FISCAL YEAR 2012 EARNINGS RELEASE
This is our 19th year of 20% compound annual growth (“CAGR”) and, as in the past,
our growth was wholly organic and across all business units. It is with great pride
that I speak about the resolve of the Bio-Reference community, which has allowed
us to become an incredible company of growth, innovation, service and purpose.
As the fiscal year drew to a close, Hurricane Sandy wreaked devastation along the
eastern coast of the United States and has had a lasting effect on the lives of
many people. It is virtually impossible to discuss our fourth quarter without addressing
the effects of Hurricane Sandy. However it is equally important to note that this
natural disaster also provided a challenge that tested the resolve of many. It also
highlighted two indisputable facts. First—the ongoing growth of Bio-Reference remains
clear despite the challenges we faced; second—the response of Bio-Reference said
volumes about the people that make up the BRLI family. Through the first three days
when we were most affected, Bio-Reference continued to draw blood, pick up specimens
and deliver results in New York, New Jersey and Connecticut—as well as around the
country. The dedication and perseverance displayed is a tribute to the people of
Bio-Reference and it would be impossible to comment about this period without giving
credit to their outstanding commitment and performance.
Hurricane Sandy affected virtually every aspect of our business. Local mail was
suspended and delayed, deliveries could not be made to the laboratory, payers were
closed, and access to fuel and operating materials was a major challenge. We operated
our facilities on generator for five days, hunting daily for diesel fuel to run
the generators. Physician offices closed, many people throughout the entire tri-state
area were without power, including employees, customers and local businesses and
facilities. It is through this perspective that we need to see the continued strong
growth we have exhibited over almost two decades.
The effect of the storm in the fourth quarter was clear-cut. It affected operations
on October 29th, 30th and 31st to a degree unmatched in the Company’s history. Based
on actual revenues and expenses from the period and literally the weeks immediately
preceding the storm as well as the analysis of the period following the storm, we
are able to estimate lost revenues and changes to expenses resulting from Hurricane
Sandy. Our revenues increased on a year over year quarterly basis by 16.4%. Excluding
the effects of the storm, we estimate that our revenues for the fourth quarter were
on track to increase just about 20%. We believe our patient count, which increased
12% over last year, could have grown over 15% without Hurricane Sandy. I don’t think
I have to remind anyone that this growth in our revenue is wholly organic and clearly
validates the underlying business plan and strategy that has remained consistent
over the past two decades and exemplifies our strategy going forward.
For the full fiscal year, based on our calculations of the effect of Hurricane Sandy,
we believe our patient count would have increased almost 17% and total revenues
would have increased well over 19%—significant increases that demonstrate the strength
of this Company. Nevertheless, our revenues for the year were almost $667m, compared
to $559m in 2011.
Growth remained strong across the board in all areas in fiscal 2012. We believe
that Bio-Reference is leading our industry with a commitment to innovation. We practice
laboratory medicine in a way that raises and answers important and relevant clinical
questions. Our success is based on anticipating those questions, and adopting innovative,
new ways to expand our Better Science, Better Service approach.
We are a specialized national laboratory that offers one-stop shopping for specialty
physicians. We are a full service regional laboratory serving the Northeast/Mid-Atlantic
regions and have an impressive menu of managed care contracts. We have a tradition
of growth and service that is extraordinary. We believe we have outstanding academic
associations and cutting edge expertise in the most relevant areas of testing today,
including genetics, oncology and Women's Health. This expertise has been well over
a decade in the making. It defines us as an enterprise.
GeneDx, our genetic sequencing laboratory, has shown strong growth, as strong as
any part of Bio-Reference, but the expertise we have gained at GeneDx has had immeasurable
value in our other testing areas, such as in oncology and Women's Health. In conjunction
with our expertise in Oncology through GenPath, our connectivity solution, CareEvolve,
which is being utilized in nearly 200 installations around the country, has enabled
us to introduce StormPath. StormPath is an innovative virtual pathology system that
allows us to work in partnership with hospital-based pathologists around the country.
This is only the first step in our long-range plan to work in a more expansive manner
with providers. Already, our informatics decision analysis programs are providing
useful insights for some of our larger providers. We are also sequencing solid tumors
in a cost effective manner to allow patients to identify their eligibility for clinical
trials when the information can be most effective; providing exome sequencing for
children who need a diagnosis when all other avenues have been exhausted; and delivering
unquestioned leadership in Cardiac Genetics. GenPath Women's Health has been successful
not because it is built on one test but because we understand that to assume leadership
in this area we must offer cutting edge solutions in all clinically relevant areas
for all Obstetricians and Gynecologists including Women's cancer, Women's infectious
diseases and Pre-Natal genetics.
It is interesting to compare both Cash Flow from operations and free cash flow between
FY 2011 and FY2012. Cash Flow from operations for the year increased from around
$21m in FY 2011 to over $53m in FY 2012 while Free Cash Flow increased from around
$12m in FY 2011 to $28m in FY 2012. To put matters in perspective, Bio-Reference,
a company that has achieved 19 years of 20% CAGR, that is an innovative leader in
the areas of genetics, oncology and Women's Health, ended its FY 2012 on October
31, 2012 with virtually no debt other than its leasing and equipment obligations.
This may be just a snapshot in time, but it bears witness to the fiscal soundness
of the Company.
Our strategy of innovation will continue unabated. Our level of service and commitment
to our clients has never been stronger as demonstrated by our performance during
Hurricane Sandy. Based on our current assumptions and circumstances, we expect our
level of growth, historically strong in the past, to continue in the future.
Our Board of Directors adopted a stock buyback program to purchase up to 1,000,000
shares of our common stock through October 31, 2012. During this program we repurchased
285,450 shares. We believe that a stock buyback program is a way for the Company
to exhibit its confidence in itself. Accordingly, our Board of Directors approved
a new stock buyback program authorizing the repurchase of up to 714,550 shares of
our common stock at prevailing market prices through October 31, 2013.
Last year we continued our guidance, which has been consistent for quite some time.
We still believe that we will increase net revenues by greater than 15%. We continue
to estimate that we will grow net income by around 20%. We will remain focused on
our future growth and performance and providing the best results for our physician
clients, the patients they serve, and for our shareholders.
Elmwood Park, New Jersey
Marc Grodman, M.D.
Chairman of the Board
President and Chief Executive Officer