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Q3 2012 Earnings Call
November 08, 2012 8:30 am ET
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
Zarak Khurshid - Wedbush Securities Inc., Research Division
Gregory J. Simpson - Wunderlich Securities Inc., Research Division
Jonathan P. Groberg - Macquarie Research
Daniel L. Leonard - Leerink Swann LLC, Research Division
Nicholas Jansen - Raymond James & Associates, Inc., Research Division
Anthony Petrone - Jefferies & Company, Inc., Research Division
Isaac Ro - Goldman Sachs Group Inc., Research Division
John M. Putnam - Capstone Investments, Research Division
Eric Criscuolo - Mizuho Securities USA Inc., Research Division
Previous Statements by ALR
» Alere's CEO Discusses Q2 2012 Results - Earnings Call Transcript
» Alere's CEO Discusses Q1 2012 Results - Earnings Call Transcript
» Alere's CEO Discusses Q4 2011 Results - Earnings Call Transcript
Thank you, Sue, and good morning and welcome to the Alere conference call to discuss our results for the quarter ended September 30, 2012.
We are joined today by Ron Zwanziger, Chairman and CEO; and Dave Teitel, CFO.
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 the U.S. securities laws. 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 acquire and integrate our acquisitions and to recognize the expected benefits of 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 and services; the market acceptance of our products and services; 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 to recognize the expected benefits of this strategy; the impact of health care reform legislation, as well as future reform initiative; the content and [indiscernible] regulatory decisions and actions, including the results and consequences of FDA inspections and the OIG subpoena, as well as the impact of changes in reimbursement policy and budgetary constraints, both in the United States and abroad; the effect of pending and future legal proceedings on our financial performance 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, 2011, 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 measure 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 www.alere.com.
With that, let me turn the call over to Alere Chairman and CEO, Ron Zwanziger. Ron?
Thanks, Doug, and good morning, everyone. Despite strong cash flow, this quarter has been very difficult, particularly given the problems with Triage in Europe. Fortunately, with the exception of Europe, the issues affecting this quarter were primarily transitory.
Throughout the third quarter, we worked with the FDA to agree on revised release specifications for the Triage products manufactured in San Diego, and at the very end of the quarter, we were able to reach final agreement. While the agreed release criteria is quite rigid and resulted in more acute yield and manufacturing issues in October than anticipated, shipments of the affected products are now beginning to increase, and we believe that while U.S. Triage supply will remain a challenge in the near future, by the end of this quarter, we should have reached a threshold of manufacturing efficiency that will enable us to move -- effectively supply the market by early in the first quarter of 2013.
In terms of business lost as a result of these supply constraints, we believe that a recovery of 50% of the lost accounts by the end of 2013 is an achievable but challenging target, which will hinge on our ability to reestablish dependable supply into the market early in the year.
A second challenge, which we have regularly been reporting on in each of our quarterly calls, has been the macroeconomic environment in Europe. As has been broadly reported in the earnings call of other companies and in the general press, European economic activity has continued to deteriorate throughout the third quarter and the impact of both that factor, as well as our supply constraints with Triage in the U.S. can be seen in our Q3 reported results.
As in prior quarters, we continue to expect difficulties in Europe to continue for the foreseeable feature with the actual impact on any given quarter quite difficult to predict.
The magnitude of these 2 issues outpaced our continued strong performance in Asia and emerging markets around the world, despite the supply constraint in Asia, which reduced Q3 revenues but should be resolved by the end of Q4.