Celera Corporation (NASDAQ:CRA) today reported net revenues of $32.6 million for the second quarter of 2010 that ended June 26, 2010, compared to $41.4 million for the prior year quarter. For the second quarter of 2010, Celera reported a net loss of $6.1 million, or $0.07 per share, compared to a net loss of $31.7 million, or $0.39 per share, for the prior year quarter.
“The second quarter of 2010 was a challenging period for us as revenues declined with lower than expected sample volumes at Berkeley HeartLab”
For the second quarters of 2010 and 2009, Celera recorded items that affected the comparability of results and a breakdown of these items is listed in the reconciliation table below. For the second quarter of 2010, these items decreased the net loss by $0.6 million, and included a pre-tax cash benefit of $2.8 million for legal and insurance settlements. For the second quarter of 2009, these items increased the net loss by $12.6 million, and included a pre-tax charge of $15.7 million for non-cash intangible asset impairment.
Celera's net loss on a non-GAAP basis, excluding the items listed in the reconciliation table below, was $6.7 million, or $0.08 per share, for the second quarter of 2010, compared to a net loss of $19.1 million, or $0.23 per share, for the prior year quarter.
"The second quarter of 2010 was a challenging period for us as revenues declined with lower than expected sample volumes at Berkeley HeartLab," said Kathy Ordoñez, Chief Executive Officer of Celera. "While our Products business met expectations in the quarter, a weakness in sample volume at BHL through the first half has made us more cautious about our full-year outlook, and we have reduced 2010 guidance accordingly."
Financial Highlights
Celera operates through three reporting segments: a clinical laboratory testing service business conducted through Berkeley HeartLab, or BHL (Lab Services); a molecular diagnostic products business (Products); and a segment that includes other activities under corporate management (Corporate). Most of the Company's molecular diagnostic business is conducted through distribution and royalty agreements with Abbott Molecular, a subsidiary of Abbott Laboratories. The Corporate segment includes revenues from royalties, licenses, funded collaborations and milestones related to the licensing of intellectual property and from Celera's former small molecule and proteomic programs.
- Revenue by segment for the second quarter of 2010 was as follows:
- Lab Services revenue was $19.6 million compared to $25.2 million in the prior year quarter, due to lower sample volume, which declined approximately 23% year over year. During the second quarter, sample volumes were adversely impacted by competitive pressures, including the loss of business from accounts serviced by former BHL sales representatives identified in the now settled litigation with Health Diagnostics Laboratory, Inc. (HDL), and changes to BHL's business that were implemented in the second half of 2009. Lab Services revenue in the second quarter does not include approximately $1.9 million for additional testing performed on samples previously received and processed by BHL. The Company is reviewing the orders for this additional testing to determine whether they support payor requirements for amounts billed to, and reimbursement received from, federal health care programs and others. As part of this review, the Company will also review similar orders in earlier periods, which totaled approximately $0.1 million in the first quarter of 2010, approximately $0.6 million in 2009, and approximately $1.4 million in 2008;
- Products revenue was $10.9 million compared to $9.7 million in the prior year quarter. The increase in revenue in the second quarter of 2010 was due to increases in both the sale of Celera manufactured products distributed by Abbott and royalties from sales of RealTime™ assays used on the m2000™ system; and
- Corporate revenue was $2.1 million compared to $6.5 million in the prior year quarter. The reduction in revenue in the second quarter of 2010 was primarily due to lower licensing revenue, including the completion of payments from three licensees, as expected, which was partially offset by higher royalty revenue received from a licensee.
- SG&A expenses for the second quarter of 2010 were $21.9 million compared to $41.1 million in the prior year quarter. Allowance for doubtful accounts in the second quarter of 2010 was $1.4 million compared to $20.1 million in the prior year quarter. Excluding the allowance for doubtful accounts, SG&A expenses for the second quarter of 2010 were $20.5 million, or 62.9% of revenues, compared to $21.0 million, or 50.7% of revenues in the prior year quarter.
- In the second quarter of 2010, days sales outstanding were 57 compared to 60 in the first quarter of 2010.
- R&D expenses for the second quarter of 2010 were $6.4 million, compared to $7.4 million in the prior year quarter, and decreased primarily as a result of the completion of certain discovery research and development projects.
- At June 26, 2010, Celera's cash and short-term investments were approximately $323 million. This balance includes $4.2 million for an unsettled short-term investment purchase, which was subsequently settled in the third quarter. Excluding this $4.2 million transaction, Celera's cash and short-term investments at June 26, 2010 were approximately $319 million, the same as at March 27, 2010.
Business and Scientific Developments