Alere Earnings Call Nuggets: Molecular Strategy and No Longer Giving Guidance

Alere Inc (NYSE:ALR) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.

Molecular Strategy

Isaac Ro – Goldman Sachs: Thanks for the color you gave on 2013 expectations without being specific can you guys commit to maybe raising earning this year, year-over-year?

David Teitel – CFO, VP and Treasurer: Well, as you know we decided not to give earnings guidance. But it will surprise if we didn’t manage to do that.

Isaac Ro – Goldman Sachs: Then maybe just on the molecular strategy, I was interested by your comments there, what was across the landscape there have been first movers here who’ve seen really solid growth, but having said that the core test opportunities as you pointed out are somewhat crowded and having said that it’s also nothing notable, it seems profitability for some of these companies has also been a challenge. So, can you just help us understand how you think you are differentiated both on the technology as well as your channel strategy?

Ron Zwanziger – Chairman, CEO and President: Sure, I mean so the reason we were late is because we wanted to wait and find and acquire and develop, the kind of technology that really would lead to a rapid test, in a sense and when we talk about rapid test, we made a test that anyone can use by themselves in any setting, any ambulatory setting. So, our channel is that tends to be different to what you have been talking about. Secondly, as it relates to the technology, we’re only ever interested in technology, which because of the nature of our rapid diagnostics involves very high volume that the technology has to lend itself to high volume manufacturing, which necessitates much more effort upfront in terms of plants and design and automation and so forth. And once you get through that, you end up with good gross margin ability to make some real money, which I think is probably way you are heading. By the way that explains why we’ve been carrying so much losses in the development program, so for example, in 2012, we probably carried around $30 million to $32 million loss on this program just out of our facility in Jena with a good chunk of that cost. Dealing with the issues of scale-up and manufacturability and process issues, which if you don’t deal with them you can never enter profitability and we are seeing a sharp improvement in – as a result of automation in our cost structure. And what we now need, because we build the extensive plant, and now we’re beginning to see growth and expect some real growth in 2013. You get efficiencies and profitabilities. And so the result we are optimistic both about the nature of our platform and that targets, the fact that are truly rapid in the sense that we mean. I just realize that was probably rather longer response than you expected.