Alere Earnings Call Insights: Growth Timeframe and Organic Growth
Alere (NYSE:ALR) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.
Jonathan Groberg – Macquarie: Ron, so obviously in the first quarter here on the revenue side, looks like things are stabilizing a bit, getting a little bit more comfort on the Triage side of the business. I guess can you maybe talk about when you make the comment that you expect to get back to historical organic growth rates, maybe give us a little bit of a timeframe on that and how important winning back share is on the Triage side in order for you to hit those targets?
Ron Zwanziger – Chairman, CEO and President: I think to get back to growth targets; there are sort of a number of different ways and a number of different products, including Triage. The significance of Triage is that it’s expanding and we’re seeing a lot of demand from most countries around the world, including a number of countries in Europe, South America, and obviously a number of countries in Asia. So the greater availability of product is going to help and the certainty around it is also higher. Of course, winning back customers in the US may be a bit difficult as we said because of the long interruption, but fortunately, there’s inherent demand for the nature of our products because of the immediacy and the advantage of point-of-care solutions in urgent situations where some of the – is some of where Triage is used. So Triage will play a factor, but we have a lot of other products that have launched and are launching which will contribute to the growth.
Jonathan Groberg – Macquarie: Then, if I could just follow up on again on Professional Diagnostics, and I think you have about 55% of 1% adjusted gross margin in that business. Obviously, flu had a pretty good quarter. So where do you think we are in terms of outside of the elements that Namal talked about? Where do you think we are just in terms of gross margin on that Professional Diagnostics side?
David Teitel – CFO, VP and Treasurer: So, flu, clearly, was helpful in the quarter, offsetting that the energy we are putting into Triage to get that back online, the number of tests we are making is producing a bit of a drag on earnings in the short term here, but we continue to make progress on yields and have more improvements in the pipeline. So we are optimistic that we can get that back. As I said, the pricing change we made a year ago in the Toxicology business had an impact on both gross margins year-over-year as well as our organic growth rate in the quarter, but that business is growing very well and still has very good margins. So there’s opportunities to continue to stabilize margins and hopefully begin to grow them as Triage stabilizes further.
Jonathan Groberg – Macquarie: So just so I’m clear, so, is 1Q ex-flu which I ex-flu, would you expect this to be the lowest gross margin for the year?
David Teitel – CFO, VP and Treasurer: Well, so I think on a like-for-like basis, likely we are at that point. I do think you have to consider the pricing change coming in the diabetes business which will have an impact on our gross margins effective July 1, and that also has to be considered.
Gregory Simpson – Wunderlich Securities: So let me start — let me follow up with organic growth. You saw the nice bounce back in Q4 to normal levels and then you dropped back. Can Dave maybe you go into some details? Asia has been strong, Europe’s been disappointing. Can you just go into the dynamics a little bit and maybe kind of the near-term prognosis?
David Teitel – CFO, VP and Treasurer: Sure. So Asia, the business outside the rest of the world business, continues to grow quite nicely. We saw growth in the U.S. ex-flu, ex the Triage situation, so the business is reasonably stable and growing in many of the markets it has historically grown in. The European market was down slightly year-over-year on an adjusted basis, but we feel better about Europe over the past couple of quarters. We see some stability there and certainly have seen better operating income contribution in Europe. I alluded earlier that Toxicology business year-over-year was impacted by the Triage situation, but was also impacted by the pricing change we made at the beginning of the second quarter of a year ago which anniversaried this year in the pain and rehab businesses. Our sample volume in that business was up quite strongly. I think we are up about 18% year-over-year from a sample volume standpoint, which is encouraging, but the impact of the pricing change, if you exclude that, our overall organic growth rate was about 4% in the quarter, which on an overall basis, is sort of more in line with we’ve historically been. So those were the highlights in the quarter…
Gregory Simpson – Wunderlich Securities: Ron, you talked about – I don’t think of violating your focus on the Q1 dynamics here, but you talked about the ongoing process of potential divestitures, non-core businesses things like that. Is that focused primarily on the health information, assets or is – I know you guys consider Toxicology a core business at this point and specifically because of the EBITDA, but the shareholder or the letter you received or they came out last night brings up an interesting point about the tax implications and things like that. And I know the big game you would incur if you were to sell Toxicology has always been certainly an impediment to the sale of that business. That’s a significant I guess chunk of value that the street hasn’t recognized in terms of the value that Toxicology business. Can you maybe just give a general answer, but maybe talk about kind of the process and what is exactly non-core these days?
Ron Zwanziger – Chairman, CEO and President: We commented before, Greg, and it really hasn’t changed. We are looking at a number of peripheral businesses all of which are profitable particularly lab-based diagnostics as we build the system. We picked up a number of units which are profitable and are in good shape and we are looking at divesting some of those and there is some of them have some scale. So, there is a whole variety, we are looking at some assets within the Health Information Solutions which are possibly maybe non-core. But to your other sort of more general point we are extremely careful as we do this to make sure that we do it in a tax-efficient way. And that any divestitures we do, we do carefully not to have excessive leakage. Because one of the things you have to be careful of is not to create too much dilution as a result of selling assets. So we’re very careful about how we’re going about the process.
Gregory Simpson – Wunderlich Securities: And just one final one. Namal, good to hear you on the call. Obviously, Ron, your thought on how soon do we maybe start to hear from you guys with respect to specific targets, and it’s two calls in a row now you guys obviously talked about seeing operational improvement and things like that by the end of the year. But I mean, when and kind of what form do you suspect you’ll lay out the specifics of the plans?
Ron Zwanziger – Chairman, CEO and President: Well, we haven’t decided specifically when we would make the specific announcement. I don’t know if you picked up Namal talked about some specifics around the service part and bringing back the profitability. But I think as we make some of the headway and as we get more confident as we — again, our own confidence rises in that, I think then we’ll become more specific. But there should be some significant numbers there.
Gregory Simpson – Wunderlich Securities: I’ll get back online. But Dave, real quick, new product revenues?