COLORADO SPRINGS, Colo., Feb. 22 /PRNewswire-FirstCall/ -- Spectranetics Corporation today reported financial results for the quarter and year ended December 31, 2006.
Revenue for the fourth quarter of 2006 was a record $17.7 million, up 44% compared with revenue of $12.3 million for the fourth quarter of 2005. For the quarter, disposable product revenue rose 56% to $14.4 million, laser revenue declined 14% to $1.4 million, and service and other revenue increased 31% to $1.9 million, all compared with the fourth quarter of 2005. The increase in disposable product revenue for the quarter was driven primarily by a 67% increase in atherectomy product sales as compared with last year, as well as a 38% increase in lead removal revenue.
The worldwide installed base of lasers increased to 623 laser systems as of December 31, 2006 (488 in the United States), which includes record net laser placements of 38 units in the fourth quarter of 2006, compared with 30 net placements in the comparable quarter last year.
Gross margin for the quarter was 73%, compared with 75% in the fourth quarter a year ago. The decline from the prior year is primarily a result of costs associated with increased manufacturing staffing and related costs to increase production volumes, primarily in the area of disposable products.
For the fourth quarter of 2006, Spectranetics reported a pre-tax loss of $1.2 million, compared with pre-tax income of $518,000 in the fourth quarter of 2005. Pre-tax loss during the fourth quarter of 2006, includes $690,000 for an unfavorable verdict in an intellectual property dispute, legal fees of approximately $500,000 for litigation related to the dispute and non-cash stock-based compensation expense of $688,000. 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; therefore, management believes that pre-tax income or loss is the most appropriate measure of its operating performance.
"Throughout 2006, Spectranetics strengthened its competitive position and expanded its market opportunity," said John G. Schulte, President and Chief Executive Officer. "Key accomplishments during the year include:
* upgrading our CLiRpath(R) products with the introduction of the TURBO and TURBO elite(TM) product lines, * placing a record 129 new lasers worldwide compared with 77 in 2005, * expanding to a 78-person sales force and improving sales management and training, * holding 14 Master Summits in which we trained approximately 400 physicians, * initiating the pivotal CELLO trial for the TURBO Booster(TM), and * securing $47.8 million in financing through a successful secondary offering.
"The fourth quarter's excellent top-line results and record new laser placements reflect continued success in the achievement of our financial objectives, as we drive greater awareness and acceptance of the advantages of laser technology in treating peripheral artery disease."
Full-Year Financial Results
Revenue for 2006 increased 47% to $63.5 million, from $43.2 million in 2005. Disposable product revenue for 2006 rose 53% to $50.6 million, laser revenue was up 25% to $5.9 million, and service and other revenue increased 27% to $7.0 million, all compared with 2005.
Gross margin for 2006 was 73%, compared with 76% in 2005, with the decline primarily due to costs associated with increased manufacturing staffing and related costs to increase production volumes, primarily in the area of disposable products.
For the year ended December 31, 2006, Spectranetics reported a pre-tax loss of $1.3 million, compared with pre-tax income of $1.9 million during the prior year. Pre-tax loss during the year ended December 31 2006, includes $690,000 for an unfavorable verdict in an intellectual property dispute, legal fees of approximately $500,000 for litigation related to the dispute and non-cash stock-based compensation expense of $2.7 million. Given the Company's significant historical net operating losses, any income tax expense or benefit is a non-cash item; therefore, management believes that pre-tax income or loss is the most appropriate measure of its operating performance.
Cash, cash equivalents and current and non-current investment securities totaled $56.5 million at December 31, 2006, compared with $16.9 million at December 31, 2005 and $57.3 million at September 30, 2006.
2007 Financial Guidance
Spectranetics today introduced 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, with a loss expected through at least the first half of the year. 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 net operating losses available to offset future taxable income. For that reason and the fact that the 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 6-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 11:00 a.m. Mountain time, 1:00 p.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 8911119. The web site replay will be available for 14 days following the completion of the call.
About Spectranetics
Spectranetics is a medical device company that develops, manufactures and markets single-use medical devices used in minimally invasive surgical procedures within the cardiovascular system in conjunction with its proprietary excimer laser system. Its CVX-300(R) excimer laser is the only system approved by the FDA for multiple cardiovascular procedures, including coronary atherectomy, and the removal of problematic pacemaker and defibrillator leads. Nearly all of our FDA-approved and investigational applications have received Communautes Europeennes (CE) mark registration for marketing within Europe. In April 2004, the Company obtained 510(k) clearance from the FDA for the laser-based treatment of patients suffering from total occlusions (blockages) in their leg arteries that are not crossable with a guidewire.
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, 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 Unaudited Condensed Consolidated Statements of Operations (000's, except per share data and percentages) Three Months Ended Year Ended December 31, December 31, 2006 2005 2006 2005 Revenue $17,682 $12,284 $63,490 $43,212 Cost of revenue 4,837 3,065 16,955 10,523 Gross margin 12,845 9,219 46,535 32,689 Gross margin % 73% 75% 73% 76% Operating expenses: Selling, general and administrative 11,256 6,755 39,824 24,149 Research, development and other technology 3,494 1,693 9,910 6,661 Total operating expenses 14,750 8,448 49,734 30,810 Operating income (loss) (1,905) 771 (3,199) 1,879 Interest expense related to litigation settlement -- -- (387) -- (387) Other income, net 694 134 1,917 424 Income (loss) before taxes (1,211) 518 (1,282) 1,916 Income tax (expense) benefit 259 (303) (165) (878) Net income (loss) $(952) $215 $(1,447) $1,038 Earnings (loss) per common and common equivalent share - basic -- $(0.03) $0.01 $(0.05) $0.04 Earnings (loss) per common and common equivalent share - diluted -- $(0.03) $0.01 $(0.05) $0.04 Weighted average shares outstanding Basic 30,831 26,202 29,130 25,940 Diluted 30,831 29,277 29,130 28,568 THE SPECTRANETICS CORPORATION Condensed Consolidated Balance Sheets (000's) (Unaudited) December 31, December 31, 2006 2005 Assets Current assets Cash, cash equivalents and investment securities $48,014 $14,937 Accounts receivable 11,185 8,141 Inventories 5,067 2,967 Deferred tax asset 49 65 Other current assets 1,440 663 Total current assets 65,755 26,773 Property, plant and equipment, net 16,176 8,801 Investment securities, non-current 8,453 1,976 Deferred tax asset, non-current 709 782 Other assets 401 443 Total assets $91,494 $38,775 Liabilities and stockholders' equity Current liabilities 13,203 11,560 Non-current liabilities 3 31 Stockholders' equity 78,288 27,184 Total liabilities and stockholders' equity $91,494 $38,775 THE SPECTRANETICS CORPORATION Supplemental Financial Information (Unaudited) Financial Summary: 2005 2006 4th Qtr 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr (000's, except per share amounts) Laser Revenue: Equipment sales $972 $820 $804 $1,076 $819 Rental fees 629 560 603 636 558 Total laser revenue 1,601 1,380 1,407 1,712 1,377 Disposable Products Revenue: Fiber-optic atherectomy revenue 4,809 5,081 6,934 6,450 7,405 Support catheter revenue 955 1,573 1,840 1,895 2,230 Total atherectomy revenue 5,764 6,654 8,774 8,345 9,635 Fiber-optic lead removal revenue 2,438 2,759 2,693 3,064 3,209 Other devices and accessories revenue 1,028 1,255 1,385 1,312 1,558 Total lead removal revenue 3,466 4,014 4,078 4,376 4,767 Service and other revenue 1,453 1,569 1,738 1,761 1,903 Total revenue 12,284 13,617 15,997 16,194 17,682 Pre-tax income (loss) 518 (619)* 516* 32* (1,211)* Cash flow generated by (used in) operating activities 330 (5,501) (924) (445) 197 Total cash and investment securities - current and non-current 16,913 11,183 58,211 57,296 56,467 Laser sales summary: Laser sales from inventory 2 2 1 4 7 Laser sales from evaluation/ rental units 6 4 5 4 0 Total laser sales 8 6 6 8 7 * Includes stock-based compensation of $620, $607, $748 and $688, respectively. Worldwide Installed Base Summary: Laser sales from inventory 2 2 1 4 7 Rental placements 26 22 25 33 30 Evaluation placements 8 8 3 3 5 Laser placements during quarter 36 32 29 40 42 Buy-backs/returns during quarter (6) (3) (4) (3) (4) Net laser placements during quarter 30 29 25 37 38 Total lasers placed at end of quarter 494 523 548 585 623
Spectranetics CorporationCONTACT: John Schulte, Chief Executive Officer, or Guy Childs, ChiefFinancial Officer, +1-719-633-8333, both of Spectranetics Corporation; orInvestors & Media, 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/
