Spectranetics Corporation (Nasdaq:SPNC) today reported financial results for the quarter and full year ended December 31, 2009.
“The fourth quarter was highlighted by several important developments and achievements – including the resolution of the 16-month federal investigation with no charges filed against the Company, reaching the highest quarterly revenue in our history and recording an adjusted pre-tax profit for the second quarter in a row”
Revenue for the fourth quarter of 2009 was $29.7 million, up 11% compared with revenue of $26.6 million for the fourth quarter of 2008.
“The fourth quarter was highlighted by several important developments and achievements – including the resolution of the 16-month federal investigation with no charges filed against the Company, reaching the highest quarterly revenue in our history and recording an adjusted pre-tax profit for the second quarter in a row,” said Emile J. Geisenheimer, Chairman, President and Chief Executive Officer. “We are positioned for further growth in 2010 and look forward to the introduction of the Turbo-Tandem™ for above-the-knee treatments. In addition, we continue to work with the Food and Drug Administration as they review our 510(k) application seeking clearance to market certain products for the treatment of in-stent restenosis in the legs.”
The pre-tax loss for the fourth quarter of 2009 was $5,514,000, compared with a pre-tax loss of $1,135,000 for the fourth quarter of 2008. The pre-tax loss during the fourth quarter of 2009 includes $6,121,000 of special items, consisting of:
- a $5,000,000 federal settlement;
- a $1,100,000 impairment of auction rate securities we continue to hold;
- a $540,000 realized loss on the sale of auction rate securities;
- $76,000 of costs associated with a previously announced litigation settlement; and
- a $595,000 credit, due to an insurance reimbursement related to federal investigation costs.
The pre-tax loss during the fourth quarter of 2008 included $2,028,000 of costs associated with the federal investigation. Excluding these special items in both periods, adjusted pre-tax income was $607,000 in the fourth quarter of 2009, compared with adjusted pre-tax income of $893,000 in the fourth 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.
Fourth Quarter Revenue Review
Vascular intervention revenue rose 5% to $15.2 million, lead management revenue increased 33% to $10.0 million, laser equipment revenue declined 15% to $2.0 million, and service and other revenue increased 5% to $2.5 million, all compared with the fourth quarter of 2008. Vascular intervention sales include three product lines — atherectomy, which decreased 5%, crossing solutions, which increased 19%, and thrombectomy, which increased 24%, all compared with the fourth quarter of 2008.
On a geographic basis, revenue in the United States was $24.4 million in the fourth quarter of 2009, an increase of 7% from the prior year fourth quarter. International revenue totaled $5.3 million, an increase of 38% from the fourth quarter of 2008.
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 December 31, 2009, the Company placed 28 laser systems with new customers compared with 35 placements during the fourth quarter of 2008. Of those new laser placements, 15 laser systems were transfers from the existing installed base during the fourth quarter of 2009, compared with 10 transfers during the fourth quarter of 2008. As of December 31, 2009 the worldwide installed base of laser systems totaled 902 (699 in the United States).
2009 Full Year Financial Results
Revenue for year ended December 31, 2009 rose 10% to $114.8 million, from $104.0 million in 2008.
Vascular intervention revenue in 2009 was $61.9 million, up 8% compared with $57.4 million in 2008; and lead management revenue was $36.8 million in 2009, up 27% compared with $28.9 million in 2008. Laser equipment revenue declined 21% to $6.8 million, from $8.6 million in 2008. Service and other revenue in 2009 was $9.3 million, up 3% compared with $9.0 million in 2008.
On a geographic basis, revenue in the United States was $96.9 million in 2009, an increase of 7% over 2008. International revenue totaled $17.9 million, an increase of 30% from 2008.
The pre-tax loss for 2009 was $13,247,000, compared with a pre-tax loss of $4,661,000 in 2008. The pre-tax loss during 2009 includes $11,779,000 of special items, consisting of:
- a $5,000,000 federal settlement;
- $2,362,000 of costs associated with the federal investigation;
- $1,166,000 of costs associated with a previously announced litigation settlement;
- a $1,100,000 impairment of auction rate securities we continue to hold;
- $1,075,000 relating to the discontinuation of the marketing and sales of the Safe-Cross® product line;
- a $540,000 realized loss on the sale of auction rate securities; and
- $536,000 of employee termination and lease abandonment costs.
The pre-tax loss during 2008 included $6,299,000 of special items, consisting of:
- $3,849,000 of in-process research and development costs and
- $2,450,000 of costs associated with the federal investigation.
Excluding these special items in both periods, adjusted pre-tax loss was $1,468,000 in 2009, compared with adjusted pre-tax income of $1,638,000 in 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 $19.1 million at December 31, 2009, compared with $18.3 million at September 30, 2009 and $20.5 million at December 31, 2008.
2010 Outlook
The Company continues to expect revenue growth during 2010 in both the vascular intervention and lead management business units and expects higher growth rates internationally than in the United States.
Excluding any impact of the Turbo-Tandem product launch, the vascular intervention revenue growth rate is anticipated to be in the low to mid-single digits during 2010 as compared with 2009. Including the impact of the Turbo-Tandem product launch, the vascular intervention revenue growth rate is anticipated to be in the high single digits to low-teens. The lead management revenue growth rate in 2010 as compared with 2009 is anticipated to be in the mid-teens.
Laser equipment revenue and service and other revenue are expected to grow in the low to mid-single digits during 2010 as compared with 2009.
Gross margin is expected to be in the range of 71% to 72% during 2010.
A pre-tax loss is anticipated for the three months ended March 31, 2010 and management expects a pre-tax profit for the year ended December 31, 2010.
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