Exhibit 99.03
(CEPHEID LOGO)
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CEPHEID NEWS
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CEPHEID REPORTS SECOND QUARTER AND SIX MONTHS 2003 RESULTS
TOTAL SIX MONTH REVENUES INCREASE BY 41% DRIVEN BY 26% INCREASE IN PRODUCT
SALES, GROSS MARGIN DOLLARS ON PRODUCT SALES INCREASE BY 111%
SUNNYVALE, CA, JULY 31, 2003 ... Cepheid (Nasdaq: CPHD) today announced
financial results for the quarter and six months ended June 30, 2003.
Product sales for the quarter ended June 30, 2003 increased 18% to approximately
$3.2 million from approximately $2.7 million for the corresponding prior year
while product sales for the six months period ended June 30, 2003 increased 26%
to approximately $6.3 million from $5.0 million for the corresponding prior year
period. The increase in product sales for both the three and six month periods
ended June 30, 2003 as compared to the corresponding prior year periods was
primarily due to the 65% and 91% increase, respectively, in reagent and
disposable sales and to a lesser extent to the 10% and 19% increase,
respectively, in instrument sales. Total revenues for the quarter ended June 30,
2003 increased 28% to approximately $4.1 million compared to approximately $3.2
million for the corresponding prior year period, while total revenues for the
first six months ended June 30, 2003 increased 41% to $7.9 million from $5.6
million for the corresponding prior year period. The increase in total revenue
for both the three and six months ended June 30, 2003 as compared to the
corresponding prior year periods was due to the increase in product sales and
grant and government sponsored research revenue.
Gross Margin Dollars on product sales (total product sales less cost of product
sales) for the three and six months ended June 30, 2003 increased by 135% and
111%, respectively, as compared to the corresponding prior year periods. The
gross margin percentage on product sales for the quarter ended June 30, 2003
increased to 42% compared to 21% for the corresponding prior year period and
increased to 42% for the six months ended June 30, 2003 as compared to 25% for
the corresponding prior year period. The increase in gross margin on product
sales for the quarter and six months ended June 30, 2003 as compared to the
corresponding prior year periods is due primarily to manufacturing economies of
scale and improved product pricing. Net loss for the quarter and six months
ended June 30, 2003 was approximately $4.4 million, or $0.14 per share and $9.1
million, or $0.29 per share, respectively, compared to a net loss of
approximately $5.5 million, or $0.21 per share and $10.5 million, or $0.40 per
share for the corresponding prior periods.
Commenting on second quarter and six months performance, Chief Executive Officer
John Bishop stated:
"As expected, sales of reagents and disposables continue to grow at a faster
rate than sales in instrument systems. Instrument penetration in the U.S. Life
Sciences market continues to expand as determined by the number of unit purchase
orders placed with institutional purchasing departments. However, we continue to
see delays in institutions completing unit purchases. Our prior years'
experience was to have approximately five units left in the buyer's purchasing
departments at the end of each quarter. In 2003 we have seen that number
increase to 35 units at the end of the first quarter ending March 31, 2003 and
to 61 units at the end of the second quarter ended June 30, 2003. We are
penetrating the market
but are clearly seeing an increase in the amount of time required to complete
the purchase process.
"In the Clinical market, the Group B Strep product was introduced at the
American College of Obstetrics and Gynecology meeting in New Orleans in May and
product evaluations have been initiated at a number of accounts.
"In the BioThreat market, the Northrop Grumman led consortium, of which Cepheid
is a part, was successful in obtaining the award of a $175 million contract for
placement of production units of the Biohazard Detection System (BDS) for the
United States Postal Service (USPS). We expect to realize approximately 15 to
17% of the initial contract award with the majority of the revenue to occur in
2004. The contract award includes an option for placement of an additional
number of BDS units, which may be exercised in 2004. We further expect to
realize continuing demand for GeneXpert(R) anthrax test cartridges beyond the
initial contract awards.
"The success in the USPS program has clearly demonstrated the ability of the
GeneXpert system to provide an accurate genetic determination on a broadly
disseminated and user-friendly basis. We expect the demonstrated capability of
the system to translate well to the Clinical market for infectious disease and
oncology use on a relatively near-term basis."
2003 OUTLOOK
Commenting on Cepheid's outlook for 2003, Mr. Bishop stated:
"We expect to see a slightly stronger second half of 2003. Additional programs
will be initiated in support of the GBS product in the Clinical market and we
expect to ship GeneXpert module first article production units for the BDS in
the fourth quarter. This will set the stage for our potential crossover to
profitability in the last quarter of 2004 or early 2005, depending on the actual
deployment schedule of the USPS BDS units and resulting test cartridge
utilization. However, despite our unchanged longer-term outlook, based on our
experience in the first two quarters of this year, particularly with regard to
the extended sales cycle within buyers' purchasing departments in the Life
Sciences Research market, we are adjusting our guidance for 2003 product sales
to a range of $14 million to $16 million. We expect our 2003 net loss to be in
the range of $18.0 million to $19.0 million or $0.56 to $0.59 per share based on
quarter-end weighted average shares outstanding."
CONFERENCE CALL INFORMATION
Cepheid's Chairman Tom Gutshall, CEO John Bishop, and CFO John R. Sluis, 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.
After the live webcast, the call will remain available on Cepheid's website,
www.cepheid.com, through July 31, 2004. A replay of the conference call will be
available at 800-642-1687 (domestic) or 706-645-9291 (international) through
August 7, 2003; the conference ID is 1709757. 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.
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 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: the scope and timing of actual USPS
funding and deployment of the BDS system, the rate of environmental testing
using the BDS 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 performance and market acceptance of the Group B Strep
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&Mac226; system and reagents. Readers
should also refer to the section entitled "Risk Factors" in Cepheid's Annual
Report on Form 10-K for 2002 and "Factors that Might Affect Future Results" in
its most recent quarterly reports on Form 10-Q, each 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.
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CEPHEID
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three months ended Six months ended
June 30, June 30,
2003 2002 2003 2002
REVENUES:
Instrument sales $ 2,565 $ 2,324 $ 5,359 $ 4,500
Reagents and disposables sales 615 373 955 499
Total product sales 3,180 2,697 6,314 4,999
License and royalty revenue 4 63 36 129
Grant and government sponsored
research revenue 682 361 1,249 361
Research and development
contract revenue 238 84 284 84
Total revenues 4,104 3,205 7,883 5,573
OPERATING COSTS AND EXPENSES:
Cost of product sales 1,857 2,135 3,665 3,744
Research and development 4,035 4,563 7,862 8,565
Selling, general and administrative 2,629 2,065 5,425 3,841
Total operating costs and expenses 8,521 8,763 16,952 16,150
Loss from operations (4,417) (5,558) (9,069) (10,577)
Interest (loss)/income, net (5) 23 (41) 72
Net loss (4,422) (5,535) (9,110) (10,505)
Net loss per share, basic and diluted $ (0.14) $ (0.21) $ (0.29) $ (0.40)
Shares used in computing net loss per
share, basic and diluted 32,410 26,380 31,902 26,363
CEPHEID
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
June 30, December 31,
2003 2002
(Unaudited) (1)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 8,542 $ 14,505
Restricted cash 2,329 2,296
Accounts receivable 2,466 3,044
Inventory 4,371 3,850
Prepaid expenses and other current assets 1,096 352
Total current assets 18,804 24,047
Property and equipment, net 6,861 6,144
Total assets $ 25,665 $ 30,191
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 2,428 $ 2,367
Accrued compensation 1,228 1,171
Accrued other liabilities 2,093 2,092
Current portion of equipment financing 1,232 1,423
Current portion of bank loan payable 36 32
Total current liabilities 7,071 7,085
Equipment financing, less current portion 1,049 1,629
Bank loan payable, less current portion 379 364
Deferred rent 431 355
SHAREHOLDERS' EQUITY
Common stock 80,961 75,928
Additional paid-in capital 7,488 7,505
Deferred stock-based compensation (11) (103)
Accumulated foreign exchange translation adjustment 37 4
Accumulated deficit (71,686) (62,576)
Total shareholders' equity 16,789 20,758
Total liabilities & shareholders' equity $ 25,665 $ 30,191
(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.
(WEB GRAPHIC) Current News Index Copyright (C) 2003, Cepheid
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