Accounting mistakes did not hurt its numbers, Alere says.
Updated August 10
Alere has finally released its financial reports for the fourth quarter and full year of 2015, concluding that accounting missteps in recent years had no material impact on previous reports. However, suitor Abbott Laboratories is still unhappy.
Abbott, which had previously offered up to $50 million to sever its $6 billion January 2016 agreement to buy Alere, had been waiting on Alere's financial reports, delayed as Alere worked to clear up accounting errors from foreign operations.
In the 10-K filed this week with the SEC, Alere cited "material weaknesses" in its internal control over financial reporting for 2014 and 2015. Those weaknesses have not been remediated, the company added, and could continue to impair its ability to report accurate financial information. Management discovered and corrected errors related to its payment of U.S. taxes on foreign earnings for 2014, according to the report.
"We did not maintain a sufficient complement of resources with adequate experience and expertise in accounting for income taxes," the company said.
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Alere also said it has spent $25.9 million to satisfy creditors perturbed by the months-long delay in filing its 2015 annual report. If the deal doesn't close in a timely manner or at all, and certain other circumstances outlined in the merger agreement occur, Alere may owe Abbott $177 million. Alere maintains that it expects the Abbott deal to close at the end of 2016. Abbott says it's still waiting for more information.
"Alere's Form 10-K filing for 2015 does not eliminate Abbott's concerns about its business controls and practices given the litany of issues that have come to light since our agreement was announced," the company said in a statement. "Alere has also failed to provide an adequate explanation for the extended filing delay and has refused to provide detailed and relevant information on several outstanding issues. We continue to await details about Alere's first half 2016 results and ongoing regulatory matters in jurisdictions around the world."
Alere makes diagnostics for a variety of infectious diseases, including HIV, dengue fever, tuberculosis, and malaria. Abbott proposed buying it for $56 in cash per share. Shortly thereafter, Alere revealed that it had received a grand jury subpoena from the U.S. Department of Justice related to its sales practices for 2013 through 2015 in Asia, Africa, and Latin America, and to matters related to the U.S. Foreign Corrupt Practices Act. Alere's directors turned down Abbott's offer to break off the deal.
Alere expects to file its first-quarter report for 2016 by August 18 and its Q2 report "as soon as is practicable," the company said in a separate statement.
Abbott's latest statement adds to the string of woes for Waltham, MA-based Alere, which also has a toxicology unit that performs drug tests for businesses and governmental agencies. Last month, federal investigators subpoenaed the company's government-billing records dating back to 2010 for patient samples tested at Alere's Austin, TX, pain management laboratory.
Alere also previously disclosed that it had received subpoenas in December 2014 from the U.S. Attorney for the District of New Jersey asking for documents relating mostly to billing and marketing practices in toxicology testing, the Wall Street Journal has reported. Most recently, Alere announced it is voluntarily withdrawing a device that tests the blood of patients who take blood thinners, following reports of inaccurate results.
Nancy Crotti is a contributor to Qmed.
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