Alere Updates On 10K Filing, Reports Preliminary Q1 Figures

Alere Inc. (NYSE:ALR) recently provided some information about its pending 10K for the year that ended on Dec 31, 2015. Over the last four months, the company has been conducting a review of its operations in Africa and China for the years 2013, 2014 and 2015.

The thorough review process has identified certain misstatements related to revenue recognition and other financial aspects for 2013 and 2014 and the first three quarters of 2015. Although these misstatements are not material to 2013 and 2014 financials, they are expected to affect 2015 figures.

Hence, Alere expects to revise its previously issued annual financial statements for 2013 and 2014 and the interim financial statements of each three quarters of 2015 in the upcoming 10K. However, Alere did not provide any time line and said that it expects to file the 10K with the SEC “as soon as practicable.”

Revenue Estimates Lowered for FY15

Meanwhile, Alere revised down its 2015 revenue guidance. The company now expects to report revenues of almost $2.47 billion, down from $2.48 billion to $2.5 billion guided earlier. Net income from continuing operations is now expected to be in the band of $10-$25 million, while adjusted EBITDA is estimated to be in the range of $505 million to $520 million.

As of Dec 31, 2015, cash and cash equivalents are expected to be $502 million, while total debt is estimated to be $3.07 billion.

Preliminary Q1 Figures

Alere also provided few details about the first quarter 2016 results. The company expects to report revenues in the range of $573-$593 million. Net income from continuing operations is now expected to be in the band of ($8)-$2 million, while adjusted EBITDA is estimated to be in the range of $106 million to $116 million.

As of Dec 31, 2015, cash and cash equivalents are expected to be $492 million, while total debt is estimated to be $3.02 billion.

No Immediate Relief for Alere

Alere’s announcement related to the 10K and the preliminary Q1 figures will certainly calm down bond holders. The figures will also be eagerly scrutinised by Abbott Laboratories (NYSE:ABT) , Alere’s current suitor.

In early February, Abbott offered $5.8 billion to acquire Alere. However, the company tried to break away from the deal following the revelation of the U.S. Department of Justice (DOJ)’s investigation into Alere’s overseas businesses. Reportedly, Abbott also offered a break-up fee, which however did not interest Alere.

The deal continues to face issues like Alere’s recent voluntary recall of the INRatio and INRatio 2 PT/INR Monitoring Systems. According to Bloomberg, the recall is expected to cost Alere between $70 million and $90 million in 2016. Abbott has already expressed its disappointment and is currently reviewing the impact of the recall on Alere’s financials.

Zacks Rank & Key Picks

Alere has a Zacks Rank #3 (Hold).

Better-ranked stocks are Boston Scientific (NYSE:BSX) and NuVasive (NASDAQ:NUVA) . Both the stocks sport a Zacks Rank #1 (Strong Buy).