WILMINGTON, Mass., Feb. 15 /PRNewswire-FirstCall/ -- CardioTech International, Inc. , a developer and manufacturer of advanced materials and medical devices for the treatment of cardiovascular and other diseases, today reported financial results for the third quarter and nine months of fiscal 2007 ended December 31, 2006. The Company also announced today that it has retained Silverwood Partners, an investment banking firm, to identify potential purchasers of its Gish Biomedical, Inc. unit (“Gish”), located in southern California and to manage the sale of Gish. Gish designs, manufactures, and markets disposable medical devices for various surgical specialties including cardiovascular surgery, orthopedics, and oncology. All of Gish’s products are single use disposable products or have a disposable component.
Michael Adams, President and CEO of CardioTech, stated: “Gish Biomedical is a strong brand name that has been associated for over 30 years with the provision of innovative, high quality, disposable medical products. Over the past year, we have received a number of inquiries from companies seeking to acquire Gish. While Gish is a great business, it is not a fit with CardioTech’s strategic direction, and the sale of Gish will permit the redeployment of capital into CardioTech’s ongoing growth initiatives. The sale of Gish is a great opportunity to align the business with an acquirer that is focused on capitalizing on the strength of the respected Gish brand in the worldwide medical device marketplace.”
Fiscal Third Quarter Results
For the fiscal third quarter, revenues were $5.4 million as compared to $5.5 million in the third quarter of fiscal 2006. The Company reported a net loss of $826,000, or $0.04 per basic and diluted share, as compared to a net loss of $958,000, or $0.05 per basic and diluted share, a year earlier.
For the nine months ended December 31, 2006, revenues were $15.7 million as compared to $17.1 million in the first nine months of fiscal 2006. The Company reported a net loss of $2.4 million for the nine months ended December 31, 2006, or $0.12 per basic and diluted share, as compared to a net loss of $1.8 million, or $0.09 per basic and diluted share, a year earlier.
For the three months ended December 31, 2006, product sales decreased $200,000 to $5.0 million, primarily due to the loss of a major customer beginning fiscal 2007 in the Company’s private label manufacturing business.
Royalty revenues were $365,000 for the three months ended December 31, 2006 as compared to $229,000 in the year-earlier period, as the Company benefited from a new supply and royalty agreement in the three months ended December 31, 2006.
Selling, general and administrative expenses for the three months ended December 31, 2006 were $1,990,000, an increase of $508,000. This increase is attributable, in part, to $330,000 in costs associated with a marketing and strategy study and incremental professional and recruiting fees. The remaining increase is primarily due to additional management employees.
The Company’s cash, cash equivalents and short-term investment balance at December 31, 2006 was $4.1 million, a decrease of $1,184,000 during the quarter. Cash was used to fund operations, including the identified costs described above and for a $350,000 purchase of capital equipment for the future manufacture of CardioPass. Working capital was $10.0 million as of December 31, 2006.
Commenting on CardioTech’s performance and revised business model, President and CEO Michael Adams said: “Our financial results were anticipated and reflect the substantial investment which began in the third quarter to put the building blocks in place for improved results in the future. Working with outside experts, we have developed a blueprint to vertically integrate our materials sciences operations at Company headquarters with our OEM manufacturing division in Minneapolis in order to strengthen our competitive position in the marketplace. We are pleased with the timely completion of regulatory preparations for the European clinical trial of our CardioPass(TM) synthetic coronary bypass graft which is now underway as well as the progress of our partnership with CorNova.”
February 15 Conference Call and Replay
CardioTech will host a conference call with investors at 2:30 p.m. ET on Thursday, February 15 2006, to discuss its fiscal second quarter financial results. Participants should dial in at (866) 256-9239 (ID# 1028590) at least 10 minutes before the call is scheduled to begin. Outside the U.S. and Canada, please dial (703) 639-1213 (ID# 1028590).
A replay will be available beginning approximately two hours after the conference call ends for a period of two weeks by dialing (888) 266-2081, Access Code 1028590. Outside the U.S. and Canada, please dial (703) 925-2533 (ID#1028590).
About CardioTech International, Inc.
CardioTech International, Inc. is a medical device company that designs, develops, manufactures and sells innovative materials and products for the treatment of cardiovascular, orthopedic, oncology and other diseases. The Company’s strategic goal is to incorporate its proprietary technology into a wide range of breakthrough medical devices. CardioPass(TM) is CardioTech’s proprietary, synthetic coronary artery bypass graft. The Company generates revenues from sales of materials and advanced medical devices, as well as from contracted product design and development services. More information about CardioTech is available by visiting its website at http://www.cardiotech-inc.com.
Forward-Looking Statements
CardioTech believes that this press release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties. Such statements are based on management’s current expectations and are subject to risks and uncertainties that could cause results to differ materially from the forward-looking statements. For further information on such risks and uncertainties, you are encouraged to review CardioTech’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended March 31, 2006 and its Quarterly Reports on Form 10-Q for the fiscal quarters ended June 30, 2006, September 30, 2006 and December 31, 2006. CardioTech assumes no obligation to update any forward-looking statements as a result of new information or future events or developments, except as required by law.
For Further Information Contact: Eric Walters Vice President & Chief Financial Officer CardioTech International, Inc. (978) 657-0075 general-info@cardiotech-inc.com Sylvia Dresner Senior Vice President VMW Corporate & Investor Relations (212) 616-6161 info@vmwcom.com CardioTech International, Inc. Condensed Consolidated Statements of Operations (Unaudited - in thousands, except per share amounts) For The Three For The Nine Months Ended Months Ended December 31, December 31, 2006 2005 2006 2005 Revenues: Product sales $5,049 $5,240 $14,723 $16,452 Royalties 365 229 943 692 5,414 5,469 15,666 17,144 Cost of sales 3,992 4,463 11,704 13,346 Gross margin 1,422 1,006 3,962 3,798 Operating expenses: Research and development, regulatory and engineering 426 358 1,170 1,061 Selling, general and administrative 1,990 1,482 5,223 4,430 2,416 1,840 6,393 5,491 Loss from operations (994) (834) (2,431) (1,693) Interest and other income and expense: Interest income 44 9 103 31 Other income 124 - 224 68 Interest and other income, net 168 9 327 99 Equity in net loss of CorNova, Inc. - (133) (278) (216) Net loss $(826) $(958) $(2,382) $(1,810) Net loss per common share, basic and diluted $(0.04) $(0.05) $(0.12) $(0.09) Shares used in computing net loss per common share, basic and diluted 19,832 19,499 19,826 19,369 CardioTech International, Inc. Condensed Consolidated Balance Sheets (Unaudited - in thousands, except share and per share amounts) December 31, March 31, 2006 2006 ASSETS Current assets: Cash and cash equivalents $3,085 $6,841 Short-term investment 1,012 - Accounts receivable-trade, net of allowance of $365 and $572 as of December 31, 2006 and March 31, 2006, respectively 2,795 2,851 Accounts receivable-other 288 265 Inventories 5,223 4,786 Prepaid expenses and other current assets 242 210 Total current assets 12,645 14,953 Property, plant and equipment, net 4,232 4,059 Amortizable intangible assets, net 496 584 Goodwill 487 487 Other assets 122 130 Investment in CorNova, Inc. - 238 Total assets $17,982 $20,451 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $809 $1,750 Accrued expenses 1,394 936 Deferred revenue 414 132 Total current liabilities 2,617 2,818 Deferred rent 121 129 Stockholders’ equity: Preferred stock; $.01 par value; 5,000,000 shares authorized; 500,000 shares issued and none outstanding as of December 31, 2006 and March 31, 2006 - - Common stock; $.01 par value; 50,000,000 shares authorized; 19,832,483 and 19,796,833 shares issued and outstanding as of December 31, 2006 and March 31, 2006, respectively 198 198 Additional paid-in capital 36,767 36,685 Accumulated deficit (21,721) (19,339) Accumulated other comprehensive loss - (40) Total stockholders’ equity 15,244 17,504 Total liabilities and stockholders’ equity $17,982 $20,451
CardioTech International, Inc.
CONTACT: Eric Walters, Vice President & Chief Financial Officer ofCardioTech International, Inc., +1-978-657-0075, orgeneral-info@cardiotech-inc.com; or Sylvia Dresner, Senior Vice Presidentof VMW Corporate & Investor Relations, +1-212-616-6161, or info@vmwcom.com,for CardioTech International, Inc.
Web site: http://www.cardiotech-inc.com//
