COLORADO SPRINGS, Colo., April 19 /PRNewswire-FirstCall/ -- Spectranetics Corporation today reported financial results for the three months ended March 31, 2007.
Revenue for the first quarter of 2007 reached $17.4 million, up 28% compared with revenue of $13.6 million for the first quarter of 2006. For the quarter, disposable product revenue rose 35% to $14.4 million, laser revenue declined 23% to $1.1 million, and service and other revenue increased 20% to $1.9 million, all compared with the first quarter of 2006. The increase in disposable product revenue for the quarter was driven primarily by a 52% increase in atherectomy product sales as compared with last year, and also included a 7% increase in lead removal revenue.
The worldwide installed base of lasers increased to 657 laser systems as of March 31, 2007 (515 in the United States), which includes net laser placements of 34 units in the first quarter of 2007, compared with 29 net placements in the comparable quarter last year.
Gross margin for the quarter was 73% of revenue, compared with 73% in the first quarter a year ago. Operating expenses in the quarter were $13.2 million, up 24% from the prior-year first quarter. The increase is primarily related to ongoing investment in an expanded field sales organization, physician training, product development and clinical research initiatives to further penetrate the large and growing market for treating peripheral arterial disease (PAD).
Pre-tax income in the first quarter of 2007 was $165,000, compared with a pre-tax loss of $619,000 in the first quarter of 2006. Pre-tax income includes stock-based compensation of $669,000 for the quarter ended March 31, 2007, as compared with $620,000 during the first quarter last year. Given the Company's significant historical net operating losses which are available to offset future taxable income, any income tax expense or benefit is a non-cash item. As a result, management believes that pre-tax income or loss is the most appropriate measure of its operating performance.
For the first quarter of 2007, Spectranetics reported a net loss of $65,000, or $0.00 per share, compared with a net loss of $638,000, or $0.02 per share, in the first quarter of 2006.
Cash, cash equivalents and current and non-current investment securities totaled $52.8 million as of March 31, 2007, compared with $56.5 million as of December 31, 2006.
"Spectranetics further expanded its role in treating PAD, as our atherectomy revenue again exceeded the overall growth in that market by a significant margin," said John G. Schulte, President and Chief Executive Officer. "Most importantly, we accelerated the progress of the TURBO Booster catheter when the FDA allowed us to end the CELLO trial early based on the strength of data on 61 patients, instead of continuing with the planned 85 patients. We have completed the patient follow-up study, and expect to file the 510(k) application within the next 30 days. The TURBO Booster will greatly increase our market opportunity, as approximately two-thirds of the endovascular procedures performed in the United States are for above-the-knee blockages."
2007 Financial Guidance
Spectranetics today affirmed its previous 2007 financial guidance as follows:
Revenue for 2007 is estimated to be within the range of $79 million to $83 million, representing 24% to 31% growth compared with 2006. Revenue guidance does not include any potential contribution from the TURBO Booster product, which is the subject of the CELLO clinical trial and is targeted at treatment of above-the-knee leg blockages.
The Company expects pre-tax income, including stock-based compensation expense, to be within the range of a $600,000 pre-tax loss to pre-tax income of $1.0 million. The Company believes that pre-tax income or loss is the most relevant measure of its operating performance given that income taxes are a non-cash expense due to historical net operating losses available to offset future taxable income. For that reason and the fact that significant fluctuations in the effective income tax rate are expected from quarter to quarter, the Company is not providing guidance on an effective income tax rate. The guidance assumes gross margin for the year in the low seventies. Stock-based compensation expense is estimated to be within the range of $3.5 million to $4.5 million during 2007.
This guidance takes into consideration the following key factors: * Laser placements are expected to be within the range of 100 to 120 net new laser placements in 2007. * Incremental costs of approximately $1.1 million related to the formation and development of a six-person dedicated sales force for lead-removal products. * Incremental increases in research, development and other technology costs of approximately $2.1 million, including development work for enhancements to the excimer laser system, and clinical trials focused on below-the-knee applications and in-stent restenosis. * The costs for relocation and consolidation of the Company's headquarters and manufacturing operations to an expanded facility in Colorado Springs, which are estimated to be in the range of $900,000 to $1.2 million in 2007, a portion of which relates to maintaining dual facilities during the twelve to fifteen month transition period.
In assessing the Company's financial guidance, Spectranetics' management considered many factors and assumptions including, but not limited to, current and projected sales trend data; status, timing and progression of the Company's product development projects; current and projected spending levels to support sales, marketing, development and administrative activities; and other risk factors discussed in Spectranetics' publicly filed documents.
Conference Call
Management will host an investment-community conference call today beginning at 9:00 a.m. Mountain time, 11:00 a.m. Eastern time, to discuss these results. Individuals interested in listening to the conference call can dial (888) 803-8271 for domestic callers, or (706) 634-2467 for international callers. The live conference call will also be available via the Internet on the investor relations section of www.spectranetics.com.
A telephone replay will be available for 48 hours following the conclusion of the call by dialing (800) 642-1687 for domestic callers, or (706) 645-9291 for international callers and entering reservation code 5399037. The web site replay will be available for 14 days following the completion of the call.
About Spectranetics
Founded in 1984, Spectranetics manufactures and sells the only excimer laser approved in the United States, Europe and Japan for use in multiple, minimally invasive cardiovascular procedures. This technology treats complex cardiovascular conditions by photo-ablating multiple lesion types into tiny particles that are easily absorbed into the blood stream. The Company's disposable catheters use high-energy "cool" ultraviolet light to vaporize arterial blockages in the legs and heart, as well as scar tissue encapsulating pacing and defibrillation leads. For more information visit www.spectranetics.com.
Spectranetics, CVX-300 and CLiRpath are registered trademarks of The Spectranetics Corporation.
Safe Harbor Statement
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements are based on current assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties may include market acceptance of excimer laser atherectomy technology, increasing price and product competition, increased pressure on expense levels resulting from expanded sales, marketing, product development and clinical activities, uncertain success of the Company's strategic direction, dependence on new product development, intellectual property claims of third parties, availability of inventory from suppliers, the receipt of FDA approval to market new products or applications and the timeliness of any approvals, market acceptance of new products or applications, product defects, ability to manufacture sufficient volumes to fulfill customer demand, availability of vendor-sourced components at reasonable prices, unexpected delays or costs associated with the Company's relocation and consolidation of its headquarters and manufacturing operations, and price volatility due to the initiation or cessation of coverage, or changes in ratings, by securities analysts. For a further list and description of such risks and uncertainties that could cause the actual results, performance or achievements of the Company to be materially different from any anticipated results, performance or achievements, please see the Company's previously filed SEC reports. Spectranetics disclaims any intention or obligation to update or revise any financial projections or forward-looking statements, whether as a result of new information, future events or otherwise.
COMPANY CONTACT: Spectranetics Corporation John Schulte, Chief Executive Officer Guy Childs, Chief Financial Officer (719) 633-8333 INVESTOR & MEDIA CONTACTS: Lippert/Heilshorn & Associates, Inc. Don Markley or Bruce Voss (310) 691-7100 dmarkley@lhai.com - Financial tables follow - THE SPECTRANETICS CORPORATION Condensed Consolidated Statements of Operations (000's, except per share data and percentages) (Unaudited) Three Months Ended March 31, 2007 2006 Revenue $17,365 $13,617 Cost of revenue 4,635 3,647 Gross margin 12,730 9,970 Gross margin % 73% 73% Operating expenses: Selling, general and administrative 10,634 (1) 8,879 (1) Research, development and other technology 2,608 (2) 1,834 (2) Total operating expenses 13,242 10,713 Operating loss (512) (743) Other income, net 677 124 Income (loss) before taxes 165 (619) Income tax expense (230) (19) Net loss $(65) $(638) Loss per common and common equivalent share - basic and diluted $(0.00) $(0.02) Weighted average shares outstanding Basic 31,009 26,360 Diluted 31,009 26,360 (1) Includes stock based compensation (SBC) of $584 thousand and $527 thousand for the three months ended March 31, 2007 and 2006, respectively. (2) Includes SBC of $85 thousand and $93 thousand for the three months ended March 31, 2007 and 2006, respectively. THE SPECTRANETICS CORPORATION Condensed Consolidated Balance Sheets (000's) (Unaudited) March 31, December 31, 2007 2006 Assets Current assets Cash, cash equivalents and investment securities $29,869 $48,014 Accounts receivable 11,229 11,185 Inventories 5,807 5,067 Deferred tax asset 49 49 Other current assets 1,138 1,440 Total current assets 48,092 65,755 Property, plant and equipment, net 18,111 16,176 Investment securities, non-current 22,964 8,453 Deferred tax asset, non-current 479 709 Other assets 536 401 Total assets $90,182 $91,494 Liabilities and stockholders' equity Current liabilities 10,074 13,203 Non-current liabilities -- 3 Stockholders' equity 80,108 78,288 Total liabilities and stockholders' equity $90,182 $91,494 THE SPECTRANETICS CORPORATION Supplemental Financial Information (Unaudited) Financial Summary: 2006 2007 1st 2nd 3rd 4th 1st Qtr Qtr Qtr Qtr Qtr (000's, except per share amounts) Laser Revenue: Equipment sales $820 $804 $1,076 $819 $402 Rental fees 560 603 636 558 661 Total laser revenue 1,380 1,407 1,712 1,377 1,063 Disposable Products Revenue: Fiber-optic atherectomy revenue 5,081 6,934 6,450 7,405 7,654 Support catheter revenue 1,573 1,840 1,895 2,230 2,470 Total atherectomy revenue 6,654 8,774 8,345 9,635 10,124 Fiber-optic lead removal revenue 2,759 2,693 3,064 3,209 2,952 Other devices and accessories revenue 1,255 1,385 1,312 1,558 1,350 Total lead removal revenue 4,014 4,078 4,376 4,767 4,302 Service and other revenue 1,569 1,738 1,761 1,903 1,876 Total revenue 13,617 15,997 16,194 17,682 17,365 Net income (loss) (638)* 308* (165)* (952)* (65)* Net income (loss) per share Basic (0.02) 0.01 (0.01) (0.03) (0.00) Diluted (0.02) 0.01 (0.01) (0.03) (0.00) Cash flow generated by (used in) operating activities (5,501) (924) (445) 197 (3,799) Total cash and investment securities -- current and non-current 11,183 58,211 57,296 56,467 52,833 Laser sales summary: Laser sales from inventory 2 1 4 7 3 Laser sales from evaluation/rental units 4 5 4 0 0 Total laser sales 6 6 8 7 3 * Includes stock-based compensation of $620, $607, $748, $688 and $669, respectively. Worldwide Installed Base Summary: Laser sales from inventory 2 1 4 7 3 Rental placements 22 25 33 30 32 Evaluation placements 8 3 3 5 5 Laser placements during quarter 32 29 40 42 40 Buy-backs/returns during quarter (3) (4) (3) (4) (6) Net laser placements during quarter 29 25 37 38 34 Total lasers placed at end of quarter 523 548 585 623 657
Spectranetics CorporationCONTACT: John Schulte, Chief Executive Officer, or Guy Childs, ChiefFinancial Officer, both of +1-719-633-8333, both of SpectraneticsCorporation; or Don Markley, dmarkley@lhai.com, or Bruce Voss, both ofLippert/Heilshorn & Associates, Inc., +1-310-691-7100, for SpectraneticsCorporation
Web site: http://www.spectranetics.com/
