PLYMOUTH, Minn., Feb. 20 /PRNewswire-FirstCall/ -- ev3 Inc. , a global endovascular device company, today reported financial results for its fiscal fourth quarter of 2006.
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As reported on January 8, 2007, ev3’s net sales in the fourth quarter of 2006 increased 41% to $57.7 million versus net sales of $41.0 million in the fourth quarter of 2005. Fourth quarter sales growth was broad-based and reflected a strong contribution from each of ev3’s Cardio Peripheral and Neurovascular business segments as well as a strong contribution from both domestic and international markets.
For the fiscal year ended December 31, 2006, ev3’s net sales increased 51% to $202.4 million versus $133.7 million for the year ended December 31, 2005. Annual sales growth in 2006 also was generated internally and reflected net sales growth in each of ev3’s reportable business segments and geographic markets.
Jim Corbett, president and CEO of ev3 Inc., commented, “We are very pleased with yet another record quarter of sales growth which substantially outpaced that of our target markets. With the FDA approval and launch of our ProtegeRX carotid stent, used in combination with an ev3 embolic protection device for carotid stenting, we are optimistic about our prospects in 2007.”
ev3’s net loss attributable to common shareholders for the fourth quarter of 2006 declined 79% to $4.6 million compared to $22.0 million in the fourth quarter of 2005. The company’s net loss attributable to common shareholders for the fiscal year ended December 31, 2006 declined 57% to $52.4 million compared to $122.1 million for the year ended December 31, 2005. ev3’s net loss per common share attributable to common shareholders for the fourth quarter of 2006 and fiscal year ended December 31, 2006 was $0.08 and $0.93 per common share, respectively, compared to $0.45 per common share in the fourth quarter of 2005 and $4.48 per common share in the full year ended December 31, 2005. Total weighted average common shares outstanding used in the per share calculations were 57.2 million and 56.6 million for the fourth quarter of 2006 and full year ended December 31, 2006, respectively and 49.2 million and 27.2 million for the fourth quarter of 2005 and full year ended December 31, 2005, respectively.
ev3’s earnings before interest, taxes, depreciation and amortization (EBITDA), excluding charges for non-cash stock-based compensation, improved approximately $19.5 million to a positive $3.0 million in the fourth quarter of 2006, compared to a loss of $16.5 million in the fourth quarter of 2005. ev3’s EBITDA loss, excluding charges for non-cash stock-based compensation, for the year ended December 31, 2006 improved $56.6 million or 71%, to a loss of $23.3 million, compared to a loss of $79.9 million for the year ended December 31, 2005. ev3 uses the non-GAAP financial measures, EBITDA and EBITDA, excluding charges for non-cash stock-based compensation, as supplemental measures of performance and believes that these measures facilitate operating performance comparisons from period to period and company to company.
EBITDA and EBITDA, excluding charges for non-cash stock-based compensation, for the fourth quarter and year ended December 31, 2006 and December 31, 2005 are reconciled to ev3’s net loss for the respective periods immediately following the detail of net sales by geography later in this press release.
Corbett continued, “Since our initial public offering in mid 2005, we have not had a more important financial objective than to achieve a positive EBITDA, excluding non-cash stock-based compensation charges, by the fourth quarter of 2006. Although we recognize that much work is yet to be done, we are gratified to report that ev3’s fourth quarter EBITDA was a positive $1.4 million and that fourth quarter EBITDA, excluding non-cash stock-based compensation, was a positive $3.0 million.”
Sales Review
In the fourth quarter of 2006, ev3’s Neurovascular segment net sales increased 39% to $23.7 million versus $17.0 million in the fourth quarter of 2005. Within the Neurovascular business segment, sales of embolic products increased 49% to $12.0 million from $8.1 million, and sales of Neurovascular access and delivery products were up 30% to $11.7 million from $8.9 million. The primary growth drivers for the Neurovascular segment were the continued market penetration of both the Onyx Liquid Embolic System for the treatment of brain arterio-venous malformations (AVMs) and the Nexus family of embolic coils for the treatment of brain aneurysms.
Cardio Peripheral segment net sales in the fourth quarter of 2006 increased 42% to $34.0 million versus $24.0 million in the fourth quarter of 2005. Within the Cardio Peripheral business segment, stent sales increased 53% to $18.5 million from $12.1 million. Sales of thrombectomy and embolic protection products increased 79% to $6.2 million from $3.5 million, while sales of procedural support and other Cardio Peripheral products increased 11% to $9.3 million from $8.4 million. The largest contributors to the growth in the Cardio Peripheral segment were ev3’s new EverFlex stent product and the SpideRX Embolic Protection Device.
On a geographic basis, ev3’s fourth quarter U.S. net sales increased 52% to $34.6 million, while fourth quarter international net sales increased 26% to $23.1 million, over the prior-year quarter. Changes in foreign currency exchange rates had a positive impact of approximately $1.2 million on fourth quarter 2006 net sales compared to the fourth quarter of the prior year.
Outlook
ev3 expects 2007 annual net sales to be in the range of approximately $262 to $278 million. ev3 expects first quarter of 2007 net sales to be in the range of $59 to $63 million. ev3 also expects its quarterly operating losses to be reduced during 2007, as compared to its quarterly operating losses for fiscal year 2006. With respect to EBITDA, excluding non-cash stock-based compensation, the company expects to generate $10 to $15 million in 2007 representing an improvement of $33 to $38 million over a negative $23 million for 2006.
Earnings Call Information
ev3 will host a conference call today, February 20, 2007, beginning at 8 a.m. CST to review its results of operations for the fourth quarter of 2006 and other recent events and to discuss its 2007 business outlook. Discussions during the conference call may include forward-looking statements regarding such topics as, but not limited to, the company’s net sales, cost of goods sold, operating expenses, distribution arrangements, clinical studies, regulatory status, financial position and comments the company may make about its future in response to questions from participants on the conference call. Any interested party may listen to the conference call through a live audio Webcast at http://www.ev3.net . For those unable to listen to the Webcast, a playback of the Webcast will be available at www.ev3.net for approximately 90 days. Those without Internet access may join the call from within the United States by dialing (866) 700-7173; outside the United States dial (617) 213-8838 passcode 98675467. A playback of the conference call will be available from 11 a.m. CST, February 20, 2007 until noon CST on February 27, 2007 by dialing (888) 286-8010 (United States) or (617) 801-6888 (International), passcode 12904482.
ev3 and the ev3 logo are trademarks of ev3 Inc., registered in the U.S. and other countries.
This press release contains other trademarks and trade names of ev3 Inc. and other third parties, which are the property of their respective owners.
Statements contained in this press release that are not historical information are forward-looking statements as defined within the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected or implied. Such potential risks and uncertainties relate, but are not limited to, in no particular order: product demand and market acceptance; the impact of competitive products and pricing; delays in regulatory approvals and the introduction of new products; and success of clinical testing. More detailed information on these and additional factors which could affect ev3 Inc.'s operating and financial results is described in the company’s filings with the Securities and Exchange Commission, including its most recent quarterly report on Form 10-Q and annual report on Form 10-K. ev3 Inc. urges all interested parties to read these reports to gain a better understanding of the many business and other risks that the company faces. Additionally, ev3 Inc. undertakes no obligation to publicly release the results of any revisions to these forward-looking statements, which may be made to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events.
ev3 Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (unaudited) For the Three Months Ended For the Years Ended December 31, December 31, December 31, December 31, 2006 2005 2006 2005 Net sales $57,675 $40,974 $202,438 $133,696 Operating expenses Cost of goods sold (a) 18,988 16,610 71,321 55,094 Sales, general and administrative (a) 32,612 35,604 141,779 130,427 Research and development (a) 6,868 8,627 26,725 39,280 Amortization of intangible assets 4,215 2,796 17,223 10,673 Loss on sale or disposal of assets, net 20 (4) 162 200 Acquired in-process research and development - - 1,786 868 Total operating expenses 62,703 63,633 258,996 236,542 Loss from operations (5,028) (22,659) (56,558) (102,846) Other (income) expense: Gain on sale of investments, net - - (1,063) (4,611) Interest (income) expense, net (224) (917) (1,695) 9,916 Minority interest in loss of subsidiary - (801) - (2,013) Other (income) expense, net (584) 448 (2,117) 3,360 Loss before income taxes (4,220) (21,389) (51,683) (109,498) Income tax expense 360 587 688 526 Net loss (4,580) (21,976) (52,371) (110,024) Accretion of preferred membership units to redemption value - - - 12,061 Net loss attributable to common shareholders $(4,580) $(21,976) $(52,371) $(122,085) Net loss per common share attributed to common shareholders (basic and diluted) (b) $(0.08) $(0.45) $(0.93) $(4.48) Weighted average common shares outstanding (b) 57,228,532 49,162,046 56,585,025 27,242,712 (a) Includes stock- based compensation charges of: Cost of goods sold $134 $208 $630 $653 Sales, general and administrative 1,314 1,236 5,868 3,141 Research and development 132 351 655 1,079 $1,580 $1,795 $7,153 $4,873 (b) Net loss per common share attributed to common shareholders and weighted average common shares outstanding reflect the June 21, 2005 1-for-6 reverse stock split for all periods presented. ev3 Inc. CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share amounts) December 31, December 31, 2006 2005 (unaudited) Assets Current assets Cash and cash equivalents $24,053 $69,592 Short-term investments 14,700 12,000 Accounts receivable, less allowance of $3,924 and $3,607, respectively 45,137 28,519 Inventories 42,124 32,987 Prepaid expenses and other assets 7,162 7,042 Other receivables 2,669 1,535 Total current assets 135,845 151,675 Restricted cash 2,022 3,102 Property and equipment, net 24,072 17,877 Goodwill 149,061 94,456 Other intangible assets, net 40,014 26,230 Other assets 1,812 3,488 Total assets $352,826 $296,828 Liabilities and stockholders’ equity Current liabilities Accounts payable $13,140 $11,716 Accrued compensation and benefits 16,382 14,612 Accrued liabilities 10,102 11,343 Current portion of long-term debt 2,143 - Total current liabilities 41,767 37,671 Long-term debt 5,357 - Other long-term liabilities 468 852 Total liabilities 47,592 38,523 Minority interest - 12,850 Stockholders’ equity Common stock: $0.01 par value; 100,000,000 shares authorized; issued and outstanding: 57,594,742 and 49,350,647, respectively 576 493 Additional paid in capital 919,221 807,032 Accumulated deficit (614,578) (562,207) Accumulated other comprehensive income 15 137 Total stockholders’ equity 305,234 245,455 Total liabilities and stockholders’ equity $352,826 $296,828 ev3 Inc. SELECTED NET SALES INFORMATION (Dollars in thousands, except per share amounts) (unaudited) For the Three For the Years NET SALES BY SEGMENT Months Ended Ended December December % December December % 31, 2006 31, 2005 change 31, 2006 31, 2005 change Cardio Peripheral Stents $18,501 $12,079 53% $64,092 $37,871 69% Thrombectomy and embolic protection 6,177 3,459 79% 21,606 12,869 68% Procedural support and other 9,344 8,451 11% 35,406 29,141 21% Total cardio peripheral 34,022 23,989 42% 121,104 79,881 52% Neurovascular Embolic products 12,026 8,046 49% 38,998 22,463 74% Neuro access and delivery products 11,627 8,939 30% 42,336 31,352 35% Total neurovascular 23,653 16,985 39% 81,334 53,815 51% Total company $57,675 $40,974 41% $202,438 $133,696 51% NET SALES BY For the Three For the Years GEOGRAPHY Months Ended Ended December December % December December % 31, 2006 31, 2005 change 31, 2006 31, 2005 change United States $34,590 $22,707 52% $121,180 $71,848 69% International 23,085 18,267 26% 81,258 61,848 31% Total net sales $57,675 $40,974 41% $202,438 $133,696 51% ev3 Inc. NON-GAAP FINANCIAL MEASURES (Dollars in thousands) (unaudited) For the Three For the Years Months Ended Ended December December December December 31, 2006 31, 2005 31, 2006 31, 2005 Reconciliation of net loss to EBITDA Net loss, as reported (GAAP basis) $(4,580) $(21,976) $(52,371) $(110,024) Interest (income) expense, net (224) (917) (1,695) 9,916 Income tax expense 360 587 688 526 Depreciation and amortization 5,854 4,026 22,878 14,816 EBITDA $1,410 $(18,280) $(30,500) $(84,766) Stock-based compensation 1,580 1,795 7,153 4,873 EBITDA, adjusted for stock- based compensation $2,990 $(16,485) $(23,347) $(79,893)
ev3 uses non-GAAP financial measures, as outlined above, as supplemental measures of performance and believes these measures facilitate operating performance comparisons from period to period and company to company by factoring out potential differences caused by variations in capital structure, tax positions, depreciation, non-cash charges and certain large and unpredictable charges. ev3 also believes that the presentation of these measures provides useful information to investors in evaluating the company’s operations, period over period. Non-GAAP measures have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analysis of the company’s results as reported under Generally Accepted Accounting Principles (GAAP).
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CONTACT: Investor Relations, Patrick Spangler, CFO, of ev3 Inc.,+1-763-398-7000, or pspangler@ev3.net , or Marian Briggs or Nancy Johnson,both of Padilla Speer Beardsley, +1-612-455-1742, or +1-612-455-1745, ormbriggs@psbpr.com , or njohnson@psbpr.com
Web site: http://www.ev3.net/
