Alpha Gen Capital
Alpha Gen Capital
Mon, Aug. 8, 10:32 AM| Mon, Aug. 8, 10:32 AM | 14 Comments
Wed, Jul. 27, 5:58 PM
- The problems continue to mount for point-of-care diagnostics firm Alere (NYSE:ALR). The latest stumble is the news that U.S. Department of Justice investigators have requested information from the company about its government billing practices, specifically its toxicology unit, which provides drug testing for employers and government bodies. The business accounts for about a quarter of Alere's revenues.
- The company received a subpoena last month seeking patient billing records. Its specific area of interest is Alere's efforts to collect co-payments from patients and alleged submission of forms to government programs like Medicare on patients' behalf. Federal law prohibits healthcare firms from covering payments for patients insured under programs like Medicare and Medicaid. The feds are also looking into whether Alere made payments or provided other inducements to doctors in order to influence their ordering of its tests. The government regards these activities as illegal kickbacks. The situation has the earmarks of a whistleblower suit.
- In February, Alere agreed to be acquired by Abbott Laboratories (NYSE:ABT) for almost $6B. Since then, however, the company has faced one embarrassing snafu after another, including having to restate its financial reports due to inappropriate revenue recognition (including "bill-and-hold" activities in China) and recalling products due to safety concerns related to the potential misreporting of results.
- In April, Abbott purportedly offered to pay as much as $50M to back out of the deal, a proposal Alere's board rejected. It is a virtual certainty that Abbott will wash its hands of Alere, though. It's just a matter of price at this point.
- Shares were down 29% today, but have rebounded 7% after hours on robust volume.
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- Update: In a statement, the company says the billing records of interest, dating back to 2010, are related to its Austin, TX pain management laboratory. It is fully cooperating with the inquiry. It also says the billings in question accounted for less than 1% of its revenues and the matter is "not material."
Fri, Jul. 15, 12:25 PM
- In a statement, point-of-care diagnostics firm Alere (ALR +7.6%) confirms that will restate its annual financial statements for 2013, 2014 and 2015 and interim statements for the periods ended March 31, 2015 and September 30, 2015 after identifying the specific revenue recognition issues that have delayed the filing of its 2015 reports.
- The specific areas pertaining to the timing of revenue recognition were mainly confined to Africa, where revenue was recorded when product was shipped to the distributor but the title did not transfer until the distributor paid for the products in full or the distributor was not obligated to pay the bill until the products were sold to end users.
- Another problem was "bill and hold" transactions (an invoice is generated but the product remains in inventory), principally in China (any legitimate accounting firm will consider this a significant "no-no").
- There were other unspecified transactions where Alere recognized revenue prior to satisfying all the contractual criteria for the transfer of title and risk to the customer.
- The company says the revisions will not be material since they do not impact the total amount of recorded revenue other than the change brought about by establishing a returns allowance for its Indian subsidiary. It plans to file its 2015 financials as soon as feasible, followed by its Q1 2016 10-Q. It admits that it expects to report one or more material weaknesses in its disclosure controls and procedures and internal control over financial reporting.
- On a preliminary basis, revenue ($M) for 2015 and Q1 2016 will be $2,447 - 2477 and $573 - 593, respectively. Net income will be $10 - 25 and $(8) - 2, respectively, and non-GAAP EBITDA $505 - 520 and $106 - 116.
- Analysts expect the $5.8B takeover by Abbott Laboratories (ABT -0.4%) to proceed.
Mon, Feb. 1, 8:07 AM
- Abbott Laboratories (NYSE:ABT) acquires point-of-care diagnostics firm Alere (NYSE:ALR) for $56 per share ($5.8B). The deal will be immediately accretive to earnings and is expected to add $0.12 - 0.13 to EPS in 2017 and more than $.20 in 2018. Annual pre-tax synergies should be ~$500M by 2019.
- Under the terms of the deal, Alere shareholders will receive $56 per share in cash. Abbott will also assume $2.6B in Alere outstanding debt.
- Waltham-MA-based Alere generates ~$2.5B in sales per year. Shares are up 46% premarket on light volume.
Sep. 15, 2014, 12:48 PM
- Diagnostics maker Alere (ALR +12.9%) bucks biotech's down day by jumping on a 6x surge in volume on reports that former CEO Ron Zwanziger intends to bid $46 per share for the company. His potential offer would value Alere at almost $4B.
- Mr. Zwanziger believes the firm is undervalued. He has a point. Alere's sales and earnings are decelerating and its P/S, P/B and P/CF ratios all lag the industry according to msn money.
Jun. 10, 2013, 7:54 AM
More on Coppersmith-Alere (ALR) letter: Coppersmith wants Alere to use the proceeds from any sales to slash its debt, which is almost $3.8B vs a market cap of $2.15B. The ops that Coppersmith wants Alere to sell are its health care management unit, its consumer products joint venture with P&G (PG), and possibly its toxicology unit. Coppersmith has been agitating for change since last month and has nominated three directors to Alere's board.| Jun. 10, 2013, 7:54 AM