YOQNEAM, Israel, Nov. 7 /PRNewswire-FirstCall/ -- Given Imaging Ltd. today announced third quarter and nine month results for the period ended September 30, 2005.
Worldwide sales of the Given(R) Diagnostic System and Given(R) PillCam video capsules reached $19.8 million in the third quarter of 2005, a 36% increase over sales of $14.6 million in the third quarter of 2004. Operating income in the third quarter of 2005 was $1.2 million, compared to an operating loss of $256,000 in the same period in 2004. Gross profit in the third quarter of 2005 reached a record 76.7% of revenues, compared to 75.1% in the third quarter of 2004. The company recorded a net profit for the quarter of $1.94 million, or $0.07 per share on a diluted basis, compared to a net profit of $114,000 in the third quarter of 2004. Cash and marketable securities at the end of the third quarter of 2005 totaled $80.9 million.
“We are pleased with the third quarter performance and our ability, despite the typical summer seasonality, to grow our U.S PillCam SB sales by 46% from the third quarter of 2004 and achieve record gross profit” said Gavriel D. Meron, president and CEO of Given Imaging.
For the nine month period ended September 30, 2005, sales were $62.3 million reflecting a 45.6% increase over sales of $42.8 million in the same period in 2004. Gross profit for the nine month period was 74.2% compared to 73.9% in the first nine months of 2004. Operating income in the first nine months of 2005 was $1.86 million, compared to an operating loss of $300,000 in the same period in 2004. Net income for the first nine months of 2005 was $2.82 million or $0.095 per share on a diluted basis compared to net income of $450,000, or $0.015 per share, on a diluted basis in the same period of 2004. The net profit for the nine month period included a special provision recorded in the second quarter, net of tax benefits, of $1.2 million for certain taxes related to our U.S. subsidiary and an adjustment of $600,000 in the valuation allowance for U.S. income tax benefits available in future periods. Excluding the aforementioned provisions, net income was $4.55 million or $0.15 per share on a diluted basis.
Third Quarter 2005 Revenue Analysis The geographic breakdown of third quarter 2005 sales is as follows: (Millions of U.S. dollars) United States $14.5 Europe and ROW $ 5.3
During the quarter, the number of PillCam SB capsules sold and reordered reached record levels. Reorders of PillCam SB grew to 31,453, up 48.9% from the third quarter of 2004, and total PillCam SB capsules sold in the quarter grew to 32,767, 46.2% higher than the third quarter of 2004. Sales of Given(R) Diagnostic Systems totaled 153 for the third quarter of 2005, compared to 129 systems in the third quarter of 2004. The increase resulted primarily from increased system sales in the United States, where system sales in this quarter totaled 114, up 34.1% from 85 systems sold in the United States in the third quarter of 2004. PillCam ESO reorders were still insignificant during the quarter as the efforts to gain reimbursement coverage are ongoing, but still have not achieved the expected results. However, it is noteworthy that numerous payers are covering the ESO procedure on a case-by-case basis.
Supplemental third quarter data can be found at http://www.givenimaging.com in the Investor section.
Third Quarter and Recent Highlights New Products Update -- Given launched its RAPID 4 software at the World Congress of Gastroenterology (WCOG) and other meetings. RAPID 4 offers new physician-friendly features and powerful tools which make it easier to read and interpret the images captured from the PillCam SB and PillCam ESO video capsules. RAPID 4 is pending clearance from the U.S. Food and Drug Administration (FDA). -- Given announced that it is finalizing the development of a third generation PillCam SB that will double the frame rate from two to four images per second and will offer enhanced viewing capacity, while at the same time increasing the capsule’s operational capture time from eight to nine hours. The new capsule will incorporate new optical and image sensor technology to provide superior image quality. The new PillCam SB is expected to be commercially available in 2006. Medical Conference Participation
During the third quarter, Given Imaging participated in four important gastroenterology meetings. New clinical data was presented in numerous papers supporting use of PillCam in both new and existing indications, as highlighted below.
The World Congress of Gastroenterology (WCOG)
Thirteen scientific abstracts were presented on capsule endoscopy in Montreal, Canada on September 10-14. Two important studies were presented concluding that PillCam SB capsule endoscopy should be used for diagnosing the cause of unexplained iron deficiency anemia (IDA) to obtain a definitive diagnosis. In addition, Given Imaging sponsored a clinical symposium attended by more than 200 physicians, at which lectures on use of PillCam for detection of small bowel tumors, celiac disease and esophageal disorders were presented.
Australian Gastroenterology Week (AGW) October 19-22
Attended by more than 1,400 delegates from Australia and New Zealand, AGW 2005 featured more than 8 oral presentations and 11 posters on PillCam SB capsule endoscopy.
United European Gastroenterology Week (UEGW)
Sixteen oral and poster presentations on PillCam endoscopy were presented at UEGW in Copenhagen, Denmark, October 15-19. Highlights included one study recommending use of the PillCam SB video capsule as a first line diagnostic tool in patients with suspected small bowel Crohn’s Disease (CD) and additional clinical studies that showed PillCam SB’s value in improving clinical and therapeutic outcomes.
American College of Gastroenterology (ACG)
Attended by more than 3,800 physicians, more than 30 abstracts using PillCam capsule endoscopy were presented at the ACG annual meeting which took place in Hawaii from October 31 to November 2. Included were three independent PillCam SB studies of more than 670 patients which showed that capsule endoscopy not only identifies small bowel tumors and previously undetected Crohn’s disease, but also leads to meaningful changes in patient management.
Capsuleendoscopy.org
This educational web portal dedicated to capsule endoscopy, now has 1,750 members from more than 70 countries who have enrolled at the site.
CMS Coding for PillCam ESO
The Centers for Medicare and Medicaid Services (CMS) determined that hospital coding for PillCam ESO is described by the American Medical Association’s (AMA) common procedural terminology (CPT) code 91110, along with modifier 52. For Medicare patients, hospitals can now report PillCam ESO procedures using CPT 91110-52, giving them a uniform mechanism for reporting Medicare claims for the PillCam ESO. For physicians, the AMA issued coding guidance when reporting claims for PillCam ESO. Physicians are instructed to use CPT 91299; miscellaneous diagnostic gastroenterology procedure unless otherwise directed by the payer. Since the 52 modifier will only allow 50% of the fee to be paid as of January 1st 2006, a request to the AMA for a dedicated CPT code, supported by the ASGE and the AGA, has been submitted on November 7, and a decision is expected by CMS at the end of 2006, to be implemented as of January 1, 2007.
Inscope $10 million Milestone Achieved
At the end of the third quarter Given Imaging achieved a $10 million milestone payment from Ethicon Endo-Surgery following the sale of the 500th workstation since the FDA approved PillCam ESO in November 2004. The milestone (included in other receivables and deferred income) will be recorded on a straight line basis over the 15 year life of the agreement as a reduction in marketing expenses.
2005 Guidance Reiteration Given Imaging reiterates full year 2005 guidance as follows: Full Year Q4 Revenues ($ million) $84.0 - $90.0 $21.7 - $26.7 Earnings per share (on a diluted basis) $0.15 - $0.26 $0.07 - $0.18 Third Quarter Webcast Information
Given Imaging will host a conference call tomorrow, Tuesday, November 8, 2005, at 9:00 am Eastern Time to discuss third quarter 2005 results. To participate in the teleconference, please dial 800-289-0494 fifteen minutes before the conference begins. International callers should dial 913-981-5520. The call will also be webcast live at www.givenimaging.com. A replay of the call will be available for thirty days on the company’s website or until November 15, 2005 by dialing 888-203-1112. International callers should dial 719-457-0820. The replay participant code is 2567774.
About Given Imaging
Given Imaging is redefining gastrointestinal diagnosis by developing, producing and marketing innovative, patient-friendly products for detecting gastrointestinal disorders. The company is developing a complete line of PillCam(TM) video capsules for detecting disorders of the gastrointestinal tract. The company’s technology platform is the Given(R) Diagnostic System, featuring the PillCam video capsule, a disposable, miniature video camera contained in a capsule, which is ingested by the patient. The PillCam(TM) SB capsule is the only naturally ingested method for direct visualization of the entire small intestine. It is currently marketed in the United States and in more than 50 other countries and has benefited more than 260,000 patients worldwide. The PillCam(TM) ESO video capsule, which provides visual examination of the esophagus, has been cleared for marketing by the FDA. Additional capsules for visualization of the stomach and colon are under development. Given Imaging’s headquarters, manufacturing and R&D facilities are located in Yoqneam, Israel; it has direct sales and marketing operations in the United States, Germany and France, and local offices in Japan, Spain and Australia. For more information, visit http://www.givenimaging.com.
This press release contains forward-looking statements about Given Imaging, including projections about our business and our future revenues, expenses and profitability, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. For example, statements in the future tense, words such as “anticipates,” “estimates,” “expects,” “intends,” “plans,” “believes,” and words and terms of similar substance used in connection with any discussion of future operating or financial performance identify such forward-looking statements. Those forward-looking statements are not guarantees of future performance and actual results could differ materially from our current expectations as a result of numerous factors, including but not limited to the following: changes in regulatory environment, our success in implementing our sales, marketing and manufacturing plan, protection and validity of patents and other intellectual property rights, the impact of currency exchange rates, the effect of competition by other companies, the outcome of future litigation, the reimbursement policies for our product from healthcare payors, quarterly variations in operating results, the impact of the newly adopted SFAS 123R for expensing option-based payments, the possibility of armed conflict or civil or military unrest in Israel and other risks disclosed in our filings with the U.S. Securities and Exchange Commission.
Given Imaging Ltd. and its Consolidated Subsidiaries Consolidated Balance Sheets In thousands except share data September 30, December 31, 2005 2004 Assets Current assets Cash and cash equivalents $58,900 $80,861 Accounts receivable: Trade (Net of provisions for doubtful debts of $411 and $115 as of September 30, 2005 and December 31, 2004, respectively) 14,436 12,261 Other 11,640 1,271 Inventories 15,961 13,794 Prepaid expenses 1,747 954 Deferred taxes 849 737 Advances to suppliers 511 555 Total current assets 104,044 110,433 Deposits 425 425 Marketable securities 21,628 - Assets held for severance benefits 1,569 1,339 Fixed assets, at cost, less accumulated depreciation 13,933 9,862 Other assets, at cost, less accumulated amortization 2,246 2,165 Total assets $143,845 $124,224 Liabilities and shareholders’ equity Current liabilities Current installments of obligation under capital lease $11 $ 11 Accounts payable: Trade 3,987 5,147 Other 13,822 8,678 Deferred revenue 2,429 3,610 Total current liabilities 20,249 17,446 Long-term liabilities Deferred income 22,938 9,340 Obligation under capital lease, net 38 48 Liability for employee severance benefits 1,912 1,596 Total long-term liabilities 24,888 10,984 Total liabilities 45,137 28,430 Minority interest 374 1,177 Shareholders’ equity 98,334 94,617 Total liabilities and shareholders’ equity $143,845 $124,224 Given Imaging Ltd. and its Consolidated Subsidiaries Consolidated Statements of Operations In thousands except share and per share data Nine-month period Three-month period ended ended Year ended September 30, September 30, December 31, 2005 2004 2005 2004 2004 (Unaudited)(Unaudited) (Unaudited) (Unaudited) (Audited) Revenues $62,376 $42,807 $19,841 $14,594 $65,020 Cost of revenues (16,070) (11,154) (4,618) (3,636) (17,734) Gross profit 46,306 31,653 15,223 10,958 47,286 Operating expenses Research and development, gross (6,079) (5,456) (2,061) (2,119) (7,363) Royalty bearing participation 872 702 374 288 1,140 Research and development, net (5,207) (4,754) (1,687) (1,831) (6,223) Sales and marketing expenses (32,227) (22,588) (9,778) (7,705) (33,652) General and administrative expenses (7,013) (4,644) (2,539) (1,678) (6,916) Total operating expenses (44,447) (31,986) (14,004) (11,214) (46,791) Operating profit (loss) 1,859 (333) 1,219 (256) 495 Financing income, net 155 102 519 165 956 Profit (loss) before taxes on income 2,014 (231) 1,738 (91) 1,451 Taxes on income 5 - (53) - 690 Profit (loss) before minority share 2,019 (231) 1,685 (91) 2,141 Minority share in losses of subsidiary 803 681 253 205 747 Net profit $2,822 $ 450 $1,938 $114 $2,888 Basic profit per Ordinary Share $0.102 $0.017 $0.070 $0.004 $0.110 Diluted profit per Ordinary Share $0.095 $0.015 $0.065 $0.004 $0.100 Weighted average number of Ordinary Shares outstanding used in basic profit per Ordinary Share calculation 27,736,989 26,332,954 27,829,442 27,404,098 26,633,964 Weighted average number of Ordinary Shares outstanding used in diluted profit per Ordinary Share calculation 29,731,618 29,091,795 29,568,874 30,139,467 29,353,448
Given Imaging Ltd.
CONTACT: Yuval Yanai, Given Imaging Ltd.; or Fern Lazarflazar@lazarpartners.com or David Carey dcarey@lazarpartners.com,+1-866-GIVEN-IR, both of Lazar Partners Ltd.
Web site: http://www.givenimaging.com/
