BIOV Bioventus Inc. Class A Common Stock (MM)

BioVeris Reports Fiscal 2005 Results GAITHERSBURG, Md., June 13 /PRNewswire/ -- BioVeris Corporation (NASDAQ:BIOV) reported today the financial results for the quarter and year ended March 31, 2005. Prior to the completion of the merger and related transactions among Roche Holding Ltd and a Roche affiliate, IGEN International, Inc. (IGEN), and BioVeris on February 13, 2004, the assets and businesses of BioVeris were owned and operated by IGEN and were fully integrated with IGEN. The financial results have been prepared and are presented as if BioVeris had been operating as a separate entity prior to February 13, 2004 using IGEN's historical cost basis in the assets and liabilities and including the historical operations of the businesses and assets transferred to BioVeris from IGEN as part of the merger and related transactions. The financial information included herein may not be indicative of the financial position, results of operations and cash flows of BioVeris in the future or what they would have been had BioVeris been operating as a stand-alone entity in the past. BioVeris adopted FASB Interpretation No. 46, "Consolidation of Variable Interest Entities" (FIN 46), as of March 31, 2004 based on a determination that Meso Scale Diagnostics, LLC. (MSD) qualified as a variable interest entity with the Company as the primary beneficiary. Accordingly, beginning as of March 31, 2004, the Company consolidated the financial information of MSD in its financial statements. In August 2004, the Company and MSD entered into a settlement agreement that resolved litigation between the parties and constituted a reconsideration event under FIN 46. The Company has determined that it no longer meets the conditions to be designated as the primary beneficiary of MSD, as certain provisions of the settlement agreement reallocated the obligation to absorb the majority of MSD's future expected losses. Accordingly, beginning August 12, 2004, the Company deconsolidated the financial results of MSD. The statement of operations for the year ended March 31, 2005 includes the consolidated revenue and expenses of MSD for the period from April 1, 2004 through August 12, 2004 and reflects MSD's net losses for the period from August 13, 2004 through December 13, 2004, the date of the sale of the Company's interests in MSD, as equity in loss of joint venture. BioVeris recorded revenues of $26.3 million for the fiscal year ended March 31, 2005, compared to $20.0 million for the last fiscal year. Of this $6.3 million increase, $4.3 million represents MSD revenues for the period April 1, 2004 though August 12, 2004. Revenues for the three months ended March 31, 2005 were $4.9 million, compared to $5.1 million for the same period in 2004. Revenues include product sales of $4.6 million and $24.7 million during the three months and year ended March 31, 2005, respectively, compared to $4.8 million and $18.7 million for the same respective prior year periods. Of the $6.0 million increase in fiscal year 2005, $4.0 million represents MSD product sales. BioVeris' sales of biodefense products for fiscal 2005 were $9.4 million, an increase of $3.3 million over the prior year. Sales of products for the life science market were $11.3 million for fiscal 2005, a decrease of $1.3 million over the prior year. These changes in product sales reflect the change of orders and product deliveries for biodefense and life science products, which are based on customers' requirements. Product costs were $2.2 million (47% of total product sales) for the three months ended March 31, 2005 compared to $3.2 million (67% of total product sales) in the corresponding prior year period. Product costs were $12.9 million (52% of total product sales) for the year ended March 31, 2005 compared to $12.2 million (65% of total product sales) in the corresponding prior year period. The current year increase of $700,000 consists of $3.7 million due to the consolidation of MSD's product costs, offset by a $3.0 million reduction in Bioveris' costs. BioVeris' product costs in fiscal 2005, as a percentage of total product sales, were 44% compared to 65% in fiscal 2004. BioVeris' product costs, as a percentage of total product sales, decreased due to reduced costs incurred in connection with instrument upgrades and detection module upgrades for existing life science customers. These voluntary upgrades occurred in the prior year and were provided to enhance overall customer satisfaction. The instrument and detection module upgrade programs were substantially completed as of December 31, 2003. Research and development expenses decreased to $4.3 million for the three months ended March 31, 2005 from $5.2 million for the corresponding prior year period. Research and development expenses increased to $21.5 million for the year ended March 31, 2005 from $19.8 million for the corresponding prior year period. The $1.7 million increase in fiscal 2005 consists of $3.7 million due to the consolidation of MSD's research and development expenses, offset by a $2.0 million reduction in BioVeris' costs. BioVeris research and development expenditures decreased in the current year due primarily to lower consulting, personnel and facilities costs. Research and development expenses primarily relate to ongoing development costs and product enhancements associated with the M-SERIES family of products, development of new assays and research and development of new systems and technologies, including point-of-care products. Future research and development costs are expected to increase as product development and core research expand, including costs associated with efforts in vaccines, developing clinical diagnostics and biodefense testing products, and development of a proprietary approach for determining an individual's personal immune status through unique diagnostic test panels. Selling, general and administrative expenses were $6.5 million for the three months ended March 31, 2005 compared to $5.0 million in the corresponding prior year period. Selling, general and administrative expenses were $32.2 million for the year ended March 31, 2005 compared to $18.7 million in the corresponding prior year period. Of the $13.5 million increase in fiscal 2005, $4.5 million represents MSD's selling, general and administrative expenses. BioVeris' increase in selling, general and administrative costs of $9.0 million was primarily attributable to higher personnel costs and professional fees in the current year. This includes costs associated with compliance with Section 404 of the Sarbanes-Oxley Act of 2002, as well as costs associated with the litigation and settlement with MSD. The book value of the Company's interests in MSD, as recorded in the investment in joint venture account on its unconsolidated balance sheet, was greater than the fair market value purchase price of these interests determined by the appraisal process. During the year ended March 31, 2005, the Company recorded non-cash charges of $35.1 million as loss on joint venture impairments, representing the amount by which the book value of the Company's interests in MSD exceeded the fair market value. Except for periods in fiscal 2005 when the Company consolidated the financial results of MSD in accordance with FIN 46, the Company recorded its proportionate share of MSD losses, representing approximately 100% of MSD's losses, as equity in loss of joint venture consistent with accounting for equity method investments. The Company recorded equity in loss of joint venture of $5.5 million and $19.6 million for the years ended March 31, 2005 and 2004, respectively. BioVeris' net loss for the three months ended March 31, 2005 was $7.1 million ($0.27 per common share), compared to a net loss of $53.5 million ($2.00 per common share) in the corresponding prior year period. BioVeris' net loss for the year ended March 31, 2005 was $77.6 million ($2.90 per common share), compared to a net loss of $93.3 million ($3.49 per common share) in the corresponding prior year period. At March 31, 2005, the Company had cash, cash equivalents and short-term investments of $95.6 million. BioVeris will host a conference call today, June 13, 2005, at 4:30 p.m. EDT to review the financial results and its business. To listen to the conference call, dial 1-800-728-2149 (United States) or 1-212-676-4900 (international) ten minutes before the starting time. A replay will be available for 48 hours after the call at 1-800-633-8284 (United States) and 1-402-977-9140 (international). The reservation number is 21248187. Both the live call and the replay will be webcast at http://www.bioveris.com/ . BioVeris Corporation is a global integrated health care company developing proprietary technologies in diagnostics and vaccinology. The Company is dedicated to the commercialization of innovative products and services for healthcare providers, their patients and their communities. BioVeris is headquartered in Gaithersburg, Maryland. More information about the Company can be found at http://www.bioveris.com/ . This press release contains forward-looking statements within the meaning of the federal securities laws that relate to future events or BioVeris' future financial performance. All statements in this press release that are not historical facts, including any statements about consolidation of future financial information and future financial or operational plans are hereby identified as "forward-looking statements." The words "may," "should," "will," "expect," "could," "anticipate," "believe," "estimate," "plan," "intend" and similar expressions have been used to identify certain of the forward-looking statements. In this press release, BioVeris has based these forward-looking statements on management's current expectations, estimates and projections and they are subject to a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those described in the forward-looking statements. Such forward-looking statements should, therefore, be considered in light of various important factors, including changes in BioVeris' strategy and business plans; BioVeris' ability to develop and introduce new or enhanced products; BioVeris' ability to enter into new collaborations on favorable terms, if at all; and changes in general economic, business and industry conditions. The foregoing sets forth some, but not all, of the factors that could impact upon BioVeris' ability to achieve results described in any forward-looking statements. A more complete description of the risks applicable to BioVeris is provided in the Company's filings with the SEC available at the SEC's web site at http://www.sec.gov/ . Investors are cautioned not to place undue reliance on these forward-looking statements. Investors also should understand that it is not possible to predict or identify all risk factors and that neither this list nor the factors identified in BioVeris' SEC filings should be considered a complete statement of all potential risks and uncertainties. BioVeris has no obligation to publicly update or release any revisions to these forward- looking statements to reflect events or circumstances after the date of this press release. (Financial data follows.) BioVeris Corporation Consolidated Statement of Operations (In thousands, except per share data) (Unaudited) Three Months Ended Twelve Months Ended March 31, March 31, 2005 2004 2005 2004 REVENUES: Product sales $4,618 $4,827 $24,662 $18,741 Royalty income 286 270 1,249 1,060 Contract fees - 51 388 155 Total 4,904 5,148 26,299 19,956 OPERATING COSTS AND EXPENSES: Product costs 2,159 3,214 12,860 12,247 Research and development 4,290 5,226 21,485 19,821 Selling, general, and administrative 6,494 4,992 32,212 18,656 Merger related costs - 71,634 - 75,702 Total 12,943 85,066 66,557 126,426 LOSS FROM OPERATIONS (8,039) (79,918) (40,258) (106,470) OTHER INCOME, NET 612 (1,106) 3,286 (933) EQUITY IN LOSS OF JOINT VENTURE (1,736) (6,194) (5,524) (19,616) LOSS ON JOINT VENTURE IMPAIRMENTS 2,033 - (35,077) - Net loss before cumulative effect of a change in accounting principle (7,130) (87,218) (77,573) (127,019) Cumulative effect of a change in accounting principle 33,700 33,700 NET LOSS $(7,130) $(53,518) $(77,573) $(93,319) Net loss per common share (basic and diluted) $(0.27) $(2.00) $(2.90) $(3.49) COMMON SHARES OUTSTANDING (basic and diluted) 26,728 26,728 26,728 26,728 BioVeris Corporation Consolidated Balance Sheets (In thousands, except share data) (Unaudited) March 31, 2005 March 31, 2004 BioVeris BioVeris and and Wholly- Wholly- Consoli- Consoli- Owned Owned dating dated Subsidi- Subsidi- MSD Eliminations BioVeris aries aries Assets Current Assets: Cash and cash equivalents $41,739 $147,398 $35,111 $- $182,509 Short-term investments 53,890 - - - - Accounts receivable, net 4,483 3,417 2,099 5,516 Inventory 5,235 5,013 3,194 - 8,207 Other current assets 2,813 2,459 2,053 (180) 4,332 Total current assets 108,160 158,287 42,457 (180) 200,564 Equipment and leasehold improvements, net 3,636 5,472 7,362 (269) 12,565 Investment in joint venture - 46,208 - (46,208) - Note receivable 4,709 - - - - Technology licenses 17,306 19,256 10 - 19,266 Other 354 354 65 - 419 Total assets $134,165 $229,577 $49,894 $(46,657) $232,814 Liabilities and Stockholders' Equity Current Liabilities: Accounts payable and accrued expenses $8,170 $26,220 $3,067 $(180) $29,107 Other current liabilities 1,351 1,977 296 - 2,273 Total current liabilities 9,521 28,197 3,363 (180) 31,380 Noncurrent deferred - liabilities 1,890 54 - 54 Total liabilities 11,411 28,251 3,363 (180) 31,434 Minority interest - - - 54 54 Series B preferred stock 7,500 7,500 - - 7,500 Stockholders' Equity: Common stock 27 27 - - 27 Additional paid-in capital 203,464 203,464 116,707 (116,707) 203,464 Accumulated deficit (87,238) (9,665) (70,176) 70,176 (9,665) Accumulated other comprehensive income (999) - - - - Total stockholders' equity 115,254 193,826 46,531 (46,531) 193,826 Total liabilities and stockholders' equity $134,165 $229,577 $49,894 $(46,657) $232,814 BioVeris Corporation Supplemental Consolidated Statement of Operations (In thousands, except per share data) (Unaudited) Year Ended March 31, 2004 Year Ended March 31, 2005 BioVeris BioVeris and and Wholly- Wholly- Consoli- Owned Owned dating Consoli- Subsidi- Subsidi- MSD Eliminations dated aries aries (In thousands, except per share data) Revenues: Product sales $18,741 $20,703 $3,959 $- $24,662 Royalty income 1,060 1,249 - - 1,249 Contract fees 155 32 356 - 388 Total 19,956 21,984 4,315 - 26,999 Operating costs and expenses: Product costs 12,247 9,167 3,693 - 12,860 Research and development 19,821 17,877 3,705 (97) 21,485 Selling, general and administrative 18,656 27,710 4,502 - 32,212 Merger related costs 75,702 - - - - Total operating costs and expenses 126,426 54,754 11,900 (97) 66,557 Loss from operations (106,470) (32,770) (7,585) 97 (40,258) Interest income 130 3,111 - - 3,191 Other, net (1,063) 95 80 - 95 Loss on joint venture impairments - (35,077) - - (35,077) Equity in loss of joint venture (19,616) (12,932) - 7,408 (5,524) Net loss before cumulative effect of a change in Accounting principle (127,019) (77,573) (7,505) 7,505 (77,573) Cumulative effect of a change in accounting principle 33,700 - - - - Net loss $(93,319) $(77,573) $(7,505) $7,505 $(77,573) Net loss per common share before cumulative effect of a change in accounting principle (basic and diluted) $(4.75) $(2.90) $(0.28) $0.28 $(2.90) Cumulative effect of a change in accounting principle 1.26 - - - - Net loss per common share (basic and diluted) $(3.49) $(2.90) $(0.28) $0.28 $(2.90) Shares used in computing net loss per common share (basic and diluted) 26,728 26,728 26,728 26,728 26,728 DATASOURCE: BioVeris Corporation CONTACT: George Migausky of BioVeris Corporation, +1-301-869-9800, ext. 2013; or Investors: Jonathan Fassberg of The Trout Group, +1-212-477-9007, ext. 16; or Media: Paul Caminiti or Andrew Cole of Citigate Sard Verbinnen, +1-212-687-8080 Web site: http:/www.bioveris.com

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