Celera Misses; Lowers Guidance - Analyst Blog - Quest Diagnostics (NYSE:DGX)

Celera Corporation (CRA) reported a net loss per share of 7 cents in the second quarter of 2010, an improvement from the year-ago quarter’s loss per share of 39 cents. Excluding one-time items, net loss was 8 cents per share compared with the Zacks Consensus Estimate of a loss of 7 cents. Net loss in second-quarter 2009 was 23 cents per share.

The company reported a record 21% year-over-year decline in revenue to $32.6 million from $41.4 million in the year-ago quarter. Reported revenues missed the Zacks Consensus Estimate of $36 million.

Although revenues declined, net loss improved due to 46.7% year-over-year decrease in the Selling, general and administrative (SG&A) as well as due to certain one time items, which decreased the losses in the second quarter.

Celera operates through three segments: Products segment, Corporate segment and the Lab Services segment. Increased sales of products (distributed by Abbott) complemented by improved royalties from sales of RealTime assays resulted in a 12.9% year-over-year spike in Products segment revenue reaching $10.9 million. Jeopardizing this positive movement, lower licensing revenue led to a 68% decline in the Corporate segment revenue at $19.6 million.

Adding to the downhill trend, the Lab Services segment reported a 22% decline in revenue to $19.6 million. Revenues were affected by a decrease in sample volumes due to competitive pressures as well as changes implemented at Berkeley HeartLab’s business, a subsidiary of Celera, in the second half of fiscal 2009. However, revenue at Berkeley HeartLab increased 12% sequentially to $2.1 million with a 7.8% corresponding increase in sample volume. The increased penetration of genetic tests into new physician accounts as well as encouraging growth witnessed in certain regions, partially offset the year-over-year declines.

Gross margin declined 500 basis points to 63% in the second quarter as compared with 68% in the prior-year quarter due to lower licensing revenues and lower sample volumes related to Berkeley HeartLab services.

Selling, general and administrative (SG&A) expenses in the second quarter decreased 46.7% year over year to $21.9 (including allowance for doubtful accounts). Excluding the allowance for doubtful accounts, SG&A expenses were $20.5 million, consistent with the year-ago quarter. Research and development (R&D) expenses declined 13.4% to $6.4 million due to the completion of certain discovery research and development projects. Celera exited the second quarter with cash and short-term investments of $319 million level with the previous quarter.

Guidance

Celera is concerned about its financial performance in fiscal 2010, as the company faces several headwinds related to the acceptance and utilization of its testing services and diagnostic products, reimbursement practices, economic pressures and competitive pressures. The concerns also include disturbances due to the departure of sales representatives identified in the Health Diagnostic Laboratory (HDL) litigation settlement in April 2010. Considering these, Celera lowered its revenue guidance range to $135 – $145 million from the previous range of $145 – $155 million.

Celera now expects adjusted net loss per share to be in the range of 25 cents to 30 cents as compared with the previous guidance range of 15 cents to 21 cents loss per share. The Zacks Consensus Estimate was to break even in fiscal 2010.

The expectation for gross margins remained unchanged at 63% to 67%. SG&A expenses are expected in the range of $85 to $95 million versus the prior outlook of $90 to $100 million, while expectations for R&D remained unchanged at $25 to $30 million. Cash and short-term investments guidance range was reiterated at $310 to $320 million.

Celera Corporation focuses on the integration of genetic testing into routine clinical care through a combination of products and services incorporating proprietary discoveries. Through its subsidiary, Berkeley HeartLab, Celera offers services to predict cardiovascular disease risk and improve patient management and through Abbott Laboratories commercializes a wide range of molecular diagnostic products. Its direct competitors include Quest Diagnostics Inc. (DGX), Human Genome Sciences Inc. (HGSI) and Laboratory Corp. of America Holdings (LH).

CELERA CORP (CRA): Free Stock Analysis Report

QUEST DIAGNOSTC (DGX): Free Stock Analysis Report

HUMAN GENOME (HGSI): Free Stock Analysis Report

LABORATORY CP (LH): Free Stock Analysis Report

Zacks Investment Research

DGXQuest Diagnostics Inc

$221.175.40%

Overview

LHLabcorp Holdings Inc

$291.942.03%

Market News and Data brought to you by Benzinga APIs

To add Benzinga News as your preferred source on Google, click here.