Medical diagnostics firm Cepheid of Sunnyvale, Calif., plans to buy a plastics molder to overcome supply constraints for cartridges it relies on for its systems, according to a news report.
GenomeWeb Daily News reported Sept. 27 that Cepheid President and CEO John Bishop told analysts that the firm's diagnostic systems sales were hurt in the third quarter by “intermittent interruptions in the supply of Xpert cartridge parts.”
Bishop did not identify the current molder of cartridge parts or which molder it is targeting to acquire. Cepheid Chief Financial Officer Andrew Miller reportedly told analysts the price of the acquisition would be in the midteens of millions of dollars. He said Cepheid would move the molding operation into a new facility, buy equipment to boost molding volumes and eventually set up a molding operation in Cepheid's facility in Sweden.
Cepheid has developed a compact, fast, automated molecular diagnostic workstation called GeneXpert. The system relies on patented cartridges.
Cepheid officials told analysts third-quarter revenue would be between $79 million and $81 million, below its target and below analysts' expectations. Officials blamed the shortfall on a shortage of cartridges as Cepheid was developing higher-capacity production tooling and processes.
Cepheid systems are used in clinics around the world to check on infectious diseases such as tuberculosis. The firm had sold 3,350 systems globally by the end of the second quarter. It reported second-quarter sales of $81 million and net profit of $1.1 million.
Cepheid officials could not be reached for comment.