WILMINGTON, Mass., June 27 /PRNewswire-FirstCall/ -- CardioTech International, Inc. , a developer and manufacturer of advanced medical device products for the treatment of cardiovascular and other diseases, today reported financial results for the fiscal fourth quarter and year ended March 31, 2007.
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For the fiscal year ended March 31, 2007, revenues were $21.2 million as compared to $22.4 million in fiscal 2006. The Company reported a net loss of $3.0 million, or $0.15 per basic and diluted share, as compared to a net loss of $5.1 million, or $0.26 per basic and diluted share, a year earlier. The decrease in revenues for fiscal 2007, when compared with fiscal 2006, is primarily due to a decline in cardiopulmonary and private-label product sales during the first three quarters. The rate of decline slowed in the fourth quarter.
For the fiscal fourth quarter, revenues were $5.5 million as compared to $5.2 million a year earlier, the increase due to higher royalties and development fees. The net loss for the quarter was $579,000, or $0.03 per basic and diluted share, as compared to a net loss of $3.3 million, or $0.17 per basic and diluted share, for the comparable prior year period.
Commenting on CardioTech’s performance, President and CEO Michael Adams said: “Our financial results for the year were anticipated and, for the fourth quarter, reflect the substantial investment which began in the third quarter to put the building blocks in place for improved results in the future. I am pleased to report that implementation of our revitalized business strategy is well underway. Our focus is on leveraging CardioTech’s materials science and manufacturing expertise in order to expand our exclusivity, development and royalty fee income, develop next generation polymers and manufacture new and complex medical devices. All these areas began showing notable improvement in the fourth quarter.
“Currently, we are actively engaged in negotiations to sell our Gish Biomedical unit. We are also proceeding on schedule with the patient enrollment and follow up phase of our European clinical trial of CardioPass(TM) synthetic coronary artery bypass graft and are committed to further improvement of our performance in the current fiscal year,” Mr. Adams concluded.
For the three months ended March 31, 2007, revenues increased by $250,000 when compared to the comparable period in 2006, of which $330,000 was primarily due to an increase in royalties and development fees, partially offset by a modest decline in product sales. The increase in royalty fees is from a major customer that is using ChronoFlex in its expanded product offerings, as well as from sales of existing products. The Company also earned fees in the three months ended March 31, 2007 from a September 2006 supply and development agreement.
The decrease in CardioTech’s net loss for fiscal 2007 is due to several factors. First, there was an overall increase of gross margin contribution, excluding royalties and development fees, of $700,000, in part due to improvements in manufacturing operations at the Company’s private label business. Second, in the fiscal 2006 fourth quarter, the Company recorded impairment charges of $1.7 million related to goodwill and inventory. Third, selling, general, administrative, and non-cash compensation expenses for the quarter ended March 31, 2007 were $1,655,000, a decrease of $220,000 when compared to the fourth quarter of fiscal 2006, excluding a $1.2 million goodwill impairment charge. The decrease is attributable, in part, to higher bad debt and non-cash compensation expenses in 2006 and amortization expense of intangible assets in 2006 which did not repeat in 2007.
The Company’s cash and cash equivalents balance at March 31, 2007 was $4.1 million, a decrease of $2.8 million during the year and was unchanged for the fourth quarter. Cash was used to fund operations, including the identified costs described above, and for more than $740,000 for the purchase of capital equipment, $350,000 of which was for manufacturing equipment for CardioPass. Working capital was $9.8 million as of March 31, 2007.
CONFERENCE CALL & REPLAY INFORMATION
CardioTech will host a conference call with investors at 2:30 p.m., ET on Wednesday, June 27, 2007, to discuss its fiscal fourth quarter and year end 2007 financial results. Participants should dial in 866-256-9239 (ID# 1098068) at least 10 minutes before the call is scheduled to begin. Outside the US and Canada 703-639-1213(ID # 1098068).
A replay will be available approximately 2 hours after the conference call ends for a period of two weeks at 888-266-2081 reference #1098068. Outside the US 703-925-2533 (ID # 1098068).
About CardioTech International:
CardioTech International, Inc. is a medical device company that designs, develops, manufactures and sells innovative products and materials for the treatment of cardiovascular, orthopedic, oncology, urology and other diseases. The Company’s business model calls for leveraging its technological and manufacturing expertise in order to expand its royalty and license fee income, develop next generation polymers and manufacture new and complex medical devices. CardioTech is conducting its first clinical trial for regulatory approval in Europe for its CardioPass synthetic coronary bypass graft. The Company generates revenues from sales of advanced medical devices and materials, as well as from contracted product design and development services. More information about CardioTech is available at its website: 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, 2007. 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. Consolidated Statements of Operations (In thousands, except per share amounts) For The Three For The Years Months Ended Ended March 31, March 31, 2007 2006 2007 2006 Revenues: Product sales $4,870 $4,952 $19,593 $21,404 Royalties and development fees 615 285 1,558 977 5,485 5,237 21,151 22,381 Cost of sales 4,108 5,003 15,977 18,484 Gross margin 1,377 234 5,174 3,897 Operating expenses: Research and development, regulatory and engineering 377 325 1,547 1,385 Selling, general and administrative 1,628 1,687 6,664 5,982 Impairment of goodwill -- 1,152 -- 1,152 Non-cash compensation 27 188 48 193 2,032 3,352 8,259 8,712 Loss from operations (655) (3,118) (3,085) (4,815) Interest and other income and expense: Interest expense -- -- (2) -- Interest income 35 15 136 42 Other income (expense), net 41 29 268 104 Other income, net 76 44 402 146 Equity in net loss of CorNova, Inc. -- (185) (279) (400) Net loss $(579) $(3,259) $(2,962) $(5,069) Net loss per common share, basic and diluted $(0.03) $(0.17) $(0.15) $(0.26) Shares used in computing net loss per common share, basic and diluted 19,957 19,699 19,859 19,451 CardioTech International, Inc. Consolidated Balance Sheets (In thousands, except share and per share amounts) March 31, 2007 2006 ASSETS Current assets: Cash and cash equivalents $4,066 $6,841 Accounts receivable-trade, net of allowance of $170 and $572 as of March 31, 2007 and 2006, respectively 2,712 2,851 Accounts receivable-other 553 265 Inventories 5,205 4,786 Prepaid expenses and other current assets 205 210 Total current assets 12,741 14,953 Property, plant and equipment, net 4,082 4,059 Amortizable intangible assets, net 468 584 Goodwill 487 487 Other assets 123 130 Investment in CorNova, Inc. - 238 Total assets $17,901 $20,451 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $1,878 $1,750 Accrued expenses 862 936 Deferred revenue 198 132 Total current liabilities 2,938 2,818 Deferred rent 116 129 Commitments and contingencies - - Stockholders’ equity: Preferred stock; $.01 par value; 5,000,000 shares authorized; 500,000 shares issued and none outstanding as of March 31, 2007 and 2006, respectively - - Common stock; $.01 par value; 50,000,000 shares authorized; 20,031,650 and 19,796,833 shares issued and outstanding as of March 31, 2007 and 2006, respectively 200 198 Additional paid-in capital 36,948 36,685 Accumulated deficit (22,301) (19,339) Accumulated other comprehensive loss - (40) Total stockholders’ equity 14,847 17,504 Total liabilities and stockholders’ equity $17,901 $20,451
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CONTACT: Eric Walters, Vice President & Chief Financial Officer ofCardioTech International, Inc., +1-978-657-0075,general-info@cardiotech-inc.com, or Sylvia Dresner, Senior Vice Presidentof VMW Corporate & Investor Relations, +1-212-616-6161, info@vmwcom.com
Web site: http://www.cardiotech-inc.com//
