Alere (ALR), a medical products company focused on integrating rapid diagnostics with health management, reported fourth-quarter and fiscal 2010 adjusted earnings per share of 77 cents and $2.69, respectively, beating the corresponding Zacks Consensus Estimates of 62 cents and $2.28.
Reported net loss was about $1 billion (or $12.24 per share) in the fourth quarter, sharply higher from a minor loss of $3.1 million (4 cents per share) in the prior-year period. Reported net loss in the most recent quarter contains a $1 billion non-cash charge resulting from the impairment of goodwill in its Health Management segment.
The company’s adjusted results exclude one-time or extraordinary charges such as amortization, restructuring, acquisition-related items and the aforementioned $1 billion non-cash charge.
Net revenues were $578.5 million in the reported quarter, up 5.9% year over year, surpassing the Zacks Consensus Estimate of $551 million. Sales were $2,155 million in the fiscal year, up 12.1%, exceeding the Zacks Estimate of $2,128 million.
On a segment-wise basis, revenues from Professional Diagnostics were $401.4 million in the fourth quarter, up 10.9% year over year. Recent acquisitions resulted in $43.8 million of incremental sales compared with the prior-year quarter. Adjusted organic segment growth was 6.5% on a year-over-year basis.
Adjusted gross margin, as reported, was 55.3% in the fourth quarter, down from 58.3% in the year-ago quarter. The same for the Professional Diagnostics segment was 60.1%, up from 59.9% in the sequentially prior quarter while that for the Health Management unit dropped to 47.6% from 51.8% in the preceding period.
Balance Sheet
Cash and cash equivalents totaled $401.3 million as of December 31, 2010, down 18.6% year over year. Long-term liabilities, in the form of notes payable, amounted to $2.4 billion, up 11.8% on a year-over-year basis.
Outlook
Diagnostic tests are shifting closer to the consumers and into the home testing market, as more diagnostic tests are being developed to monitor patients rather than simply diagnose them. Alere’s strategy of combining disease management with point-of-care testing (“POCT”), in a manner that encourages patients to take responsibility for their overall health care, is viewed as a prudent approach while at the same time ensuring affordability.
In addition to growing its revenues through a combined strategy of continued acquisitions and measured organic growth, the company is committed to improving its operating margin. Further, its product pipeline is strong, which has been developed through a combination of internal R&D as well as serial acquisitions. One of the company’s competitors is Abaxis (ABAX).
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