IRIS International, Inc. (IRIS International), a in-vitro diagnostic imaging company, has reported revenues of $95.5 million for the full year of 2008, up 13%, compared with the revenue of $84.3 million in the previous year-end. It has also reported net income of $9 million, or $0.48 per diluted share, for the full year of 2008, compared with the net income of $7.5 million, or $0.40 per diluted share, in the previous year-end.
The company reported fourth quarter 2008 revenue of $26.7 million, up 22% over revenue of $21.9 million in the fourth quarter of 2007, and record full year revenue of $95.5 million for the year ended Dec. 31, 2008, a 13% increase over revenue of $84.3 million for fiscal 2007.
“We are pleased to report the strongest fourth quarter and year end performance in IRIS’ nearly 30-year history, with continued strong double digit revenue and earnings growth achieved in both the quarter and full year, despite challenging global economic conditions,” stated Cesar Garcia, chairman, president and chief executive officer. “Significant gains were made in each of our reporting segments, with high margin consumable and service revenue showing the strongest improvement, increasing 27% over last year’s fourth quarter, and now accounting for 49% of overall revenue for the year. Instrument shipments remain strong with a record 153 iQ(R)200 analyzers shipped in the fourth quarter, the highest in any quarter since launching the iQ(R)200 in August 2003. We are also pleased with commercial shipments in the fourth quarter of 55 of our new iChem(R)VELOCITY(TM) automated urine chemistry analyzers and iRICELL(TM) integrated urinalysis workstations, and a total of 88 units shipped through year end, since its release to the international marketplace in September 2008. Moving forward, our sales pipeline is solid and we anticipate a record first quarter and full year fiscal 2009,” Garcia said.
For the fourth quarter 2008, IRIS had record revenue of $26.7 million, up 22% from the $21.9 million reported in the fourth quarter of 2007. Net income for the 2008 fourth quarter was a record $3.4 million, or $0.18 per diluted share, compared with net income of $2.7 million, or $0.14 per diluted share in the fourth quarter of 2007. The 2008 fourth quarter diluted EPS includes $0.04 related to the $1.2 million net payment to IRIS as part of the manufacturing transition and licensing agreement signed with IDEXX Laboratories in December 2008. This non-recurring payment has been booked by IRIS primarily as other income and does not impact revenue from operations. Diluted weighted average shares outstanding for the three months ended December 31, 2008 and 2007, were 18.5 million and 19.0 million, respectively.
“Following the September 2008 launch in the international market of the iChem(R)VELOCITY(TM) and our new iRICELL(TM) workstation, we continue to see strong demand as evidenced by the placement of 55 units in the fourth quarter and a total of 88 units shipped through year end. Interest remains high and we see a solid pipeline through the remainder of the year. In addition, we are anticipating our planned U.S. launch of the iChem(R)VELOCITY(TM) and iRICELL(TM) system as soon as these instruments attain FDA 510(k) clearance. Our 510(k) submission has been reviewed by the FDA and we are compiling our responses which we expect to submit to the FDA within the next few weeks,” Garcia said.
IVD consumable and service gross profit margin was 56% for the 2008 fourth quarter, compared with 54% in the year-ago period and 57% for the full year 2008, versus 54% for 2007. This was driven by increased consumable volumes and improved profitability in the service business. “Consumable and service profitability continues to improve with our rapidly increasing installed base of iQ analyzers and, we believe will continue to benefit with the release of the iChem(R)VELOCITY(TM), which is now beginning to favorably impact the utilization of our strip manufacturing facility. The launch of our iChem(R)VELOCITY(TM) and iRICELL(TM) products are significant catalysts toward achieving our 60% gross margin target in the consumables and service segment during 2010,” Garcia said.
“Following IRB approval in January 2009, we are pleased to have completed the testing of the 30 patient study in the first stage of our clinical study with Duke University Medical Center using our NADiA(TM) ProsVue(TM) ultra sensitive prostate-specific antigen diagnostic assay for identifying post-prostatectomy patients with low risk of prostate cancer recurrence,” Garcia said. “We are in the data analysis process of the study and it is our expectation to incorporate these results into the Pre-Investigational Device (Pre-IDE) application already reviewed by the FDA. Following FDA review of our final Pre-IDE, we plan to initiate a larger multi-center study which is expected to be completed and submitted with an FDA 510(k) application in the later part of the second quarter of 2009. We are on schedule with the regulatory plan that we outlined in January 2009,” he added.
Operating expenses up $9.6 million, or 36% of sales, in the fourth quarter of 2008, compared with $8.2 million, or 37% of sales, in the fourth quarter of 2007. Marketing and selling expenses up $4.0 million in the fourth quarter of 2008, compared with $3.1 million in the fourth quarter of 2007. This increase in marketing and selling expense is attributable to an increase in sales and marketing personnel, and new product introduction expenses related to the iChem VELOCITY and future new product initiatives. General and administrative expenses in the fourth quarter of 2008 were $3.1 million compared with $2.6 million in the prior year period, and remained at less than 12% of sales.
Operating income in the fourth quarter of 2008 increased by 37% to $3.5 million, compared with $2.6 million in the fourth quarter of 2007. Operating income for the 2008 full year increased 22% to $11.0 million, versus $9.0 million in 2007.
The effective tax rate for the fourth quarter of 2008 was 34% and 33% for the 2008 fiscal year, compared with an effective tax rate of 8% in the fourth quarter of 2007 and 27% for the 2007 fiscal year.
Garcia noted that the company’s balance sheet remains strong with no debt and cash and short- term investments of $26.6 million at December 31, 2008. This is after approximately $12.0 million spent in the repurchase of approximately 1 million IRIS shares in the open market, as part of the 2008 stock repurchase program.
“In spite of the economic turmoil, IRIS performed according to plan and we are pleased to have achieved our guidance as stated in October 2008. While we remain cautiously optimistic, we believe it is prudent to take a conservative approach in providing guidance for 2009, given the continued current economic uncertainty. Although we expect a stronger second half than first half in 2009, our spending plans have been timed in line with our revenue expectations, when possible, without delaying our product timelines. We believe the strong rate of instrument placement in 2008 provides significant confidence toward achieving our planned consumable growth in 2009, and the global roll out of iChem(R)VELOCITY(TM) and iRICELL(TM) should provide another platform to drive incremental instruments revenue and recurring consumables and service revenue while we complete the development of NADiA(TM) ProsVue(TM). These new product platforms should be the basis for continuing growth in 2010 and beyond,” Garcia said.
IRIS is issuing initial guidance for full year 2009, anticipating revenue growth to at least $102 million and earnings of at least $0.48 per fully diluted share. For the current first quarter ending March 31, 2009, IRIS anticipates revenue growth to at least $22 million and earnings of at least $0.08 per share. Our 2009 guidance does not include any revenue relating to NADiA ProsVue, as we have not yet secured regulatory clearance. Research and Development expense is expected to be at 11% of revenue.