Spectranetics Corporation (Nasdaq:SPNC) today reported financial results for the three and six months ended June 30, 2010.
“Our Lead Management products continued their strong growth rate, increasing 14% over last year's second quarter. Further, the recently introduced Turbo-Tandem™ achieved sales of $1.4 million in the second quarter, helping drive peripheral atherectomy product sales up 8%”
Revenue for the second quarter of 2010 was $30.0 million, up 3% compared with revenue of $29.0 million for the second quarter of 2009. Pre-tax income for the second quarter of 2010 was $124,000, compared with a pre-tax loss of ($2.3) million in the second quarter of 2009.
"Our Lead Management products continued their strong growth rate, increasing 14% over last year's second quarter. Further, the recently introduced Turbo-Tandem™ achieved sales of $1.4 million in the second quarter, helping drive peripheral atherectomy product sales up 8%," said Emile J. Geisenheimer, Chairman, President and Chief Executive Officer. "Notwithstanding $300,000 of costs associated with a voluntary QuickCat™ product recall, we achieved a pre-tax profit for the second quarter, which reflects continued focus on productivity and expense management. We believe this discipline will drive further profitability in the second half of the year."
Pre-tax income in the second quarter of 2010 includes a $60,000 credit, due to an insurance reimbursement related to federal investigation costs. The pre-tax loss during the second quarter of 2009 included $982,000 of costs associated with the federal investigation, and $170,000 in employee termination costs. Excluding these special items in both periods, the adjusted pre-tax income was $64,000 in the second quarter of 2010, compared with an adjusted pre-tax loss of ($1.2) million in the second quarter of 2009.
Net income for the second quarter of 2010 was $91,000, or $0.00 per diluted share, compared with a net loss of ($2.3) million, or ($0.07) per share, in the second quarter of 2009. Excluding the special items discussed above, adjusted net income for the second quarter of 2010 was $31,000, or $0.00 per diluted share, compared with an adjusted net loss of ($1.2) million, or ($0.04) per share, in the second quarter of 2009.
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 are provided immediately following the financial tables under Reconciliation of Non-GAAP Financial Measures.
Second Quarter Revenue Review
Vascular Intervention revenue rose slightly to $16.1 million, Lead Management revenue increased 14% to $10.0 million, laser equipment revenue declined 19% to $1.6 million, and service and other revenue rose 2% to $2.3 million, all compared with the second quarter of 2009. Vascular Intervention sales include three product lines — atherectomy (including peripheral and coronary), which increased 5%, crossing solutions, which decreased 5%, and thrombectomy, which decreased 5%, all compared with the second quarter of 2009.
On a geographic basis, revenue in the United States was $26.0 million in the second quarter of 2010, an increase of 6% from the prior year second quarter. International revenue totaled $4.0 million, a decrease of 11% from the second quarter of 2009.
Year-to-Date Financial Results
Revenue for the first half of 2010 rose 5% to $59.0 million, from $56.3 million for the first half of 2009.
Year-to-date 2010 Vascular Intervention revenue was up 1% to $31.6 million, Lead Management revenue was up 18% to $19.9 million, laser equipment revenue declined 15% to $2.9 million, and service and other revenue declined 2% to $4.6 million, all compared with the first six months in 2009. Vascular Intervention sales include three product lines — atherectomy (including peripheral and coronary), which increased 3%, crossing solutions, which decreased 3%, and thrombectomy, which increased 1%, all compared with the first six months of 2009.
On a geographic basis, revenue in the United States was $50.8 million during the six months ended June 30, 2010, an increase of 6% from the comparable period last year. International revenue totaled $8.2 million, a decrease of 1% from the first six months of 2009.
Mr. Geisenheimer continued, "Despite strong growth in peripheral atherectomy and Lead Management revenue during the first half, our total sales were affected by less than anticipated international revenue as well as coronary atherectomy and thrombectomy revenue within the U.S. Further, we anticipate foreign currency exchange rates to put downward pressure on international revenue in the second half of this year. As a result, we now expect a slower revenue growth rate internationally than in the U.S. for the full year of 2010."
The pre-tax loss for the first half of 2010 was ($800,000), compared with a pre-tax loss of ($5.2) million in the first half of 2009. The pre-tax loss in the first half of 2010 includes legal and related costs of $293,000 associated with the federal investigation. The pre-tax loss during the first half of 2009 included $2.4 million of costs associated with the federal investigation, and $170,000 in employee termination costs. Excluding these special items in both periods, the adjusted pre-tax loss was ($507,000) in the first half of 2010, compared with an adjusted pre-tax loss of ($2.7) million in the first half of 2009.
The net loss for the first half of 2010 was ($867,000), or ($0.03) per share, compared with a net loss of ($5.1) million, or ($0.16) per share, in the first half of 2009. Excluding the special items discussed above, the adjusted net loss in the first half of 2010 was ($574,000), or ($0.02) per share, compared with an adjusted net loss of ($2.6) million, or ($0.08) per share, in the first half of 2009.
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 are provided immediately following the financial tables under Reconciliation of Non-GAAP Financial Measures.
Cash, cash equivalents and current investment securities totaled $21.9 million at June 30, 2010, compared with $19.1 million at December 31, 2009. In addition, the Company holds $6.7 million of auction-rate securities at June 30, 2010, a decrease from $9.8 million at December 31, 2009 due primarily to the sale of one of the auction rate security positions during the first quarter of 2010. These securities are included as "investment securities - non-current" on the balance sheet.
2010 Outlook
The Company has updated its outlook for 2010 full year performance, which is described below.
Due to our continued focus on productivity and expense management and an expectation that second half revenue will be stronger than the first half in both Vascular Intervention and Lead Management, management continues to expect a pre-tax profit for the year ended December 31, 2010.
The Vascular Intervention revenue growth rate during 2010 as compared with 2009 is now anticipated to be three to five percent as compared with our previous outlook for a growth rate in the high single digits to low-teens. The growth rate for peripheral atherectomy, which is the largest product category within Vascular Intervention, is anticipated to be in the range of 11% to 13%.
Management reiterates its Lead Management revenue percentage growth rate in the mid-teens for 2010 as compared with 2009.
Laser equipment revenue and service and other revenue are now expected to decrease by approximately 5% as compared with our previous outlook for growth in the low to mid-single digits.
Gross margin is expected to be approximately 72%, which is at the high end of the previously provided range of 71% to 72% for the year ended December 31, 2010.
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