LINCOLNSHIRE, Ill., Nov. 1 /PRNewswire-FirstCall/ -- Aksys, Ltd. , a pioneer in innovative dialysis systems, today reported results for the third quarter ended September 30, 2005.
Third Quarter Highlights -- Revenues for the third quarter of 2005 were $822,000. The Company’s net loss for the third quarter of 2005 was $7.0 million or $0.23 per share. -- Aksys signed three new partnership agreements during the quarter. -- At quarter end, 163 patients were being treated on PHD(R) Systems.
“Every month, we are training more clinics and introducing new patients to the PHD Program,” said Bill Dow, President and CEO of Aksys, Ltd. “In an effort to further increase awareness of daily home hemodialysis and the PHD System, Aksys led a number of educational initiatives during the third quarter, which drew participation across the range of stakeholders in the renal industry.”
These programs included: -- An Aksys-sponsored series of regional clinical meetings for physicians - those who have programs and those who are considering launching a program in the near future. -- The Aksys Continuing Education Program for nephrology social workers across the country. -- ESRD Surveyor Training Clinic where Aksys conducts in-depth education for new state surveyors to familiarize them with proprietary capabilities of the PHD System. -- The launch of regional ESRD Town Hall Meetings in key cities around the country. These meetings are conducted in a large venue where we invite a wide range of healthcare professionals and patients to hear an expert panel discuss the benefits and issues of daily home hemodialysis as a preferred alternate therapy to conventional thrice- weekly hemodialysis in the dialysis clinic setting.
“The meetings have also allowed Aksys to share the results of a Company- sponsored national patient survey and a new white paper on the economic impact of kidney disease by Northwestern University healthcare economist David Dranove,” continued Mr. Dow. “Both papers contain relevant and timely information that support an accelerated rate of adoption of frequent home hemodialysis therapy. We believe that this momentum will continue to build as we further spread the word about the benefits of this daily hemodialysis.”
Financial Results
For the third fiscal quarter of 2005, Aksys reported revenues of $822,000 compared to revenues of $581,000 for the third quarter of 2004. For the nine months ended September 30, 2005, Aksys reported revenues of $1,842,000, an increase of 5% from the $1,762,000 reported for the nine months ended September 30, 2004. Due to the increased number of patients using the PHD, we saw an increase in revenue for the quarter and year to date, largely driven by increased revenues for service and consumable supplies. While 57 more patients are using the PHD as of September 30, 2005 versus the same period last year, more units in 2005 have been rented rather than sold. Revenue from sales is recognized at the time of installation, while rental revenue is recognized over the life of the rental agreement. As a result, our product revenues for the nine months ended September 30, 2005 increased only slightly compared to the same period in 2004.
Cost of sales was $2,672,000 in the third quarter of 2005, an increase from the $2,381,000 reported for the third quarter of 2004. For the nine months ended September 30, 2005, cost of sales was $11,727,000, an increase from the $7,330,000 reported for the nine months ended September 30, 2004. The increase in cost of sales for the quarter was driven largely by an increase in the number of patients using the PHD System. An increase in patients requires additional service and consumable supplies. The increase in cost of sales for the year to date was driven in part by an increase in the number of patients and also by impairment, warranty and obsolescence charges during the first half of the year. The increase in patients for the nine months ended September 30, 2005 compared to the nine months ended September 30, 2004 resulted in a $515,000 increase in the cost of sales from consumable supplies and a $353,000 increase in service costs. Depreciation expense for the nine months ended September 30, 2005 increased by $327,000 from the comparable period in 2004 due to additional machines in the rental pool.
Operating expenses for the third quarter 2005 were $4,945,000, an increase from the $4,336,000 reported for the third quarter of 2004. The increase for the third quarter can be attributed primarily to product enhancement and development activities.
The Company reported a net loss for the third quarter of 2005 of $7,019,000, or $0.23 per share, compared to a net loss of $6,410,000, or $0.21 per share, for the third quarter of 2004. For the nine months ended September 30, 2005, Aksys reported a net loss of $26,770,000, an increase from the $19,803,000 reported for the nine months ended September 30, 2004.
“We paid down our $3.4 million line of credit during the third quarter and ended the quarter with $14.1 million of cash and liquid investments. We have sufficient cash resources to fund Aksys’ business into the first quarter of 2006,” said Larry Birch, Senior Vice President and Chief Financial Officer of Aksys, Ltd.
Outlook
Bill Dow commented, “During the third quarter we began implementing the PHD program at eight new clinics. With our expanded sales force and aggressive marketing initiatives, we fully expect to meet our year-end goal of 170-190 patients on the PHD System and to continue increasing market awareness and acceptance of daily home hemodialysis.” Mr. Dow continued, “As the market innovator in a growing segment, it’s an exciting time for us. We’re proud to represent the gold standard in hemodialysis treatment including unparalleled quality of therapy, ease of machine use, prescription flexibility and technology safety. At the same time, the PHD program allows clinics the opportunity to manage a profitable daily home hemodialysis program within today’s reimbursement infrastructure.”
Conference Call
The Company plans to discuss these results and further details of its third quarter 2005 during a conference call on Tuesday, November 1, 2005, at 12:00 p.m. Eastern Time. The call can be accessed via the Internet through http://www.aksys.com . A replay will be available from 3:00 p.m. Eastern Time, November 1, through 6:00 p.m. Eastern Time, November 30, by dialing 703-925-2533, code 798523 or by logging onto the Internet at http://www.aksys.com or http://www.earnings.com .
About the Company
Aksys, Ltd. produces hemodialysis products, providing services for patients suffering from kidney failure. The Company’s lead product, the PHD(R) System, is a currently available, advanced technology hemodialysis system designed to improve clinical outcomes of patients and reduce mortality, morbidity and the associated high cost of patient care. Further information is available on Aksys’ website: http://www.aksys.com .
This press release contains forward-looking statements that involve a number of risks and uncertainties. Our actual results could differ materially from the results identified or implied in any forward-looking statement. These statements are based on our views as of the date they are made with respect to future results or events. Factors that could cause such a difference include, but are not limited to, the following: (i) uncertainty about the acceptance of the PHD System by both potential users and purchasers, including without limitation, patients, clinics and other health care providers; (ii) risks related to uncertain unit pricing and product cost, which may not be at levels that permit the Company to be profitable; (iii) risks related to quality control issues and consistency of service applicable to the PHD System; (iv) market, regulatory reimbursement and competitive conditions; (v) risks related to the failure to meet additional development and manufacturing milestones for the PHD System on a timely basis, including, without limitation, manufacturing and servicing cost reduction efforts; (vi) our ability to obtain sufficient capital on acceptable terms to run our business; (vii) risks inherent in relying on third parties to manufacture the PHD System; (viii) changes in Quality System Requirements; and (ix) risks related to the disposition of our common stock by Durus Life Sciences Master Fund Ltd. and its affiliates. The Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results or events expressed or implied therein will not be realized.
-financial table to follow- AKSYS, LTD. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) Quarter ended Nine months ended September 30, September 30, 2005 2004 2005 2004 Revenue: Product Sales $233,000 $224,000 $331,000 $829,000 Product Rentals 192,000 101,000 478,000 268,000 Service and supplies 397,000 256,000 1,033,000 665,000 Total revenue 822,000 581,000 1,842,000 1,762,000 Cost of sales: Product 1,052,000 976,000 6,623,000 3,206,000 Service and supplies 1,620,000 1,405,000 5,104,000 4,124,000 Total cost of sales 2,672,000 2,381,000 11,727,000 7,330,000 Operating expenses: Research and development 1,988,000 1,711,000 6,496,000 4,926,000 Sales and marketing 1,127,000 1,064,000 3,548,000 3,507,000 General and administrative 1,830,000 1,561,000 6,179,000 5,337,000 Total operating expenses 4,945,000 4,336,000 16,223,000 13,770,000 Operating loss (6,795,000) (6,136,000) (26,108,000) (19,338,000) Other income and expense: Realized loss on available- for-sale security - - (113,000) - Interest income 191,000 177,000 623,000 413,000 Interest expense (397,000) (345,000) (1,154,000) (772,000) Total other income and expense (206,000) (168,000) (644,000) (359,000) Income tax expense (18,000) (106,000) (18,000) (106,000) Net loss $(7,019,000) $(6,410,000) $(26,770,000) $(19,803,000) Net loss per share, basic and diluted $(0.23) $(0.21) $(0.89) $(0.66) Weighted average shares outstanding 29,940,918 29,824,013 29,919,305 29,814,637 SELECTED BALANCE SHEET DATA September 30, December 31, 2005 2004 (unaudited) Cash and short-term investments $6,632,000 $31,117,000 Working capital 6,247,000 32,611,000 Long-term investments 8,222,000 8,168,000 Total assets 25,924,000 52,945,000 Total liabilities 21,829,000 21,938,000 Stockholders’ equity 4,095,000 31,007,000
Aksys, Ltd.
CONTACT: Laurence P. Birch, Senior Vice President and Chief FinancialOfficer of Aksys, Ltd., +1-847-229-2222
Web site: http://www.aksys.com/
