Alere Inc. (ALR)

ALR 
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Alere (ALR)

Q4 2013 Earnings Call

February 06, 2014 8:30 am ET

Executives

Doug Guarino - Director of Corporate Communications & Corporate Relations

Ron Zwanziger - Chairman, Chief Executive Officer and President

David A. Teitel - Chief Financial Officer, Principal Accounting Officer, Vice President and Treasurer

Namal Nawana - Chief Operating Officer

Analysts

Jonathan P. Groberg - Macquarie Research

Daniel L. Leonard - Leerink Swann LLC, Research Division

William B. Bonello - Craig-Hallum Capital Group LLC, Research Division

Raj Denhoy - Jefferies LLC, Research Division

Jeffrey Frelick - Canaccord Genuity, Research Division

Isaac Ro - Goldman Sachs Group Inc., Research Division

Zarak Khurshid - Wedbush Securities Inc., Research Division

Presentation

Operator

Good morning, and welcome to the Alere Incorporated Conference Call to Discuss Fourth Quarter 2013 Results. [Operator Instructions]

Please note this event is being recorded. I would now like to turn the conference over to Mr. Doug Guarino, Director of Corporate Relations. Mr. Guarino, please go ahead.

Doug Guarino

Thank you, Amy. And good morning, and welcome to the Alere conference call to discuss our results for the quarter and year ended December 31, 2013. We're joined today by Ron Zwanziger, Chairman and CEO; Dave Teitel CFO; and Namal Nawana, COO.

Before we get to that discussion, though, I would 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 U.S. securities laws, including statements about future organic growth, potential divestitures and anticipated reductions in costs. These statements reflect our current views with respect to 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 complete planned divestitures, integrate our acquisitions and recognize the expected benefits of our restructuring and operational initiatives; the success of ongoing our potential product launches and product reintroduction; our ability to develop enhanced health information solutions through the integrated use of innovative diagnostic and monitoring devices and to recognize the expected benefits of this strategy; the impact of health care reform legislation; the content and timing of regulatory decisions and actions, including the impact of the FDA Warning Letter in the OIG subpoena, as well as the impact of changes in reimbursement policy and budgetary constraints, both in the United States and abroad; and the risks and uncertainties described in our periodic reports filed with the Securities and Exchange Commission, including our Form 10-K for the year ended December 31, 2012, as well as 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 measures discussed, a 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.

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

Ron Zwanziger

Thanks, Doug, and good morning, everyone. As posted in our earnings release earlier today, we delivered very strong results in the fourth quarter, reflecting a continuation of the improved financial performance we've achieved throughout 2013.

As we continue to execute against a 3-point plan, which we described to shareholders more than a year ago, our focus on operational excellence is yielding more consistent performance across multiple businesses and geographies, thus allowing us to identify and react more quickly to local challenges.

This capacity is, in turn, leading to improved earnings predictability and results.

Our full year organic revenue growth from our Professional Diagnostic unit of 5.1% compared to 4.8% in 2012 reflects a gradual shift from acquired growth to organic growth as a natural progression of our business. While we continued to experience quarterly fluctuations on organic growth rate, the trend remains, and I'll -- we'll spend more time during this call describing why we have such confidence about our prospects for expanding growth rates in the coming years.

One of the main contributors to our optimism about revenue growth is the anticipated recovery in Triage. Our manufacturing has continued to ramp up through improved deals. And with further automation planned for early 2014, we're now consistently supplying the market with all the products other than the 2 panels, shortness of breath and toxicology. Based on our progress over the past few months, we have become increasingly confident we will return [ph] one or both of these remaining Triage panels to the market during the first half of this year.

We made significant changes to the composition of our board of directors in 2013 in a process begun in 2012 to address the increasing size and complexity of our business. Throughout the second half of the year, our board members have been actively engaged in an objective top-down review of all facets of the business and have been providing actionable input on all aspects of the company's business and strategy. Their work has been invaluable in helping us further refine our mission and has improved -- and has provided increased confidence around the shareholder value that can be created through our approach.

Through active communications with our employees as well as through an incentive system that keeps key executives around the world mindful of our commitments, we remain intently focused on enhancing shareholder value through the 3-point plan to accelerate the company's organic growth rate, improve operational execution and deleverage our capital structure. Successful execution of this plan should drive higher operating margins, improve free cash flow generation and increase earnings growth in support of the commitments we have made to shareholders.

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