Third quarter revenue was $13.8M, an increase of 3% over the third quarter of 2016.
Conference Call Today at 4:30 p.m. ET |
| [07-November-2017] |
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MINNEAPOLIS, Nov. 7, 2017 /PRNewswire/ -- Cogentix Medical (NASDAQ: CGNT), a global medical device company focused on providing the Urology, Uro/Gyn and Gynecology markets with innovative and proprietary products, today reported financial results for the third quarter ended September 30, 2017. Third Quarter and Business Development Highlights
"We achieved the second highest quarterly revenue in the company's history despite some short-term volatility in the timing of capital orders for our PrimeSight™ product line and reduced urology procedures as a result of practice closures due to hurricanes in Texas and the Southeast," said Darin Hammers, President & CEO. "Our Urology business grew four percent in the third quarter, and we believe that this business will have a very strong finish to the year as several large capital orders for PrimeSight that were initially expected in the third quarter are now expected to close in the fourth quarter. We continue to execute our plan to build on our leadership position in the urology market and we are in the process of increasing our U.S. urology sales force to 51 territory managers, up from 46 at the end of the second quarter. Also in the third quarter, we completed our agreement with Vensica, which allows Cogentix to acquire, with a modest investment, a potentially revolutionary approach to administering botulinum toxin to treat overactive bladder and other possible indications. We are well positioned as we look forward to 2018 and beyond". Financial Results for the Third Quarter Ended September 30, 2017 For the quarter ended September 30, 2017, the Company achieved total revenue of $13.8 million compared to $13.4 million in the year ago quarter. The $0.4 million increase in reported revenue is entirely attributable to the increase in Urology revenue, as non-core Industrial and Airway Management revenue remained stable at approximately $1.9 million for this quarter and the year ago quarter. Revenue from PrimeSight totaled $4.3 million, down $0.1 million due to quarterly variability in the timing of capital orders. Urgent PC revenue totaled $5.4 million compared to $5.2 million in the year ago period. The $0.2 million increase in Urgent PC revenue represents the first year over year increase in revenue since the third quarter of 2016, following the entrance of a large competitor in the PTNS market. Revenue from Macroplastique® and other urology products in the quarter totaled $2.3 million, an increase of approximately $0.4 million compared to the prior year period that is primarily attributable to our acquisition of Genesis Medical LTD ("Genesis"), a privately held U.K. company that distributes a variety of products to urologists, in July 2017. Gross margin for the quarter ended September 30, 2017 was 68.3% compared with 67.4% in the year-ago period with the 90 basis point increase due to product mix. Operating expenses in the quarter totaled $9.6 million compared to $8.5 million in the same period of the prior year. The increase in operating expenses is attributable to approximately $0.3 million of business development related expenses in the current quarter, an increase in sales and marketing expenses of $0.4 million due to the increase in the number of sales representative for our Urology business, higher non-cash stock based compensation and the inclusion of the operating costs of Genesis since our acquisition in July 2017. Operating loss for the quarter was $0.2 million compared to an operating profit of $0.5 million in the year ago period. Cash operating profit, a non-GAAP financial measure that is operating profit excluding all non-cash items, was $1.0 million for the quarter ended September 30, 2017 compared to a cash operating profit of $1.4 million (excluding one-time charges) in the year-ago quarter. Earnings per share was breakeven in both the current quarter and the year ago quarter. At September 30, 2017, the Company's cash and investments totaled $26.8 million, compared to $26.9 million at June 30, 2017. There were no borrowings under the Company's $7.0 million line of credit as of September 30, 2017. Nine Month Financial Results Ended September 30, 2017 For the nine-month period ended September 30, 2017, total revenue of $40.8 million represented an increase of 6% over the year ago period. This increase is due to 8% growth in the Urology business, partially offset by a decline in non-core Airway Management and Industrial revenue. Operating loss for the nine months ended September 30, 2017 was $1.0 million while cash operating profit (which excludes non-cash items) was $2.4 million. Conference Call Cogentix Medical will host a conference call and webcast today at 4:30 p.m. Eastern Time (3:30 p.m. Central Time). Darin Hammers, President and Chief Executive Officer, will host the event along with Brett Reynolds, Chief Financial Officer. Individuals wishing to participate in the conference call should dial 877-303-1595 with the conference ID number 3769188. To access a live webcast of the call, go to the investor relations section of Cogentix Medical's website at ir.cogentixmedical.com. An audio replay will be available for 30 days following the call at 855-859-2056 with the conference ID number 3769188. An archived webcast will also be available at ir.cogentixmedical.com. About Cogentix Medical For Further Information: Cautionary Statements Related to Forward-Looking Statements This press release includes forward-looking statements. These forward-looking statements generally can be identified by the use of words such as "anticipate," "expect," "plan," "could," "may," "will," "believe," "estimate," "forecast," "goal," "project," and other words of similar meaning. Forward-looking statements in this press release include, but are not limited to, statements about expected revenue growth rates; the Company's expectations regarding operating profit and cash operating profit; and plans, objectives, expectations and intentions with respect to future operations, products and services. Each forward-looking statement contained in this press release is subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statement. Applicable risks and uncertainties include, among others, the effects of industry, economic or political conditions outside of the Company's control; competitive market factors; actual or contingent liabilities; the adequacy of the Company's capital resources; and the risks identified under the heading "Risk Factors" in the annual report on Form 10-K, for the year ended December 31, 2016, filed with the Securities and Exchange Commission ("SEC") on March 30, 2017. Investors are cautioned to not to place considerable reliance on the forward-looking statements contained in this presentation. Investors are encouraged to read the Company's filings with the SEC, available at www.sec.gov, for a discussion of these and other risks and uncertainties. The forward-looking statements in this presentation speak only as of the date of this release, and the Company undertakes no obligation to update or revise any of these statements. The Company's businesses are subject to substantial risks and uncertainties, including those referenced above. Investors, potential investors, and others should give careful consideration to these risks and uncertainties. COGENTIX MEDICAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2017 2016 2017 2016
---- ---- ---- ----
Net sales $13,765,065 $13,407,611 $40,779,414 $38,618,826
Cost of goods sold 4,370,408 4,369,574 13,522,655 12,257,933
--------- --------- ---------- ----------
Gross profit 9,394,657 9,038,037 27,256,759 26,360,893
--------- --------- ---------- ----------
68.3% 67.4% 66.8% 68.3%
Operating expenses
General and
administrative 2,055,763 1,558,090 6,250,246 5,087,871
Research and
development 1,234,468 1,218,669 3,556,977 3,255,603
Selling and
marketing 5,697,552 5,203,477 16,699,590 16,272,678
Amortization of
intangible assets 601,604 590,858 1,780,803 1,772,574
One-time costs - (53,887) - 2,257,654
9,589,387 8,517,207 28,287,616 28,646,380
--------- --------- ---------- ----------
Operating income
(loss) (194,730) 520,830 (1,030,857) (2,285,487)
-------- ------- ---------- ----------
Other income (expense)
Interest income 62,867 124 184,425 529
Interest expense (6,122) (380,803) (19,747) (1,147,470)
Other income 1,001 - 7,365 -
Foreign currency
exchange gain
(loss) 3,020 (14,905) 49,213 (40,311)
60,766 (395,584) 221,256 (1,187,252)
------ -------- ------- ----------
Income (loss)
before income
taxes (133,964) 125,246 (809,601) (3,472,739)
Income tax expense 26,125 18,932 141,276 52,122
------ ------ ------- ------
Net income (loss) $(160,089) $106,314 $(950,877) $(3,524,861)
========= ======== ========= ===========
Basic net income
(loss) per common
share $0.00 $0.00 $(0.02) $(0.14)
Diluted net income
(loss) per common
share $0.00 $0.00 $(0.02) $(0.14)
Weighted average common shares outstanding:
Basic 60,126,357 25,633,172 59,888,906 25,509,584
Diluted 60,126,357 25,748,844 59,888,906 25,509,584
COGENTIX MEDICAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30, 2017 December 31, 2016
------------------ -----------------
Assets
Current assets:
Cash and cash
equivalents $15,375,756 $9,369,624
Short-term
investments 10,656,566 13,573,057
Accounts receivable,
net 7,178,811 6,770,838
Inventories 7,375,504 7,235,043
Other 987,982 571,527
------- -------
Total current assets 41,574,619 37,520,089
Property, plant, and
equipment, net 2,466,344 2,115,316
Goodwill 19,150,849 18,749,888
Other intangible
assets, net 7,969,736 9,482,578
Long-term
investments 719,417 5,344,004
Investment in equity
interest 2,000,000 -
Deferred tax assets
and other 160,716 163,427
------- -------
Total assets $74,041,681 $73,375,302
=========== ===========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $2,051,979 $2,689,035
Income tax payable 249,690 113,191
Accrued liabilities:
Compensation 3,889,783 4,670,640
Deferred revenue 759,786 597,524
Accrued legal fees 56,241 34,667
Accrued foreign and
domestic sales tax/
VAT 476,355 327,992
Accrued employee
expenses 92,134 88,557
Other 1,383,222 387,056
Total current
liabilities 8,959,190 8,908,662
Accrued pension
liability 244,940 308,918
Deferred rent 600,092 639,019
Other 618,936 278,780
------- -------
Total liabilities 10,423,158 10,135,379
---------- ----------
Total shareholders'
equity 63,618,523 63,239,923
---------- ----------
Total liabilities and
shareholders' equity $74,041,681 $73,375,302
=========== ===========
COGENTIX MEDICAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30,
-------------
2017 2016
---- ----
Cash flows from operating activities:
Net loss $(950,877) $(3,524,861)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 2,336,095 2,364,673
Share-based compensation expense 1,131,482 440,000
Amortization of premium on available-
for-sale securities 95,727 -
Deferred rent (23,840) 6,836
Amortization of discount on related
party debt - 836,288
Proceeds from restricted stock exchanged
for taxes (17,690) (57,343)
Other 8,003 (59,048)
Changes in operating assets and liabilities:
Accounts receivable, net 270,965 1,399,070
Inventories 57,344 (1,637,619)
Other current assets (154,906) 265,395
Accounts payable (917,289) 394,573
Interest payable - 261,505
Accrued compensation (1,035,278) 1,796,568
Accrued liabilities, other 657,950 213,387
Accrued pension liability (99,389) (45,463)
Deferred revenue 250,174 220,789
------- -------
Net cash provided by operating
activities 1,608,471 2,874,750
--------- ---------
Cash flows from investing activities:
Proceeds from maturity of available-
for-sale securities 9,900,000 -
Purchases of available-for-sale
securities (2,438,322) -
Purchase of equity method investment (2,000,000) -
Purchases of property, plant and
equipment (680,416) (232,331)
Acquisition of business, net of cash
acquired (178,042) -
Net cash provided by (used in) investing
activities 4,603,220 (232,331)
--------- --------
Cash flows from financing activities:
Borrowings from line of credit 3,033,385 2,646,500
Repayments of line of credit (3,033,385) (2,646,500)
Payments to former Genesis shareholder (7,354) -
Repayments of secured borrowings (180,755) -
Proceeds from exercise of stock options 9,713 -
Financing costs - (375,839)
Net cash used in financing activities (178,396) (375,839)
-------- --------
Effect of exchange rates on cash and
cash equivalents (27,163) (4,949)
------- ------
Net increase in cash and cash
equivalents 6,006,132 2,261,631
Cash and cash equivalents at beginning
of period 9,369,624 1,976,594
--------- ---------
Cash and cash equivalents at end of
period $15,375,756 $4,238,225
=========== ==========
Supplemental disclosure of cash flow information:
Cash paid during the period for income
tax $152,941 $35,424
Cash paid during the period for interest $13,741 $47,754
Non-GAAP Financial Measures: The tables set forth below entitled "Cash Operating Profit (Unaudited)" provides the non-GAAP cash operating profit for the Company for the three and nine months ended September 30, 2017 and September 30, 2016. These tables reconcile the Company's operating income / loss calculated in accordance with GAAP to the Company's cash operating income, a non-GAAP financial measure that excludes non-cash charges for share-based compensation, depreciation and amortization and one-time income (expenses). The non-GAAP financial information used by management and disclosed by us is not a substitute for, nor superior to, financial information and consolidated financial results calculated in accordance with GAAP, and you should carefully evaluate our reconciliations to non-GAAP. We may calculate our non-GAAP financial information differently from similarly titled measures used by other companies. Therefore, our non-GAAP financial information may not be comparable to those used by other companies. We have described the reconciliations of each of our non-GAAP financial information described above to the most directly comparable GAAP financial measures. We use this non-GAAP financial information, and in particular non-GAAP cash operating income / loss, for internal managerial purposes because we believe such measures are one important indicator of the strength and the operating performance of our business. Analysts and investors frequently ask us for this information. We believe that they use this information to evaluate the overall operating performance of companies in our industry, including as a means of comparing period-to-period results and as a means of evaluating our results with those of other companies. Q3 Additional Information
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COGENTIX MEDICAL, INC. AND SUBSIDIARIES
REVENUE BY PRODUCT
QUARTER ENDED September 30,
(dollars in thousands)
Market/Product 2017 2016 $ Change % Change
-------------- ---- ---- -------- --------
PrimeSight $4,293 $4,407 $(114) (2.6%)
Urgent PC 5,360 5,210 150 2.9%
Macroplastique 1,715 1,671 44 2.6%
Other 550 208 342 164.4%
--- --- --- -----
Total Urology 11,918 11,496 422 3.7%
Airway Management 762 845 (83) (9.8%)
Industrial 1,085 1,067 18 1.7%
----- ----- --- ---
Total Other 1,847 1,912 (65) (3.4%)
Combined Revenue $13,765 $13,408 $357 2.7%
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COGENTIX MEDICAL, INC. AND SUBSIDIARIES
CASH OPERATING PROFIT (UNAUDITED)
(NON-GAAP)
QUARTER ENDED September 30,
(dollars in thousands) 2017 2016 $ Change % Change
---- ---- -------- --------
Revenue $13,765 $13,408 $357 2.7%
Gross profit 9,395 9,038 357 3.9%
68.3% 67.4%
Operating costs 8,988 7,980 1,008 12.6%
Amortization of intangibles 602 591 11 1.9%
One-time costs - (54) 54 n/m
--- --- ---
Operating income (loss) (195) 521 (716) (137.4%)
Non-cash operating costs 1,220 977 243 24.9%
One-time costs - (54) 54 n/m
--- --- ---
Cash operating profit, excluding one-time costs
$1,025 $1,444 $(419) (29.0%)
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YTD Additional Information
--------------------------
COGENTIX MEDICAL, INC. AND SUBSIDIARIES
REVENUE BY PRODUCT
NINE MONTHS ENDED September 30,
(dollars in thousands)
Market/Product 2017 2016 $ Change % Change
-------------- ---- ---- -------- --------
PrimeSight $13,735 $10,885 $2,850 26.2%
Urgent PC 15,602 15,720 (118) (0.8%)
Macroplastique 5,237 5,510 (273) (5.0%)
Other 1,071 798 273 34.2%
----- --- --- ----
Total Urology 35,645 32,913 2,732 8.3%
Airway Management 2,235 2,468 (233) (9.4%)
Industrial 2,899 3,238 (339) (10.5%)
----- ----- ---- ------
Total Other 5,134 5,706 (572) (10.0%)
Combined Revenue $40,779 $38,619 $2,160 5.6%
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COGENTIX MEDICAL, INC. AND SUBSIDIARIES
CASH OPERATING PROFIT (UNAUDITED)
(NON-GAAP)
NINE MONTHS ENDED September 30,
(dollars in thousands) 2017 2016 $ Change % Change
---- ---- -------- --------
Revenue $40,779 $38,619 $2,160 5.6%
Gross profit 27,257 26,361 896 3.4%
66.8% 68.3%
Operating costs 26,507 24,616 1,891 7.7%
Amortization of intangibles 1,781 1,773 8 0.5%
One-time costs - 2,258 (2,258) n/m
--- ----- ------
Operating loss (1,031) (2,286) 1,255 (54.9%)
Non-cash operating costs 3,468 2,741 727 26.5%
One-time costs - 2,258 (2,258) n/m
--- ----- ------
Cash operating profit, excluding one-time costs
$2,437 $2,713 $(276) (10.2%)
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Company Codes: NASDAQ-SMALL:CGNT |
