TranS1 Inc. Reports Operating Results for the Fourth Quarter of 2012, Issues First Quarter 2013 Guidance

TranS1 Inc. Reports Operating Results for the Fourth Quarter of 2012, Issues
First Quarter 2013 Guidance

                - Fourth quarter revenues were $4.1 million -

               - Net loss per share was $0.44 for the quarter –

  - Excluding special items, net loss per share was $0.20 for the quarter* -

RALEIGH, N.C., March 4, 2013 (GLOBE NEWSWIRE) -- TranS1 Inc. (Nasdaq:TSON), a
medical device company focused on designing, developing and marketing products
to treat degenerative conditions of the spine affecting the lumbar region,
today announced its financial results for the fourth quarter ended December
31, 2012.

Comparison of Selected Financial Results (in millions, except per share data)
                                 Three Months Ended December 31,
                                 2012                   2011
As reported:                                            
Total revenue                     $4.1                  $4.0
Net loss                          (12.0)                 (4.9)
Net loss per common share         (0.44)                 (0.18)
Excluding special items*:                               
Net loss                          (5.3)                  (4.7)
Net loss per common share         (0.20)                 (0.17)

* See "Reconciliation of GAAP Financial Information to Non-GAAP Financial
Information" below.

Revenues were $4.1 million in the fourth quarter of 2012, representing a 3.5%
increase from revenues of $4.0 million in the fourth quarter of 2011.Domestic
revenues were $3.0 million in the fourth quarter of 2012, compared to $3.7
million in the fourth quarter of 2011 and international revenues were $1.1
million in the fourth quarter of 2012, compared to $0.3 million in the fourth
quarter of 2011.The increase in international revenues was due to the initial
stocking order for our new distributor in China. Gross margin was 62.2% in the
fourth quarter of 2012 as compared to 73.9% in the fourth quarter of 2011. The
decrease in gross margin was due primarily to a higher percentage of
international sales which carry a lower gross margin than domestic sales,
inventory charges related to excess inventories, and increased depreciation
expense on reusable kits.

Net loss was $12.0 million in the fourth quarter of 2012, compared to a net
loss of $4.9 million in the fourth quarter of 2011.Net loss per common share
was $0.44 in the fourth quarter of 2012 compared to a net loss per share of
$0.18 in the fourth quarter of 2011.

Excluding special items, net loss in the fourth quarter of 2012 was $5.3
million, or $0.20 per common share, compared to net loss excluding special
items of $4.7 million, or $0.17 per common share in the fourth quarter of
2011.Special items in the fourth quarter of 2012 consisted of expenses of
$6.6 million, including $0.6 million of legal fees, related to our tentative
agreement in principle with the U.S. Department of Justice to settle its
federal investigation related to the subpoena issued in October 2011. Special
items in the fourth quarter of 2011 consisted of expenses of $0.2 million for
legal fees related to the U.S. Department of Justice investigation.

Cash and cash-equivalents were $21.5 million as of December 31, 2012.

"In the fourth quarter we made significant progress on our key operational
goals, including further reimbursement progress, expanding clinical
publications and driving adoption of the VEO direct lateral system.In
addition, we re-launched AxiaLIF in November at a large per-to-peer training
event in anticipation of the activation of our Category I code on January 1,"
said Ken Reali, President and Chief Executive Officer of TranS1. "We believe
that the stabilization of our domestic business and the initial stocking order
in China have created positive momentum for TranS1 as we enter 2013."

TranS1 Outlook

For the first quarter ending March 31, 2013, the Company expects total
revenues in the range of $3.0 - $3.4 million.

Conference Call

TranS1 will host a conference call today at 8:30 am Eastern time to discuss
its fourth quarter financial results.This conference call replaces the call
originally scheduled for today at 4:30PM. The conference call numbers did not
change. To listen to the conference call on your telephone, please dial (877)
881-2183 for domestic callers and (970) 315-0453 for international callers
approximately ten minutes prior to the start time. The call will be
concurrently webcast.To access the live audio broadcast or the archived
recording, as well as the Company's presentation used during the conference
call, use the following link at http://ir.trans1.com/events.cfm.

Reconciliation of GAAP Financial Information to Non-GAAP Financial Information

To supplement the Company's consolidated financial statements presented in
accordance with GAAP, the Company uses non-GAAP measures of certain components
of financial performance, including net loss and net loss per common share,
which are adjusted from results based on GAAP. Although "as adjusted"
financial measures are non-GAAP financial measures, the Company believes that
the presentation of "as adjusted" financial measures calculated to exclude
"special items" are useful adjuncts to the GAAP "as reported" financial
measures. "Special items" consist of charges related to a tentative
settlement with the U.S. Department of Justice, including related legal fees,
and legal fees related to a stockholder class action lawsuit.These non-GAAP
measures are provided to enhance investors' overall understanding of the
Company's current financial performance and the Company's prospects for the
future.We believe that providing a non-GAAP measure that adjusts for
significant non-recurring expenses allows comparison of our core operations
from period to period.These non-GAAP measures may be considered in addition
to results prepared in accordance with generally accepted accounting
principles, but should not be considered a substitute for, or superior to,
GAAP results. The non-GAAP measures included in this press release have been
reconciled to the most directly comparable GAAP measure.

About TranS1 Inc.

TranS1 is a medical device company focused on designing, developing and
marketing products to treat degenerative conditions of the spine affecting the
lumbar region. TranS1 currently markets the AxiaLIF® family of products for
single and two level lumbar fusion, the VEO^TM lateral access and interbody
fusion system and the Vectre^TM posterior fixation system for lumbar fixation
supplemental to AxiaLIF fusion. TranS1 was founded in May 2000 and is
headquartered in Raleigh, North Carolina.For more information, visit
www.trans1.com.

Forward Looking Statements

This press release includes statements that are based on our current beliefs
and assumptions.These statements constitute "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 are intended to qualify for
the safe harbor from liability established by the Private Securities
Litigation Reform Act of 1995.Such statements are subject to risks and
uncertainties that are often difficult to predict, are beyond our control, and
which may cause results to differ materially from expectations. Factors that
could cause our results to differ materially from those described include, but
are not limited to, the pace of adoption of our product technology by spine
surgeons, the outcome of coverage and reimbursement decisions by the
government and third party payors, the success of our continuing product
development efforts, the effect on our business of existing and new regulatory
requirements, uncertainty surrounding the outcome of the matters relating to
the subpoena issued to the Company by the Department of Health and Human
Services, Office of Inspector General, stockholder class action lawsuits, and
other economic and competitive factors.For a discussion of the most
significant risks and uncertainties associated with TranS1's business, please
review the Company's filings with the Securities and Exchange Commission,
including its Annual Report on Form 10-K for the year ended December 31, 2011
and subsequent reports. You are cautioned not to place undue reliance on
these forward looking statements, whichare based on TranS1's expectations as
of the date of this press release and speak only as of the date of this press
release.We undertake no obligation to publicly update or revise any forward
looking statement, whether as a result of new information, future events or
otherwise.

TranS1 Inc.
Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except per share amounts)
(Unaudited)
                                                             
                     Three Months Ended December Twelve Months Ended December
                      31,                        31,
                     2012           2011         2012           2011
                                                             
                                                             
Revenue               $4,129       $3,990     $14,570      $19,153
Cost of revenue       1,562         1,042       4,309         4,555
Gross profit          2,567         2,948       10,261        14,598
Operating expenses:                                           
Research and          1,520         1,350       5,457         5,191
development
Sales and marketing   4,925         4,906       20,049        21,561
General and           1,510         1,368       6,172         5,890
administrative
Charges related to
U.S. Government       6,583         235         8,324         235
settlement
Total operating       14,538        7,859       40,002        32,877
expenses
Operating loss        (11,971)       (4,911)      (29,741)       (18,279)
Other income          (1)            (1)          (147)          6
(expense), net
Net loss              $(11,972)    $(4,912)   $(29,888)    $(18,273)
Other comprehensive                                           
loss:
Foreign currency
translation           --             40           1              42
adjustments
Comprehensive loss    $(11,972)    $(4,872)   $(29,887)    $(18,231)
                                                             
Net loss per common
share - basic and     $(0.44)      $(0.18)    $(1.10)      $(0.81)
diluted
                                                             
Weighted average
common shares         27,291        27,207      27,267        22,588
outstanding - basic
and diluted



Reconciliation of GAAP Financial Information to Non-GAAP Financial Information
(in thousands, except per share amounts)
(Unaudited)
                                                            
                   Three Months Ended Dec. 31, Twelve Months Ended Dec. 31,
                   2012           2011          2012           2011
GAAP net loss       $(11,972)    $(4,912)    $(29,888)    $(18,273)
Special items:                                                
Charges related to
U.S. Government     6,583         235          8,324         235
settlement
Shareholder         68            --          399           --
litigation related
Net loss excluding  $(5,321)     $(4,677)    $(21,165)    $(18,038)
special items
                                                            
GAAP net loss per   $(0.44)      $(0.18)     $(1.10)      $(0.81)
share
Special items:                                                
Charges related to
U.S. Government     0.24          0.01         0.31          0.01
settlement
Shareholder         --           --          0.01          --
litigation related
Net loss excluding  $(0.20)      $(0.17)     $(0.78)      $(0.80)
special items
                                                            
Shares used in
computing GAAP and  27,291        27,207       27,267        22,588
non-GAAP loss per
share


TranS1 Inc.
Consolidated Balance Sheets
(in thousands)
(Unaudited)
                                                    December 31, December 31,
                                                    2012         2011
Assets                                                           
Current assets:                                                  
Cash and cash equivalents                            $21,541     $38,724
Short-term investments                               --         6,027
Accounts receivable, net                             3,206       2,522
Inventory                                            5,017        4,525
Prepaid expenses and other assets                    330          680
Total current assets                                 30,094       52,478
Property and equipment, net                          2,166        1,554
Total assets                                         $32,260     $54,032
                                                                
Liabilities and Stockholders' Equity                              
Current liabilities:                                             
Accounts payable                                     $2,603      $3,127
Accrued expenses related to U.S. Government          6,792        180
settlement
Accrued expenses                                     1,648        1,199
Total current liabilities                            11,043       4,506
Noncurrent liabilities                               78           26
                                                                
Stockholders' equity                                              
Common stock                                         3            3
Additional paid-in capital                           159,929      158,403
Accumulated other comprehensive income (loss)        14           13
Accumulated deficit                                  (138,807)    (108,919)
Total stockholders' equity                           21,139       49,500
Total liabilities and stockholders' equity           $32,260     $54,032



TranS1 Inc.
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
                                                                
                            Three Months Ended December Twelve Months Ended
                             31,                        December 31,
                            2012           2011         2012       2011
Cash flows from operating activities:                             
Net loss                     $(11,972)     $(4,912)    $(29,888) $(18,273)
Adjustments to reconcile net
loss to net cash used in                                         
operating activities
Depreciation                 346            189          1,141      662
Stock-based compensation     304            304          1,366      1,558
Allowance for excess and     428            9            524        521
obsolete inventory
Provision (reversal of       12             (56)         (15)       31
provision) for bad debts
Loss on disposal of fixed    --             5            261        54
assets
Changes in operating assets                                      
and liabilities:
(Increase) decrease in       (1,142)        945          (669)      1,101
accounts receivable
(Increase) decrease in       (281)          (301)        (1,015)    (1,168)
inventory
(Increase) decrease in       56             (431)        350        (291)
prepaid expenses
Increase (decrease) in       610            1,230        (524)      913
accounts payable
Increase in accrued expenses
related to U.S. Government   6,160          180          6,612      180
settlement
Increase (decrease) in       (84)           (150)        500        (852)
accrued expenses
Net cash used in operating   (5,563)        (2,988)      (21,357)   (15,564)
activities
Cash flows from investing                                        
activities:
Purchases of property and    (222)          (272)        (2,014)    (708)
equipment
Purchases of investments     --             --           --         (16,102)
Sales and maturities of      --             12,054       6,027      28,150
investments
Net cash provided by (used   (222)          11,782       4,013      11,340
in) investing activities
Cash flows from financing                                        
activities:
Net proceeds from issuance   --             (24)         --         18,334
of common stock
Proceeds from exercise of    93             7            160        111
stock options
Net cash provided by         93             (17)         160        18,445
financing activities
Effect of exchange rate
changes on cash and cash     --             40           1          42
equivalents
Net increase (decrease) in   (5,692)        8,817        (17,183)   14,263
cash and cash equivalents
Cash and cash equivalents,   27,233         29,907       38,724     24,461
beginning of period
Cash and cash equivalents,   $21,541       $ 38,724     $21,541   $38,724
end of period

CONTACT: Investors:
         TranS1 Inc.
         Joseph P. Slattery, 919-825-0868
         Executive Vice-President and Chief Financial Officer
         or
         Westwicke Partners
         Mark Klausner, 443-213-0501
         trans1@westwicke.com
 
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