Patient Safety Technologies' 2009 fourth-quarter revenue up 85.2%

Apr 1 2010

Patient Safety Technologies, Inc. (OTC Bulletin Board: PSTX) announced record quarterly and annual revenues for the quarter and year ended December 31, 2009.

"I am pleased to announce that 2009 was a banner year on all fronts," said Steven H. Kane, President and Chief Executive Officer of Patient Safety Technologies, Inc.  "Not only did we see record year over year revenue growth of 62% and significantly more momentum in our Q4-09 sales, but we also reached the landmark milestone of having had over 1,000,000 surgical procedures performed, utilizing over 25,000,000 Safety Sponges® without a single unintended retained sponge event.  Additionally, we renewed our exclusive distribution agreement with Cardinal Health, which included an advance purchase of $10 million in safety sponge products and an $8 million prepayment."  Kane added, "2009 also saw the implementation of the SurgiCount Indemnification Program, a dedicated insurance policy which insures hospitals that use the Safety Sponge® System in conjunction with our Citadel™ File Manager for up to $1,000,000 should a retained Safety Sponge® occur during a surgical procedure.  This indemnification program, in conjunction with an expanded sales force, a dedicated clinical implementation team, and a streamlined acquisition process, all contributed to a rapidly accelerating rate of adoption across all levels of hospitals.  Among these hospitals is an increasing number of U.S. News & World Report's "America's Best Hospitals",  which includes the University of California at San Francisco, Cleveland Clinic, Brigham and Women's, Mayo Clinic, and The Mount Sinai Hospital in New York."  

Fourth Quarter 2009 vs. Fourth Quarter 2008 Results

Revenue for the fourth quarter 2009 was $1,561,469, an increase of 85.2% from the $843,226 reported for the fourth quarter 2008.  Fourth quarter 2009 gross margin of 36.2% decreased from fourth quarter 2008 gross margin of 45.4% primarily due to adjustments relating to our scanner program, distributor rebates and a year-end inventory reserve adjustment.   Net loss for the fourth quarter 2009 was $6,737,537 compared a loss of $983,995 for the fourth quarter of 2008. This fourth quarter 2009 net loss included net non-cash charges of $4,263,025, while the fourth quarter of 2008 included net non-cash income of $632,089, for equity based compensation, issuance of warrants and change in our warrant derivative liability.

Full Year 2009

Revenues for the full year in 2009 were $4,503,535, an increase of 62.0% from the $2,779,871 reported for 2008.  Gross margin for 2009 was 40.0% which increased from 35.3% reported for 2008 due to higher sales volumes of surgical sponge products.  Net loss for 2009 was $17,531,255 compared a loss of $4,373,524 for 2008. The 2009 net loss included net non-cash charges of $10,790,832, while the 2008 net loss included net non-cash income of $916,062, for equity based compensation, issuance of warrants and change in our warrant derivative liability. Net loss per common share increased to ($0.90) per share in 2009 from ($0.31) per share in 2008.

Kane concluded, "In 2010, we are committed to build on this strong momentum, and to continue to develop and implement innovative programs and technology enhancements to make the Safety Sponge® System the standard of care in the hospital marketplace."