WALTHAM, Mass., Aug 03, 2005 /PRNewswire-FirstCall via COMTEX/ -- Inverness Medical Innovations, Inc. (IMA), a leading manufacturer and marketer of rapid diagnostic products for the consumer and professional markets, today announced its financial results for the quarter and the six months ended June 30, 2005. Results for the six month period ended June 30, 2005, and all 2004 results provided herein for comparative purposes contain all prior period adjustments which the Company believes are necessary to address the revenue recognition issues disclosed in the Company's June 28, 2005 press release. The Audit Committee of the Company's Board of Directors has completed an independent investigation into these matters which has contributed to management's calculation of the necessary restatement at $4.2 million in net revenue reversal with a $3.1 million gross margin impact spread over the quarters of 2003 and 2004 and the first quarter of 2005. In addition we have taken an inventory write off of $2.4 million related to excess quantities of raw material and finished goods for product at our Wampole division which is recorded as a cost of sales in the second quarter of 2005. The Company's independent registered public accounting firm's review of the results of the investigation is ongoing.
For the second quarter of 2005, Inverness Medical Innovations reported adjusted cash basis net income of $9.3 million, or $0.38 per diluted share, including the items and charges included in interest and other income (expense) as discussed below, compared to adjusted cash basis net loss of $3.5 million, or $0.18 per share, in the second quarter of 2004. The net income available to common stockholders prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") was $3.0 million, or $0.12 per common share, in the second quarter of 2005 compared to a net loss available to common stockholders of $6.7 million, or $0.34 per common share, for the second quarter of 2004.
The Company's GAAP results for the second quarter of 2005 include amortization of $3.0 million and a $3.5 million charge associated with our previously announced decision to close one of our manufacturing facilities, and its GAAP results for the second quarter of 2004 include amortization of $2.5 million and a $0.3 million write off of deferred debt origination costs and non-cash discounts. These amounts have been excluded from the adjusted cash basis net loss or income per common share for the respective quarters.
Included in interest and other income (expense), net for the second quarter of 2005 are pre-tax amounts of $17.6 million of income relating to periods prior to 2005 and the value of an option received under licensing arrangements entered into during the quarter, offset by a charge of $2.7 million associated with an arbitration award related to a Nutritional segment commercial dispute arising from a distribution arrangement signed in September 1996.
In the second quarter of 2005, the Company recorded net revenues of $102.3 million compared to net revenues of $89.1 million in the second quarter of 2004. The majority of the revenue increase was due to increased sales in our Consumer Diagnostics business from higher sales of the Company's Clearblue digital pregnancy test and increased supply to Pfizer of their e.p.t pregnancy
test and to increased Professional Diagnostic revenues contributed by Binax, Inc., which we acquired on March 31, 2005.
For the six months ended June 30, 2005, the Company reported an adjusted cash basis net income of $5.8 million, or $0.25 per diluted share, compared to adjusted cash basis net loss of $1.5 million, or $0.08 per share, in the six months ended June 30, 2004. The net loss available to common stockholders prepared in accordance with accounting principles GAAP was $4.8 million, or $0.22 per common share, for the six months ended June 30, 2005 compared to a net loss available to common stockholders of $10.9 million, or $0.56 per common share, in the six months ended June 30, 2004.
The Company's GAAP results for the first six months of 2005 include amortization of $5.7 million, a $3.5 million charge associated with our previously announced decision to close one of our manufacturing facilities and a $1.6 million non-recurring charge for a product recall, compared to amortization of $5.0 million, a $3.8 million write off of deferred debt origination costs and non-cash discounts and redemption interest related to redeemable convertible preferred stock of $749,000 in the first six months of 2004. These amounts have been excluded from the adjusted cash basis net loss or income per common share for the respective periods.
Net revenues for the six months ended June 30, 2005 were $194.5 million compared to net revenues of $180.3 million for the six months ended June 30, 2004.
A detailed reconciliation of the Company's adjusted cash basis net income or loss, which is a non-GAAP financial measure, to net income or loss under GAAP, as well as a discussion regarding this non-GAAP financial measure, is included in the schedules to this press release.
The Company will host a conference call beginning at 9:00 a.m. (Eastern Time) today, August 3, 2005, to discuss these results as well as other corporate matters. During the conference call, the Company may answer questions concerning business and financial developments and trends and other business and financial matters. The Company's responses to these questions, as well as other matters discussed during the conference call, may contain or constitute information that has not been previously disclosed.
The conference call can be accessed by dialing 973-935-2401 (domestic and international), an access code is not required, or via a link on the Inverness website at http://www.invernessmedical.com. It is also available via link at http://orion.calleci.com/servlet/estreamgetevent?id=5747&folder=webstream using Real Player or via link at http://orion.calleci.com/servlet/estreamgetevent?id=5746&folder=webstream using Windows Media. A telephone replay of the call will be available by dialing 973-341-3080 (domestic and international) with an access code of 6310406. That replay will be available until 12:00 midnight (Eastern Time) on August 6, 2005. An on demand webcast of the call will be available at the Inverness website (http://www.invernessmedical.com/News.htm) two hours after the end of the call and will be accessible for 12 months. Additionally, reconciliations to non-GAAP financial measures not included in this press release that may be discussed during the call will also be available at the same website beginning shortly before the conference call and will continue to be available on this website for 12 months.
For more information about Inverness Medical Innovations, please visit our website at http://www.invernessmedical.com.
Inverness Medical Innovations is a leading global developer of advanced diagnostic devices and is presently exploring new opportunities for its proprietary electrochemical and other technologies in a variety of professional diagnostic and consumer-oriented applications including immuno-diagnostics with a focus on women's health and cardiology. The Company's new product development efforts, as well as its position as a leading supplier of consumer pregnancy and fertility/ovulation tests and rapid point-of-care diagnostics, are supported by the strength of its intellectual property portfolio. The Company is headquartered in Waltham, Massachusetts.