CONTACTS
[LOGO] Cepheid At the Company:
Cepheid
904 Caribbean Drive John Bishop John Sluis
Synnyvale, CA94089 CEO, Cepheid CFO, Cepheid
Telephone: 408.541.4191 408-541-4191 408-541-4191
Fax: 408.541.4192 bishop@cepheid.com sluis@cepheid.com
At FRB | Weber Shandwick:
Cynthia Martin Tricia Ross
Media Contact Investor/Analyst
Information
312.640.6741 310-407-6540
clmartin@webershandwick.com tross@webershandwick.com
For Immediate Release
CEPHEID REPORTS FIRST QUARTER 2003 RESULTS
Total Quarter Revenues Increase By 60% Driven by 36% Increase in
Product Sales, Gross Profit on Product Sales Increase by 92%
SUNNYVALE, Calif., April 30, 2003 -- Cepheid (NASDAQ: CPHD) today announced
financial results for the first quarter ended March 31, 2003.
Product sales for the quarter ended March 31, 2003 increased 36% to
approximately $3.1 million from approximately $2.3 million in the same quarter
of 2002. The increase in product sales was due to increases in both instrument
and reagent and disposable sales. Total first quarter revenues increased 60% to
approximately $3.8 million compared to approximately $2.4 million for the same
quarter of 2002 due to the increase in product sales and grant and government
sponsored research revenue.
The gross margin on product sales for the quarter increased to 42% compared to
30% for the same period of 2002. The increase in gross margin is due primarily
to improved product pricing and manufacturing economies of scale. Research and
development and selling, general and administrative expenses increased by
approximately 15% for the quarter ended March 31, 2003 as compared to the same
quarter of 2002. This increase primarily resulted from the company's increased
investment in sales and marketing in the United States and Europe. Net loss for
the quarter ended March 31, 2003 was approximately $4.7 million, or $0.15 per
share, compared to a net loss of approximately $5.0 million, or $0.19 per share
for the same quarter in 2002.
Commenting on first quarter performance, Chief Executive Officer John Bishop
stated:
"We are realizing the benefits of strategic initiatives developed and
implemented in 2002. Product sales resulting from our European subsidiary,
Cepheid SA, offset softness in the United States Life Science market resulting
from weakness in government funding of grant and research programs. Sales of
reagents and disposables contributed to the quarter on a more significant basis
and we realized a substantial increase in product margins resulting from
improved product pricing and manufacturing economies of scale. Significantly,
with the initial shipment of the IDI-Strep B(TM)
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product in March, we entered the Clinical Genetic Assessment Market, the third
market segment of our three primary markets, Life Sciences, BioThreat and
Clinical Genetic Assessment. We expect the Clinical Genetic Assessment market to
represent the most substantial of our market opportunities and a key to our
strategic growth.
In the BioThreat market, the Northrop Grumman led consortium, of which Cepheid
is a part, is progressing toward deployment of the pre-production units of the
Bio-Agent Detection System (BDS) being developed by the consortium for the U.S.
Postal Service (USPS). Under the previously announced pre-production contract
BDS units will be installed and tested at 14 USPS facilities.
Recent articles appearing in the press state that production deployment of the
BDS may be initiated in Q1 2004 depending upon data collected with the
pre-production units. Utilization of test cartridges is expected to be in line
with the potential deployment schedule of the BDS units. While some GeneXpert
shipments for BDS may be realized in 2003, we do not expect them to represent a
meaningful contribution to 2003 product sales."
2003 Outlook
Commenting on Cepheid's outlook for 2003, Mr. Bishop stated:
"We expect to continue to make progress with our international marketing
initiatives and with our entry into the Clinical Genetic Assessment
market. However, we expect to see continued softness in the United States
Life Sciences market for the remainder of 2003. As a result, we now expect
to see 2003 product sales, excluding any sales associated with any
potential USPS BDS production contract, to be in the range of $19.0
million to $22.0 million. We expect our 2003 net loss to be in the range
of $16.5 million to $15.0 million or $0.53 to $0.48 per share, based on
March 31, 2003 weighted average shares outstanding of 31.4 million and
excluding any potential benefit from a USPS production contract," Bishop
concluded.
Conference Call Information
Management will host a conference call today at 4:30pm (Eastern) to discuss
Cepheid's financial results, business highlights and outlook. The call will be
simultaneously broadcast over the Internet. Interested participants and
investors may access the teleconference call by dialing 800-215-6437 (domestic)
or 706-679-7393 (international). There will also be a live webcast of the call
on the Investor Relations section of Cepheid's web site at www.cepheid.com. Web
participants are encouraged to go to the web site at least 15 minutes prior to
the start of the call to register, download, and install any necessary audio
software. Listening to the webcast requires speakers and RealPlayer(TM)
software, downloadable free at www.real.com.
Cepheid's CEO John Bishop, COO and President Dr. Kurt Petersen and CFO John R.
Sluis, will be present. After the live webcast, the call will remain available
on Cepheid's website, www.cepheid.com, through April 29, 2004. A replay of the
conference call will be available at 800-642-1687 (domestic) or 706-645-9291
(international) through May 7, 2003; the conference ID is 9992846. The replay
will be available after 5:30 pm (Eastern).
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About Cepheid
Cepheid (Nasdaq: CPHD), based in Sunnyvale, Calif., is a leading
developer, manufacturer and marketer of fully integrated systems that enable
genetic assessment when and where it is needed. Founded in 1996, the company is
commercializing its technology and products worldwide for research, medical, and
industrial applications requiring assessment of the human genome, infectious
disease and biothreat agents. See www.cepheid.com for more information.
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This press release contains forward-looking statements that are not purely
historical regarding Cepheid's or its management's intentions, beliefs,
expectations and strategies for the future, including those relating to revenue
growth, growth in identified markets, future net losses, the status of the
potential USPS BDS program, new product introductions, and business prospects.
Because such statements deal with future events, they are subject to various
risks and uncertainties, and actual results could differ materially from the
company's current expectations. Factors that could cause actual results to
differ materially include risks and uncertainties such as those relating to:
whether the Northrop-Grumman led consortium is awarded a BDS production contract
by the USPS, the ability of the parties to agree on a contract that is
acceptable to all participants, the timing of actual USPS funding and
deployment, the rate of environmental testing conducted by the USPS, which will
affect the amount of consumable products sold, and whether the system-as-built
performs to specifications; the potential need for FDA regulation in the
clinical diagnostic markets that Cepheid may target; the ability of Cepheid to
bring the IDI-Strep B product to market within projected time frames, and the
performance and market acceptance of this product; Cepheid's ability to develop
additional products for the Clinical Genetic Assessment market; the potential
need to obtain rights and licenses with respect to certain technologies, targets
and tests in other markets Cepheid may pursue; Cepheid's reliance on
distributors to market, sell and support its products; Cepheid's success in
increasing its direct sales; the impact of competitive products and pricing; the
ability of Cepheid to manage geographically-dispersed operations; underlying
market conditions in the U.S. and in international markets; and development and
manufacturing problems, including with respect to the GeneXpert(R) system and
reagents. Readers should also refer to the section entitled "Risk Factors" in
Cepheid's Annual Report on Form 10-K for 2002, filed with the Securities and
Exchange Commission.
All forward-looking statements and reasons why results might differ
included in this release are made as of the date of this press release, based on
information currently available to Cepheid, and Cepheid assumes no obligation to
update any such forward-looking statement or reasons why results might differ.
(FINANCIAL STATEMENTS FOLLOW)
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CEPHEID
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share data)
Three months ended
March 31,
2003 2002
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Revenues:
Instrument sales..................................... $ 2,794 $ 2,175
Reagents and disposables sales 340 126
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Total Product Sales............................... 3,134 2,301
License and royalty revenue......................... 32 66
Grant and government sponsored research
revenue........................................... 567 --
Research and development contract revenue 46 --
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Total revenues.................................. 3,779 2,367
Operating costs and expenses:
Cost of product sales................................ 1,808 1,609
Research and development............................. 3,827 4,001
Selling, general and administrative.................. 2,796 1,775
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Total operating costs and expenses.............. 8,431 7,385
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Loss from operations................................... (4,652) 5,018)
Interest (expense ) income, net........................ (36) 48
------- -------
Net loss .............................................. $(4,688) $(4,970)
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Net loss per share, basic and diluted.................. $ (0.15) $ (0.19)
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Shares used in computing net loss per share, basic
and diluted......................................... 31,393 26,346
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CEPHEID
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
ASSETS
March 31, December 31,
2003 2002 (1)
---------- ------------
(unaudited)
Current assets:
Cash and cash equivalents.................................. $ 13,250 $ 14,505
Restricted cash............................................ 2,326 2,296
Accounts receivable........................................ 3,112 3,044
Inventory.................................................. 3,961 3,850
Prepaid expenses and other current assets.................. 781 352
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Total current assets............................... 23,430 24,047
Property and equipment, net................................ 6,248 6,144
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Total assets....................................... $ 29,678 $ 30,191
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable........................................... $ 2,024 $ 2,367
Accrued compensation....................................... 1,507 1,171
Accrued other liabilities.................................. 1,782 2,092
Current portion of equipment financing..................... 1,312 1,423
Current portion of bank loan payable....................... 33 32
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Total current liabilities.......................... 6,658 7,085
Equipment financing, less current portion.................... 1,323 1,629
Bank loan payable, less current portion...................... 366 364
Deferred rent, less current portion.......................... 398 355
Shareholders' equity:
Common stock............................................... 80,709 75,928
Additional paid-in capital................................. 7,488 7,505
Deferred stock-based compensation.......................... (16) (103)
Accumulated foreign exchange translation adjustment 16 4
Accumulated deficit........................................ (67,264) (62,576)
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Total shareholders' equity......................... 20,933 20,758
---------- ----------
Total liabilities and shareholders' equity......... $ 29,678 $ 30,191
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(1) The balance sheet at December 31, 2002 has been derived from the audited
financial statements which are included in the Company's Form 10-K filed
with the Securities and Exchange Commission.
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