Given Imaging Ltd. Reports First Quarter 2011 Results

YOQNEAM, ISRAEL--(Marketwire - May 04, 2011) - Given Imaging Ltd. (NASDAQ: GIVN) today announced financial results for the first quarter ended March 31, 2011.

Worldwide revenues were $40 million in the first quarter of 2011, a 25 percent increase from $32.1 million in the first quarter of 2010. First quarter 2011 revenues include sales of $5.5 million from Sierra Scientific Instruments (Sierra), which the company acquired on April 1, 2010. Gross margin on a non-GAAP basis in the first quarter of 2011 was 77.4 percent, compared to 77.1 percent in the first quarter of 2010.

Non-GAAP operating profit was $3.9 million, compared to $3.5 million in the first quarter of 2010. On a non-GAAP basis, net income for the first quarter of 2011 was $3 million, or $0.10 per share on a fully diluted basis, compared to $4.4 million, or $0.14 per share on a fully diluted basis, in the first quarter of 2010. On a GAAP basis, net income for the first quarter of 2011 was $0.7 million, or $0.02 per share, compared to $2.1 million, or $0.07 per share, in the same quarter of last year. In the first quarter of 2011 finance expense, net, was $0.1 million, compared to finance income, net, of $0.98 million in the first quarter of 2010. Tax expense for the first quarter of 2011 was $0.7 million, compared to $0.1 million in the same quarter of last year. A reconciliation of GAAP results to non-GAAP results is attached.

Cash and cash equivalents, short-term investments and marketable securities on March 31, 2011 totaled $83.9 million.

“We are pleased to report that we achieved a 25 percent increase in total revenues in the first quarter of 2011, fueled by sales of Sierra Scientific Instruments products, and by solid growth of our PillCam business in the EMEA and APAC regions,” said Homi Shamir, president and CEO of Given Imaging. “Looking ahead, we are encouraged by several positive developments, including recovery of our core PillCam SB business in the EMEA region, which looks to be back on track, and the recent FDA decision to clear the marketing of PillCam SB in the U.S. for use in monitoring lesions that may indicate Crohn’s disease. Finally, we are making progress towards starting the PillCam COLON pivotal trials in the U.S. and Japan.”

First Quarter 2011 Revenue Analysis

Revenues in the Americas region were $24.1 million, including revenues of $3.2 million from sales of Sierra products. In the same period in 2010 revenues in the Americas region were $20.5 million. Revenues in the EMEA region were $11.2 million, including $1.5 million from sales of Sierra products, compared to $8.5 million in the same quarter last year. APAC revenues were $4.7 million, including Sierra sales of $0.7 million, compared to $3.1 million in the same period in 2010.

Worldwide PillCam SB sales amounted to 54,200 capsules in the first quarter of 2011, compared to 50,900 capsules in the same period last year. PillCam SB sales in the Americas region were 33,400 capsules, approximately the same as in the first quarter of last year. PillCam SB sales in the EMEA region increased 18 percent to 15,000 capsules, compared to 12,700 capsules in the first quarter of 2010 and PillCam SB sales in the APAC region increased 26 percent to 5,800 capsules, compared to 4,700 capsules in the same period in 2010.

Supplemental first quarter data can be found at www.givenimaging.com in the Investor Relations section.

2011 Guidance

The company reaffirms its guidance for 2011 of revenues between $165 million and $173 million, GAAP EPS of $0.35 - $0.40, and non-GAAP EPS of $0.65 - $0.70.

Recent Developments

PillCam SB Expanded Indication -- In March 2011, Given Imaging received clearance from the U.S. Food and Drug Administration (FDA) to promote the PillCam SB video capsule for use in monitoring lesions that may indicate Crohn’s disease. Sensor Belt Expanded Availability -- In February 2011, the FDA cleared revised labeling regarding the use of the SensorBelt in patients with a higher than normal Body Mass Index (BMI) of up to 43.3 kg/m2. PillCam Patent Infringement Lawsuit -- The Regional Court (Patent Chamber) in Dusseldorf, Germany ruled that the MiroCam capsule endoscopy system manufactured by IntroMedic of South Korea infringed two patents asserted by Given Imaging. The court’s rulings allow Given Imaging to prevent IntroMedic’s German distributor, Medwork Medicinal Products and Services GmbH, from selling the current model of the MiroCam capsule and MiroView software in Germany. International Colon Capsule Expert Meeting -- In February, the inaugural International Colon Capsule Expert Meeting took place in Italy, assembling a panel of gastrointestinal experts from around the world. The purpose of the meeting was to discuss and develop guidelines for colon capsule endoscopy in accordance with the methodology established by the European Society of Gastrointestinal Endoscopy. Guidelines are expected to be published in the fourth quarter of 2011. 

Conference Call / Webcast Information

U.S. Call / Webcast

The company will host a conference call in English at 9:00 am ET on Thursday, May 5, 2011. To participate in this teleconference, please dial 888-715-1394 fifteen minutes before the conference is scheduled to begin. Callers outside of the U.S. should dial 913-312-1513. The call will also be webcast live at www.givenimaging.com. A replay of the call will be available for two weeks on the company’s website, or until May 19, 2011, by dialing 888-203-1112. Callers outside of the U.S. should dial 719-457-0820. The replay participant code is 3018955.

Hebrew Call

A separate conference call in Hebrew will take place on May 5, 2011 at 2:00 pm Israel time, 7:00 am ET. To access this call, please dial + 972-3-918-0609ten minutes before the conference is scheduled to begin. A replay of the call will be available from May 8 until May 10, 2011 by dialing +972-3-925-5900.

About Given Imaging Ltd.

Since pioneering the field of capsule endoscopy in 2001, Given Imaging has become a world leader in GI medical devices, offering health care providers a range of innovative options for visualizing, diagnosing and monitoring the digestive system. The company offers a broad product portfolio including PillCam® video capsules for the small bowel, esophagus and colon [PillCam® COLON not approved for use in the United States.], industry-leading ManoScan™ high-resolution manometry and Bravo® wireless and Digitrapper® pH and impedance products. Given Imaging is committed to delivering breakthrough innovations to the GI community and supporting its ongoing clinical needs. Given Imaging’s headquarters are located in Yoqneam, Israel, with operating subsidiaries in the United States, Germany, France, Japan, Australia, Vietnam and Hong Kong. For more information, please visit www.givenimaging.com.

Use of Non-GAAP Measures

This press release provides financial measures for net income and basic and diluted earnings per share that exclude certain items and are therefore not calculated in accordance with generally accepted accounting principles (GAAP). Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance that enhances management’s and investors’ ability to evaluate the Company’s net income and earnings per share and to compare it with historical net income and earnings per share.

The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management uses both GAAP and non-GAAP measures when evaluating the business internally and therefore felt it is important to make these non-GAAP adjustments available to investors.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, projections about our business and our future revenues, expenses and profitability. Forward-looking statements may be, but are not necessarily, identified by the use of forward-looking terminology such as “may,” “anticipates,” “estimates,” “expects,” “intends,” “plans,” “believes,” and words and terms of similar substance. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual events, results, performance, circumstances or achievements of the Company to be materially different from any future events, results, performance, circumstances or achievements expressed or implied by such forward-looking statements. Factors that could cause actual events, results, performance, circumstances or achievements to differ from such forward-looking statements include, but are not limited to, the following: (1) our ability to develop and bring to market new products, (2) our ability to successfully complete any necessary or required clinical studies with our products, (3) our ability to receive regulatory clearance or approval to market our products or changes in regulatory environment, (4) our success in implementing our sales, marketing and manufacturing plans, (5) the level of adoption of our products by medical practitioners, (6) the emergence of other products that may make our products obsolete, (7) lack of an appropriate bowel preparation materials to be used with our PillCam COLON capsule, (8) protection and validity of patents and other intellectual property rights, (9) the impact of currency exchange rates, (10) the effect of competition by other companies, (11) the outcome of significant litigation, (12) our ability to obtain reimbursement for our product from government and commercial payors, (13) quarterly variations in operating results, (14) the possibility of armed conflict or civil or military unrest in Israel, (15) the impact of global economic conditions, (16) our ability to successfully integrate acquired businesses, (17) changes and reforms in applicable healthcare laws and regulations, (18) adverse events related to our products or product quality issues that could require us to recall products and impact our sales, and (19) other risks and factors disclosed in our filings with the U.S. Securities and Exchange Commission, including, but not limited to, risks and factors identified under such headings as “Risk Factors,” “Cautionary Language Regarding Forward-Looking Statements” and “Operating Results and Financial Review and Prospects” in the Company’s Annual Report on Form 20-F for the year ended December 31, 2010. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except for the Company’s ongoing obligations to disclose material information under the applicable securities laws, it undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

 Given Imaging Ltd. and its Consolidated Subsidiaries Excluded Items For the Three Months Ended March 31, 2011 and 2010 (Unaudited, dollars in thousands) Research Selling And And General Tax Gross Develop- Market- And Other Expense Profit ment ing Admin Expenses (Benefit) Total -------- -------- -------- -------- -------- ------- ------- Three month period ended March 31, 2011 Compensation expenses $ - $ 182 $ 561 $ 1,394 $ - $ - $ 2,137 Sierra PPA 237 - 81 - - (127) 191 -------- -------- -------- -------- -------- ------- ------- Total $ 237 $ 182 $ 642 $ 1,394 $ 0 ($ 127) $ 2,328 ======== ======== ======== ======== ======== ======= ======= Three month period ended March 31, 2010 Compensation expenses $ - $ 83 $ 327 $ 1,203 $ - $ - $ 1,613 Sierra acquisition expenses - - - 686 - - 686 -------- -------- -------- -------- -------- ------- ------- Total $ 0 $ 83 $ 327 $ 1,889 $ 0 $ 0 $ 2,299 ======== ======== ======== ======== ======== ======= ======= Given Imaging Ltd. and its Consolidated Subsidiaries Reconciliation of GAAP results to non-GAAP results For the Three months ended March 31, 2011 and 2010 Condensed, in thousands except share and per share data Q1 2011 Q1 2010 Specified Non Specified Non GAAP Items(*) GAAP GAAP Items(*) GAAP -------- -------- -------- -------- -------- -------- Revenues $ 39,969 - $ 39,969 $ 32,097 - $ 32,097 Cost of revenues (9,267) 237 (9,030) (7,336) - (7,336) -------- -------- -------- -------- -------- -------- Gross profit 30,702 237 30,939 24,761 - 24,761 -------- -------- -------- -------- -------- -------- Gross profit as a % of revenues 76.8% - 77.4% 77.1% - 77.1% Operating expenses Research and development, net (5,461) 182 (5,279) (3,777) 83 (3,694) Sales and marketing (17,249) 642 (16,607) (14,749) 327 (14,422) General and administrative (6,522) 1,394 (5,128) (5,134) 1,889 (3,245) Other, net (17) - (17) (63) - (63) -------- -------- -------- -------- -------- -------- Total operating expenses (29,249) 2,218 (27,031) (23,723) 2,299 (21,424) Operating profit 1,453 2,455 3,908 1,038 2,299 3,337 Operating profit as a % of revenues 3.6% - 9.8% 3.2% - 10.4% Financing income (expense), net (96) - (96) 978 - 978 -------- -------- -------- -------- -------- -------- Profit before taxes on income 1,357 2,455 3,812 2,016 2,299 4,315 Income tax expense (592) (127) (719) (129) - (129) -------- -------- -------- -------- -------- -------- Net Profit 765 2,328 3,093 1,887 2,299 4,186 Net (income) loss attributable to non-controlling interest (88) - (88) 166 - 166 -------- -------- -------- -------- -------- -------- Net profit attributable to shareholders $ 677 $ 2,328 $ 3,005 $ 2,053 $ 2,299 $ 4,352 ======== ======== ======== ======== ======== ======== Net profit attributable to shareholders as a % of revenues 1.7% - 7.5% 6.4% - 13.6% Earnings per share Basic Earnings attributable to shareholders per Ordinary Share $ 0.02 $ 0.08 $ 0.10 $ 0.07 $ 0.08 $ 0.15 ======== ======== ======== ======== ======== ======== Diluted Earnings attributable to shareholders per Ordinary Share $ 0.02 $ 0.08 $ 0.10 $ 0.07 $ 0.07 $ 0.14 ======== ======== ======== ======== ======== ======== (*)See specified items on Excluded Items table Given Imaging Ltd. and its Consolidated Subsidiaries Interim Consolidated Balance Sheets In thousands except share data (Unaudited) March 31 December 31 2011 2010 ------------ ------------ Assets Current assets Cash and cash equivalents $ 28,922 $ 34,619 Short-term investments 39,947 51,973 Accounts receivable: Trade (Net of provisions for doubtful debts of $267 and of $295 as of March 31, 2011 and December 31, 2010, respectively) 26,616 27,862 Other 3,640 4,291 Inventories 21,509 19,076 Prepaid expenses 2,306 1,585 Deferred tax assets 1,664 1,638 Advances to suppliers 373 441 ------------ ------------ Total current assets 124,977 141,485 Deposits 1,244 1,212 Assets held for employee severance payments 6,897 6,393 Marketable Securities 14,999 3,873 Non-current Inventory 5,077 5,626 Fixed assets, at cost, less accumulated depreciation 13,498 13,709 Intangible assets, less accumulated amortization 31,298 25,813 Goodwill 24,089 24,089 ------------ ------------ Total Assets $ 222,079 $ 222,200 ============ ============ Given Imaging Ltd. and its Consolidated Subsidiaries Interim Consolidated Balance Sheets In thousands except share data (Unaudited) March 31 December 31 2011 2010 ------------ ------------ Liabilities and equity Current liabilities Current installments of obligation under capital lease $ 166 $ 168 Accounts payable Trade 7,899 9,125 Other 22,029 26,065 Deferred income 852 788 ------------ ------------ Total current liabilities 30,946 36,146 ------------ ------------ Long-term liabilities Obligation under capital lease, net 201 244 Liability in respect of employees’ severance payments 7,650 7,151 Deferred tax liabilities 5,744 5,871 ------------ ------------ Total long-term liabilities 13,595 13,266 ------------ ------------ Total liabilities 44,541 49,412 ------------ ------------ Equity Shareholders’ equity Ordinary Shares, NIS 0.05 par value each (90,000,000 shares authorized; 30,027,447 and 29,829,277 shares issued and fully paid as of March 31, 2011 and December 31, 2010, respectively) 353 350 Additional paid-in capital 198,882 194,899 Capital reserve 2,051 2,051 Accumulated other comprehensive income 94 95 Accumulated deficit (24,030) (24,707) ------------ ------------ Shareholders’ equity 177,350 172,688 ------------ ------------ Non-controlling interest 188 100 ------------ ------------ Total Equity 177,538 172,788 ------------ ------------ Total liabilities and equity $ 222,079 $ 222,200 ============ ============ Given Imaging Ltd. and its Consolidated Subsidiaries Interim Consolidated Statements of Operations In thousands except share and per share data (Unaudited) Three month period ended March 31 Year ended ---------------------- December 31 2011 2010 2010 ---------- ---------- ---------- Revenues $ 39,969 $ 32,097 $ 157,809 Cost of revenues (9,267) (7,336) (37,629) ---------- ---------- ---------- Gross profit 30,702 24,761 120,180 ---------- ---------- ---------- Operating expenses Research and development, gross (5,773) (4,024) (21,695) Government grants 312 247 1,477 ---------- ---------- ---------- Research and development, net (5,461) (3,777) (20,218) Sales and marketing (17,249) (14,749) (67,114) General and administrative (6,522) (5,134) (25,138) Other, net (17) (63) (759) ---------- ---------- ---------- Total operating expenses (29,249) (23,723) (113,229) ---------- ---------- ---------- Operating income 1,453 1,038 6,951 Financing income (expense), net (96) 978 2,599 ---------- ---------- ---------- Income before taxes on income 1,357 2,016 9,550 Income tax expense (592) (129) (1,362) ---------- ---------- ---------- Net income 765 1,887 8,188 Net loss (income) attributable to non-controlling interest (88) 166 290 ---------- ---------- ---------- Net income attributable to shareholders of the company $ 677 $ 2,053 $ 8,478 ========== ========== ========== Earnings per share Basic Earnings attributable to shareholders per Ordinary Share $ 0.02 $ 0.07 $ 0.29 ========== ========== ========== Diluted Earnings attributable to shareholders per Ordinary Share $ 0.02 $ 0.07 $ 0.28 ========== ========== ========== Weighted average number of Ordinary Shares used to compute basic Earnings per Ordinary share 29,434,741 29,427,767 29,670,842 ========== ========== ========== Weighted average number of Ordinary Shares used to compute diluted Earnings per Ordinary share 30,356,969 30,646,418 30,525,654 ========== ========== ========== Given Imaging Ltd. and its Consolidated Subsidiaries Consolidated Statements of Cash Flows In thousands (Unaudited) Three month period ended March 31 Year ended ---------------------- December 31 2011 2010 2010 ---------- ---------- ---------- Cash flows from operating activities: Net income $ 765 $ 1,887 $ 8,188 Adjustments required to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 1,998 1,498 7,662 Goodwill impairment - - 20 Deferred tax assets (26) 206 761 Deferred tax liabilities (127) - (888) Stock option compensation 2,137 1,613 8,482 Loss from disposal of long-term assets 27 - 739 Other (10) 87 304 Decrease in accounts receivable - trade 1,246 3,028 560 Decrease (increase) in accounts receivable - other 651 (320) (488) Decrease (increase) in prepaid expenses (721) (559) (23) Decrease (increase) in advances to suppliers 68 157 93 Decrease (increase) in inventories (1,884) 1,425 2,331 Increase (decrease) in accounts payable (5,312) (5,210) 3,389 Increase in deferred income 64 252 554 ---------- ---------- ---------- Net cash provided by (used in) operating activities (1,124) 4,064 31,684 ---------- ---------- ---------- Cash flows from investing activities: Purchase of fixed assets and intangible assets (7,299) (1,222) (5,056) Acquisition of Sierra, net of cash acquired - - (34,709) Payment on account of business combination - (35,000) - Deposits, net (28) (24) (6) Proceeds from sales of marketable securities and short term investments 14,044 18,208 29,352 Investments in trading and marketable securities (13,148) (7,546) (36,968) ---------- ---------- ---------- Net cash used in investing activities (6,431) (25,584) (47,387) ---------- ---------- ---------- Cash flows from financing activities: Principal payments on capital lease obligation (41) (34) (143) Proceeds from the issuance of Ordinary Shares 1,849 1,991 4,219 Purchase of shares from a non-controlling shareholder in a Subsidiary - - (403) ---------- ---------- ---------- Net cash provided by financing activities 1,808 1,957 3,673 ---------- ---------- ---------- Effect of exchange rate changes on cash 50 80 191 ---------- ---------- ---------- Decrease in cash and cash equivalents (5,697) (19,483) (11,839) Cash and cash equivalents at beginning of period 34,619 46,458 46,458 ---------- ---------- ---------- Cash and cash equivalents at end of period $ 28,922 $ 26,975 $ 34,619 ========== ========== ========== Supplementary cash flow information Income taxes paid $ 50 $ 48 $ 234 ========== ========== ==========