BRANFORD, Conn., May 8 /PRNewswire-FirstCall/ -- CAS Medical Systems, Inc. , a medical device company focused on innovative, non-invasive vital signs monitoring, today announced financial results for the first quarter ended March 31, 2007.
Highlights
Revenue for the quarter increased 23 percent over Q1 2006 to $9.3 million Earnings for Q1 of $0.01 despite increases in FORE-SIGHT(TM) spending Andrew E. Kersey assumes role of President and CEO
Financial Results for Q1
Revenues for the first quarter ended March 31, 2007 were $9.3 million, an increase of $1.7 million, or 23 percent, over the $7.6 million reported for the first quarter ended March 31, 2006. Increases in blood pressure related product sales of 34 percent, primarily from sales of vital signs monitors and blood pressure cuffs accounted for the increase in revenues, partially offset by reductions in original equipment manufacturer (“OEM”) and apnea product sales.
Operating income for the first quarter ended March 31, 2007 was $176,000 compared to $334,000 for the same period last year. Operating income includes $94,000 and $134,000, respectively, of stock compensation charges for the three-month periods ended March 31, 2007 and 2006. Operating income for the three months ended March 31, 2007 was also affected by a $250,000, or 41 percent, increase in research and development (“R&D”) expenses primarily related to the development of the Company’s Near-Infrared Spectroscopy (“NIRS”) FORE-SIGHT Absolute Cerebral Oximeter. Selling, general and administrative (“S,G&A”) expenses also increased $497,000, or 25 percent, for the three months ended March 31, 2007 over the first three months of the prior year, primarily due to increased NIRS-related sales and marketing costs. Operating results for the first quarter of the prior year contained retirement benefit credits of $87,000 related to the curtailment of the Company’s retirement benefit plan.
Net income for the three months ended March 31, 2007 totaled $79,000, or $0.01 per diluted common share, compared to net income of $140,000, or $0.01 per diluted share, for the three months ended March 31, 2006. Net income for the three-month periods ended March 31, 2007 and 2006 was affected by $85,000 and $134,000 of non-deductible stock compensation expenses. The Company’s income tax expense for the three months ended March 31, 2007 assumes an effective tax rate for 2007 of 33 percent compared to an effective rate of 48 percent for the first three months of the prior fiscal year. The higher effective rate for the prior year resulted primarily from the non- deductibility of the stock compensation costs.
Management Discussion
“I am pleased with our results for the first quarter, which includes revenue growth of 23 percent over the first quarter of last year despite the reduction in sales to Medtronic, a significant OEM customer,” commented Andrew Kersey, President and CEO. “Even with this decrease to Medtronic, CASMED has produced strong results through our efforts with other OEM partners and customers. In January, Medtronic announced a voluntary suspension of U.S. shipments from its Physio-Control division. We continue to fulfill their international requirements and anticipate an increase in demand starting in June. It remains uncertain, however, as to when full U.S. shipments will resume to prior levels and we continue to closely monitor the Medtronic Physio-Control situation.”
Mr. Kersey added, “During the first quarter, we substantially increased our spending for the commercialization of the FORE-SIGHT Cerebral Oximeter, including ongoing R&D, manufacturing start-up, and sales and marketing. More specifically, these investments include: product certification costs; tools, materials and outside services related to pilot production costs; recruitment of our clinical specialists; expansion of our marketing team; training of sales distribution partners; and trade shows, advertising and promotion. CASMED expects to continue to invest in FORE-SIGHT during the remainder of 2007 to maximize our future success in this new market.
“We also achieved a number of milestones for the FORE-SIGHT Cerebral Oximeter. U.S. distribution is in place and trained and we have a full complement of clinical specialists to support initial sales. Pilot production is complete and we are ready for full production this quarter. The product is currently being demonstrated by our clinical specialists for potential sales to key accounts. We anticipate first sales of FORE-SIGHT within this second quarter.”
FORE-SIGHT Status
In the first quarter, the Company exhibited FORE-SIGHT at seven trade shows and plans to exhibit at an additional eight shows this quarter. Product evaluations have begun, with sixteen scheduled for the month of May. To date, the FORE-SIGHT monitor has been presented during grand rounds at two major medical centers and is scheduled for an additional three grand round demonstrations at other major centers during the second quarter.
Scheduled scientific presentations of FORE-SIGHT include an upcoming abstract by Dr. David MacLeod of Duke University Medical Center, presented by Keita Ikeda, Ph.D at the 11th Annual Outcomes meeting in Barbados, May 9th through May 12th. Dr. Ikeda will present preliminary results of a study utilizing the FORE-SIGHT Absolute Cerebral Oximeter. This study explores results to date of the saturation differences observed between the right and left sides of the brain during different stages of cardiac surgery on adult patients.
Analogic/CASMED Agreement
Separately, the Company also announced today that it reached an agreement with Analogic Corporation of Peabody, Massachusetts under which CASMED will be the exclusive worldwide distributor for a family of co-branded vital signs monitors developed, manufactured, and currently marketed by Analogic. The initial term of the Agreement is five years, subject to meeting certain minimum revenue targets, and incorporates additional one-year extensions, again subject to meeting certain revenue targets.
2007 Outlook
The Company reiterates its position that it expects revenues to continue to grow during 2007. However, it cannot predict its overall growth rate due to the following factors:
-- The impact of the Medtronic Physio-Control suspension of shipments into the U.S. market and the lack of certainty as to when or if full U.S. shipments will resume to prior levels -- Unpredictability as to market acceptance, the length of the sales cycle, and sensor utilization rates surrounding the FORE-SIGHT product -- Timing and logistics involved in securing worldwide distribution of Analogic products
Conference Call Information
CASMED will host a conference call on May 8, 2007 at 10:00 a.m. Eastern Time to discuss first quarter results. Participants on the call will be Andrew Kersey, President and CEO, and Jeffery Baird, CFO.
The live call may be accessed by phone at (888) 455-3619 (domestic) or (210) 234-0026 (international), passcode CASM. If you would like to participate, please call at least ten minutes prior to the start time of 10:00 a.m. Eastern Time. A replay of the call will also be available by phone until June 8, 2007 beginning approximately two hours after the end of the call. It can be accessed at (888) 568-0360 (domestic) or (203) 369-3910 (international).
A live audio webcast of the conference call will also be available on the Company’s website located at www.casmed.com. Please allow extra time prior to the call to visit the site and download the streaming media software required to join the webcast. An online archive of the webcast will be available within two hours of the end of the live call and archived on the website until June 8, 2007.
About the FORE-SIGHT Absolute Cerebral Oximeter
CASMEDs’ initial market focus for the FORE-SIGHT product is on high risk cardiovascular surgeries, of which there are about 700,000 performed each year in the U.S. Additional market opportunities include a broad range of general surgical procedures and post-operative and critical care settings. Protecting the brain from low oxygen levels during these procedures is an important goal of every surgical team because the brain is highly vulnerable to oxygen deprivation. At normal body temperatures, damage to brain cells due to lack of oxygen can occur after just a few seconds. The FORE-SIGHT Cerebral Oximeter provides new information that allows clinicians to monitor and respond to instances of brain tissue oxygen deprivation before damage to the brain occurs.
About CASMED
Founded in 1984, CAS Medical Systems, Inc. is dedicated to the design and manufacture of innovative, non-invasive technologies and products vital to patient care in the most challenging clinical environments. Its current product lines include cerebral oximeters, blood pressure measurement technology, vital signs monitors, blood pressure cuffs, cardio-respiratory and apnea monitors and products for neonatal intensive care. With a reputation for the highest quality products available in the markets it serves, CASMED products are used by clinicians worldwide.
For further information regarding CAS Medical Systems, Inc., visit the Company’s website at www.casmed.com.
Company Contacts CAS Medical Systems, Inc. Jeffery Baird, CFO 203-488-6056 ir@casmed.com Investors and Media Financial Dynamics John Capodanno 212-850-5705 jcapodanno@fd-us.com
Statements included in this press release, which are not historical in nature, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements relating to the future performance of the Company are subject to many factors including, but not limited to, the customer acceptance of the products in the market, the introduction of competitive products and product development, commercialization and technological difficulties, and other risks detailed in the Company’s most recent Form 10-KSB and other Securities and Exchange Commission filings.
Such statements are based upon the current beliefs and expectations of the Company’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. When used in this press release the terms “anticipate”, “believe”, “estimate”, “expect”, “may”, “objective”, “plan”, “possible”, “potential”, “project”, “will” and similar expressions identify forward-looking statements. The forward-looking statements contained in this press release are made as of the date hereof, and we do not undertake any obligation to update any forward- looking statements, whether as a result of future events, new information or otherwise.
CAS MEDICAL SYSTEMS, INC. STATEMENTS OF INCOME (Unaudited) Three Months Three Months Ended Ended Mar 31, Mar 31, 2007 2006 Revenues $9,289,332 $7,556,685 Costs and Expenses: Cost of Products Sold 5,747,621 4,604,237 Research and Development 854,717 604,876 Selling, General and Administrative 2,510,496 2,013,482 9,112,834 7,222,595 Operating Income 176,498 334,090 Interest Expense 57,932 64,370 Pre-tax Income 118,566 269,720 Income Taxes 39,127 129,465 Net Income $79,439 $140,255 EARNINGS PER COMMON SHARE: Basic $0.01 $0.01 Diluted $0.01 $0.01 WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: Basic 10,604,925 10,248,942 Diluted 12,057,423 12,139,621 CAS MEDICAL SYSTEMS , INC. BALANCE SHEETS (1) (Unaudited) Mar 31, Dec. 31, 2007 2006 Cash and cash equivalents $814,534 $1,334,535 Accounts receivable 4,461,925 4,906,303 Inventories 7,222,921 6,808,193 Deferred income taxes 338,333 329,458 Recoverable income taxes 396,121 320,943 Other current assets 332,263 408,171 Total current assets 13,566,097 14,107,603 Property, plant, and equipment 7,240,122 6,859,759 Accumulated depreciation (3,680,889) (3,535,915) 3,559,233 3,323,844 Intangible and other assets, net 505,685 457,352 Goodwill 3,379,021 3,379,021 Deferred income taxes 204,411 175,611 Total assets $21,214,447 $21,443,431 Current portion of long-term debt $618,246 $609,615 Notes payable 29,074 69,241 Accounts payable 3,021,025 3,228,265 Accrued expenses 842,144 1,104,726 Total current liabilities 4,510,489 5,011,847 Long-term debt, less current portion 3,648,290 3,806,587 Common stock 43,052 42,717 Additional paid-in capital 5,286,435 4,935,538 Common stock held in treasury, at cost (101,480) (101,480) Retained earnings 7,827,661 7,748,222 Shareholder’s equity 13,055,668 12,624,997 Total liabilities & equity $21,214,447 $21,443,431 (1) The Company is in the process of finalizing its implementation of FIN 48, a recent accounting pronouncement related to income tax. This may affect certain components of the Company’s balance sheet as of March 31, 2007 as reported in the Company’s 10-Q which will be filed on or before May 14, 2007.
CAS Medical Systems, Inc.
CONTACT: Jeffery Baird, CFO of CAS Medical Systems, Inc., +1-203-488-6056,ir@casmed.com; Investors and Media, John Capodanno of Financial Dynamics,+1-212-850-5705, jcapodanno@fd-us.com, for CAS Medical Systems, Inc.
Web site: http://www.casmed.com//
