Cepheid Q3 Loss Widens, Revenues Top View; Boosts 2014 Outlook

(RTTNews) - Molecular diagnostics company Cepheid, Inc. (CPHD) reported Thursday a loss for the third quarter that widened from last year, despite improved gross margins and double-digit sales growth, reflecting higher costs and operating expenses. The company also raised earnings and revenues guidance for the full-year 2014.

"We continued to make solid progress on our strategic initiatives in the third quarter, broadening our test menu, growing our installed base to more than 7,500, penetrating the Independent Lab Market with the addition of two major national U.S. reference lab customers, and extending our technology lead," Chairman and CEO John Bishop said in a statement.

The Sunnyvale, California-based company reported a net loss of $7.24 million or $0.10 per share for the third quarter, wider than $1.38 million or $0.02 per share in the prior-year quarter.

Excluding items, adjusted net income for the quarter was $4.65 million or $0.06 per share, compared to $6.62 million or $0.09 per share in the year-ago quarter.

On average, 15 analysts polled by Thomson Reuters expected the company to report a loss of $0.16 per share for the quarter. Analysts' estimates typically exclude special items.

Total sales for the quarter grew 15 percent to $115.21 million from $100.08 million in the same quarter last year, and topped twenty-one Wall Street analysts' consensus estimate of $110.04 million.

Gross margins for the quarter improved 400 basis points to 49 percent, but total costs and operating expenses increased to $122.06 million from $101.60 million last year.

Total clinical sales for the quarter grew 17 percent from the year-ago quarter to $107.1 million, with clinical systems sales declining 3 percent and clinical reagents sales improving 21 percent. Meanwhile, non-clinical and other sales decreased 2 percent to $8.1 million from last year.

Geographically, domestic sales increased 16 percent to $67.9 million, and international sales grew 14 percent to $47.3 million in the prior-year quarter.

Gross margins for the quarter improved 300 basis points to 51 percent, but total costs and operating expenses increased to $118.61 million from $100.92 million last year.

Looking ahead to fiscal 2014, Cepheid raised its adjusted earnings guidance to in a range of $0.11 to $0.13 per share from the prior range of $0.10 to $0.13 per share. The company also now projects sales between $461 million and $465 million, up from the previous projection between $452 million and $461 million.

Street is currently looking for full-year 2014 loss of $0.52 per share on annual sales of $458.81 million.

"With renewed momentum in North America, continued strength in International, our first virology test expected before the end of the year, and growing interest in our sexual health portfolio, we believe that Cepheid is entering a prolonged growth phase," Bishop added.

CPHD closed Thursday's regular trading session at $44.67, up $0.86 or 1.96% on a volume of 1.10 million shares.