COLORADO SPRINGS, Colo., July 27 /PRNewswire-FirstCall/ -- Spectranetics Corporation today reported financial results for the three and six months ended June 30, 2006.
Revenue for the second quarter of 2006 was a record $16.0 million, up 50% compared with revenue of $10.6 million for the second quarter of 2005. Revenue growth was driven primarily by strength in Spectranetics’ atherectomy product sales, which increased 77% compared with the prior year. For the quarter, disposable product revenue rose 54% to $12.9 million, laser revenue rose 28% to $1.4 million, and service and other revenue rose 43% to $1.7 million, all compared with the second quarter of 2005.
The worldwide installed base of lasers increased to 548 laser systems as of June 30, 2006 (424 in the United States), which includes net laser placements of 25 units in the second quarter of 2006 compared with 17 net placements in the comparable quarter last year.
Gross margin for the quarter was 76%, compared with gross margin of 75% in the second quarter a year ago. Operating expenses in the quarter were $11.7 million, up 58% compared with the prior year. The increase is primarily related to ongoing investment in an expanded field sales organization, physician training, clinical research and product development initiatives to further penetrate the large and growing market for treating peripheral arterial disease (PAD). Operating expenses in the second quarter of 2006 also include stock compensation expense of $607,000, pursuant to the adoption of Statement of Financial Accounting Standards 123(R), which the Company adopted as of January 1, 2006.
For the second quarter of 2006, the Company reported net income of $521,000, or $0.02 per diluted share, compared with net income of $242,000, or $0.01 per diluted share, in the second quarter of 2005. Pre-tax income in the second quarter of 2006, including stock compensation expense of $607,000, was $862,000, compared with pre-tax income of $643,000 in the second quarter of 2005.
“Our focus during the first half of 2006 has been on accelerating revenue growth through investment in new products and clinical trials, and by expanding physician training programs and the size of our field sales force,” said John G. Schulte, President and Chief Executive Officer. “Our outstanding results in the second quarter demonstrate the success of these strategic initiatives, as well as growth in the PAD market. We are pleased to report continued strength in new laser placements, as well as increased utilization by our physician base. Our field sales organization has grown to 72 employees, and we are building towards an 80 to 90 person field sales organization by year-end. The demand for our products remains strong, and we will continue to make investments to enhance our competitive position throughout 2006.”
Year-to-Date Financial Results
Revenue for the first half of 2006 rose 50% to $29.6 million, from $19.7 million for the first half of 2005. Year-to-date 2006 disposable product revenue was $23.5 million, up 55% compared with disposable product revenue of $15.1 million in the first half of 2005, and equipment revenue was up 48% to $2.8 million from $1.9 million in the first half of 2005. Service and other revenue for the first six months of 2006 was $3.3 million, up 23% compared with service and other revenue of $2.7 million for the comparable period in 2005.
Gross margin for the first half of 2006 was 75%, compared with 76% in the first half of 2005, with the decline primarily due to an increase in staffing, production equipment and related costs incurred to increase production capacity.
Net loss for the first half of 2006 was ($117,000), or $0.00 per diluted share, compared with net income of $317,000, or $0.01 per diluted share, in the first half of 2005. Pre-tax income for the first half of 2006, including stock compensation expense of $1,227,000, was $243,000 compared with pre-tax income of $775,000 in the first half of 2005.
Cash, cash equivalents and current and non-current investment securities totaled $58.2 million as of June 30, 2006, compared with $11.2 million as of March 31, 2006. The increase is primarily due to the completion of a common stock offering in May 2006 with net proceeds to the Company of approximately $47.9 million.
2006 Financial Guidance
Spectranetics today raised its previous 2006 financial guidance as follows:
Revenue is estimated to be within the range of $61 million to $64 million, representing 41% to 48% growth over 2005 revenue, and an increase from previous guidance of $55 to $58 million; this guidance takes into consideration the following key factors:
1. Laser placements, which are expected to be within the range of 95 to 105 net new laser placements in 2006, compared with previous guidance of 80 to 100 net new laser placements. 2. Continued expansion of the field sales organization; Spectranetics expects the total number of field sales employees to be in the range of 80 to 90 by the end of 2006, compared with previous guidance of 75 to 80. 3. Continued increases in product development and clinical study costs, particularly with the initiation of enrollment in the CELLO trial.
The Company expects net income, including stock-based compensation, to be within the range of a $2.0 million net loss to break-even, and assumes gross margins in the mid-seventies. Stock-based compensation is estimated to be within the range of $2.5 million to $3.0 million during 2006. Previous net income guidance was a net loss of $2.5 million to $5.5 million, including stock-based compensation of $2.5 to $3.5 million.
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 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 2958507. 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 Condensed Consolidated Statements of Operations (000’s, except per share data and percentages) (unaudited) Three Months Ended Six Months Ended June 30, June 30, 2006 2005 2006 2005 Revenue $15,997 $10,645 $29,614 $19,698 Cost of revenue 3,862 2,639 7,509 4,815 Gross margin 12,135 8,006 22,105 14,883 Gross margin % 76% 75% 75% 76% Operating expenses: Selling, general and administrative 9,584(1) 5,882 18,463(1) 11,266 Research, development and other technology 2,137(2) 1,553 3,971(2) 3,018 Total operating expenses 11,721 7,435 22,434 14,284 Operating income 414 571 (329) 599 Other income, net 448 72 572 176 Income before taxes 862 643 243 775 Income tax expense (341) (401) (360) (458) Net income (loss) $521 $242 $(117) $317 Earnings (loss) per common and common equivalent share - basic -- $0.02 $0.01 $(0.00) $0.01 Earnings (loss) per common and common equivalent share - diluted -- $0.02 $0.01 $(0.00) $0.01 Weighted average shares outstanding Basic 28,471 25,818 27,422 25,741 Diluted 31,259 27,650 27,422 27,646 (1) Includes stock-based compensation of $577,000 and $1,104,000 for the three and six months ended June 30, 2006, respectively. (2) Includes stock-based compensation of $30,000 and $123,000 for the three and six months ended June 30, 2006, respectively. THE SPECTRANETICS CORPORATION Condensed Consolidated Balance Sheets (000’s) (Unaudited) June 30, December 31, 2006 2005 Assets Current assets Cash, cash equivalents and securities $56,146 $14,937 Accounts receivable 9,590 8,141 Inventories 5,952 2,967 Deferred tax asset 65 65 Other current assets 1,525 663 Total current assets 73,278 26,773 Property, plant and equipment, net 11,975 8,801 Investment securities, non-current 2,065 1,976 Deferred tax asset, non-current 422 782 Other assets 385 443 Total assets $88,125 $38,775 Liabilities and stockholders’ equity Current liabilities 10,377 11,560 Non-current liabilities 13 31 Stockholders’ equity 77,735 27,184 Total liabilities and stockholders’ equity $88,125 $38,775 THE SPECTRANETICS CORPORATION Supplemental Financial Information (Unaudited) Financial Summary: 2005 2006 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr (000’s, except per share amounts) Laser Revenue: Equipment sales $691 $767 $972 $820 $804 Rental fees 406 447 629 560 603 Total laser revenue 1,097 1,214 1,601 1,380 1,407 Disposable Products Revenue: Fiber-optic atherectomy revenue 4,207 4,236 4,809 5,081 6,934 Support catheter revenue 755 793 955 1,573 1,840 Total atherectomy revenue 4,962 5,029 5,764 6,654 8,774 Fiber-optic lead removal revenue 2,254 2,441 2,438 2,759 2,693 Other devices and accessories revenue 1,114 1,209 1,028 1,255 1,385 Total lead removal revenue 3,368 3,650 3,466 4,014 4,078 Service and other revenue 1,218 1,337 1,453 1,569 1,738 Total revenue 10,645 11,230 12,284 13,617 15,997 Net income (loss) 242 506 215 (638)* 521* Net income (loss) per share Basic 0.01 0.02 0.01 (0.02) 0.02 Diluted 0.01 0.02 0.01 (0.02) 0.02 Cash flow generated by (used in) operating activities (244) 460 330 (5,501) (924) Total cash and investment securities-current and non-current 16,074 16,800 16,913 11,183 58,211 Laser sales summary: Laser sales from inventory 3 4 2 2 1 Laser sales from evaluation/rental units 2 2 6 4 5 Total laser sales 5 6 8 6 6 * Includes stock-based compensation of $620 and $607, respectively. Worldwide Installed Base Summary: Laser sales from inventory 3 4 2 2 1 Rental placements 9 14 26 22 25 Evaluation placements 8 4 8 8 3 Laser placements during quarter 20 22 36 32 29 Buy-backs/returns during quarter (3) (4) (6) (3) (4) Net laser placements during quarter 17 18 30 29 25 Total lasers placed at end of quarter 446 464 494 523 548
Spectranetics Corporation
CONTACT: John Schulte, Chief Executive Officer, or Guy Childs, ChiefFinancial Officer, both of Spectranetics Corporation, +1-719-633-8333; 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//
