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"Gen-Probe posted very good financial results in the third quarter of2007, as both our clinical diagnostics and blood screening businesses againestablished new sales records," said Henry L. Nordhoff, the Company'schairman, president and chief executive officer.
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In the third quarter of 2007, net income was $17.3 million, compared to$14.8 million in the prior year period, an increase of 17%. EPS in the thirdquarter of 2007 were $0.31, compared to $0.28 in the prior year period, anincrease of 11%. In this press release, all per share amounts are calculatedon a fully diluted basis, and all results are presented on a GAAP basis.
Product sales in the third quarter of 2007 were $97.4 million, compared to$83.5 million in the prior year period, an increase of 17%. Total revenuesfor the third quarter of 2007 were $101.7 million, compared to $92.2 millionin the prior year period, an increase of 10%.
For the first nine months of 2007, net income was $65.7 million, comparedto $42.4 million in the prior year period, an increase of 55%. EPS in thefirst nine months of 2007 were $1.21, compared to $0.80 in the prior yearperiod, an increase of 51%. Product sales for the first nine months of 2007were $278.5 million, compared to $239.8 million in the prior year period, anincrease of 16%. Total revenues for the first nine months of 2007 were $304.1million, compared to $263.7 million in the prior year period, an increase of15%.
Gen-Probe's net income and EPS in the third quarter of 2007 benefited froma reduction in income tax expense of approximately $0.9 million ($0.02 pershare) associated with the completion of the Company's 2006 federal taxreturn. In addition, the Company's net income and EPS for the first ninemonths of 2007 benefited from a reduction in income tax expense ofapproximately $8.7 million ($0.16 per share), which was recorded in the secondquarter. As previously disclosed, this benefit resulted from the completionin April of an Internal Revenue Service audit of the Company's 2003 and 2004federal income tax returns. Based on the results of this audit, the Companyreleased reserves primarily associated with federal research and developmenttax credits generated from 1999 to 2004.
Detailed Results
Gen-Probe's clinical diagnostics sales in the third quarter of 2007 wereagain led by the APTIMA Combo 2(R) assay, an amplified nucleic acid test (NAT)for simultaneously detecting Chlamydia trachomatis (CT) and Neisseriagonorrhoeae (GC). Sales of this assay continued to grow strongly, driven bymarket share gains on both the Company's semi-automated instrument platformand on the high-throughput, fully automated TIGRIS(R) system. Clinicaldiagnostics sales in the third quarter also benefited from increased sales ofinstrumentation to current and new customers. Revenue from the PACE(R)product line, the Company's non-amplified tests for Chlamydia and gonorrhea,declined in the third quarter compared to the prior year period, in line withGen-Probe's expectations.
In blood screening, product sales in the third quarter of 2007 benefitedfrom continued international expansion, and from higher pricing associatedwith U.S. commercial sales of the PROCLEIX(R) WNV (West Nile virus) assay onthe TIGRIS system. Gen-Probe's blood screening products are marketedworldwide by Chiron, a business unit of Novartis Vaccines and Diagnostics.Gen-Probe's blood screening sales in the third quarter of 2007 also benefitedfrom favorable assay ordering patterns, primarily associated with theCompany's WNV assay, and from increased sales of TIGRIS instruments toNovartis.
Collaborative research revenues in the third quarter of 2007
