates to the expensing of non-cash
stock-based compensation, beginning the first quarter of 2006.
Biosite Incorporated Unaudited Reconciliation of Consolidated
Statements of Income Data - Non-GAAP to Consolidated Statements of
Income Data - GAAP (in thousands, except per share data and
margins) Nine months ended Nine months ended September 30, 2006
September 30, 2005 Non-GAAP Adjmts GAAP Non-GAAP Adjmts GAAP Total
revenues: Product sales $227,640 $-- $227,640 $211,282 $-- $211,282
Contract revenue 4,101 -- 4,101 3,996 -- 3,996 Total revenues
231,741 -- 231,741 215,278 -- 215,278 Gross margin on product sales
70% (1%) 69% 70% 0% 70% Operating expenses: Cost of product sales
68,366 1,870[a] 70,236 64,155 -- 64,155 Selling, general and
administrative 61,386 11,523[a] 72,909 54,930 -- 54,930 Research
and development 34,055 5,299[a] 39,354 31,509 -- 31,509 License and
patent disputes 3,142 -- 3,142 1,340 -- 1,340 Total operating
expenses 166,949 18,692 185,641 151,934 -- 151,934 Operating income
64,792 (18,692) 46,100 63,344 -- 63,344 Operating income as % of
total revenue 28% (8%) 20% 29% 0% 29% Interest and other income,
net 3,554 -- 3,554 1,669 -- 1,669 Income before provision for
income taxes 68,346 (18,692) 49,654 65,013 -- 65,013 Provision for
income taxes (25,417) 5,283[a] (20,134) (24,680) -- (24,680) Net
income $42,929 $(13,409) $29,520 $40,333 $-- $40,333 Diluted
earnings per share $2.36 $(0.76) $1.60 $2.19 $-- $2.19 Diluted
shares used in calculating per share amounts 18,154 241 18,395
18,394 -- 18,394 [a] - Adjustments to exclude from Non-GAAP
financial measures the impact of FAS 123R, which relates to the
expensing of non-cash stock-based compensation, beginning the first
quarter of 2006. Biosite Incorporated Selected Product Data (in
thousands, except margins and %'s) Sales by Product: Q1 2005 Q2
2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Triage(R) Drugs of
Abuse Products $10,283 $11,341 $12,408 $11,018 $11,547 $10,464
$11,444 Triage Cardiac Panel 5,985 6,439 7,142 6,629 6,616 7,188
6,902 Triage BNP Tests 49,771 49,058 43,892 46,893 52,564 50,678
45,531 Triage Profiler Products 1,946 2,226 2,852 3,465 4,036 4,598
5,735 Triage D-Dimer Test 131 481 757 1,489 1,417 1,450 1,616
Triage Parasite Panel 255 283 355 269 286 337 377 Triage C.
difficile Panel 1,349 1,377 942 988 1,029 1,088 1,022 Triage Meters
776 693 538 724 625 539 458 Triage Stroke Panel (EU) -- -- 2 15 37
30 26 Total Product Sales $70,496 $71,898 $68,888 $71,490 $78,157
$76,372 $73,111 Inter- national Sales: Q1 2005 Q2 2005 Q3 2005 Q4
2005 Q1 2006 Q2 2006 Q3 2006 Inter- national Sales as % of Product
Sales 13% 12% 12% 13% 14% 15% 14% BNP Inter- national Sales as % of
BNP Total Sales 10% 9% 9% 10% 11% 11% 10% Margin by Product Type
(a), (b): Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006
Triage Drugs of Abuse Product Line 82% 78% 82% 81% 79% 77% 73%
Triage Cardio- vascular Product Line (incl. BNP) 72% 69% 69% 70%
71% 70% 68% (a) These margins do not include all products. The
Triage Meters, Triage Micro Product Line and Triage Stroke Panel
are not included. (b) Includes the impact of FAS 123R, which
relates to the expensing of non-cash stock-based compensation,
beginning the first quarter of 2006. Biosite Incorporated Unaudited
Balance Sheet Data - GAAP (in thousands) September 30, December 31,
2006 2005 Unaudited Assets Cash, cash equivalents & marketable
securities $159,078 $132,412 Accounts receivable 30,997 30,303
Inventories 31,871 32,627 Other current assets 8,908 9,422 Total
current assets 230,854 204,764 Property, equipment and leasehold
improvements, net 158,218 151,018 Patents and license rights, net
9,828 4,764 Other assets 12,958 7,380 Total assets $411,858
$367,926 Liabilities and Stockholders' Equity Current liabilities
$50,902 $39,104 Long-term liabilities 9,152 13,457 Stockholders'
equity 351,804 315,365 Total liabilities and stockholders' equity
$411,858 $367,926 Biosite Incorporated Guidance Data (in thousands,
except per share data, margins and %'s) The financial guidance
provided below is an estimate based on information available as of
October 26, 2006. The Company's future performance and financial
results are subject to risks and uncertainties, and actual results
could differ materially from the guidance set forth below. Some of
the factors that could affect the Company's actual financial
results are stated above in the section entitled "Forward Looking
Statements" and in the Company's filings with the SEC. The Company
assumes no obligation to update the guidance set forth below. Three
months ended December 31, 2006 Non-GAAP Estimate Adjustments (a)
GAAP Estimate Triage(R) BNP product sales $48,000 -- $48,000 Total
product sales $75,500 -- $75,500 Total revenues $76,500 -- $76,500
International product sales % of Total product sales 16.0% -- 16.0%
Gross margin on product sales 69.5% (1.0%)(b) 68.5% Operating
expenses (excl. Cost of sales) % of Revenue 40.0% 7.0%(b) 47.0%
Operating income as % of total revenues 29.5% (8.0%)(b) 21.5%
Diluted earnings per share $0.83 $(0.25)(b) $0.58 Income tax rate
38.5% 3.0%(b) 41.5% Cash flow from operations $15,000 -- $15,000
Year ended December 31, 2006 Non-GAAP Estimate Adjustments (a) GAAP
Estimate Triage BNP product sales $196,500 -- $196,500 Total
product sales $303,000 -- $303,000 Total revenues $308,000 --
$308,000 International sales % of total sales 15.0% -- 15.0% Gross
margin on product sales 70.0% (1.0%)(b) 69.0% Operating expenses
(excl. Cost of sales) % of revenues 42.0% 7.0%(b) 49.0% Operating
income as % of total revenues 28.5% (8.0%)(b) 20.5% Diluted
earnings per share $3.19 $(1.01)(b) $2.18 Income tax rate 37.5%
3.5%(b) 41.0% Cash flow from operations $80,000 -- $80,000 Year
ended December 31, 2007 Non-GAAP Estimate Adjustments (a) GAAP
Estimate Total revenues $326,000 -- $326,000 (a) These adjustments
reconcile the Company's non-GAAP financial guidance to its GAAP
financial guidance for the next quarter and full year 2006 and the
full year 2007. See the section entitled "About Non-GAAP Financial
Measures" above. (b) Reflects the estimated non-cash compensation
expense attributable to stock-based compensation awards including
stock options and employee stock purchase plan shares and their
estimated impact on income taxes and diluted shares used in
calculating EPS. This amount reflects the total estimated expense
from the application of FAS 123R, which the Company adopted in the
first quarter of 2006. DATASOURCE: Biosite Incorporated CONTACT:
Nadine Padilla, VP, Corporate & Investor Relations of Biosite
Incorporated, +1-858-805-2820, Web site: http://www.biosite.com/
Company News On-Call: http://www.prnewswire.com/comp/116737.html
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