Rochester Medical announces operating results for the fiscal year ended September 30, 2009

Nov 6 2009

Rochester Medical Corporation (Nasdaq: ROCM) today announced operating results for its fourth quarter and year ended September 30, 2009.

The Company reported sales of $9,009,000 for the current quarter compared to $9,512,000 for the fourth quarter of last year. The Company reported a quarterly net loss of $229,000 or ($.02) per diluted share compared to net income of $342,000 or $.03 per diluted share for the fourth quarter of last year.

The approximate 5% decrease in sales (.6% decrease on a constant currency basis) resulted from a 2% increase in Rochester Medical Branded Sales (10% increase on a constant currency basis), offset by a 20% decrease in Private Label Sales (20% decrease on a constant currency basis). Constant currency basis assumes current exchange rates for all periods in order to exclude the impact of foreign exchange variations. In the fourth quarter of 2009 the U.S. dollar was significantly stronger versus the pound sterling, thus negatively affecting Rochester Medical Branded Sales levels in translated U.S. dollars given the significant volume of branded product sales in the United Kingdom.

Net income adjusted for certain non-recurring unusual items and certain recurring non-cash expenses, or "Non-GAAP Net Income" for the current quarter was $95,000 or $.01 per diluted share compared to Non-GAAP Net Income of $658,000 or $.05 per diluted share for the fourth quarter of last year. The decrease for the current quarter on a Non-GAAP basis is primarily attributable to the impact of exchange rate variation and increased investment in Sales and Marketing programs.

For the fiscal year ended September 30, 2009, the Company reported sales of $34,799,000 compared to sales of $35,192,000 for the previous year. It reported net income for the year of $109,000 or $.01 per diluted share compared to net income of $759,000 or $.06 per diluted share for the previous year. The approximate 1% decrease in annual sales (7% increase on a constancy currency basis) resulted from a 2% decrease in Rochester Medical Branded Sales (10% increase on a constant currency basis) partially offset by a 2% increase in Private Label Sales (2% increase on a constant currency basis).

Non-GAAP Net Income for the current year was $865,000 or $.07 per diluted share compared to Non-GAAP Net Income of $2,174,000 or $.17 per diluted share for the previous year. The decrease for the current year on a Non-GAAP basis is primarily due to the impact of exchange rate variation and increased investment in Sales and Marketing. It is also due to a tax benefit of $654,000 taken in the third quarter of last year and higher interest income in the prior year.

Rochester Medical also announced that a device reimbursement code has been issued this week by Medicare covering the Company's FemSoft Insert, which is a soft disposable device used to manage female stress urinary incontinence. The Company believes the availability of Medicare reimbursement, which commences in 2010, will help this unique device become an economically accessible and often preferred solution for incontinent women in the U.S.

Commenting on today's announcements, Rochester Medical's CEO and President Anthony Conway said, "First I must say that I am delighted with the Medicare reimbursement approval for the FemSoft Insert. This unique technology has the potential to help millions of women deal with the difficulties of incontinence with comfort, dignity, and grace. Rochester Medical is putting the appropriate plans in place to ensure that clinicians and women throughout the country have access to this excellent choice.

"Regarding the quarterly results, I think it is particularly important to highlight our progress in the U.S. and U.K., the areas of our direct sales and marketing focus. Combined fourth quarter sales of all Rochester Medical Branded products in those markets were up a solid 15% on a constant currency basis compared to the same period of the prior year. In those same combined markets on a constant currency basis, sales of Intermittent Catheters rose an impressive 46%, and Foley Catheter sales were up strongly with a 68% increase. These two product lines are our current growth drivers and, along with the FemSoft Insert, are expected to be the primary growth drivers in 2010 and beyond. The 20% drop in Private Label Sales is strictly due to timing of orders which causes the quarterly up and down fluctuations." To that point Conway noted Private Label Sales were up 42% in the third quarter and for the year were up 2%.

Conway continued, "We introduced the StrataSI(TM) and StrataNF(TM) Foley Catheters this quarter and we are extremely pleased with the initial reception. I believe that the comfortable softness and gentle feel of these all silicone catheters along with the infection prevention characteristics provide a clearly superior choice over latex catheters for all patients. Latex catheters currently make up 90% of the U.S. Foley catheter market.

"Looking ahead, given the new Strata product line, the recently introduced MAGIC3(TM) Intermittent Catheter line, the just announced National Healthcare System reimbursement for the FemSoft female incontinence insert in the U.K., and the Medicare final reimbursement approval announced today for FemSoft in the U.S., 2010 promises to be a very interesting and active year for Rochester Medical."