HOUSTON, May 25 /PRNewswire-FirstCall/ -- Cyberonics, Inc. today announced financial results for the fourth quarter and year ended April 28, 2006 and reported that its Board of Directors has authorized the repurchase of up to 3.0 million shares of Cyberonics Common Stock in amounts, and at times and prices to be determined and approved by the Board of Directors.
Net sales for the fourth quarter increased by $9.4 million, or 35%, to a record $36.0 million, compared to net sales of $26.7 million for the fourth quarter last year. Net sales for the fourth quarter increased sequentially over the third quarter by $4.7 million, or 15%. U.S. net sales for the fourth quarter were $31.8 million, an increase of $9.4 million, or 42%, as compared to U.S. net sales of $22.5 million for the fourth quarter last year. International sales for the fourth quarter were $4.2 million, slightly higher than the same period last year.
Net sales for the fiscal year ended April 28, 2006 were a record $123.4 million compared to $103.4 million for the fiscal year ended April 29, 2005. Net sales for the year ended April 28, 2006 included $107.9 million from the U.S. market and $15.5 million from international markets, compared to net sales of $90.3 million from the U.S. market and $13.1 million from international markets for the fiscal year ended April 29, 2005.
Gross profit margin for the quarter ended April 28, 2006 was a record 88.0%, compared to 87.6% for the quarter ended April 29, 2005. Gross profit margin for the fiscal year ended April 28, 2006 was 87.2% and improved by 230 basis points over gross margin of 84.9% for the fiscal year ended April 29, 2005. The improvements in gross profit margin are the result of improved operational efficiencies and an increase in average system prices.
Operating expenses for the quarter ended April 28, 2006 were $36.6 million, compared to $30.1 million for the same quarter last year and $42.0 million for the third quarter. Operating expenses for the year ended April 28, 2006 were $168.5 million, compared to $100.8 million for the year ended April 29, 2005.
Net loss for the quarter ended April 28, 2006 was $5.2 million, or $0.21 per share, improving by $1.3 million, or 20% as compared to net loss of $6.5 million, or $0.26 per share for the fourth quarter ended April 29, 2005. Net loss for the fourth quarter improved by $9.5 million, or 65%, as compared to the loss for the third quarter. Net loss for the year ended April 28, 2006 was $60.7 million, or $2.44 per share, as compared to $12.2 million, or $ 0.51 per share for the year ended April 29, 2005.
“Cyberonics accomplished more of its mission to improve the lives of people touched by refractory epilepsy or treatment-resistant depression (TRD) in the fourth quarter and fiscal 2006 than in any quarter and fiscal year in our history,” commented Robert P. (“Skip”) Cummins, Cyberonics’ Chairman of the Board and Chief Executive Officer. “Since epilepsy approval in 1997 over 40,000 patients have accumulated over 100,000 patient years of experience with VNS Therapy. Many of these patients’ lives have been markedly improved, including many TRD patients’ lives that have been reportedly transformed by VNS Therapy since TRD approval in July 2005. The unique value of VNS Therapy to patients with refractory epilepsy and/or TRD gives Cyberonics confidence in the continued accomplishment of our financial goals to accelerate sales growth and achieve profitability in fiscal 2007 as psychiatrists and Americans with TRD gain parity in access with neurologists and their refractory epilepsy patients to VNS Therapy.”
“We are making no changes to our guidance for FY2007, which assumes no favorable TRD national or regional coverage policies, no favorable VNS TRD technology assessments, and minimal improvements in quarterly new patient identifications, cycle times and conversion rates,” commented Pamela B. Westbrook, Cyberonics’ Vice President, Finance and Administration and Chief Financial Officer. “We expect quarterly sales to exceed $50 million by the fourth quarter of fiscal 2007. Due to the unpredictability of case-by-case approvals and TRD patient cycle times and conversion rates, we expect that annual sales growth rates throughout fiscal 2007 will vary quarter-to-quarter. In terms of earnings, we continue to expect that we will return to positive quarterly earnings beginning in the second quarter of fiscal 2007, excluding non-cash stock options expenses required under FAS123R.
“We have adopted SFAS No. 123R, effective for fiscal 2007, beginning April 29, 2006. Under that requirement, we are utilizing the Black Scholes option pricing model and the Modified Prospective Method which requires compensation cost to be recognized under SFAS 123R for grants issued after the adoption date and the unvested portion of grants issued prior to the adoption date. As a result, consistent with compensation amounts reported for prior periods in pro-forma footnote disclosures in our financial statements, we anticipate recognizing non-cash share-based compensation expense relating to stock option grants of approximately $20 million or an estimated $0.78 per fully diluted share during fiscal year 2007,” concluded Ms. Westbrook.
“The time has come for psychiatrists and their patients to have unfettered access to the only FDA-approved, safe and effective long-term treatment option for TRD,” concluded Mr. Cummins. “The peer-reviewed literature confirms that traditional antidepressants do not satisfy the adherence and durability of response needs of TRD patients or their payers. TRD patients with either a prior hospitalization or previously-treated with ECT cost private payers and Medicare approximately $40,000 per patient per year, primarily in depression- related hospitalization costs. The rapidly building body of peer-reviewed evidence, including the evidence presented at this week’s American Psychiatric Association annual meeting, shows that VNS Therapy not only is delivered as prescribed (100% adherence), but also is associated with remarkable two-year durability of response and decreases in suicidality and hospitalizations due to worsening depression in patients with the most chronic and resistant depressions ever studied. Cyberonics’ highest priority remains TRD parity in access to VNS Therapy, and we are more confident than ever that we will ultimately accomplish that objective given the rapidly growing body of peer- reviewed, valid scientific evidence that confirms the unique safety, effectiveness and cost-effectiveness of VNS Therapy for patients, psychiatrists and payers.”
CONFERENCE CALL INFORMATION
A conference call to discuss Q4 and FY06 financial results will be held at 8:30 AM EDT on Friday, May 26, 2006. To listen to the conference call live by telephone dial 877-451-8943 (if dialing from within the U.S.) or 706-679-3062 (if dialing from outside the U.S.). The conference ID is 9537076; the leader is Pam Westbrook. Presentation slides will be available on-line at http://www.cyberonics.com no later than 8:00 AM EDT on Friday, May 26, 2006. A replay of the conference call will be available approximately two hours after the completion of the conference call by dialing 800-642-1687 (if dialing from within the U.S.) or 706-645-9291 (if dialing outside the U.S.). The replay conference ID access code is 9537076.
ABOUT VNS THERAPY AND CYBERONICS
Information on Cyberonics, Inc. and VNS Therapy(TM) is available at http://www.cyberonics.com and http://www.vnstherapy.com .
SAFE HARBOR STATEMENT
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These statements can be identified by the use of forward-looking terminology, including “may,” “believe,” “will,” “expect,” “anticipate,” “estimate,” “plan,” “intend,” and “forecast,” or other similar words. Statements contained in this press release are based upon information presently available to us and assumptions that we believe to be reasonable. We are not assuming any duty to update this information should those facts change or should we no longer believe the assumptions to be reasonable. Investors are cautioned that all such statements involve risks and uncertainties, including without limitation, statements concerning guidance for sales, earnings and non-cash share-based compensation expense in fiscal 2007 and the adoption by payers of favorable national and regional TRD coverage policies. Our actual results may differ materially. Important factors that may cause actual results to differ include, but are not limited to: continued market acceptance of VNS Therapy and sales of our product; the development and satisfactory completion of clinical trials and/or market test and/or regulatory approval of VNS Therapy for the treatment of Alzheimer’s disease, anxiety, or other indications; adverse changes in coverage or reimbursement amounts by third-parties; intellectual property protection and potential infringement claims; maintaining compliance with government regulations and obtaining necessary government approvals for new applications; product liability claims and potential litigation; reliance on single suppliers and manufacturers for certain components; the accuracy of management’s estimates of future expenses and sales; and other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission (SEC). For a detailed discussion of these and other cautionary statements, please refer to Cyberonics’ most recent filings with the SEC, including its Form 10-K for the fiscal year ended April 29, 2005.
CYBERONICS, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS April 28, 2006 April 29, 2005 (Unaudited) ASSETS Current Assets Cash, cash equivalents and short- term marketable securities $93,355,071 $61,475,892 Accounts receivable, net 21,341,942 16,476,084 Inventories 17,304,794 8,545,385 Other current assets 5,274,133 3,355,778 Total Current Assets 137,275,940 89,853,139 Property and equipment, net and other assets 15,024,344 9,002,258 $152,300,284 $98,855,397 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities $21,521,961 $23,049,628 Long term liabilities 126,148,457 209,928 Stockholders’ equity 4,629,866 75,595,841 $152,300,284 $98,855,397 CYBERONICS, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS For the Thirteen Weeks For the Fifty-Two Weeks Ended Ended April 28, April 29, April 28, April 29, 2006 2005 2006 2005 (Unaudited) (Unaudited) (Unaudited) Net sales $36,047,613 $26,659,945 $123,441,575 $103,442,570 Cost of sales 4,337,432 3,317,534 15,758,001 15,575,741 Gross Profit 31,710,181 23,342,411 107,683,574 87,866,829 Operating Expenses: Selling, general and administrative 28,733,006 24,712,216 139,615,763 81,430,943 Research and development 7,823,111 5,401,069 28,917,647 19,341,075 Total Operating Expenses 36,556,117 30,113,285 168,533,410 100,772,018 Loss From Operations (4,845,936) (6,770,874) (60,849,836) (12,905,189) Interest income 1,043,772 405,620 3,211,956 1,072,488 Interest expense (1,287,386) (107,278) (3,018,969) (444,270) Other income (expense), net (21,596) 18,270 69,460 84,736 Loss before income tax (5,111,146) (6,454,262) (60,587,389) (12,192,235) Income tax expense 41,294 11,819 99,266 26,113 Net Loss $(5,152,440) $(6,466,081) $(60,686,655) $(12,218,348) Basic loss per share $(0.21) $(0.26) $(2.44) $(0.51) Diluted loss per share $(0.21) $(0.26) $(2.44) $(0.51) Shares used in computing basic loss per share 25,032,043 24,636,669 24,916,938 24,036,736 Shares used in computing diluted loss per share 25,032,043 24,636,669 24,916,938 24,036,736
Cyberonics, Inc.
CONTACT: investor relations of Cyberonics, Inc., +1-281-228-7262, or fax,+1-281-218-9332, or ir@cyberonics.com ; or Helen Shik, Vice President ofSchwartz Communications, +1-781-684-0770, or fax, +1-781-684-6500, orhshik@schwartz-pr.com , for Cyberonics, Inc.
Web site: http://www.cyberonics.com/
