Spectranetics Corporation (Nasdaq:SPNC) today reported financial results for the quarter and nine months ended September 30, 2009.
Revenue for the third quarter of 2009 was $28.8 million, up 7% compared with revenue of $26.8 million for the third quarter of 2008.
The pre-tax loss for the third quarter of 2009 was $2,492,000, compared with pre-tax income of $615,000 for the third quarter of 2008. The pre-tax loss during the third quarter of 2009 includes $3,133,000 of special items, consisting of $602,000 of costs associated with the federal investigation; $1,090,000 of costs associated with previously announced ongoing litigation, which is unrelated to the federal investigation; $1,075,000 relating to the discontinuation of the marketing and sales of the Safe-Cross® product line; and $366,000 of employee termination and lease abandonment costs. Pre-tax income during the third quarter of 2008 included $422,000 of costs associated with the federal investigation. Excluding these special items in both periods, adjusted pre-tax income was $641,000 in the third quarter of 2009, compared with adjusted pre-tax income of $1,037,000 in the third quarter of 2008. A further description of these special items and a reconciliation of these non-GAAP financial measures to the most directly comparable financial measure calculated in accordance with GAAP is provided immediately following the financial tables under Reconciliation of Non-GAAP Financial Measures.
“Several important milestones were reached this quarter that reflect our focus on positioning the Company for continued revenue growth and careful management of our cost structure. We received 510k clearance and initiated a limited market release for our Turbo-Tandem™ device. We also filed a 510k application with the FDA for the treatment of in-stent restenosis in leg arteries. During the quarter, we completed a restructuring of the Company’s organization that we expect to result in annual savings of approximately $1.7 million,” said Emile J. Geisenheimer, Chairman, President and Chief Executive Officer. “Further, we achieved $28.8 million of revenue in the third quarter, which is historically our weakest quarter of the year. Of particular note is the 29% revenue growth in our lead management business and the achievement of an adjusted pre-tax profit for the first time this year.”
Third Quarter Revenue Review
Vascular intervention revenue rose 7% to $15.4 million, lead management revenue increased 29% to $9.8 million, laser equipment revenue declined 43% to $1.4 million, and service and other revenue declined 6% to $2.2 million, all compared with the third quarter of 2008. Vascular intervention sales include three product lines -- atherectomy, which decreased 3%, crossing solutions, which increased 23%, and thrombectomy, which increased 26%, all compared with the third quarter of 2008.
On a geographic basis, revenue in the United States was $24.5 million during the quarter ended September 30, 2009, an increase of 6% from the prior year third quarter. International revenue totaled $4.3 million, an increase of 18% from the third quarter of last year.
Reflecting the Company’s emphasis on sales to existing accounts, laser placements to new customers were anticipated to decline compared with prior year levels. During the quarter ended September 30, 2009, the Company placed 30 laser systems with new customers compared with 38 placements during the third quarter of last year. Of those new laser placements, 17 laser systems were transfers from the existing installed base during the third quarter of 2009, compared with 13 transfers during the third quarter of 2008. As of September 30, 2009 the worldwide installed base of laser systems totaled 889 (693 in the United States).
Year-to-Date Financial Results
Revenue for the first nine months of 2009 rose 10% to $85.2 million, from $77.4 million for the first nine months of 2008.
Year-to-date 2009 vascular intervention revenue was $46.7 million, up 9% compared with $43.0 million in the first nine months of 2008; and year-to-date lead management revenue was $26.8 million, up 25% compared with $21.4 million the first nine months of 2008. Laser equipment revenue declined 24% to $4.8 million, from $6.3 million in the comparable period of 2008. Service and other revenue for the first nine months of 2009 was $6.9 million, up 2% compared with $6.7 million for the comparable period in 2008.
On a geographic basis, revenue in the United States was $72.6 million during the nine months ended September 30, 2009, an increase of 8% from the comparable period last year. International revenue totaled $12.6 million, an increase of 28% from last year.
The pre-tax loss for the first nine months of 2009 was $7,733,000, compared with a pre-tax loss of $3,526,000 in the first nine months of 2008. The pre-tax loss during the nine months ended September 30, 2009 includes $5,658,000 of special items, consisting of $2,957,000 of costs associated with the federal investigation; $1,090,000 of costs associated with previously announced ongoing litigation, which is unrelated to the federal investigation; $1,075,000 relating to the discontinuation of the marketing and sales of the Safe-Cross® product line; and $536,000 of employee termination and lease abandonment costs. Pre-tax loss during the nine months ended September 30, 2008 included $4,271,000 of special items, consisting of $3,849,000 of in-process research and development costs and $422,000 of costs associated with the federal investigation. Excluding these special items in both periods, adjusted pre-tax loss was $2,075,000 in the first nine months of 2009, compared with adjusted pre-tax income of $745,000 in the first nine months of 2008. A further description of these special items and a reconciliation of these non-GAAP financial measures to the most directly comparable financial measure calculated in accordance with GAAP is provided immediately following the financial tables under Reconciliation of Non-GAAP Financial Measures.
Cash, cash equivalents and current investment securities totaled $18.3 million at September 30, 2009, compared with $15.6 million at June 30, 2009 and $20.5 million at December 31, 2008.
2009 Outlook
The Company continues to expect revenue growth during 2009 in both the vascular intervention and lead management business units.
Vascular intervention revenue is anticipated to increase approximately 8% to 9% in 2009 as compared with 2008. Lead management revenue growth in 2009 as compared with 2008 is anticipated to approximate 27% to 28%.
Gross margin is expected to be approximately 71% in 2009.
While management expects to incur a pre-tax loss for 2009, a pre-tax profit is anticipated in the second half of 2009 after adjusting for the special items discussed under Reconciliation of Non-GAAP Financial Measures immediately following the financial tables.
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. Individuals interested in listening to the conference call should dial (888) 803-8271 for domestic callers, or (706) 634-2467 for international callers. The live conference call will also be available via the Internet on the investor relations section of www.spectranetics.com. A slide presentation will accompany the webcast.
A telephone replay will be available for 48 hours following the conclusion of the call by dialing (800) 642-1687 for domestic callers, or (706) 645-9291 for international callers and entering reservation code 36171056. The web site replay will be available for 14 days following the completion of the call.
Scientists unveil a 3D photoacoustic scanner that speeds up vascular imaging for real-time clinical use