First Quarter Results Driven by Record Worldwide GreenLight(TM)
Delivery Devices and Laser System Shipments and Solid Aesthetic
Sales SAN JOSE, Calif., May 1 /PRNewswire-FirstCall/ -- Laserscope
(NASDAQ:LSCP), a leader in the development and commercialization of
minimally-invasive medical devices, including medical lasers and
advanced fiber-optic delivery devices, today reported its financial
results for the first quarter ended March 31, 2006. 2006 First
Quarter Highlights (compared to the prior-year quarter): -
GreenLight PV(R) fiber optic delivery devices shipped worldwide for
PVP increased 29% to 21,006 units from 16,255 units - GreenLight PV
worldwide laser system installed base grew 71% to 868 units - Total
revenues grew 14% to $32.0 million - R&D spending increased 86%
to $2.9M - Aesthetic sales increased 23% to $7.6 million - Pre-tax
income $4.9 million (includes $0.6 million of stock based
compensation expense), down from $6.2 million in Q1 2005 - Income
tax rate of 43%, up from 20% in Q1 2005 - Diluted EPS of $0.12
(includes expense of $0.6 million pre-tax or $0.02 per share for
stock based compensation expense) First Quarter 2006 Operating
Results U.S. sales of GreenLight PV delivery devices were 14,782
units in the first quarter of 2006 compared with 15,221 units in
the fourth quarter of 2005 and 11,792 units in the first quarter of
2005. International sales of GreenLight PV delivery devices were
6,224 units compared with 5,461 units in the fourth quarter of 2005
and 4,463 units during the first quarter of the prior year. Sales
of aesthetic products totaled $7.6 million in the first quarter of
2006 compared with $6.2 million in the first quarter of 2005. Gross
margin was 61% in the first quarter of 2006, compared with 62% for
the first quarter of 2005 and 59% for the fourth quarter of 2005.
Higher average unit prices for aesthetics relative to Q1 of 2005
were offset by higher international urology fiber and system sales
as a percentage of total revenues. International sales typically
have lower margins than US sales. Research and development
("R&D") expenses increased 86% in the first quarter to $2.9
million, or 9% of revenues, from $1.6 million, or 6% of revenues,
in the first quarter of 2005. The increase in R&D expense
resulted from accelerated new product development and clinical
activities focused on the near- and medium-term development of
multiple new products and clinical applications in urology and
aesthetics. As previously announced, the Company anticipates that
full year 2006 R&D spending will increase 50% to 60% over 2005
levels. On May 22nd, 2006, Laserscope will hold a special Investor
Forum to discuss these R&D and clinical programs and new
product announcements at the American Urological Association
Meeting in Atlanta, Georgia. Selling, general and administrative
("SG&A") expenses grew approximately 20% to $11.8 million, or
37% of revenues in the first quarter of 2006, compared to $9.9
million, or 35% of revenues in the first quarter of 2005. The
increase in SG&A expenses resulted primarily from higher sales,
marketing, business development and administrative expenses to
support the Company's current and future growth initiatives
domestically and internationally. First quarter operating income
was $4.7 million, compared with $6.1 million in the first quarter
of 2005. First quarter 2006 net income was $2.8 million, or $0.12
per diluted share, compared with net income of $5.0 million, or
$0.22 per diluted share, in the same quarter last year, and $5.9
million or $0.26 per fully diluted share for the fourth quarter of
2005. As a result of net operating loss and tax credit
carryforwards, the Company's effective tax rate for 2005 was 7.5%.
Valuation allowances for these deferred tax assets were released in
2005. Accordingly, the Company anticipates an income tax rate of
approximately 43% in 2006. Net income for the first quarter of 2006
includes the impact from the adoption of SFAS No. 123 (revised
2004), "Share- Based Payment" ("SFAS 123(R)") by which the Company
recognized pre-tax equity- based compensation expense of $596,000
or $0.02 per diluted share. The Company's effective income tax rate
was 43% in the first quarter of 2006. Commenting on the first
quarter results, Eric Reuter, CEO and President of Laserscope said,
"Our international progress exceeded expectations as we continued
to make strides in all major international markets, a strong
indication that we are indeed making important progress in
replacing the Trans Urethral Resection of the Prostate (TURP)
procedure with Photoselective Vaporization of the Prostate (PVP) as
the worldwide standard of care for Benign Prostaic Hyperplasia
(BPH). International market penetration remains an important part
of our long-term strategic growth plan. We are on track to begin
our clinical studies in Japan, the second largest TURP market
outside the US, beginning in the third quarter of 2006 and we
continue to expect strong urology revenue growth in the major
international markets in 2006 and beyond. Although our domestic
urology revenue was more modest than we had expected this quarter,
direct accounts showed a strong increase in delivery device usage
sequentially with large mobilizing partnerships showing flat to
slightly down sequentially. Additionally, some capital equipment
purchase processes were delayed as these customers chose to wait
for the upcoming American Urological Association meeting before
making purchase decisions. As indicated previously, we expect
year-over-year revenue and earnings growth to be heavily weighted
toward the second half of the year as revenues from our new
products pipeline, expanded sales network, recent acquisition, and
product cost reduction initiatives take effect." "We are continuing
to make significant investments in R&D and sales and marketing
as part of our commitment to remaining at the forefront of the new
technology and product development curve. We are also aggressively
pursuing selective strategic acquisitions to augment our existing
product and technology portfolio, increase our manufacturing
efficiencies, and drive continued revenue and earnings growth. To
that end, we are very excited about our acquisition of Innovaquartz
Inc., which we announced today and we will discuss in more detail
today at our first quarter earnings conference call." "We have also
continued our efforts to revitalize our aesthetics product line.
Although very competitive, this is still a growth market. We
continue to work closely with our U.S. distribution partner, Henry
Schein, to drive sales in this large and growing market in the US
as well as internationally. Our goal is to return this business to
market growth rates by the fourth quarter of 2006 by increasing our
distribution network of direct sales representatives both
domestically and internationally and releasing a series of new
products and marketing programs during the balance of 2006 and in
2007. We look forward to giving an overview of our aesthetics
product development pipeline at our Investor Forum in May." Balance
Sheet Summary Laserscope's balance sheet remains strong. At March
31, 2006, the Company had no bank borrowings and a cash position of
$33.2 million, up from $30.7 million at December 31, 2005. At
quarter-end, net accounts receivable was $24.0 million. Days sales
outstanding (DSOs) were 67, up slightly from 66 in the fourth
quarter of 2005. Outlook The company continues to expect full year
2006 revenue and fully taxed earnings to increase by 20% to 25%
over 2005 levels to $0.72 - $0.75 per share, assuming a 43% tax
rate is applied to both 2006 and 2005 pre-tax earnings, and
excluding the impact of FAS 123(R) stock compensation expenses in
2006. The Company anticipates that revenue and fully taxed earnings
will be larger in the second half of 2006 (approximately 55% to 60%
of the full year's total) due to new products we will bring to
market as a result of internal R&D and strategic activities.
Adoption of SFAS 123R The results for the first quarter of 2006
include the impact from adoption in 2006 of SFAS 123R that requires
expensing of stock options and other share- based payments. The
company included in its cost of revenues and operating expenses
total share-based compensation expenses of approximately $596,000
($472,000 net of income tax or $0.02 per diluted share). Special
Investor Relations Forum Announced Laserscope will be holding a
special Investor Relations Forum coinciding with the 2006 American
Urological Association Meeting on May 22, 2006. At this meeting,
Laserscope will be discussing current and future R&D and
business development initiatives for our urology and aesthetic
product lines as well as unveiling the latest new additions to the
Laserscope urology product line. Investors are invited to attend
in-person or via a web-cast which will be announced prior to the
event. Those planning to attend in person should contact
Laserscope's IR representatives as attendance will be limited.
Management Conference Call Management of Laserscope will hold a
conference call today, Monday, May 1, 2006 at 8:00am PT / 11:00am
ET to discuss results for the 2006 first quarter. To participate in
the call, please dial 800-218-0204 (303-262-2050 for international
callers) at least five minutes prior to the start time. Investors
will also have the opportunity to listen to the conference call
live on the Internet through Laserscope's website at
http://www.laserscope.com/. Investors should go to the website a
few minutes early, as it may be necessary to download audio
software to access the conference call. A replay of the conference
call will be available through Monday, May 8, 2006, by dialing 800-
405-2236 (303-590-3000 for international callers), and entering
passcode 11059316. An archive will also be available at
Laserscope's website. About Laserscope Laserscope designs,
manufactures, sells and services on a worldwide basis an advanced
line of minimally-invasive medical products including medical laser
systems and related energy delivery devices for the office,
outpatient surgical center, and hospital markets. More information
about Laserscope can be found on its web site at
http://www.laserscope.com/. Safe Harbor Statement This press
release contains forward-looking information within the meaning of
Section 21E of the Securities Exchange Act of 1934, and is subject
to the safe harbor created by this section. These forward-looking
statements include: statements about Laserscope's future
profitability and operating results, competition, manufacturing and
engineering improvements in our existing products designed to
reduce the cost of goods sold, expected benefits resulting from the
acquisition of Innovaquartz, Inc., expected continued momentum of
Laserscope's business and growth including new product offerings,
worldwide adoption rates of the PVP procedure using the GreenLight
PV(R) laser system, our ability to compete with similar product
offerings and other therapies for the treatment of BPH, market
penetration opportunities in international markets such as in
Europe and the Asia Pacific region, including Japan, and the
relationship with our distribution partner for aesthetic products,
Henry Schein, Inc. These statements are subject to a number of
risks and uncertainties, including: uncertainties regarding
introduction of new technologies competitive to Laserscope's
products and the degree to which our current and new products are
accepted by customers, which could affect the level of demand for
our products; any acquisitions we make, including the acquisition
of InnovaQuartz, Inc., may not provide us the expected benefits and
could disrupt our business and harm our financial condition,
results of operations and cash flows, uncertainties regarding the
impact that competitive products and therapies as well as private
and public payer reimbursement levels for the PVP procedure could
have on the competitiveness of our current pricing programs, which
could adversely impact our financial results; our dependence on
sole source providers for key components and products; risk of
reductions in government and private insurance reimbursement of
hospitals and physicians for health care costs, which may
negatively impact hospitals and physicians decisions to purchase
our products reducing adoption rates and sales growth; risks that
we may be unable to protect adequately the integrity, safety and
proper use of our disposable fiber optic delivery device with the
GreenLight PV(R) laser system, which could result in negative
patient outcomes and reduce our disposable delivery device
recurring revenue stream; risks that patents and licenses that we
hold may be challenged, invalidated or circumvented or that we may
become the subject of intellectual property litigation;
uncertainties regarding our ability to compete with companies that
have significantly greater financial, technical, research and
development, manufacturing and marketing resources than we have;
and uncertainties that new products will receive regulatory
approval in applicable jurisdictions. Actual results may differ
materially due to these and other factors. The matters discussed in
this press release also involve risks and uncertainties described
from time to time in Laserscope's filings with the Securities and
Exchange Commission. In particular, see the Risk Factors described
in Laserscope's most recent Quarterly Report on Form 10-Q and
Annual Report on Form 10-K. Copies of Laserscope's public
disclosure filings with the SEC, including the most recent Annual
Report on Form 10-K and the most recent forms 10-Q are available
upon request from its Investor Relations Department at its website
at http://www.laserscope.com/ and at the SEC's website:
http://www.sec.gov/. Laserscope assumes no obligation to update the
forward-looking information contained in this press release.
GreenLight(TM) Delivery Device Sales (Units) 2006 Q1 United States
14,782 International 6,224 Total 21,006 2005 Q1 Q2 Q3 Q4 Year
United States 11,792 14,379 12,654 15,221 54,046 International
4,463 4,712 4,985 5,461 19,621 Total 16,255 19,091 17,639 20,682
73,667 LASERSCOPE FINANCIAL SUMMARY (Unaudited) Condensed
Consolidated Statements of Income Three months ended March 31,
(thousands except per share amounts) 2006 2005 Net revenues $32,009
$28,177 Cost of sales (1) 12,499 10,577 Gross margin 19,510 17,600
Operating expenses: R&D, clinical and regulatory (1) 2,949
1,585 Selling, general and administrative (1) 11,835 9,878 14,784
11,463 Operating income 4,726 6,137 Interest income (expense) and
other, net 144 79 Net income before income taxes 4,870 6,216
Provision for income taxes (1) 2,079 1,253 Net income (1) $ 2,791 $
4,963 Basic net income per share (1) $0.13 $0.23 Diluted net income
per share (1) $0.12 $0.22 Shares used in basic per share
calculations 22,327 22,009 Shares used in diluted per share
calculations 22,823 22,986 (1)Includes the following amounts for
stock based compensation Cost of sales $100 $-- R&D, clinical
and regulatory 110 -- Selling, general and administrative 386 --
Total 596 -- Provision for income taxes (124) -- Net income $472
$-- Basic net income per share $0.02 $-- Diluted net earnings per
share $0.02 $-- LASERSCOPE FINANCIAL SUMMARY (Unaudited) Condensed
Consolidated Balance Sheets March 31, December 31, ($ in thousands)
2006 2005 Assets Current assets: Cash & cash equivalents
$33,234 $30,653 Accounts receivable, net 23,972 25,138 Inventories
27,595 27,058 Prepayments and other current assets 18,461 19,171
Total current assets 103,262 102,020 Property and equipment, net
10,919 8,663 Other assets 1,060 1,087 Total assets $115,241
$111,770 Liabilities and Shareholders' Equity Current liabilities
$26,203 $26,973 Capital leases 4 9 Shareholders' equity 89,034
84,788 Total liabilities and shareholders' equity $ 115,241 $
111,770 At Laserscope: At Financial Relations Board: Eric Reuter,
President & CEO Tricia Ross Analyst/Investor Contact Derek
Bertocci, CFO (617) 520-7064 (408) 943-0636 DATASOURCE: Laserscope
CONTACT: Eric Reuter, President & CEO, or Derek Bertocci, CFO,
+1-408-943-0636 both of Laserscope; or At Financial Relations
Board: Analyst/Investor Contact, Tricia Ross, +1-617-520-7064 Web
site: http://www.laserscope.com/
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