YOQNEAM, ISRAEL--(Marketwire - November 03, 2010) - Given Imaging Ltd. (NASDAQ: GIVN) today announced financial results for the third quarter ended September 30, 2010.
Worldwide revenues were $38.7 million in the third quarter of 2010, a 10 percent increase from $35.2 million in the third quarter of 2009. Third quarter revenues include $5.9 million from Sierra Scientific Instruments (SSI) which the company acquired in April. Revenue in the quarter was lower than expected primarily due to lower sales in the EMEA region. Gross margin on a non-GAAP basis in the third quarter of 2010 was 77.3 percent, compared to gross margin of 77.8 percent in the third quarter of 2009.
On a non-GAAP basis, net income for the third quarter of 2010 was $3.2 million, or $0.11 per share on a fully diluted basis, compared to net income of $6.0 million, or $0.20 per share on a fully diluted basis in the third quarter of 2009. On GAAP basis, net income for the third quarter of 2010 was $1.0 million, or $0.03 per share, compared to $3.8 million, or $0.13 per share in the same quarter of last year. A reconciliation of GAAP results to non-GAAP results is attached.
Net cash provided by operating activities in the third quarter was $11.2 million, compared to $3.3 million in the third quarter of 2009. Cash and cash equivalents, short-term investments and marketable securities on September 30, 2010 totaled $83.2 million.
“Financial results this quarter continued to be negatively affected by the global economic slowdown. In the EMEA region, we were impacted by lower than expected PillCam sales particularly in Spain, Italy and Greece where our customers have reduced inventory levels. We anticipate this trend may continue during the fourth quarter. At the same time, we are encouraged by the fact that PillCam utilization in this region hasn’t changed and we expect sales in the region to rebound in 2011. Despite the difficult global macroeconomic environment, our revenues grew by 10% compared to the same period last year, our gross margin remained strong and our operating cash flow exceeded $11 million. We are also pleased with the notable improvement in gross margins of the Bravo and Sierra product lines. With a diversified business, strong balance sheet and constant innovation, we are well positioned to accelerate our growth when the economy improves,” said Homi Shamir, president and CEO.
Third Quarter 2010 Revenue Analysis
Revenues in the Americas region were $26.1 million, including revenues of $4.2 million from the Bravo pH Monitoring System and $3.6 million from sales of SSI. In the same period in 2009 revenues in the Americas region were $22.6 million, including revenues of $3.7 million from Bravo. Revenues in the EMEA region were $8.4 million including $1.6 million from SSI. In the same period in 2009, EMEA revenues were $9 million. APAC revenues were $4.1 million including SSI sales of $0.6 million in the third quarter of 2010 compared to $3.6 million in the same period in 2009.
Worldwide PillCam SB sales amounted to 52,600 capsules in the third quarter of 2010, compared to 54,800 in the same period last year. PillCam SB sales in the Americas region of 36,500 in the third quarter of 2010 were flat compared to the same period last year. PillCam SB sales in the EMEA region were 10,500 compared to 13,500 in the third quarter of 2009, while PillCam SB sales in the APAC region were 5,600 compared to 5,000 in the same period in 2009.
Supplemental third quarter data can be found at www.givenimaging.com in the Investor Relations section.
Nine Month Financial Results
For the nine month period ended September 30, 2010, revenues increased by 11 percent to $112.9 million compared to $101.7 million in the same period of 2009. Revenue for the first nine months of 2010 includes SSI revenues of $11.6 million. Sales in the Americas region in the first nine months of 2010 were $72.5 million compared to $65.7 million in the same period in 2009. Sales in the Americas region include $11.9 million from sales of Bravo, compared to $9.6 million in the first nine months of 2009. SSI sales in the Americas region were $7.1 million in the period. Sales in the EMEA region were $28.5 million and include $3.2 million in sales from SSI, compared to $27.1 million in the same period in 2009. Sales in the APAC region were $11.7 million compared to $9.0 million last year.
On a non-GAAP basis, gross profit margin for the nine month period was 77.3 percent compared to 76.6 percent in 2009. On a GAAP basis, gross profit margin in the first nine months of 2010 was 75.7 percent. On a non-GAAP basis net income for the first nine months of 2010 was $13.8 million, or $0.45 per share on a fully diluted basis, compared to $13.5 million, or $0.45 per share on a fully diluted basis for the same period in 2009. GAAP net income for the first nine months of 2010 was $5.3 million, or $0.17 per share on a fully diluted basis, compared to $9.0 million or $0.30 per share on a fully diluted basis in the same period last year.
2010 Guidance Update
Due to the unstable European economy, the fact that EMEA customers reduced PillCam inventory levels which may continue in the fourth quarter, and lower healthcare utilization in the US, the company is reducing its 2010 financial guidance. The Company now anticipates that 2010 revenues will be between $154 million and $157 million. GAAP earnings per share is expected to be between $0.18 - $0.23. Non-GAAP earnings per share (excluding charges relating to FAS123R and SSI acquisition expenses) is expected to be between $0.51 - $0.58.
Recent Developments
Given Imaging recently launched new products at the American College of Gastroenterology Annual Meeting 2010:
-- PillCam SB 2-EX A small bowel capsule which extends capsule operating time to a minimum of 12 hours for patients who are confirmed or believed to have slow motility -- PillCam Express A video capsule delivery device for patients who are unable to ingest the capsule or who have slow gastric emptying times
Conference Call / Webcast Information
U.S. Call / Webcast
The company will host a conference call in English at 9:00 am ET on Thursday, November 4, 2010. To participate in this teleconference, please dial 888-264-8893 fifteen minutes before the conference is scheduled to begin. Callers outside of the U.S. should dial 913-312-1482. 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 November 18 by dialing 888-203-1112. Callers outside of the U.S. should dial 719-457-0820. The replay participant code is 2594018.
Hebrew Call
A separate conference call in Hebrew will take place on November 4, 2010 at 1:00 pm Israel time, 7:00 am ET. To access this call, please dial +972 3 918 0610 ten minutes before the conference is scheduled to begin. A replay of the call will be available from November 7 until November 9 by dialing +972 3 925 5921.
About Given Imaging Ltd.
Since 2001, Given Imaging has advanced gastrointestinal visualization by developing innovative, patient-friendly tools based on its PillCam® Platform. PillCam® capsule endoscopy uses cutting-edge, wireless technology and advanced software to provide physicians with natural images of the small intestine via PillCam® SB, the esophagus through PillCam® ESO and the colon with PillCam® COLON [PillCam® COLON is not cleared for use in the USA]. The PillCam® capsules are miniature video cameras that patients ingest. Given Imaging’s other capsule products include Agile™ patency capsule, to verify intestinal patency, and Bravo®, the only wireless, catheter-free, 48-hour pH test commercially available for pH testing to assess gastroesophageal reflux disease (GERD). In April, 2010, Given Imaging acquired Sierra Scientific Instruments, the leading provider of specialty GI diagnostic solutions and pioneer of high-resolution manometry for assessing gastrointestinal motility. Sierra Scientific is now a wholly-owned subsidiary of Given Imaging. Given Imaging’s headquarters, manufacturing and R&D facilities are located in Yoqneam, Israel, with operating subsidiaries in the United States, Germany, France, Japan, Australia and Hong Kong. For more information, please visit www.givenimaging.com.
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 and (18) 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, 2009. 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 September 30, 2009 and 2010 (Unaudited, dollars in thousands) Research Selling General Tax Gross And And And Expense Profit Development Marketing Admin (Benefit) Total --------- --------- --------- --------- -------- -------- Three month period ended September 30, 2010 Compensation expenses $ - $ 148 $ 367 $ 1,550 $ - $ 2,065 Sierra PPA 236 (111) 82 - (82) 125 --------- --------- --------- --------- -------- -------- Total $ 236 $ 37 $ 449 $ 1,550 ($ 82) $ 2,190 ========= ========= ========= ========= ======== ======== Three month period ended September 30, 2009 Compensation expenses $ - $ 93 $ 511 $ 1,586 $ - $ 2,190 --------- --------- --------- --------- -------- -------- Total $ - $ 93 $ 511 $ 1,586 $ 0 $ 2,190 ========= ========= ========= ========= ======== ======== Given Imaging Ltd. and its Consolidated Subsidiaries Excluded Items For the Nine Months Ended September 30, 2009 and 2010 (Unaudited, dollars in thousands) Research Selling General Tax Gross And And And Expense Profit Development Marketing Admin (Benefit) Total --------- --------- --------- --------- -------- -------- Nine month period ended September 30, 2010 Compensation expenses $ - $ 304 $ 993 $ 5,173 $ - $ 6,470 Sierra acquisition expenses - - - 686 - 686 Sierra PPA 1,745 - 164 250 (761) 1,398 --------- --------- --------- --------- -------- -------- Total $ 1,745 $ 304 $ 1,157 $ 6,109 ($ 761) $ 8,554 ========= ========= ========= ========= ======== ======== Nine month period ended September 30, 2009 Compensation expenses $ - $ 286 $ 1,509 $ 4,083 $ - $ 5,878 Tax (benefit) - - - - (1,390) (1,390) --------- --------- --------- --------- -------- -------- Total $ 0 $ 286 $ 1,509 $ 4,083 ($ 1,390) $ 4,488 ========= ========= ========= ========= ======== ======== Given Imaging Ltd. and its Consolidated Subsidiaries Reconciliation of GAAP results to non-GAAP results For the Three months ended September 30, 2010 and 2009 Condensed, in thousands except share and per share data Q3 2010 Q3 2009 Specified Specified Items Non Items Non GAAP (*) GAAP GAAP (*) GAAP -------- -------- -------- -------- --------- -------- Revenues $ 38,658 - $ 38,658 $ 35,220 - $ 35,220 Cost of revenues (8,999) 236 (8,763) (7,827) - (7,827) Gross profit 29,659 236 29,895 27,393 27,393 Gross profit as a % of revenues 76.7% - 77.3% 77.8% 77.8% Operating expenses Research and development, net (5,635) 37 (5,598) (4,632) 93 (4,539) Sales and marketing (17,408) 449 (16,959) (14,758) 511 (14,247) General and administrative (6,046) 1,550 (4,496) (5,042) 1,586 (3,456) Other, net (142) - (142) (316) - (316) Total operating expenses (29,231) 2,036 (27,195) (24,748) 2,190 (22,558) Operating profit 428 2,272 2,700 2,645 2,190 4,835 Operating profit as a % of revenues 1.1% 7.0% 7.5% 13.7% Financing income, net 887 - 887 1,086 - 1,086 Profit before taxes on income 1,315 2,272 3,587 3,731 2,190 5,921 Income tax benefit (expense) (334) (82) (416) -6 0 (6) Net Profit 981 2,190 3,171 3,725 2,190 5,915 Net loss attributable to non-controlling interest 30 - 30 114 - 114 Net profit attributable to shareholders $ 1,011 $ 2,190 $ 3,201 $ 3,839 $ 2,190 $ 6,029 2.6% 8.3% 10.9% 17.1% Earnings per share Basic Earnings attributable to shareholders per Ordinary Share $ 0.03 $ 0.08 $ 0.108 $ 0.13 $ 0.07 $ 0.20 Diluted Earnings attributable to shareholders per Ordinary Share $ 0.03 $ 0.08 $ 0.11 $ 0.13 $ 0.07 $ 0.20 Given Imaging Ltd. and its Consolidated Subsidiaries Reconciliation of GAAP results to non-GAAP results For the nine months ended September 30, 2010 and 2009 Condensed, in thousands except share and per share data YTD 2010 YTD 2009 Specified Specified Items Non Items Non GAAP (*) GAAP GAAP (*) GAAP -------- -------- -------- -------- -------- -------- Revenues $112,889 - $112,889 $101,723 - $101,723 Cost of revenues (27,397) 1,745 (25,652) (23,766) - (23,766) Gross profit 85,492 1,745 $ 87,237 77,957 - 77,957 Gross profit as a % of revenues 75.7% 77.3% 76.6% 76.6% Operating expenses Research and development, net (14,575) 304 (14,271) (12,522) 286 (12,236) Sales and marketing (48,502) 1,157 (47,345) (45,257) 1,509 (43,748) General and administrative (18,136) 6,109 (12,027) (14,021) 4,083 (9,938) Other, net (376) - (376) (331) - (331) Total operating expenses (81,589) 7,570 (74,019) (72,131) 5,878 (66,253) Operating profit 3,903 9,315 13,218 5,826 5,878 11,704 Operating profit as a % of revenues 3.5% 11.7% 5.7% 11.5% Financing income, net 1,690 - 1,690 1,276 - 1,276 Profit before taxes on income 5,593 9,315 14,908 7,102 5,878 12,980 Income tax benefit (expense) (563) (761) (1,324) 1,160 (1,390) (230) Net Profit 5,030 8,554 13,584 8,262 4,488 12,750 Net loss attributable to non-controlling interest 245 - 245 704 - 704 Net profit attributable to shareholders $ 5,275 $ 8,554 $ 13,829 $ 8,966 $ 4,488 $ 13,454 Net profit attributable to shareholders as a % of revenues 4.7% 12.3% 8.8% 13.2% Earnings per share Basic Earnings attributable to shareholders per Ordinary Share $ 0.18 $ 0.29 $ 0.48 $ 0.31 $ 0.15 $ 0.46 Diluted Earnings attributable to shareholders per Ordinary Share $ 0.17 $ 0.28 $ 0.45 $ 0.30 $ 0.15 $ 0.45 Given Imaging Ltd. and its Consolidated Subsidiaries Interim Consolidated Balance Sheets In thousands except share data (Unaudited) September 30 December 31 ------------- ------------- 2010 2009 ------------- ------------- Assets Current assets Cash and cash equivalents $ 39,848 $ 46,458 Short-term investments 38,414 31,736 Accounts receivable: Trade 25,113 24,742 Other 3,276 3,799 Inventories 18,921 17,302 Prepaid expenses 2,323 1,036 Deferred tax assets 1,558 2,207 Advances to suppliers 385 534 ------------- ------------- Total current assets 129,838 127,814 ------------- ------------- Deposits 1,223 1,062 Assets held for employee severance payments 5,895 4,968 Marketable securities 4,925 16,956 Non-current inventory 5,899 6,015 Fixed assets, at cost, less accumulated depreciation 14,034 13,843 Deferred tax assets 192 192 Intangible assets, less accumulated amortization 26,319 11,284 Goodwill 24,109 3,586 ------------- ------------- Total Assets $ 212,434 $ 185,720 ============= ============= Given Imaging Ltd. and its Consolidated Subsidiaries Interim Consolidated Balance Sheets In thousands except share data (Unaudited) September 30 December 31 ------------ ------------ 2010 2009 ------------ ------------ Liabilities and equity Current liabilities Current installments of obligation under capital lease $ 171 $ 145 Accounts payable: Trade 8,704 6,789 Other 23,828 20,060 Deferred income 771 234 ------------ ------------ Total current liabilities 33,474 27,228 ------------ ------------ Long-term liabilities Obligation under capital lease, net 285 356 Liability in respect of employees’ severance payments 6,617 5,530 ------------ ------------ Deferred tax liabilities 4,486 - ------------ ------------ Total long-term liabilities 11,388 5,886 ------------ ------------ Total liabilities 44,862 33,114 ------------ ------------ Equity Shareholders’ equity Ordinary Shares, NIS 0.05 par value each (90,000,000 shares authorized; 29,784,327 and 29,370,972 shares issued and fully paid as of September 30, 2010 and December 31, 2009, respectively) 350 345 Additional paid-in capital 192,766 182,203 Capital reserve 2,051 2,166 Accumulated other comprehensive income 170 399 Accumulated deficit (27,910) (33,185) ------------ ------------ Shareholders’ equity 167,427 151,928 ------------ ------------ Non-controlling interest 145 678 ------------ ------------ Total Equity 167,572 152,606 ------------ ------------ Given Imaging Ltd. and its Consolidated Subsidiaries Interim Consolidated Statements of Operations In thousands except share and per share data (Unaudited) Nine-month Three-month period ended period ended September 30 September 30 Year ended ---------------------- ---------------------- December 31 2010 2009 2010 2009 2009 ---------- ---------- ---------- ---------- ---------- Revenues $ 112,889 $ 101,723 $ 38,658 $ 35,220 $ 141,763 Cost of revenues (27,397) (23,766) (8,999) (7,827) (33,145) ---------- ---------- ---------- ---------- ---------- Gross profit 85,492 77,957 29,659 27,393 108,618 ---------- ---------- ---------- ---------- ---------- Operating expenses Research and development, gross (15,643) (13,543) (6,196) (5,019) (17,842) Government grants 1,068 1,021 561 387 1,109 ---------- ---------- ---------- ---------- ---------- Research and development, net (14,575) (12,522) (5,635) (4,632) (16,733) Sales and marketing (48,502) (45,257) (17,408) (14,758) (61,428) General and administrative (18,136) (14,021) (6,046) (5,042) (18,919) Other, net (376) (331) (142) (316) (1,220) ---------- ---------- ---------- ---------- ---------- Total operating expenses (81,589) (72,131) (29,231) (24,748) (98,300) ---------- ---------- ---------- ---------- ---------- Operating income 3,903 5,826 428 2,645 10,318 Financing income, net 1,690 1,276 887 1,086 1,584 ---------- ---------- ---------- ---------- ---------- Income before taxes on income 5,593 7,102 1,315 3,731 11,902 Income tax benefit (expense) (563) 1,160 (334) (6) 1,542 ---------- ---------- ---------- ---------- ---------- Net income 5,030 8,262 981 3,725 13,444 Net loss attributable to non-controlling interest 245 704 30 114 891 ---------- ---------- ---------- ---------- ---------- Net income attributable to shareholders $ 5,275 $ 8,966 $ 1,011 $ 3,839 $ 14,335 ========== ========== ========== ========== ========== Earnings per share Basic Earnings attributable to shareholders per Ordinary Share $ 0.18 $ 0.31 $ 0.03 $ 0.13 $ 0.49 ========== ========== ========== ========== ========== Diluted Earnings attributable to shareholders per Ordinary Share $ 0.17 $ 0.30 $ 0.03 $ 0.13 $ 0.47 ========== ========== ========== ========== ========== Weighted average number of Ordinary Shares used to compute basic Earnings per Ordinary Share 29,623,700 29,264,952 29,768,548 29,278,785 29,281,897 ========== ========== ========== ========== ========== Weighted average number of Ordinary Shares used to compute diluted Earnings per Ordinary Share 30,566,498 30,108,597 30,346,875 30,648,420 30,423,162 ========== ========== ========== ========== ========== Given Imaging Ltd. and its Consolidated Subsidiaries Consolidated Statements of Cash Flows In thousands (Unaudited) Nine-month Three-month period ended period ended September 30 September 30 Year ended ------------------ ----------------- December 31 2010 2009 2010 2009 2009 -------- -------- -------- -------- -------- Cash flows from operating activities: Net income $ 5,030 $ 8,262 $ 981 $ 3,725 $ 13,444 Adjustments required to reconcile net income to net cash provided by operating activities: Depreciation and amortization 5,823 4,513 1,767 1,531 6,096 Goodwill impairment - - 483 Deferred tax assets 649 (334) 276 (517) (1,221) Deferred tax liabilities 4,486 - (82) - - Stock based compensation 6,470 5,878 2,065 2,190 7,268 Loss from disposal of fixed assets 468 331 176 316 714 Other 121 (231) 413 (80) (144) Net change in trading securities 108 (6,355) (215) (2,983) - Decrease (increase) in accounts receivable - trade 3,309 426 1,256 1,134 (3,069) Decrease (increase) in accounts receivable - other 527 1,569 1,511 (105) 863 Decrease (increase) in prepaid expenses (761) (329) (764) (711) 595 Decrease in advances to suppliers 149 2,963 348 262 3,006 Decrease (increase) in inventories 2,213 (5,546) (428) (2,858) (4,386) Increase (decrease) in accounts payable (1,683) 1,251 3,992 1,760 1,819 Increase (decrease) in deferred income 537 (1,304) (98) (386) (1,289) -------- -------- -------- -------- -------- Net cash provided by operating activities 22,960 11,094 11,198 3,278 24,179 -------- -------- -------- -------- -------- Cash flows from investing activities: Purchase of fixed assets and intangible assets (3,777) (3,619) (1,227) (1,171) (4,794) Deposits (41) 16 (14) 26 34 Acquisition of Sierra, net of cash acquired (1) (34,709) - - Proceeds from sales of marketable securities and short term investments 26,793 32,424 4,400 11,698 38,085 Investments in trading and marketable securities (21,777) (13,218) (13,991) (1,010) (27,410) -------- -------- -
