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HealtheTech, Inc. (HETC) Reports 43% Revenue Gain Over Previous Quarter


10/19/2005 5:12:31 PM

GOLDEN, Colo., Jan. 19 /PRNewswire-FirstCall/ -- HealtheTech, Inc., the maker of proprietary handheld medical devices and software for the measurement of resting metabolic rate and nutrition monitoring, today reported financial results for the fourth quarter of 2004. Total revenues for the fourth quarter of 2004 were $1,177,000, compared to $825,000 for the third quarter of 2004, a 43% quarter over quarter improvement and a 98% improvement over the $593,000 of total revenues for the fourth quarter of 2003. Net loss for the fourth quarter of 2004 was essentially equivalent to the third quarter of 2004 and a 66% improvement from the fourth quarter 2003. The Company reported a net loss of $1.97 million ($0.27 per share) for the fourth quarter 2004 compared to a net loss of $1.95 million ($0.27 per share) for the third quarter of 2004 and a net loss of $5.83 million ($1.37 per share) for the fourth quarter of 2003.

Statistics -- three and twelve months ended December 31, 2004 (in thousands except per share amounts) Three months Twelve months ended 12/31 ended 12/31 2003 2004 2003 2004 Revenue $ 593 $ 1,177 $ 5,228 $ 3,783 Gross profit $ 56 $ 244 $ 1,355 $ 647 Operating expense (GAAP) $ 5,899 (1) $ 2,257 $ 28,246 $10,306 Business operations expense (non-GAAP) $ 2,905 $ 2,113 $ 20,727 $ 8,848 Net loss $(5,828)(1) $(1,967) $(26,725) $(9,491) Loss per share $ (1.37)(1) $ (0.27) $ (6.67) $ (1.34) Weighted average shares 4,260 7,178 4,007 7,104 (1) includes restatement as of 1/1/03 for FAS123 adoption -- originally reported as $6,595, $(6,541) and $(1.54), respectively

As of December 31, 2004, HealtheTech had $9.5 million in cash, cash equivalents and restricted cash, compared to $11.3 million as of September 30, 2004 and $17.0 million as of December 31, 2003.

"Our selling cycle continues to be longer than we would like it to be, but our positive sales trends over the past 12 months indicate a much broader acceptance of our products in the commercial fitness, medically supervised weight management and corporate wellness markets," stated Sandy MacPherson, President & COO. "We had a particularly strong fourth quarter in the fitness market as a result of some significant repeat orders from several of our key customers. Total unit placements for the quarter were up over 200% from the previous quarter and up over 500% from the fourth quarter of 2003. Our 'SmartGem' pre-loaded measurement devices continue to be the product of choice for our customers with 96% of all device sales during the quarter coming from this configuration."

Our business operations expense remained highly efficient, but was up $170,000 or 8.5% versus the third quarter due to several new initiatives developed to enhance revenue across all of our market segments. During the fourth quarter we launched our "Metabolic Fingerprint" public relations campaign which aired on over 50 television and radio stations across the country creating awareness on the importance of personal metabolic rate measurements. We also began hiring a direct sales force to help increase our penetration, particularly within the medical market. Our strict expense control measures throughout the year improved cash flow by nearly 50% for the fourth quarter of 2004 versus the same period in 2003 and allowed us to finish 2004 with a higher cash balance than we had anticipated at the start of the year.

"We are extremely pleased with the progress we made during 2004 in building a strong foundation for growth. We were able to reduce our annual expenditures by nearly 60% over 2003, develop a new, more efficient internal manufacturing capability and almost double fourth quarter sales over the same period last year by significantly expanding our base of customers. We completed the year with a very positive upward trend in sales and we believe our current cash position will enable us to execute our growth strategy in 2005 and beyond," stated Sandy MacPherson.

In previous earnings releases we introduced a non-GAAP measure, "business operations expense," that our management uses as a benchmark on how well we are managing our controllable expenses. While we are not suggesting that this measure is superior to traditional GAAP metrics, we find that it effectively isolates those expenses that our employees can directly influence. Reconciliation of this non-GAAP measure to GAAP follows:

Reconciliation of non-GAAP term (in 000's) Three months ended 12/31 Twelve months ended 12/31, 2003 2004 2003 2004 Operating expenses (GAAP) $5,899 (1) $2,257 $28,246 $10,306 Less -- Stock-based charges (2,165)(1) (134) (5,066) (1,070) Less -- Restructuring charges & asset impairment (829) (10) (2,453) (388) Business operations expense (non-GAAP) $2,905 $2,113 $20,727 $8,848 (1) includes restatement as of 1/1/03 for FAS123 adoption -- originally reported as $6,595 and $2,861, respectively. About HealtheTech

HealtheTech, Inc., headquartered in Golden, CO, develops and markets technologically advanced and proprietary handheld medical devices and software for the measurement of resting metabolic rate and monitoring of weight and nutrition. HealtheTech's breakthrough products assist healthcare and wellness professionals in the areas of weight management, fitness, health and medical nutrition therapy, to provide cost-effective and individualized nutrition monitoring and weight management tools. HealtheTech's product line includes hardware and software that enables individuals to monitor their health and nutrition conveniently and affordably. For more information, please visit http://www.healthetech.com/.

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of applicable securities laws. All statements included herein, other than statements of historical fact, may constitute forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that these expectations will prove to be correct. Such statements are based on management's current expectations, estimates and projections, which are subject to a wide range of uncertainties and business risks. Important factors that could cause actual results to differ materially from the Company's expectations are disclosed in the risk factors contained in the Company's 2003 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 29, 2004. All forward-looking statements are expressly qualified in their entirety by such factors.

HealtheTech, Inc. Statements of Operations ($ in 000's) Three Months Ending Twelve Months Ending 12/31/2003 12/31/2004 12/31/2003 12/31/2004 (Unaudited) Unaudited) (Unaudited) Revenue: Product Sales 430 1,081 2,667 3,180 Software and Other 164 96 2,561 603 Total Revenue 593 1,177 5,228 3,783 Cost of Revenue: Product Sales 372 825 2,649 2,584 Software and Other 116 101 1,148 510 Stock Based Charges 50 7 76 42 Total Cost of Revenue 538 933 3,873 3,136 Gross Profit 56 244 1,355 647 Gross Profit % 9% 21% 26% 17% Operating Expenses: Research & Development 1,078 343 6,499 2,132 Selling, General and Administrative 1,827 1,705 14,228 6,579 Other Operating Expenses -- 65 -- 137 Stock-based Charges 2,165 134 5,066 1,070 Restructuring Charges & Asset Impairment 829 10 2,453 388 Total Operating Expenses (1) 5,899 2,257 28,246 10,306 (Loss) from Operations (5,843) (2,013) (26,891) (9,659) Interest Income 16 46 172 169 Interest Expense (1) -- (6) (1) Net (Loss) (1) (5,828) (1,967) (26,725) (9,491) Basic and diluted loss per common share (1) (1.37) (0.27) (6.67) (1.34) Basic and diluted weighted average common shares outstanding 4,260 7,178 4,007 7,104 (1) Three months ended 12/31/2003 restates impact of 12/31/03 FAS123 adoption retroactive to 1/1/03. Originally the entire impact of the FAS123 adoption was reflected in the fourth quarter of 2003. 4Q03 originally reported as operating expense of $6,595, net loss of $(6,541) and basic and diluted loss per share of $(1.54). HealtheTech, Inc. Balance Sheet ($ in 000's) December 31, December 31, 2003 2004 (Unaudited) ASSETS Current assets: Cash and cash equivalents 17,003 8,033 Restricted cash -- 1,500 Receivables, net of allowance 620 921 Inventory 1,908 1,169 Prepaid expenses 676 474 Other current assets 18 30 Total current assets 20,226 12,127 Property & equipment, net 1,844 1,038 Deposits 266 265 Intangible assets, net of amortization 1,556 1,348 TOTAL ASSETS 23,892 14,778 LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities: Accounts payable 489 211 Accrued liabilities 1,214 656 Deferred revenue 72 78 Total current liabilities 1,774 945 Other liabilities: Other liabilities 89 93 Total other liabilities 89 93 Total liabilities 1,863 1,039 Stockholders' equity: Common stock 7 7 Deferred stock-based charges (1,817) (1,459) Additional paid-in capital 114,764 115,608 Accumulated deficit (90,924) (100,416) Total stockholders' equity 22,029 13,739 TOTAL LIABILITIES & STOCKHOLDERS' EQUITY 23,892 14,778

HealtheTech, Inc.

CONTACT: Media, Allison Snyder, +1-720-746-3398, or Investors, James W.Dennis, Chairman and CEO, +1-303-526-5085, both of HealtheTech, Inc.


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