SAN JOSE, Calif., Nov. 10 /PRNewswire-FirstCall/ -- VNUS(R) Medical Technologies, Inc. , a leading provider of medical devices for the minimally invasive treatment of venous reflux disease, today announced its financial results for the third quarter ended September 30, 2005.
Net revenues for the third quarter were $12.1 million, an increase of 20% from $10.1 million for the corresponding quarter of 2004 and a decrease of 2% from $12.3 million for the second quarter of 2005. Net revenue growth from the same period last year was driven principally by increased sales of proprietary disposable endovenous catheters and accessory products, as well as increased unit sales of the company’s radiofrequency (RF) generators to hospitals and physicians for use in the VNUS Closure(R) procedure. The 2% decrease in net revenues from the prior quarter was driven primarily by slower than expected catheter sales in the U.S. in July and a larger than expected decrease in international sales during the summer.
Third-quarter net income was $1.7 million, an increase of 66% from $995,000 for the corresponding quarter of 2004 and an increase of 20% from $1.4 million for the second quarter of 2005. Earnings per share for the third quarter were $0.11 on a fully diluted basis, compared with $0.09 for the third quarter of 2004 and with $0.09 for the second quarter ended June 30, 2005. The number of weighted average shares outstanding used in the per-share calculation for the third quarter of 2005 was 15.6 million, consistent with the second quarter of 2005.
Net income for the third quarter of 2005 included the effect of a non-cash charge for stock-based compensation of $146,000. This compared with non-cash charges for stock-based compensation of $296,000 for the corresponding quarter of 2004 and $128,000 for the second quarter of 2005.
VNUS’ balance sheet at September 30, 2005 included cash, cash equivalents and short-term investments of $70.4 million. The company generated approximately $1.7 million in net cash flows from operations during the nine months ended September 30, 2005.
“Our third-quarter results showed good year-over-year growth of net revenues and very strong growth of net income,” said VNUS President and Chief Executive Officer Brian Farley. “Despite this growth, revenues came in below our expectations, primarily due to slower than expected catheter sales in July. Because we were able to manage operating expenses, net income exceeded our expectations and grew 20% sequentially.”
Farley continued, “The company achieved a major milestone in September when the Journal of Vascular Surgery published five-year follow-up results for the VNUS Closure procedure from a large multi-center international registry. These results indicate that the VNUS Closure procedure exhibits enduring efficacy and persistent patient symptom relief, and is the only published report of five-year efficacy associated with endovenous treatment of venous reflux. We also continued the progressive market release of our Closure RFS(TM) family of products, which are used to treat perforator vein reflux, typically seen in patients with more advanced venous disease, such as patients with venous ulcers or other skin damage. Our flexible model of the Closure RFS product family, called the Closure Plex, is also suited to treat tributary vein reflux, which is prevalent in approximately 25% of patients treated today with the Closure catheter.”
VNUS also announced today its business outlook for fourth-quarter and full-year 2005.
Business Outlook
VNUS currently estimates that fourth-quarter 2005 net revenues will range from approximately $12.0 million to $12.4 million. The company continues to invest in the growth of its business by expanding its research and development staff, marketing activities and general and administrative functions. Partially as a result of these ongoing investments, VNUS currently estimates that fourth-quarter net income will range from approximately $0.7 million to $1.0 million, or $0.04 to $0.06 per share on a fully diluted basis. These estimates could be significantly affected by adjustments that may be made to the company’s valuation allowance against deferred tax assets in the fourth quarter. The number of weighted average shares outstanding used to calculate estimated earnings per share for the fourth quarter is currently expected to range from approximately 15.6 million to 15.8 million.
VNUS estimates that full-year 2005 net revenues will range from approximately $47.7 million to $48.0 million and net income will range from approximately $5.3 million to $5.6 million, or $0.34 to $0.36 per share on a fully diluted basis. These estimates could be significantly affected by adjustments that may be made to the company’s valuation allowance against deferred tax assets in the fourth quarter. This outlook assumes approximately 15.6 million to 15.7 million weighted average shares outstanding for the full year.
Today’s Teleconference
VNUS plans to host its regular quarterly teleconference today at 2:00 p.m. PST / 5:00 p.m. EST. This call will be webcast live and as a replay on the company’s website at http://ir.vnus.com/. A phone replay will be available for one week after the live call at (719) 457-0820, code number 8845594.
About VNUS Medical Technologies, Inc.
VNUS is a leading provider of medical devices for the minimally invasive treatment of venous reflux disease, a progressive condition caused by incompetent vein valves in the leg. VNUS sells the Closure system, which consists of a proprietary radiofrequency (RF) generator and proprietary disposable endovenous catheters and devices to close diseased veins through the application of temperature-controlled RF energy. For more information, please visit the corporate website at www.vnus.com.
Forward-Looking Statements
In addition to statements of historical facts or statements of current conditions, VNUS has made forward-looking statements in this press release. Words such as “expects,” “estimates” and “believes,” or variations of such words and similar expressions, are intended to identify such forward-looking statements in this press release, including the statements regarding the outlook for VNUS’ business and revenue and net income forecasts, the potential impact of adjustments that may be made to VNUS’ valuation allowance against deferred tax assets on this outlook, and the statements made by Mr. Farley. Actual results may differ materially from current expectations based on a number of factors affecting VNUS’ business, including, among other things, changing competitive, market and regulatory conditions; customer and physician preferences; changes in reimbursement levels established by governmental and third-party payors; the ability of VNUS to protect its patent position; the effectiveness of advertising and other promotional campaigns; the timely and successful implementation of strategic initiatives; and overall economic and market conditions. The reader is cautioned not to unduly rely on these forward-looking statements. VNUS expressly disclaims any intent or obligation to update these forward-looking statements except as required by law.
Additional information concerning these and other risk factors can be found in press releases issued by VNUS and VNUS’ periodic public filings with the Securities and Exchange Commission (SEC), including its Annual Report on Form 10-K filed with the SEC on March 31, 2005 and its Quarterly Report on Form 10-Q filed with the SEC on August 12, 2005. Copies of VNUS press releases and additional information about VNUS are available on the corporate website at www.vnus.com.
--Financial Statements Attached-- VNUS MEDICAL TECHNOLOGIES, INC. Condensed Consolidated Balance Sheets (in thousands) (unaudited) September 30, December 31, 2005 2004 ASSETS Current assets: Cash and cash equivalents $48,914 $68,566 Short-term investments 21,456 -- Accounts receivable, net 6,348 5,347 Inventories, net 3,368 1,644 Prepaid expenses and other current assets 910 677 Total current assets 80,996 76,234 Property and equipment, net 1,418 1,096 Other assets 666 642 Total assets $83,080 $77,972 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $772 $1,242 Accrued liabilities 3,988 4,311 Total current liabilities 4,760 5,553 Other liabilities 95 111 Total liabilities 4,855 5,664 Stockholders’ equity: Common stock 15 14 Additional paid-in capital 115,469 114,698 Deferred stock-based compensation (618) (1,231) Accumulated deficit (36,599) (41,173) Accumulated other comprehensive loss (42) -- Total stockholders’ equity 78,225 72,308 Total liabilities and stockholders’ equity $83,080 $77,972 VNUS MEDICAL TECHNOLOGIES, INC. Condensed Consolidated Statements of Operations (in thousands, except per-share data) (unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2005 2004 2005 2004 Net revenues $12,129 $10,116 $35,635 $26,980 Cost of revenues (1) 2,915 2,562 8,790 6,697 Gross profit 9,214 7,554 26,845 20,283 Operating expenses Sales and marketing (1) 4,991 4,149 14,403 11,612 Research and development (1) 783 1,129 2,687 3,379 General and administrative (1) 2,124 1,216 6,044 3,333 Total operating expenses 7,898 6,494 23,134 18,324 Income from operations 1,316 1,060 3,711 1,959 Interest income and other income, net 458 46 1,204 99 Income before provision for taxes 1,774 1,106 4,915 2,058 Provision for income taxes 121 111 341 206 Net income $1,653 $995 $4,574 $1,852 Net income per share Basic $0.11 $0.10 $0.31 $0.18 Diluted $0.11 $0.09 $0.29 $0.16 Weighted average number of shares used in per-share calculations Basic 14,786 1,372 14,585 1,357 Diluted 15,611 11,681 15,624 11,486 (1) Includes the following charges for stock-based compensation: Three Months Ended Nine Months Ended September 30, September 30, 2005 2004 2005 2004 Cost of revenues $16 $26 $51 $64 Sales and marketing 57 148 174 367 Research and development 13 22 44 60 General and administrative 60 100 203 250 $146 $296 $472 $741 VNUS MEDICAL TECHNOLOGIES, INC. Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) Nine Months Ended September 30, 2005 2004 Cash flows from operating activities: Net income $4,574 $1,852 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 416 305 Non-employee stock compensation and amortization of deferred stock-based compensation 472 741 Changes in operating assets and liabilities: Accounts receivable (1,001) (1,662) Inventories (1,724) (855) Prepaid expenses and other assets (235) (998) Other long-term assets (24) 13 Accounts payable (470) 227 Accrued and other liabilities (339) 1,011 Net cash provided by operating activities 1,669 634 Cash flows from investing activities: Purchase of short-term investments (21,498) -- Purchase of property and equipment (738) (421) Net cash used in investing activities (22,236) (421) Cash flows from financing activities: Proceeds from the exercise of stock options for common stock 915 76 Net cash provided by financing activities 915 76 Net (decrease) increase in cash and cash equivalents (19,652) 289 Cash and cash equivalents at the beginning of the year 68,566 11,711 Cash and cash equivalents at the end of the period $48,914 $12,000
VNUS Medical Technologies, Inc.
CONTACT: Tim Marcotte, Vice President, Finance and Administration, ChiefFinancial Officer, of VNUS Medical Technologies, Inc., +1-408-473-1199 orir@vnus.com
Web site: http://www.vnus.com/
