Alere Beats in 4Q, Incurs Loss

Alere ( ALR - Snapshot Report ) , a medical products company focused on integrating rapid diagnostics with health management, reported fourth-quarter and fiscal 2011 adjusted earnings per share of 74 cents and $2.48, respectively, beating the corresponding Zacks Consensus Estimates of 68 cents and $2.32.

Reported net loss was about $365.2 million (or $4.62 per share) in the fourth quarter which contains, among other items, write down and amortization charges.

Revenues

Net revenues were $651.1 million in the reported quarter, up 12.6% year over year, beating the Zacks Consensus Estimate of $630 million. Sales were $2,386.5 million in fiscal 2011, up 10.7%, surpassing the Zacks Consensus Estimate of $2,371 million.

By segment, revenues from Professional Diagnostics were $497.4 million, up 23.9% year over year. Recent acquisitions resulted in $90.1 million of incremental sales compared with the prior-year quarter. Adjusted organic segment growth was 2.8% on a year-over-year basis, which was negatively impacted by the economic uncertainty in Europe.

Revenues from the Health Management segment were $125.9 million, down 14.7% partly due to some large health plans in-sourcing select services.

Margin

Adjusted gross margin, as reported, was 55.8% in the fourth quarter, up from 55.3% in the year-ago quarter. The same for the Professional Diagnostics segment was 60%, down marginally from 60.1% a year ago while that for the Health Management unit dropped to 45.3% from 47.6% in the prior-year quarter.

Balance Sheet

Cash, cash equivalents and marketable securities totaled about $300.2 million as of December 31, 2011, down 25.6% on a year-over-year basis. Long-term liabilities, in the form of notes payable, amounted to $3,280 million, up 37.8%.

Outlook

Diagnostic tests are shifting closer to the consumers and into the home testing market, as more diagnostic tests are being developed to monitor patients rather than simply diagnose them. Alere's strategy of combining disease management with point-of-care testing (“POCT”), in a manner that encourages patients to take responsibility over their overall health care, is viewed as a prudent approach while at the same time ensuring affordability.

In addition to growing its revenues through a combination strategy of continued acquisitions and measured organic growth, the company is committed to improving its operating margin. Further, its product pipeline is strong, which has been developed through a combination of internal R&D as well as serial acquisitions. One of the company’s competitors is Abaxis ( ABAX - Analyst Report ) .