OAKLAND, Calif., Aug. 11 /PRNewswire-FirstCall/ -- World Heart Corporation , a developer of mechanical circulatory support systems, today reported its second quarter 2006 financial results. Revenues for the second quarter ended June 30, 2006 were $3.0 million, an increase of 22%, compared with revenues of $2.4 million reported in the second quarter ended June 30, 2005. For the first six months of 2006, revenues were $6.3 million, an increase of 7%, compared with revenues of $5.9 million for the first six months of 2005.
The net loss for the 2006 second quarter was $3.9 million, or $0.07 per share, when 55.5 million weighted average common shares were outstanding, compared with a net loss of $4.6 million, or $0.27 per share, in the prior year’s second quarter, when 17.1 million weighted average common shares were outstanding. The net loss for the six month period ended June 30, 2006 was $7.3 million, or $0.13 per share, when 55.5 million weighted average common shares were outstanding, compared with $8.6 million, or $0.51 per share for the six-month period ended June 30, 2005 when 16.8 million weighted average common shares were outstanding.
WorldHeart’s cash and cash equivalents were $4.6 million at June 30, 2006, a decrease of $2.7 million from March 31, 2006 and a decrease of $6.1 million from December 31, 2005. During the first half of 2006, cash usage from operating activities was $6.0 million. This represents a reduction of approximately $1.4 million per quarter from average levels of cash usage in the last two quarters of 2005.
The Company continues to aggressively explore, with the assistance of investment banking advisors, all financing and strategic alternatives, including equity financing or a possible sale of the Company. The Company is taking steps to conserve cash pending a definitive outcome of these activities. These measures include reducing raw material purchases and manufacturing activities to better align inventories with current commercial shipments and curtailing discretionary spending.
Additional Financial Information
For the three months ended June 30, 2006, gross margin as a percent of revenue was 36%, compared with 13% for the three months ended June 30, 2005. For the six months ended June 30, 2006, gross margin as a percent of revenue was 47%, compared with 27% for the six months ended June 30, 2005. Significantly lower cost of goods sold during this year’s three and six month periods was due principally to more favorable manufacturing variances when compared with the same periods last year. In addition, there was a higher margin other-product revenue mix this year.
Selling, general and administrative expenses for the three months ended June 30, 2006 were $2.3 million, a decrease of $0.7 million, or 25%, from the same period in 2005. For the six months ended June 30, 2006, selling, general and administrative expenses were $4.7 million, a decrease of $1.7 million, or 27%, from the six months ended June 30, 2005. These decreases were due to reduced selling and administrative costs, including savings realized from the consolidation of North American Novacor operations completed in June 2005.
Research and development expenses for the three months ended June 30, 2006 were $2.8 million, an increase of $1.5 million, compared with the three months ended June 30, 2005. Research and development expenses for the six months ended June 30, 2006 were $5.7 million, an increase of $3.2 million, compared with the same period last year. These increases were primarily due to the MedQuest acquisition in July 2005 and the related development costs of the WorldHeart Rotary ventricular assist device.
About World Heart Corporation
WorldHeart is a developer of mechanical circulatory support systems. The company is headquartered in Oakland, California, USA with additional facilities in Salt Lake City, Utah and in Heesch, Netherlands. WorldHeart’s registered office is Ottawa, Ontario, Canada.
Any forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and include statements regarding the Company’s expectations with respect its ability to secure additional funding or enter into other strategic relationship, including a sale of the Company, and the impact of its cost reduction efforts on the Company’s ability to maintain on-going operations, depending upon the outcome of these funding efforts, as well as other statements that can be identified by the use of forward-looking language, such as “believes,” “feels,” “expects,” “may,” “will,” “should,” “seeks,” “plans,” “anticipates,” or “intends” or the negative of those terms, or by discussions of strategy or intentions. Investors are cautioned that all forward-looking statements involve risk and uncertainties, including without limitation: slow market acceptance of and demand for the Company’s Novacor LVAS product; costs and delays associated with clinical trials; limitations on third-party reimbursement; inability to protect proprietary technology; slow Destination Therapy adoption rate for VADs, including our Novacor LVAS; loss of commercial market share to competitors due to WorldHeart’s financial condition; immediate and significant need for additional financing; delays in completion of cost reductions programs or implementation of other alternative programs or transactions and other risks detailed in the Company’s filings with the United States Securities and Exchange Commission, including its Annual Report on Form 10-KSB for the year ended December 31, 2005, as amended.
WORLD HEART CORPORATION Consolidated Balance Sheets (United States Dollars - in thousands) June 30, December 31, 2006 2005 (Unaudited) ASSETS Current assets Cash and cash equivalents $4,568 $10,662 Trade and other receivables 2,475 3,896 Prepaid expenses 1,142 778 Inventory 7,580 8,216 15,765 23,552 Long-term assets Capital assets 1,585 1,837 Other assets 1,337 1,433 Total assets $18,687 $26,822 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities Accounts payable and accrued liabilities $3,856 $3,755 Deferred revenue 168 1,205 Other liabilities 1,198 1,149 Total current liabilities $5,222 $6,109 Total shareholders’ equity 13,465 20,713 Total liabilities and shareholders’ equity $18,687 $26,822 WORLD HEART CORPORATION Consolidated Statements of Operations (unaudited) (United States Dollars and shares in thousands except per share amounts) Three Months Ended Six Months Ended June 30, June 30, 2006 2005 2006 2005 Revenue $2,988 $2,449 $6,273 $5,866 Cost of goods sold (1,910) (2,142) (3,322) (4,254) Gross margin 1,078 307 2,951 1,612 Operating expenses Selling, general and administrative 2,276 3,017 4,731 6,463 Research and development 2,763 1,275 5,662 2,462 Restructuring costs - 212 - 341 Amortization of intangibles 48 128 96 255 Total operating expenses 5,087 4,632 10,489 9,521 Operating loss (4,009) (4,325) (7,538) (7,909) Other income (expenses) 121 (318) 208 (676) Net loss applicable to common shareholders $(3,888) $(4,643) $(7,330) $(8,585) Weighted average number of common shares outstanding 55,480 17,101 55,480 16,831 Basic and diluted loss per common share $(0.07) $(0.27) $(0.13) $(0.51)
World Heart Corporation
CONTACT: Richard Juelis +1-510-563-4713, or Peggy Allman, +1-510-563-4721,both for World Heart Corporation
Web site: http://www.worldheart.com//
