Digene posts 3rd-quarter loss of 19 cents a share

Red ink is swollen by one-time charge

May 15, 2002|By Julie Bell | Julie Bell,SUN STAFF

Digene Corp. said yesterday that its fiscal third-quarter loss widened despite increased revenue, largely because of a one-time charge related to its purchase of rights to a diagnostic test for sexually transmitted diseases.

Digene Chief Executive Officer Evan Jones said the Gaithersburg company continues to support its planned acquisition by Cytyc Corp., although the merger remains under review by the Federal Trade Commission.

Cytyc CEO Patrick J. Sullivan reaffirmed his support for the acquisition, which would pair two companies that offer complementary diagnostic tests for cervical cancer.

"Obviously, we're all operating in a vacuum of real tangible information here," said Pacific Growth Equities analyst Al Kildani, referring to how the FTC review is affecting the merger's prospects. But he added that "we're still confident the transaction will close. The timing of it is the biggest question."

Digene reported a net loss of $3.3 million, or 19 cents a share, for the quarter that ended March 31. The results include a one-time charge of $2.5 million, or 14 cents a share, related to the company's reacquisition of rights to a diagnostic test for chlamydia and gonorrhea from Abbott Laboratories. Without that expense, Digene's loss was $800,000, or 5 cents a share.

That compares with a loss of $1.6 million, or 10 cents a share, for the third quarter a year ago. Quarterly revenue increased 58 percent, to $14.2 million from $9 million, on the strength of demand for Digene's test kits for human papillomavirus. HPV, as the virus is known, is associated with the vast majority of cervical cancers.

The financial results, excluding the charge, exceeded analysts' expectations of a loss of 6 cents a share, according to the average estimate of four analysts surveyed by Thomson Financial/First Call.

Shares of Digene rose 49 cents to $23.92 yesterday. Shares of Boxborough, Mass.-based Cytyc gained 54 cents to $16.84.

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