SALT LAKE CITY, Nov. 17 /PRNewswire-FirstCall/ -- IOMED, Inc. held its 2006 annual shareholders' meeting on Friday, November 10, where shareholders re-elected two Class I directors to its Board of Directors. Messrs. Michael T. Sember and Robert J. Lollini, were re-elected with "for" votes of 52% and 52%, respectively and will each serve terms expiring in 2009. IOMED shareholders also ratified the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for fiscal 2007.
In his presentation on the state of IOMED, which can be viewed on the Company's website at www.iomed.com, Mr. Lollini, President and CEO, said, "Since 2003, we have maintained an efficient core operating business that has been both profitable and cash flow positive. Through our investment in research and development, we have maintained our reputation of offering the best and broadest product line in the industry, and will continue this momentum with the release of new iontophoresis products in fiscal 2007.
"We have also enhanced the financial structure of IOMED over the last four years, generating $5.2 million in cumulative operating cash flow, decreasing debt and increasing shareholders' equity at a compound annual growth rate of 8.7% since fiscal 2003, despite high litigation expenses."
With respect to litigation, the company settled two intellectual property lawsuits in fiscal 2006 and recently prevailed in a jury trial involving a third intellectual property lawsuit. Mr. Lollini discussed the impact of these events on the Company. "Over the last four years, our net income has been masked by high litigation expenses. Without these expenses, pro forma net income in fiscal 2005 and 2006 would have been $1.4 million and $1.5 million, respectively, rather than the $425,000 and $600,000 reported net income. While the recent favorable jury verdict is still subject to appeal, we are confident that it will stand and that the final resolution of these matters offers an opportunity to free up resources, eliminate contingencies, and allow us to pursue our growth strategies and other opportunities to increase shareholder value," he said.
Pro forma net income is considered non-GAAP financial information, and a reconciliation can be found in the table below.
Mr. Lollini also discussed the loss of Compex Technologies as a distributor and other previously reported changes in the Company's distribution network stating, "Changes in our distribution network adversely impacted average selling prices and sales volumes in both fiscal 2005 and 2006 and will likely continue to have an adverse affect into fiscal 2007. These impacts were mitigated by the sale of new products introduced in late fiscal 2004 which have been well received into the marketplace and continue to gain momentum and in addition, we expect the release of new products in fiscal 2007 to further bolster our competitive position and market share."
Mr. Lollini said that several recent events in the pharmaceutical market might present new collaborative development opportunities for the Company. He referred to ALZA Corporation's pending market launch of IONSYS(TM), an iontophoretic fentanyl patch for pain control, Pfizer's licensing agreement with Quark Biotech and Merck's $1.1 billion purchase of Sirna Therapeutics. "Both Quark and Sirna are among several companies developing SiRNA (short interfering RNA) and other molecules for the treatment of ophthalmic diseases. Based on the chemical properties, relative size and potency of many of these molecules, they may represent ideal candidates for OcuPhor(R), IOMED's iontophoretic drug delivery technology for ophthalmic applications. These and other developments, including the July 2006 FDA approval of Genentech's Lucentis(TM) drug for the treatment of wet age-related macular degeneration, have generated increased interest in our OcuPhor technology and our expertise in iontophoretic drug delivery," he said.
IOMED is a leader in developing, manufacturing and marketing active drug delivery systems used primarily to treat acute local inflammation in the physical and occupational therapy and sports medicine markets. The Company is pursuing opportunities to advance its position as a provider of quality, innovative non-invasive medical products that improve patient healthcare. IOMED seeks to accomplish this by expanding its product line, distributing new products, developing strategic partnerships, and through acquisitions. To find out more about IOMED, Inc. , visit our website at www.iomed.com.
The statements contained in this news release that are not purely historical are forward-looking statements, as defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and include IOMED's beliefs, expectations or intentions regarding its future operations and financial condition. All forward-looking statements included in this news release are made as of the date hereof and are based upon information available to IOMED as of such date. IOMED assumes no obligation to update any forward-looking statement. It is important to note that actual outcomes could differ materially from those in such forward-looking statements. Readers should also refer to the risk factors and other disclosures set forth in IOMED's filings with the Securities Exchange Commission, including Forms 10-K, 10-Q and 8-K.
Reconciliation of non-GAAP financial measures to GAAP financial measures.
Fiscal Year Ended June 30,
Reported GAAP net income $425,000 $600,000
Litigation expense 971,000 887,000
Pro forma net income $1,396,000 $1,487,000