Spectranetics Achieves Fourth Quarter Revenue of $36.8 Million
Spectranetics Achieves Fourth Quarter Revenue of $36.8 Million
13% Increase Over Q4 2011
Provides Outlook for 2013
COLORADO SPRINGS, Colo., Feb. 21, 2013 (GLOBE NEWSWIRE) -- The Spectranetics
Corporation (Nasdaq:SPNC) today reported financial results for the three and
twelve months ended December 31, 2012. Highlights of the quarter (all compared
with the quarter ended December 31, 2011) include:
* Lead Management revenue growth of 29%, 30% on a constant currency basis^1
* Vascular Intervention revenue growth of 5%, 6% on a constant currency
basis, led by U.S. peripheral atherectomy growth of 15%
* U.S. revenue increased 14% to $30.8 million
* International revenue increased 8% to $5.9 million, 11% growth on a
constant currency basis
"The fourth quarter of 2012 marks our fifth consecutive quarter of double
digit revenue growth on a constant currency basis," said President and Chief
Executive Officer, Scott Drake. "We set the goal more than a year ago to be a
reliable, profitable double digit growth company—and in 2012, we have cleared
this bar. As we look forward to 2013, we have reason to be excited about our
prospects—our core markets are growing in the range of 10% and we are gaining
share. We are providing our outlook for 2013, which anticipates continued
success. Over the long term, we are striving to drive further revenue
acceleration and continued margin expansion, which will culminate in
meaningful operating leverage over time."
Net income for the fourth quarter of 2012 was $673,000, or $0.02 per diluted
share, compared with net income of $355,000, or $0.01 per diluted share, for
the fourth quarter of 2011. Non-GAAP adjusted net income for the fourth
quarter of 2012 was $984,000, or $0.03 per diluted share, and for the fourth
quarter of 2011 was $1.3 million, or $0.04 per diluted share. Non-GAAP
adjusted net income excludes special items described later in this release
under the heading "Reconciliation of Non-GAAP Financial Measures."
^1Constant currency is a non-GAAP financial measure. See "Reconciliation of
Non-GAAP Financial Measures" later in this release.
2012 Financial Results
Revenue for the twelve months ended December 31, 2012 rose 10% (11% on a
constant currency basis) to $140.3 million, from $127.3 million in 2011.
Vascular Intervention revenue increased 8% (9% on a constant currency basis)
to $67.3 million; Lead Management revenue increased 19% (20% on a constant
currency basis) to $55.2 million; and laser system, service and other revenue
decreased 4%, both on an as reported and constant currency basis, to $17.8
million.
On a geographic basis, United States revenue was $117.4 million, an increase
of 11% from 2011. International revenue was $22.8 million, an increase of 7%
(13% on a constant currency basis) from 2011.
Net income for the twelve months ended December 31, 2012 was $2.2 million, or
$0.06 per diluted share, compared with net income of $894,000 or $0.03 per
diluted share, in the twelve months ended December 31, 2011. Non-GAAP adjusted
net income for the twelve months ended December 31, 2012 was $2.5 million, or
$0.07 per diluted share, and for the twelve months ended December 31, 2011 was
$2.7 million, or $0.08 per diluted share. Non-GAAP adjusted net income
excludes special items described later in this release under the heading
"Reconciliation of Non-GAAP Financial Measures."
2013 Outlook
Management projects that 2013 revenue will be in the range of $153.0 - $155.5
million, an increase of 9% - 11% from 2012.
Net income for 2013 is projected to be in the range of $0.0 - $0.5 million, or
$0.00 - $0.01 per diluted share, including the impact of the Medical Device
Tax which is estimated to be approximately $2.5 million for 2013. Projected
net income also includes estimated non-cash amortization costs of
approximately $1.6 - $2.0 million associated with the recently announced
acquisition of the Quick-Access™ and Quick-Cross Capture™ devices.
Earnings before interest, taxes, depreciation, amortization, special items and
the medical device tax (Adjusted EBITDA) is anticipated to be in the range of
$13.5 - $14.5 million in 2013, compared with Adjusted EBITDA of $13.1 million
in 2012. Adjusted EBITDA provides for comparability between periods and
represents an additional measure of the operating performance of the business.
As a result of seasonal operating expenses that are higher in the first half
of the year, investments in research, development and commercial programs,
non-cash amortization costs associated with the previously announced
acquisition, and the impact of the medical device tax, a net loss of up to
$2.5 million is anticipated in the first half of 2013, mostly in the first
quarter.
Conference Call
Management will host an investment community conference call today beginning
at 9:00 a.m. Mountain time, 11:00 a.m. Eastern time, to discuss these results
and answer questions. Individuals interested in listening to the conference
call may do so by dialing (877) 561-2747 for domestic callers, or (973)
409-9689 for international callers, or from the webcast on the investor
relations section of the Company's Web site at: www.spectranetics.com. The
webcast will be available on the Company's Web site for 14 days following the
completion of the call.
About Spectranetics
Spectranetics develops, manufactures, markets and distributes single-use
medical devices used in minimally invasive procedures within the
cardiovascular system. The Company's products are sold in more than 40
countries and are used to treat arterial blockages in the heart and legs, as
well as the removal of pacemaker and defibrillator leads.
The Company's Vascular Intervention (VI) products include a range of
peripheral and cardiac laser catheters for ablation of occluded arteries above
and below the knee and within coronary arteries. The Company also markets
aspiration and thrombectomy catheters for the removal of thrombus and support
catheters to facilitate crossing of coronary and peripheral arterial
blockages.
The Lead Management (LM) product line includes excimer laser sheaths and
cardiac lead management accessories for the removal of pacemaker and
defibrillator cardiac leads.
For more information, visit www.spectranetics.com.
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 and the Private Securities Litigation Reform Act of 1995.
You can identify these statements by the fact that they do not relate strictly
to historical or current facts. Such statements may include words such as
"anticipate,""will,""estimate,""expect,""look forward," "strive," "project,"
"intend," "should," "plan," "believe," "hope," "enable," "potential," and
other words and terms of similar meaning in connection with any discussion of,
among other things, future operating or financial performance, strategic
initiatives and business strategies, regulatory or competitive environments,
our intellectual property and product development. These forward-looking
statements include, but are not limited to, statements regarding our
expectation of continued growth and the reasons for that growth, growth rates,
and 2013 outlook including projected revenue and net income. Such statements
are based on current assumptions that involve risks and uncertainties that
could cause actual outcomes and results to differ materially. You are
cautioned not to place undue reliance on these forward-looking statements and
to note that they speak only as of the date hereof. These risks and
uncertainties may include market acceptance of excimer laser atherectomy
technology and our lead removal products, increasing price and product
competition, increased pressure on expense levels resulting from expanded
sales, marketing, product development and clinical activities, uncertain
success of our strategic direction, dependence on new product development,
uncertain success of or delays in our clinical trials, adverse results in
connection with any ongoing legal proceeding, or any legal proceeding in which
we may become involved, adverse impact to our business of the healthcare
reform and related legislation, continued or worsening adverse conditions in
the general domestic and global economic markets and continued volatility and
disruption of the credit markets, which, among other things, affects the
ability of hospitals and other health care systems to obtain credit and may
impede our access to capital, intellectual property claims of third parties,
availability of inventory from suppliers, adverse outcome of FDA inspections,
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, unexpected delays or costs associated with any planned
improvements to our manufacturing processes, and share 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 our actual results, performance or achievements to be
materially different from any anticipated results, performance or
achievements, please see our previously filed SEC reports, including those
risks set forth in our 2011 Annual Report on Form 10-K. We disclaim any
intention or obligation to update or revise any financial or other projections
or other forward-looking statements, whether as a result of new information,
future events or otherwise.
Use of Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements prepared in
accordance with U.S. generally accepted accounting principles (GAAP), we use
certain non-GAAP financial measures in this release. Reconciliations of the
non-GAAP financial measures used in this release to the most directly
comparable GAAP measures for the respective periods, and an explanation of our
use of these non-GAAP measures, can be found in "Reconciliation of Non-GAAP
Financial Measures" immediately following the financial tables. Non-GAAP
financial measures have limitations as analytical tools and should not be
considered in isolation or as a substitute for our financial results prepared
in accordance with GAAP.
-Financial tables follow-
THE SPECTRANETICS CORPORATION
Condensed Consolidated Statements of Operations
(000's, except per share data and percentages)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2012 2011 2012 2011
Revenue $36,751 $32,524 $140,285 $127,287
Cost of products sold 9,815 8,800 37,927 35,723
Gross profit 26,936 23,724 102,358 91,564
Gross margin % 73.3% 72.9% 73.0% 71.9%
Operating expenses:
Selling, general and administrative 20,967 17,795 82,254 70,502
Research, development and other 4,712 4,066 16,846 17,729
technology
Acquisition-related costs 311 — 311 —
Federal investigation legal and accrued — (370) — (370)
indemnification costs
Settlement costs - license agreement — 1,821 — 1,821
dispute
Litigation charge — — — 596
Total operating expenses 25,990 23,312 99,411 90,278
Operating income 946 412 2,947 1,286
Litigation-related interest expense — — — (230)
Other income (expense), net 2 (64) 13 69
Total other income (expense) 2 (64) 13 (161)
Income before taxes 948 348 2,960 1,125
Income tax expense (benefit) 275 (7) 734 231
Net income $673 $355 $2,226 $894
Net income per common share:
Basic $0.02 $0.01 $0.06 $0.03
Diluted 0.02 0.01 0.06 0.03
Weighted average shares outstanding:
Basic 34,698 33,720 34,377 33,458
Diluted 36,299 34,614 35,767 34,370
THE SPECTRANETICS CORPORATION
Condensed Consolidated Balance Sheets
(000's)
12/31/2012 12/31/2011
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $37,775 $39,638
Accounts receivable, net 19,945 18,123
Inventories, net 9,288 8,542
Deferred income taxes, current portion, net 313 610
Other current assets 2,506 2,421
Total current assets 69,827 69,334
Property and equipment, net 27,006 27,249
Goodwill 13,296 11,569
Other assets 640 884
Total assets $110,769 $109,036
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $20,193 $27,960
Non-current liabilities 1,879 1,566
Stockholders' equity 88,697 79,510
Total liabilities and stockholders' equity $110,769 $109,036
THE SPECTRANETICS CORPORATION
Supplemental Financial Information
(Unaudited)
Financial Summary 2011 2012
(000's, except laser sales and 4^th Qtr 1^st Qtr 2^nd Qtr 3^rd Qtr 4^th Qtr
installed base amounts)
Disposable products revenue:
Vascular Intervention revenue $15,877 $16,411 $17,420 $16,821 $16,684
Lead Management revenue 11,893 12,368 13,526 13,918 15,374
Total disposable products revenue 27,770 28,779 30,946 30,739 32,058
Service and other revenue 2,541 2,659 2,515 2,508 2,757
Laser revenue:
Equipment sales 909 591 409 910 772
Rental fees 1,304 1,240 1,165 1,073 1,164
Total laser revenue 2,213 1,831 1,574 1,983 1,936
Total revenue 32,524 33,269 35,035 35,230 36,751
Net income 355 12 636 905 673
Non-GAAP adjusted net income 1,310 N/A N/A N/A 984
excluding special items (1)
Cash flow generated by (used in) 3,051 (4,713) 423 3,748 5,703
operating activities
Total cash and current investment 39,638 27,000 27,659 31,646 37,775
securities at end of quarter
Laser sales summary:
Laser sales from inventory 5 3 2 5 6
Laser sales from 3 — 1 1 —
evaluation/rental units
Total laser sales 8 3 3 6 6
(1) Non-GAAP adjusted net income
excluding special items is a
non-GAAP financial measure.
Please refer to the non-GAAP
reconciliation tables following
this table for the reconciliation
of the fourth quarter of 2011 and
2012. There were no special items
in the first, second or third
quarters of 2012.
Worldwide Installed Base Summary:
Laser sales from inventory 5 3 2 5 6
Rental placements 21 15 18 21 30
Evaluation placements 4 7 8 4 6
Laser placements during quarter 30 25 28 30 42
Buy-backs/returns during quarter (13) (13) (14) (19) (24)
Net laser placements during 17 12 14 11 18
quarter
Total lasers placed at end of 1,011 1,023 1,037 1,048 1,066
quarter
Reconciliation of Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements prepared in
accordance with GAAP, we use certain non-GAAP financial measures in this
release. Reconciliations of these non-GAAP financial measures to the most
directly comparable GAAP measures for the respective periods can be found in
the tables below. An explanation of the manner in which our management uses
these non-GAAP measures to conduct and evaluate our business and the reasons
why management believes that these non-GAAP measures provide useful
information to investors is provided following the reconciliation tables.
THE SPECTRANETICS CORPORATION
Reconciliation of revenue by geography to non-GAAP revenue by geography
on a constant currency basis
(000's, except percentages)
(unaudited)
Three Months Ended
December 31, 2012 December 31, Change
2011
Foreign
Revenue, exchange Revenue on Constant
as impact as a constant Revenue, as As currency
reported compared currency reported reported basis
to prior basis
period
United States $30,819 $— $30,819 $27,050 14% 14%
International 5,932 159 6,091 5,474 8% 11%
Total revenue $36,751 $159 $36,910 $32,524 13% 13%
Twelve Months Ended
December 31, 2012 December 31, Change
2011
Foreign
Revenue, exchange Revenue on Constant
as impact as a constant Revenue, as As currency
reported compared currency reported reported basis
to prior basis
period
United States $117,436 $— $117,436 $105,933 11% 11%
International 22,849 1,227 24,076 21,354 7% 13%
Total revenue $140,285 $1,227 $141,512 $127,287 10% 11%
THE SPECTRANETICS CORPORATION
Reconciliation of revenue by product line to non-GAAP revenue by product line
on a constant currency basis
(000's, except percentages)
(unaudited)
Three Months Ended
December 31, 2012 December 31, Change
2011
Foreign Revenue
Revenue, exchange on Constant
as impact as a Revenue, as As currency
reported compared constant reported reported basis
to prior currency
period basis
Vascular $16,684 $108 $16,792 $15,877 5% 6%
Intervention
Lead Management 15,374 77 15,451 11,893 29% 30%
Laser System, 4,693 (26) 4,667 4,754 (1)% (2)%
Service & Other
Total revenue $36,751 $159 $36,910 $32,524 13% 13%
Twelve Months Ended
December 31, 2012 December 31, Change
2011
Foreign Revenue
Revenue, exchange on Constant
as impact as a Revenue, as As currency
reported compared constant reported reported basis
to prior currency
period basis
Vascular $67,336 $533 $67,869 $62,264 8% 9%
Intervention
Lead Management 55,186 588 55,774 46,480 19% 20%
Laser System, 17,763 106 17,869 18,543 (4)% (4)%
Service & Other
Total revenue $140,285 $1,227 $141,512 $127,287 10% 11%
THE SPECTRANETICS CORPORATION
Reconciliation of Net Income to Non-GAAP Adjusted Net Income Excluding Special
Items and
Net Income per Diluted Share to Non-GAAP Adjusted Net Income Excluding Special
Items
per Diluted Share
(000's, except per share data)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2012 2011 2012 2011
Per Per Per Per
Net diluted Net diluted Net diluted Net diluted
income share income share income share income share
(1) (1) (1) (1)
Net income, as $673 $0.02 $355 $0.01 $2,226 $0.06 $894 $0.03
reported
Acquisition-related 311 0.01 — — 311 0.01 — —
costs (2)
Federal
investigation legal
and accrued — — (370) (0.01) — — (370) (0.01)
indemnification
costs (3)
Settlement costs
--- license — — 1,821 0.05 — — 1,821 0.05
agreement dispute
(4)
Litigation charge — — — — — — 596 0.02
(5)
Litigation-related
interest expense — — — — — — 230 0.01
(5)
Decrease in
valuation allowance — — (496) (0.01) — — (496) (0.01)
against deferred
tax asset (6)
Non-GAAP adjusted
net income $984 $0.03 $1,310 $0.04 $2,537 $0.07 $2,675 $0.08
excluding special
items
1) Per share amounts may not add due to rounding. Per diluted share is
calculated based on the fully diluted weighted average shares outstanding for
all periods. The fully diluted weighted average shares were 36,298,552 and
35,766,970 for the three and twelve months ended December 31, 2012,
respectively, and 34,614,334 and 34,370,124 for the three and twelve months
ended December 31, 2011.
2) In the fourth quarter of 2012, we incurred $0.3 million in legal and other
costs related to our acquisition of certain product lines from Upstream
Peripheral Technologies Ltd. Further information regarding this matter is
included in our Form 8-K filed on January 7, 2013.
3) In the third quarter of 2010, we accrued a $6.5 million charge to record our
estimated liability related to indemnification obligations that we had with
three former employees. In the fourth quarter of 2011, we reversed $0.4 million
of the original accrual based on developments in the court proceedings,
including the conclusion of the trial of two of the defendants and the
dismissal of charges against a third defendant. Further information regarding
this matter is included in our Annual Report on Form 10-K for the year ended
December 31, 2011.
4) In January 2012, we entered into a Termination and Mutual Release
("Agreement") with Medtronic, Inc. The Agreement terminated the License
Agreement between us and Medtronic dated February 28, 1997. Under the
Agreement, we paid Medtronic $3.0 million in January 2012. We had accrued
royalty expenses in the amount of $1.2 million prior to the settlement;
therefore, the amount of $1.8 million was recorded as settlement costs—license
agreement dispute. The Agreement includes a mutual release and no further
royalty expenses will be incurred subsequent to the effective date of the
Agreement.
5) In the third quarter of 2011, the Dutch Court of Appeal issued a ruling in
favor of Cardiomedica S.p.A., requiring us to pay $0.6 million plus $0.2
million of interest to Cardiomedica. Further information regarding this matter
is included in our Annual Report on Form 10-K for the year ended December 31,
2011.
6) In the fourth quarter of 2011, we entered into a strategic tax transaction
with the approval of the Dutch tax authority that effectively extended the life
of a portion of a net operating loss (NOL) carryforward in the Netherlands,
which had previously been scheduled to expire on December 31, 2011 and which
had previously been fully reserved. As a result, we recorded a $0.5 million tax
benefit representing our estimate of the actual utilization of the extended
deduction in future years.
THE SPECTRANETICS CORPORATION
Reconciliation of Net Income to
EBITDA and Adjusted EBITDA
(000's)
(unaudited)
Twelve Months Ended
December 31,
2012
Net income, as reported $2,226
Provision for income taxes 734
Interest income, net (8)
Depreciation and amortization 9,854
EBITDA 12,806
Acquisition-related costs 311
Adjusted EBITDA $13,117
Management uses the non-GAAP financial measures as supplemental measures to
analyze the underlying trends in our business, assess the performance of our
core operations, establish operational goals and forecasts that are used in
allocating resources and evaluate our performance period over period and in
relation to our competitors' operating results.
The impact of foreign exchange rates is highly variable and difficult to
predict. We use a constant currency basis to show the impact from foreign
exchange rates on current period revenue compared to prior period revenue
using the prior period's foreign exchange rates. In order to properly
understand the underlying business trends and performance of our ongoing
operations, we believe that investors may find it useful to consider the
impact of excluding changes in foreign exchange rates from our revenue.
We believe that presenting the non-GAAP financial measures used in this
release provides investors greater transparency to the information used by our
management for financial and operational decision-making and allows investors
to see our results "through the eyes" of management. We also believe that
providing this information better enables our investors to understand our
operating performance and evaluate the methodology used by management to
evaluate and measure such performance.
Non-GAAP financial measures have limitations as analytical tools and should
not be considered in isolation or as a substitute for our financial results
prepared in accordance with GAAP. Some of the limitations associated with our
use of these non-GAAP financial measures are provided below:
* Management exercises judgment in determining which types of charges or
other items should be excluded from the non-GAAP financial measures used.
* Items such as the acquisition-related costs, federal investigation legal
and accrued indemnification costs, the license agreement termination
charge and the litigation charge and related interest that are excluded
from net income and net income per share can have a material impact on
cash flows, GAAP net income and net income per share and reflect economic
costs to us that are not reflected in non-GAAP adjusted net income and
non-GAAP adjusted net income per share.
* Depreciation and amortization expense, while not requiring cash
settlement, are ongoing and recurring expenses and have a material impact
on GAAP net income and reflect economic costs to us that are not reflected
in Adjusted EBITDA.
* The decrease in the valuation allowance against the deferred tax assets
represents a change in the value of assets. The benefit associated with
this change in value is not included in our non-GAAP adjusted net income
or non-GAAP adjusted net income per share.
* Revenue growth rates stated on a constant currency basis, by their nature,
exclude the impact of foreign exchange, which may have a material impact
on GAAP revenue.
* Non-GAAP financial measures are not based on any comprehensive set of
accounting rules or principles and therefore other companies may calculate
similarly titled non-GAAP financial measures differently than we do,
limiting the usefulness of those measures for comparative purposes.
CONTACT: The Spectranetics Corporation
Guy Childs, Chief Financial Officer
(719) 633-8333
INVESTOR CONTACTS
Westwicke Partners
Lynn Pieper
(415) 202-5678
lynn.pieper@westwicke.com
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