) reported a loss of 10 cents per share in the first quarter of
2014, a substantial decrease from the year-ago income of 2 cents
a share. However, loss was narrower than the Zacks Consensus
Estimate of a loss of 19 cents. Including one-time items, the
company reported a loss of 13 cents per share.
Revenues in Detail
Revenues grew 16.3% year over year to $106.9 million in the
first quarter, edging past the Zacks Consensus Estimate of $105
This increase came on the back of strong market adoption of
GeneXpert Systems and broadening reach of the Xpert test
portfolio. Growth was also driven by strong business in High
Burden Developing Countries (HBDC) and improved performance in
the commercial clinical business.
Segments in Detail
(up 26.1% year over year to $100.4 million) contributed about
93.9% to total revenues in the reported quarter. The Clinical
segment comprises Clinical Systems (up 38.4% year over year to
$17.3 million) and Clinical Reagents (up 23.8% year over year to
$83.1 million). The company expects Commercial Clinical
revenues in the range of $335-$346 million in 2014, up 14% - 18%
On the other hand, Cepheid's
Non-Clinical & Other business
revenues declined 47.2% year over year to $6.5 million. The
company expects non-Clinical business revenues to decline to
approximately $27 million in 2014.
During the reported quarter, Cepheid installed 181 GeneXpert
systems in its commercial Clinical business and another 322
GeneXpert systems as part of its HBDC program. The total count of
systems placed worldwide, including the HBDC systems, scales
6,012 as of Mar 31, 2014.
Cepheid's gross margin (considering stock-based compensation
as regular expense) declined 370 basis points (bps) year over
year to 50.6% in the reported quarter, reflecting an unfavorable
mix toward the lower-margin HBDC business. Cost of goods sold
during the quarter spiked 25.7% to $52.9 million.
In the reported quarter, operating expenses amounted to $58.4
million, up 26.4% year over year.
Cepheid exited the quarter with cash and cash equivalents and
short-term investments of $267.8 million compared with $74.9
million as on Dec 31, 2013. The company issued convertible Senior
Notes in Feb 2014 thereby collecting net proceeds of $336.4
In the first quarter of 2014, Cepheid used $16.9 million in
operating activities compared to generation of $15 million cash
flow from operations in 2013. Capital expenditure decreased 1.9%
year over year to $8.8 million.
2014 Guidance Tweaked
Cepheid revised its earnings per share guidance for 2014.
While it continues to expect total revenues in the range of $446
- $461 million, the company now expects a loss of 22 - 27 cents
per share in 2014. This includes the impact of stock-based
compensation expense. Earlier, the company was expecting a loss
of 25-30 cents per share. The new guidance reflects the issuance
of convertible Senior Notes in Feb 2014.
Excluding the impact of stock-based compensation expense, the
company expects earnings in the range of 19-24 cents per share
(old guidance: 24-29 cents per share)
The Zacks Consensus Estimate of $457 million is towards the
higher end of the revenue guidance range.
Cepheid expects total revenues in the range of $113 - $115
million in the second quarter of 2014. Moreover, excluding the
impact of stock-based compensation expense, the company expects
bottom line results to range from a loss of a penny to earnings
of 2 cents per share.
We are encouraged by the better-than-expected first quarter
results. Going forward, Cepheid's prospects seem strong with
growing adoption of the high throughput Infinity system and an
expanding molecular diagnostics test menu. Moreover, the launch
of Xpert HPV and Xpert Norovirus outside the U.S. provides
confidence regarding the company's potential.
Additionally, with the company expanding its geographical
boundaries to Italy, Spain and Scotland, strategies to expand in
emerging markets like India and China, and Xpert Trichomonas and
Xpert CARBA-R targeted for CE-IVD release in the second quarter
of 2014, we are optimistic about Cepheid's potential to improvise
its performance in
However, the non-performance of the Non-clinical business in
the first quarter will continue to remain a concern for the
Currently, Cepheid carries a Zacks Rank #3 (Hold). Some
better-ranked stocks in the broader healthcare sector that
warrant a look are
Myriad Genetics Inc.
ANI Pharmaceuticals, Inc
). All these companies sport a Zacks Rank #1 (Strong Buy).
AMGEN INC (AMGN): Free Stock Analysis Report
ANI PHARMACEUT (ANIP): Free Stock Analysis
CEPHEID INC (CPHD): Free Stock Analysis
MYRIAD GENETICS (MYGN): Free Stock Analysis
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