American Medical Systems Holdings, Inc. (NASDAQ: AMMD) reported sales of $136.4 million for the second quarter of 2010, a 7.9 percent increase over sales of $126.4 million in the comparable quarter of 2009. Adjusting for the negative impact of $1.4 million due to fluctuations in foreign exchange rates since the time the second quarter guidance was issued; revenue would have achieved the upper end of the guidance range. Conversely, compared to the prior year, foreign exchange had a minimal favorable impact, resulting in second quarter constant currency growth of 7.6 percent. Further adjusting revenue for the impact of the Her Option® product line, which was sold during the first quarter of 2010, results in constant currency growth of 9.1 percent.
“Adding to our confidence for the remainder of 2010 was our operational performance in the second quarter, once again achieving very strong gross and operating margins and net income growth of 20 percent plus.”
The Company reported strong second quarter net income of $20.6 million, a 22.0 percent increase over net income of $16.9 million in the same quarter last year. The resulting second quarter earnings per share of $0.26 compares to $0.23 in the same quarter last year, and non-GAAP adjusted earnings per share of $0.31 compares to $0.29 in the same period last year, finishing at the top of our guidance. Non-GAAP adjusted earnings per share excludes the impact of the amortization of intangible assets and amortization of financing costs, both significant non-cash items affecting comparability to other companies. A reconciliation of reported net income to non-GAAP adjusted net income is provided in the attached schedules.
Men's Health sales of $61.4 million in the second quarter, represented an increase of 7.7 percent on a reported basis compared to the same quarter last year, and grew 7.5 percent on a constant currency basis, with the erectile restoration and male continence product lines contributing equally to the growth. The BPH therapy business increased 3.9 percent on a reported basis, and grew 3.7 percent on a constant currency basis, to $29.2 million during the quarter. Late in the second quarter, the Company launched the new GreenLight™ XPS Laser Therapy System, and received 510(k) clearance for the revolutionary MoXy™ Liquid Cooled Fiber, our newest system for the treatment of BPH. The Women's Health business, excluding the Her Option® product line that was sold in the first quarter, increased 15.7 percent on a reported basis and 15.3 percent on a constant currency basis to $44.5 million in the second quarter. Pelvic floor repair has continued its strong performance, driven by the success of both Elevate® anterior and Elevate® posterior. The female continence product line recorded improving growth rates in the second quarter, approaching mid single digits. Revenue from uterine health of $1.3 million pertains to the product supply agreement with CooperSurgical, Inc., as part of the product line divestiture agreement.
"We had solid second quarter revenue performance and are very excited about the market opportunities related to the launch of the new GreenLight™ XPS system and the anticipated launch of the MoXy™ Liquid Cooled Fiber later this year. We are equally excited about the third quarter launch of the new MiniArc® Precise Single-Incision Sling System for the treatment of female stress urinary incontinence (SUI)," noted Tony Bihl, Chief Executive Officer. Mr. Bihl further stated, "Adding to our confidence for the remainder of 2010 was our operational performance in the second quarter, once again achieving very strong gross and operating margins and net income growth of 20 percent plus."
Outlook
Despite recent pressures on revenue as a result of the strengthened U.S. dollar, the Company reaffirms its full year 2010 revenue guidance of $544 to $560 million. Third quarter revenue guidance is in the range of $128 to $132 million. This guidance assumes foreign currency exchange rates remain constant with current rates.
Consistent with 2009, the Company has two significant non-cash charges in GAAP earnings that create inconsistencies in comparisons to many other companies; amortization of financing costs and amortization of intangible assets. Accordingly, the Company guides to non-GAAP adjusted earnings per share, which the Company defines as GAAP earnings per share excluding the impact of amortization of intangible assets and amortization of financing costs.
The Company reaffirms its full year 2010 non-GAAP adjusted earnings per share guidance of $1.19 to $1.27. Third quarter non-GAAP adjusted earnings per share guidance is in the range of $0.26 to $0.29. Both the full year and third quarter guidance exclude the impact of amortization of intangible assets which is approximately $0.025 and $0.10 for the third quarter and full year 2010, respectively, and amortization of financing costs, which is approximately $0.025 and $0.11 for the third quarter and full year 2010, respectively. Guidance for both periods excludes the impact of any unusual non-recurring items that could occur, such as gain or loss on early debt extinguishments, sale of non-strategic assets or IPRD charges on milestone payments related to prior acquisitions.