Q3 2004 Inverness Medical Innovations Earnings Conference Call - Part 1.

(From Fair Disclosure Wire)

OPERATOR: Good afternoon, ladies and gentlemen. Welcome to the Inverness Medical Innovations Third Quarter Earnings Conference. At this time, all parties have been placed on a listen-only mode, and we will open the floor for questions following the presentation. At this time, it is my pleasure to turn the floor over to your host, Doug Guarino. Please go ahead, sir. DOUG GUARINO, DIRECTOR OF CORPORATE RELATIONS, INVERNESS MEDICAL INNOVATIONS, INC.: Thank you, Autumn. Good morning and welcome to the Inverness Medical Innovations conference call to discuss our results for the quarter ended September 30, 2004. We are joined today by, Ron Zwanziger, Chairman and CEO and Chris Lindop, CFO. Before we get to that discussion, though, I would first like to draw your attention to the fact that certain matters discussed in this conference call will constitute forward-looking statements within the meaning of the US securities laws. These statements reflect our current views with respect to future events or financial performance, and are based on management's current assumptions and information currently available. Actual results and the timing of certain events could differ materially from those projected or contemplated by the forward-looking statements, due to numerous factors, including, without limitation, our ability to successfully develop and commercialize products, the market acceptance of our products, the content and timing of decisions by regulatory authorities, both in the United States and abroad, the effect of pending and future legal proceedings on our financial performance, and the risks and uncertainties described in our periodic reports filed with the Securities & Exchange Commission, including our Form 10-Q for the period ended June 30, 2004. Our company undertakes no obligation to update forward-looking statements. Additionally, please note that during this call, we may discuss non-GAAP financial measures. For each non-GAAP financial measure discussed, including net income and income per share attributable to common stockholders adjusted for nonrecurring and certain other charges and income, EBITDA and free cash flow, a presentation of the most directly comparable GAAP financial measure and a reconciliation of the differences between the non-GAAP financial measure discussed in the most directly comparable GAAP financial measure is available on the company's website at invernessmedical.com, either as part of our earnings release for the third quarter or separately. With that, let me turn the call over to Inverness Medical CFO, Chris Lindop. Chris?

CHRIS LINDOP, CFO, INVERNESS MEDICAL INNOVATIONS, INC.: Thank you Doug, and good morning everyone. Net revenues for the third quarter of 2004 were $97.5 million, which was up 35% as compared to $72.4 million for the third quarter of 2003. Excluding the favorable impact of currency translation, revenues grew by approximately 22.5 million, or 31% over the third quarter of 2003. Compared to Q3 of 2003, and adjusted for the impact of currency translation, organic growth in our diagnostics products businesses was 13.4%, with strong performance in our Women's Health Care product sales fueling the growth. The balance of the overall revenue increase was primarily due to the revenues contributed through our acquisitions of the rapid diagnostics business of Abbott Laboratories on September 30, 2003; Applied Biotech Inc. on August 27th of 2003, and Viva Diagnostika of GmbH on June 2nd of 2004. Sequentially, revenues grew from 88.7 million in Q2, to 97.5 million for the third quarter. Sales from our Women's Health Care business fueled by increased supply to Pfizer of their EPT pregnancy test and increased sales of our Clear Blue pregnancy and ovulation test, both domestically and in Europe, accounted for the sequential growth. Approximately 66% of our net product sales in the third quarter of 2004 related to consumer products, while the other 34% related to professional diagnostic products. While our GAAP results reflected a net loss of $771,000, or a loss of $0.04 per diluted share, our …