IRVING, Texas, Nov. 2 /PRNewswire-FirstCall/ -- Carrington Laboratories, Inc. reported revenue for the quarter ended September 30, 2006 of $6.7 million, compared to revenue of $5.6 million in the year-ago period. The 18 percent increase was due largely to increased revenue from the Company's consumer services product lines, which grew 49 percent to $3.6 million for the third quarter of 2006, compared to $2.4 million in the year- ago period. Excluding non-recurring royalty payments, total revenue from the Company's ongoing businesses increased 31% for the quarter.
Total medical services revenue for the third quarter 2006 decreased 14 percent compared to the same period last year, the result of an expected decrease in royalty revenues. Medical services revenue, excluding royalties, increased 8 percent to $2.2 million compared to $2.0 million for the third quarter last year.
Net loss for the third quarter of 2006 was $1.8 million, or 16 cents per basic and diluted share, compared to a net loss of $1.6 million, or 15 cents per basic and diluted share in the prior year period. Pro forma loss for the quarter, before $700,000 net funding of DelSite, was $1.1 million compared to a $1.0 million pro forma loss in the prior year's period.
Revenue for the nine months ended September 30, 2006 totaled $21 million vs. $22 million in the prior year period. Net loss for the nine months just ended, which includes DelSite funding, was $5.5 million, or 50 cents per basic and diluted share, compared to a net loss of $1.6 million, or 15 cents per basic and diluted share a year ago.
"The growth in our consumer services segment is providing revenue diversity and margin enhancement while offsetting the expected declines and volatility in other categories," said Carlton E. Turner, Ph.D., Carrington's chief executive officer. "With key staffing additions in place and new supply agreements announced earlier this year, we expect this revenue trend to continue."
Commenting on DelSite, Dr. Turner noted the continuing successful development of its drug and vaccine delivery technologies, most recently evidenced by the contract with the National Cancer Institute (NCI) for testing GelVac(TM) nasal powder formulation for a Human Papillomavirus (HPV) vaccine. HPV is a known cause of cervical cancer. DelSite continues its flu vaccine development. A Phase I clinical with a flu vaccine is scheduled for 2007. This powder formulated vaccine will use an egg-based antigen and does not require preservatives, needles, or the costly cold storage distribution system.
DelSite's senior scientist Yawei Ni, Ph.D. delivered an oral presentation entitled "An Inactivated Influenza Nasal Powder Vaccine" at the Second International Conference on Influenza Vaccines for the World (IVW), October 18-20, 2006 in Vienna, Austria. The IVW hosts world-renowned experts to report the latest data trends associated with influenza vaccines.
Recently, a DelSite presentation entitled "A Stable Dry Powder Vaccine Formulation (GelVac(TM)) for Nasal Delivery" was made at the American Association of Pharmaceutical Scientists Annual Meeting and Exposition in San Antonio, Texas.
Another DelSite paper entitled "Immuno-enhancing Effect of a Novel In-situ Gelling Pectic Polysaccharide" has been accepted at the Fourth International Conference on Vaccines in Washington, DC, scheduled for November 16-17, 2006.
Conference Call Scheduled
Investors are invited to listen to today's conference call at 4:30 p.m. Eastern, 3:30 p.m. Central, by dialing 800-510-9691 in the US or 617-614-3453 internationally. The pass code is 74163928. The call is also being web cast by CCBN and can be accessed at Carrington's web site at http://www.carringtonlabs.com. A replay of the call will be available a few hours after the call concludes by dialing 888-286-8010 in the US and 617-801- 6888 internationally. The pass code for the replay is 60313526.
The web cast is also being distributed through the Thomson StreetEvents Network to both institutional and individual investors. Individual investors can listen to the call at http://www.fulldisclosure.com, Thomson/CCBN's individual investor portal, powered by StreetEvents. Institutional investors can access the call via Thomson's password-protected event management site, StreetEvents (http://www.streetevents.com).
About Carrington
Carrington Laboratories, Inc. is an ISO 9001-certified, research-based, biopharmaceutical and consumer products company currently utilizing naturally- occurring complex carbohydrates to manufacture and market products for mucositis, radiation dermatitis, wound and oral care, as well as to manufacture and market the nutraceutical raw material Manapol(R) and cosmetic raw material Hydrapol(TM). Carrington also manufactures and markets consumer products and manufactures quality products for other companies. Manufacturing operations comply with cGMP standards. Carrington's DelSite Biotechnologies subsidiary is developing its proprietary GelSite(R) technology designed to provide controlled release of peptide and protein-based drugs. Carrington's technology is protected by more than 130 patents in 26 countries. Select products carry the CE mark, which is recognized worldwide. For more information, visit www.carringtonlabs.com.
About DelSite
DelSite Biotechnologies, Inc. was formed based on discoveries at Carrington Laboratories, Inc., and is a wholly-owned subsidiary of Carrington. DelSite Biotechnologies is a drug delivery and biotechnology company established to provide the pharmaceutical and biotechnology industries with novel delivery solutions for vaccines and therapeutic agents. For more information, visit www.delsite.com.
Non-GAAP Financial Information
This press release contains the non-generally accepted accounting principle financial measure of Total Revenue from Ongoing Businesses which is defined as total revenue less royalties. The amounts included in the calculation of this measure are computed in accordance with generally accepted accounting principles (GAAP). We believe this measure is useful to investors because it may provide users of this financial information with a meaningful measure of the growth in the Company's revenues from ongoing businesses without the effect of expected decreases in royalty revenue. Total Revenue from Ongoing Businesses is not a measure of financial performance under GAAP and thus should not be considered in isolation. Furthermore, it should not be seen as a substitute for metrics prepared in accordance with GAAP. Our reconciliation of this measure to total revenue is included in the following tables.
This press release also contains the non-generally accepted accounting principle financial measure of Medical Services revenue excluding royalties, which is defined as total Medical Services division revenues less licensing royalties. The amounts included in the calculation of this measure are computed in accordance with generally accepted accounting principles (GAAP). We believe this measure is useful to investors because it may provide users of this financial information with a meaningful measure of the Company's sales growth in the Medical Services division as the result of increased shipments without the impact of the expected decrease in contractual royalties. This measure is not a measure of financial performance under GAAP and thus should not be considered in isolation. Furthermore, it should not be seen as a substitute for metrics prepared in accordance with GAAP. Our reconciliation of this measure to GAAP revenues is included in the following tables.
This press release also contains the non-generally accepted accounting principle financial measure of Pro forma profit and loss which is defined as net income or loss excluding net DelSite expenses. The amounts included in the calculation of this measure are computed in accordance with generally accepted accounting principles (GAAP). We believe this measure is useful to investors because it may provide users of this financial information with a meaningful measure of the Company's profitability before funding the research and development activities of its DelSite subsidiary. Pro forma profit and loss is not a measure of financial performance under GAAP and thus should not be considered in isolation. Furthermore, it should not be seen as a substitute for metrics prepared in accordance with GAAP. Our reconciliation of this measure to net income or loss is included in the following tables.
Certain statements in this release concerning Carrington may be forward- looking. Actual events will be dependent upon a number of factors and risks including, but not limited to: subsequent changes in plans by the Company's management; delays or problems in formulation, manufacturing, distribution, production and/or launch of new finished products; changes in the regulatory process; changes in market trends; and a number of other factors and risks described from time to time in the Company's filings with the Securities & Exchange Commission, including the Form 10-Q, filed August 14, 2006.
CARRINGTON LABORATORIES, INC. Condensed Consolidated Statements of Operations (unaudited) (in thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, 2006 2005 2006 2005 Revenue: Medical Services $2,161 $2,008 $6,383 $6,120 Royalty income 104 617 312 1,852 Medical Services, total 2,265 2,625 6,695 7,972 Consumer Services 3,580 2,400 12,465 12,766 Grant income, DelSite 811 608 1,506 1,414 Total revenues 6,656 5,633 20,666 22,152 Cost and expenses: Cost of product sales 4,615 4,056 15,257 13,646 Selling, general and administrative 1,884 1,732 5,652 5,488 Research and development 171 204 536 657 Research and development-DelSite 1,503 1,204 3,985 3,938 Other income (19) - (36) (133) Interest expense, net 266 41 723 122 Net income (loss) before income taxes (1,764) (1,604) (5,451) (1,566) Provision for income taxes - (30) - - Net income (loss) $(1,764) $(1,574) $(5,451) $(1,566) Net income (loss) per common share -Basic and diluted $ (0.16) $ (0.15) $ (0.50) $ (0.15) Weighted average shares outstanding - Basic 10,884 10,769 10,843 10,750 Weighted average shares outstanding - Diluted 10,884 10,769 10,843 10,750 Reconciliation of Non-GAAP Financial Measures: Total revenue: $6,656 $5,633 $20,666 $22,152 Less: royalties 104 617 312 1,852 Total revenue from ongoing businesses $6,552 $5,016 $20,354 $20,300 Medical Services revenue: $2,265 $2,625 $6,695 $7,972 Less: royalties 104 617 312 1,852 Medical Services revenue excluding royalties $2,161 $2,008 $6,383 $6,120 Net income (loss): $(1,764) $(1,574) $(5,451) $(1,566) Less: DelSite grant income 811 608 1,506 1,414 Plus: DelSite expenses 1,503 1,204 3,985 3,938 Pro forma profit (loss) before DelSite $(1,072) $(978) $(2,972) $958 CARRINGTON LABORATORIES, INC. Condensed Consolidated Balance Sheets (in thousands) September 30, December 31, 2006 2005 (unaudited) (audited) ASSETS: Current Assets: Cash and cash equivalents $1,684 $6,262 Accounts receivable, net 3,204 2,679 Inventories, net 4,477 4,705 Prepaid expenses 336 392 Total current assets 9,701 14,038 Property, plant and equipment, net 6,315 6,755 Customer relationships, net 248 392 Other assets, net 678 804 Total assets $16,942 $21,989 LIABILITIES AND SHAREHOLDERS' EQUITY: Current Liabilities: Line of credit $1,811 $1,812 Accounts payable 2,302 2,092 Accrued liabilities 1,606 1,585 Current portion of long-term debt and capital lease obligations 205 188 Deferred revenue 1,035 1,386 Total current liabilities $6,959 $7,063 Long-term debt and capital lease obligations, net of debt discount 3,679 3,418 Commitments and contingencies - - Shareholders' Equity: Common stock 109 108 Capital in excess of par value 57,431 57,185 Accumulated deficit (51,233) (45,782) Treasury stock at cost (3) (3) Total shareholders' equity 6,304 11,508 Total liabilities and shareholders' equity $16,942 $21,989
Carrington Laboratories, Inc.CONTACT: Carlton E. Turner, Chief Executive Officer of Carrington,+1-972-518-1300
Web site: http://www.carringtonlabs.com/
