HOUSTON, June 4, 2015 /PRNewswire/ -- Cyberonics, Inc. (NASDAQ:CYBX) today announced results for the fourth quarter and fiscal year ended April 24, 2015.
Annual highlights1
Operating results for fiscal 2015 compared to fiscal 2014, and other achievements to date include:
- Worldwide sales of $291.6 million, a constant currency increase of 6.8% over prior year sales, excluding the single-country order and license fee from prior year sales;
- Worldwide unit sales of 14,515, an increase of 5.5% over prior year unit sales, as adjusted;
- International unit sales reached a record 4,665 units, a 15.4% increase over the FY14 international unit sales adjusted for the single-country order;
- Record adjusted non-GAAP income from operations of $99.5 million, an increase of 15.7%;
- Adjusted non-GAAP income from operations margin of 34.1%;
- Adjusted non-GAAP income per diluted share increased by 21.4% to $2.44;
- Sales of AspireSR® generator reached 15% of all international unit sales in the first full year during a staged launch;
- U.S. Food & Drug Administration ("FDA") approval of the AspireSR generator;
- CE Mark approval, and first commercial implant, of the VITARIA generator, which provides Autonomic Regulation Therapy ("ART") for chronic heart failure;
- First shipments from the new international manufacturing facility in Costa Rica; and
- Share repurchases on the open market of 0.9 million shares for $49 million.
Quarterly highlights1
Operating results for the fourth quarter of fiscal 2015 compared to the fourth quarter of fiscal 2014, and other achievements, include:
- Worldwide net sales of $74.1 million, a constant currency increase of 5.0% over sales adjusted for the prior year to exclude the single-country order;
- U.S. net product sales of $59.4 million, an increase of 2.0% over the comparable quarter of the prior year;
- International net sales of $14.7 million, an increase of 17.5% on a constant currency basis over sales adjusted for the single-country order;
- Record worldwide unit sales of 3,753;
- Record international unit sales of 1,320 units, an 18.4% increase over sales adjusted for the single-country order;
- Adjusted non-GAAP income from operations increased by 13.1% to a record $26.5 million;
- Adjusted non-GAAP income per diluted share of $0.64 compared with adjusted non-GAAP income per diluted share of $0.55, an increase of 16.4%; and
- Our first direct employee in Japan started in April.
Results and objectives
"For the seventh consecutive year, the Cyberonics team delivered record net sales and operating income," commented Dan Moore, Cyberonics' President and Chief Executive Officer. "We are pleased to report continuation of our consistent multi-year sales and profit growth. We achieved our two most important regulatory approvals with the recent announcement of our U.S. approval for the AspireSR generator, along with the CE Mark approval of the VITARIA generator announced earlier this year. These two products provide a solid foundation for continued growth for the company.
"With the additional opportunities arising from the pending merger with Sorin, expected to close by the end of September 2015, we plan to increase our efforts to bring these important products to patients with epilepsy and CHF. In advance of the expected closing of our proposed merger, we made several changes to senior management at the start of the 2016 fiscal year.
- Jason Richey, Vice President and General Manager International, has assumed responsibility for all U.S. commercial activity, including sales, marketing and reimbursement.
- Mark Verratti, Vice President for Worldwide Sales, will assume the International role from Jason, and in addition, be responsible for planning the international commercial integration, as well as international CHF commercialization.
- Sherrie Perkins, Vice President, New Business Development, has assumed the Project Manager role on the integration team.
"Both Jason and Mark will report directly to Rohan Hoare, Chief Operating Officer. Jason's experience with the launch of the AspireSR generator in Europe and EMMEA brings significant benefit to the U.S. sales team as we launch this new, technologically-advanced product in our largest market.
"Further, we are pleased to announce the addition of John Murphy, Ph.D., as Vice President, Research & Development. John has more than 19 years of relevant product design and engineering experience at large medical device companies and in a range of industries, including telecommunications and defense-related companies. In his most recent company, John's positions included Vice President, R&D, Neuromodulation; Vice President, Hardware Engineering Implantable Electrical Systems Division (IESD); and Vice President, Electrical Engineering & Power Component for IESD.
"International growth continued its strong trajectory, with adjusted revenue growth for fiscal 2015 of approximately 17% on a constant currency basis, and all regions achieving very robust sales growth. The AspireSR generator provided a significant contribution, with penetration increasing substantially as the year progressed. The AspireSR generator accounted for 17% of all international unit sales in the third quarter and grew to 23% in the fourth quarter. We are especially pleased that in U.K. and Germany, where the product was initially launched, the AspireSR generator accounted for over 50% of unit sales in the fourth quarter, and many accounts have converted all their purchases to the new generator.
"Our U.S. sales were disappointing for the year, with new-patient activity weaker than planned. We expect significant improvement in fiscal 2016 following a refocused approach under Jason Richey's leadership and are also excited that AspireSR will now be available for our sales force.
"We have also made progress with the ProGuardian product, and recently shipped the first systems to the U.K. to commence a limited market evaluation, now underway. Following an internal review of the Centro generator, we concluded that additional design improvements were warranted. As a result of the decision to redesign the product, we wrote-down some of the assets associated with the original Centro program. As evidenced in cardiac rhythm management, we continue to believe that the functionality of a wireless-enabled generator will be important addition to our future product offering.
"With the previously announced CE Mark approval to market the VITARIA System in Europe to treat patients suffering from chronic heart failure, we initiated a limited commercial launch and achieved our first commercial implant. We formed a dedicated sales team to market this new product in Europe. Our second study, ANTHEM-HFpEF, focused on heart failure patients with preserved ejection fraction, is also progressing," concluded Mr. Moore.
Stock Repurchase Update
Cyberonics purchased 875,000 shares for $49 million on the open market in fiscal 2015. This program was suspended after the announcement of our proposed merger with Sorin S.p.A. on February 26, 2015.
Fiscal 2016 guidance
We are not providing revenue or operating income guidance for fiscal year 2016 as a result of potential disclosure obligations imposed by the UK Listing Authority, arising from our proposed merger with Sorin S.p.A., as well as a planned change in our fiscal year end following the closing of the proposed merger. With the launch of the VITARIA generator in Europe and the launch of the AspireSR generator in the U.S. market, we have confidence that, on a constant currency basis, sales growth rates will be higher in fiscal 2016 than in the recently completed fiscal year and more in line with our historical averages.
Use of non-GAAP financial measures
In this press announcement, management has disclosed financial measurements that present financial information not in accordance with Generally Accepted Accounting Principles (GAAP). These measurements are not a substitute for GAAP measurements, although company management uses these measurements as aids in monitoring the company's ongoing financial performance from quarter to quarter and year to year on a regular basis and for benchmarking against other medical technology companies. Adjusted non-GAAP net sales, adjusted non-GAAP income from operations, adjusted non-GAAP net income and adjusted non-GAAP income per diluted share measure the net sales, income from operations, net income and income per diluted share, respectively, of the company, excluding unusual items. Management uses and presents these measures because management believes that such adjustments facilitate an understanding of the financial impact of unusual items on the company's short- and long-term financial trends. Management also uses adjusted non-GAAP items to forecast and to evaluate the operational performance of the company, as well as to compare results of current periods to prior periods on a consistent basis. Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) measures the adjusted non-GAAP income from operations of the company and excludes the aforementioned items, as well as non-cash equity compensation and other income (expense) items.
Non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly-titled measures used by other companies. Investors should consider non-GAAP measures in addition to, and not as a substitute for, or superior to, financial performance measures prepared in accordance with GAAP.
Please refer to the attached reconciliations between GAAP and non-GAAP financial measures.
Fourth-Quarter Results Webcast and Conference Call Instructions
Cyberonics will host a conference call today, June 4, 2015, beginning at 8:00 a.m. Central Time (9:00 a.m. Eastern Time) to review its results of operations for the fiscal year 2015 fourth quarter, and annual results, followed by a question and answer session.
The conference call will be available to interested parties through a live audio webcast in the Investor Relations section of Cyberonics' corporate website at http://www.cyberonics.com. To listen to the conference call live by telephone, dial 877-638-4557 (if dialing from within the U.S.) or 914-495-8522 (if dialing from outside the U.S.). The conference ID is 32810065.
Within 24 hours of the webcast, a replay will be available under the "Events & Presentations" section of the Investor Relations portion of the Cyberonics website, where it will be archived and accessible for approximately 12 months.
About Cyberonics, Inc. and the VNS Therapy® System
Cyberonics, Inc. is a medical device company with core expertise in neuromodulation. The company developed and markets the VNS Therapy System, which is FDA-approved for the treatment of medically refractory epilepsy and treatment-resistant depression. The VNS Therapy System uses an implanted medical device that delivers pulsed electrical signals to the vagus nerve. Cyberonics offers the VNS Therapy System in selected markets worldwide. Cyberonics also has CE Mark for the VITARIA System, which provides autonomic regulation therapy for the treatment of chronic heart failure.
Additional information on Cyberonics and the VNS Therapy System is available at www.cyberonics.com.
Important Information for Investors and Shareholders
This press release is for informational purposes only and is not intended to and does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy or an invitation to purchase or subscribe for any securities or the solicitation of any vote in any jurisdiction pursuant to the proposed merger transactions involving Cyberonics Inc. ("Cyberonics"), Sand Holdco PLC ("NewCo") and Sorin S.p.A. ("Sorin") or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, and applicable European regulations. Subject to certain exceptions to be approved by the relevant regulators or certain facts to be ascertained, the public offer will not be made directly or indirectly, in or into any jurisdiction where to do so would constitute a violation of the laws of such jurisdiction, or by use of the mails or by any means or instrumentality (including without limitation, facsimile transmission, telephone and the internet) of interstate or foreign commerce, or any facility of a national securities exchange, of any such jurisdiction. This communication does not represent an investment solicitation in Italy, pursuant to Section 1, letter (t) of Legislative Decree no. 58 of February 24, 1998, as amended.
("NewCo") has filed with the Securities and Exchange Commission (the "SEC") a registration statement on Form S-4, which includes a preliminary proxy statement of Cyberonicsthat also constitutes a preliminary prospectus of NewCo (the "proxy statement/prospectus"). A definitive proxy statement/prospectus will be delivered as required by applicable law after the registration statement on Form S-4 is declared effective by the SEC. INVESTORS AND SHAREHOLDERS ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC, CAREFULLY AND IN THEIR ENTIRETY, WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT SORIN S.P.A. ("Sorin Group"), CYBERONICS, NEWCO, THE PROPOSED MERGER TRANSACTIONS INVOLVING CYBERONICS, SORIN AND NEWCO AND RELATED MATTERS.
Investors and shareholders will be able to obtain free copies of the definitive proxy statement/prospectus (once it becomes available) and other documents filed with the SEC by the parties through the website maintained by the SEC at www.sec.gov. In addition, investors and shareholders will be able to obtain free copies of the definitive proxy statement/prospectus and other documents filed with the SEC on Cyberonics' website at www.cyberonics.com within the "Investor Relations" section or by contacting Cyberonics' Investor Relations (for documents to be made available to Cyberonics' shareholders).
The release, publication or distribution of this press release in certain jurisdictions may be restricted by law, and therefore persons in such jurisdictions into which this press release is released, published or distributed should inform themselves about and observe such restrictions.
Participants in the Distribution
Sorin, Cyberonics and NewCo and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of Cyberonics with respect to the proposed transactions contemplated by the preliminary proxy statement/prospectus. Information regarding the persons who are, under the rules of the SEC, participants in the solicitation of proxies from the shareholders of Cyberonics in connection with the proposed transactions, including a description of their direct or indirect interests, on account of security holdings or otherwise, will be set forth in the definitive proxy statement/prospectus filed with the SEC. Information regarding Cyberonics's directors and executive officers is contained in Cyberonics's Annual Report on Form 10-K for the year ended on April 25, 2014 and its Proxy Statement on Schedule 14A, dated July 30, 2014, which are filed with the SEC and can be obtained free of charge from the sources indicated above.
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.
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