Caliper Life Sciences second-quarter GAAP revenue decreases 10% to $29.0 million

Caliper Life Sciences, Inc. (Nasdaq: CALP), today reported results for its second quarter ended June 30, 2010.  Second quarter GAAP revenue decreased 10% to $29.0 million from $32.1 million in the same period in 2009 as a result of divestitures in 2010 and 2009. Revenue from on-going business increased 4% on a reported basis and 6% on an organic basis (which assumes constant currency).  The Company reported net income in the second quarter of $9.2 million, or $0.18 per share, inclusive of an $11.1 million after-tax divestiture gain, compared to a net loss of $4.1 million, or ($0.08) per share, in the same quarter of 2009.  The Company achieved break-even earnings per share on a non-GAAP basis (adjusted for acquisition-related intangibles amortization and restructuring charges, and net of the divesture gain) in the second quarter of 2010, compared to a non-GAAP net loss per basic share of $0.05 in the same period in 2009.  The Company also reported positive earnings before interest, depreciation, amortization, non-cash stock compensation and other special items (EBITDA) of $1.4 million in the second quarter, which was its fourth consecutive quarter of attaining positive EBITDA results (see "Use of Non-GAAP Financial Measures" and "Reconciliation of GAAP to Non-GAAP Financial Measures").  

Second Quarter Commentary:

• The Company's IVIS® and LabChip® product families represented 77% of total revenues in the quarter and together achieved 14% reported growth and 16% organic growth compared to the same period in 2009.  These product lines grew a combined 20% during the first half of 2010 on both a reported and organic basis on the strength of customer demand.  Ongoing revenues for the remainder of the business decreased 22% during the quarter and 20% over the first half of 2010.  These decreases were attributable to the Company's automation product lines and Caliper Discovery Alliances and Services (CDAS).  Automation revenues have decreased year-to-date as the Company streamlines the focus of its platforms toward LabChip and other biomolecular applications.  With respect to CDAS, the year-to-date decrease results from unfavorable comparisons to the same period in 2009 as a result of a large non-recurring project completed in 2009 and ongoing project delays under its EPA ToxCast contract.
• Total gross margin and combined product/services gross margin each increased 10 points in the second quarter and 11 points for the first half of 2010 compared to the same periods in 2009. Total gross margin in the second quarter of 2010 increased to 52% from 42%, and combined product/services gross margin increased to 48% from 38% compared to the second quarter of 2009.  The Company's gross margin improvements reflect a favorable shift in revenue mix with a greater percentage of revenues being derived from higher margin instruments and consumables associated with the IVIS and LabChip product families. The Company's divestiture of its low gross margin preclinical mouse services business in the fourth quarter of 2009 also contributed to the increase in service gross margins during the second quarter of 2010 compared to the same period in 2009.  Other factors which resulted in improved overall gross margins in the second quarter included increased license revenues, reduced warranty costs, reduced inventory reserve provision needs and material cost savings from vendor sourcing initiatives.
• Operating expenses (research and development, and selling, general and administrative costs) decreased to $15.0 million, or 5%, from $15.9 million during the second quarter compared to the same period in 2009.  The net overall decrease resulted primarily from the divestiture of the Company's preclinical mouse services business in the fourth quarter of 2009, and a sustained focus on controlling operating expenses.
• A restructuring charge of $0.6 million was recognized in the second quarter of 2010 related to further consolidation of facility space in the Company's Mountain View, California chip manufacturing facility.
• Breakeven non-GAAP earnings per share were achieved in the second quarter of 2010 as a result of the Company's improved gross margins and reduction in operating expenses compared to the same period in 2009, as discussed above.  Cash, cash equivalents and marketable securities less outstanding debt totaled $37.6 million as of June 30, 2010, compared to a net cash position of $23.1 million as of December 31, 2009.  As of June 30, 2010, the Company had no outstanding debt and approximately $20.0 million of borrowing availability under its $25 million bank credit facility.

"Our strong quarter performance reflects the continued positioning of our products to address the fast-growing biotherapeutic, genomics and preclinical imaging markets.  It was another solid quarter of progress for our IVIS and LabChip product lines.  As the percentage of our total revenues represented by these areas increases, we are seeing material improvement in our gross margins and consequently our EBITDA," commented Kevin Hrusovsky, Caliper's president and CEO.  "We are expecting positive revenue growth for CDAS to emerge once the next phase of the ToxCast project gets underway, and we also expect to generate sequential quarterly growth in automation as we complete the refocusing of our automation business.  As our strategies unfold, we expect to see a return to positive revenue growth for all parts of our business, which we believe will further enhance the bottom line," added Hrusovsky.

Business Highlights in the Second Quarter:

• The Company held its 2010 annual Customer Owners Group (COG2010) meeting at its Hopkinton, Massachusetts headquarters.  Over 200 customers attended COG2010 and over 35 presentations were made covering the topics of biologics, vaccines, preclinical imaging, small molecule drug discovery and molecular diagnostics.  In the Day 1 keynote address, Dr. George Church of Harvard Medical spoke about Caliper's role and influence on sequencing, and how advances in sequencing and the understanding of genomic data will shape future healthcare.  In the Day 2 keynote address,  Kevin Hrusovsky, president and CEO, highlighted six themes (Genome Sequencing, Biomarkers and Non-invasive Imaging on the diagnostic front, and Vaccines, Biotherapeutics and Stem Cells on the therapeutic front) for revolutionizing medicine, and also described how Caliper technologies are impacting each of these themes.  
• The Company's CDAS unit was awarded a new funding commitment for $2.9 million under its contract with the Environmental Protection Agency (EPA) for the EPA's ToxCast screening program, increasing the current backlog of Phase II task orders to $4.7 million.  CDAS is awaiting receipt of compounds to begin Phase II services, the timing of which is now indicated for late in the third quarter or the fourth quarter of this year.
• The Company completed the sale of its solid phase extraction and evaporation product lines to Biotage AG for $16.5 million in cash.  The Company will continue manufacturing these products for Biotage under a three year manufacturing agreement.

2010 Guidance

The Company maintains its full year 2010 projection for 4-6% organic revenue growth over comparable 2009 non-GAAP revenue (i.e. adjusted for divestitures).  Based upon the Company's current expectations regarding foreign currency rates, this represents a GAAP revenue range for 2010 of $117 to $120 million. The Company will provide further detail on its business outlook during the conference call today.