COLORADO SPRINGS, Colo., Oct. 30 /PRNewswire-FirstCall/ -- Spectranetics Corporation today reported financial results for the three and nine months ended September 30, 2006.
Revenue for the third quarter of 2006 was a record $16.2 million, up 44% compared with revenue of $11.2 million for the third quarter of 2005. For the quarter, disposable product revenue rose 47% to $12.7 million, laser revenue was up 41% to $1.7 million, and service and other revenue increased 32% to $1.8 million, all compared with the third quarter of 2005. The increase in disposable product revenue for the quarter was driven primarily by a 66% increase in atherectomy product sales as compared with last year and supported by a 20% increase in lead removal revenue.
The worldwide installed base of lasers increased to 585 laser systems as of September 30, 2006 (457 in the United States), which includes record net laser placements of 37 units in the third quarter of 2006, compared with 18 net placements in the comparable quarter last year.
Gross margin for the quarter was 74% of revenue, compared with 76% in the third quarter a year ago. The decline from a year ago is primarily a result of costs associated with increased manufacturing staffing and related costs aimed at increasing production capacity, primarily in the area of disposable products. Operating expenses in the quarter were $12.6 million, up 55% from the prior-year third 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). Operating expenses in the third quarter of 2006 also include stock- compensation expense of $748,000, pursuant to the adoption of Statement of Financial Accounting Standards 123(R), which the Company adopted as of January 1, 2006.
For the third quarter of 2006, Spectranetics reported a net loss of $165,000, or $0.01 per diluted share, compared with net income of $506,000, or $0.02 per diluted share, in the third quarter of 2005. Pre-tax income in the third quarter of 2006, including stock-compensation expense of $748,000, was $32,000, compared with pre-tax income of $623,000 in the third quarter of 2005.
“Our outstanding revenue results in the third quarter reflect the continued favorable market response to our CLiRpath(R) Turbo catheters, the success of our physician training programs and the ramp up and recent reorganization of our field sales organization,” said John G. Schulte, President and Chief Executive Officer. “We are also pleased to report another record quarter in new laser placements, expanding our foundation for further growth. We also achieved two important objectives during the quarter. First, we initiated enrollment in the CELLO trial, which is an FDA-approved trial that will enroll 85 patients at up to 15 sites. The trial will provide clinical data on the reduction of the arterial blockage in above the knee arteries following use of our TURBO-Booster product. Second, we received clearance from the FDA to market the TURBO elite. product line, which
incorporates a number of features that improve ease of use and ablation capability.”
Year-to-Date Financial Results
Revenue for the first nine months of 2006 rose 48% to $45.8 million, from $30.9 million for the first nine months of 2005. Year-to-date 2006 disposable product revenue rose 52% to $36.2 million, laser revenue was up 45% to $4.5 million, and service and other revenue increased 26% to $5.1 million, all compared with the first nine months of 2005.
Gross margin for the first nine months of 2006 was 74%, compared with 76% in the first nine months of 2005, with the decline primarily due to costs associated with increased manufacturing staffing and related costs aimed at increasing production capacity, primarily in the area of disposable products.
Net loss for the first nine months of 2006 was $495,000, or $0.02 per share, compared with net income of $823,000, or $0.03 per diluted share, in the first nine months of 2005. The pre-tax loss for the first nine months of 2006, including stock-compensation expense of approximately $2.0 million, was $71,000, compared with pre-tax income of $1.4 million in the first nine months of 2005.
Cash, cash equivalents and current and non-current investment securities totaled $57.3 million as of September 30, 2006, compared with $58.2 million as of June 30, 2006.
2006 Financial Guidance
Spectranetics today modified its previous 2006 financial guidance as follows:
Revenue for 2006 is estimated to be within the range of $62 million to $64 million, representing 43% to 48% growth over 2005 revenue; this compares with previous guidance for 2006 revenue to be within the range of $61 million to $64 million. The Company expects net loss, including stock-based compensation, to be within the range of a $2.0 million net loss to breakeven, and assumes gross margin in the mid-seventies, which is unchanged from previous guidance. Stock-based compensation is estimated to be within the range of $2.5 million to $3.0 million during 2006.
This guidance takes into consideration the following key factors: 1. Laser placements are expected to be within the range of 110 to 120 net new laser placements in 2006, compared with previous guidance of 95 to 105 net new laser placements. 2. Spectranetics continues to expect the total number of field sales employees to be in the range of 80 to 90 by the end of 2006. 3. Continued increases in research, development and other technology costs, particularly with the ongoing enrollment in the CELLO trial.
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 3:00 p.m. Mountain time, 5:00 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 9403296. 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 Nine Months Ended September 30, September 30, 2006 2005 2006 2005 Revenue $16,194 $11,230 $45,808 $30,928 Cost of revenue 4,263 2,643 12,118 7,458 Gross margin 11,931 8,587 33,690 23,470 Gross margin % 74% 76% 74% 76% Operating expenses: Selling, general and administrative 10,105 (1) 6,128 28,568 (1) 17,394 Research, development and other technology 2,445 (2) 1,950 6,416 (2) 4,968 Total operating expenses 12,550 8,078 34,984 22,362 Operating (loss) income (619) 509 (1,294) 1,108 Other income, net 651 114 1,223 290 Income (loss) before taxes 32 623 (71) 1,398 Income tax expense (197) (117) (424) (575) Net (loss) income $(165) $506 $(495) $823 Earnings (loss) per common and common equivalent share - basic and diluted $(0.01) $0.02 $(0.02) $0.03 Weighted average shares outstanding Basic 30,791 26,070 28,557 25,852 Diluted 30,791 28,483 28,557 27,980 (1) Includes stock-based compensation of $670,000 and $1,774,000 for the three and nine months ended September 30, 2006, respectively. (2) Includes stock-based compensation of $78,000 and $201,000 for the three and nine months ended September 30, 2006, respectively. THE SPECTRANETICS CORPORATION Condensed Consolidated Balance Sheets (000’s) (Unaudited) September 30, December 31, 2006 2005 Assets Current assets Cash, cash equivalents and investment securities $50,834 $14,937 Accounts receivable 10,294 8,141 Inventories 5,356 2,967 Deferred tax asset 65 65 Other current assets 1,617 663 Total current assets 68,166 26,773 Property, plant and equipment, net 13,789 8,801 Investment securities, non-current 6,462 1,976 Deferred tax asset, non-current 358 782 Other assets 412 443 Total assets $89,187 $38,775 Liabilities and stockholders’ equity Current liabilities 10,833 11,560 Non-current liabilities 6 31 Stockholders’ equity 78,348 27,184 Total liabilities and stockholders’ equity $ 89,187 $ 38,775 THE SPECTRANETICS CORPORATION Supplemental Financial Information (Unaudited) Financial Summary: 2005 2006 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr 3rd Qtr (000’s, except per share amounts) Laser Revenue: Equipment sales $767 $972 $820 $804 $1,076 Rental fees 447 629 560 603 636 Total laser revenue 1,214 1,601 1,380 1,407 1,712 Disposable Products Revenue: Fiber-optic atherectomy revenue 4,236 4,809 5,081 6,934 6,450 Support catheter revenue 793 955 1,573 1,840 1,895 Total atherectomy revenue 5,029 5,764 6,654 8,774 8,345 Fiber-optic lead removal revenue 2,441 2,438 2,759 2,693 3,064 Other devices and accessories revenue 1,209 1,028 1,255 1,385 1,312 Total lead removal revenue 3,650 3,466 4,014 4,078 4,376 Service and other revenue 1,337 1,453 1,569 1,738 1,761 Total revenue 11,230 12,284 13,617 15,997 16,194 Net income (loss) 506 215 (638)* 308* (165)* Net income (loss) per share Basic 0.02 0.01 (0.02) 0.01 (0.01) Diluted 0.02 0.01 (0.02) 0.01 (0.01) Cash flow generated by (used in) operating activities 460 330 (5,501) (924) (445) Total cash and investment securities - current and non-current 16,800 16,913 11,183 58,211 57,296 Laser sales summary: Laser sales from inventory 4 2 2 1 4 Laser sales from evaluation/rental units 2 6 4 5 4 Total laser sales 6 8 6 6 8 * Includes stock-based compensation of $620, $607 and $748, respectively. Worldwide Installed Base Summary: Laser sales from inventory 4 2 2 1 4 Rental placements 14 26 22 25 33 Evaluation placements 4 8 8 3 3 Laser placements during quarter 22 36 32 29 40 Buy-backs/returns during quarter (4) (6) (3) (4) (3) Net laser placements during quarter 18 30 29 25 37 Total lasers placed at end of quarter 464 494 523 548 585
Spectranetics Corporation
CONTACT: John Schulte, Chief Executive Officer, or Guy Childs, ChiefFinancial Officer, both of Spectranetics Corporation, +1-719-633-8333; orInvestors and 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/
