Spectranetics Corporation today reported financial results for the quarter and full year ended December 31, 2010.
Revenue for the fourth quarter of 2010 was $29.3 million, a decrease of 1% as reported and essentially flat on a constant currency basis, compared with revenue of $29.7 million for the fourth quarter of 2009. Pre-tax income for the fourth quarter of 2010 was $0.5 million, compared with a pre-tax loss of $(5.5) million in the fourth quarter of 2009. Excluding special items in both periods, adjusted pre-tax income was $1.5 million in the fourth quarter of 2010, compared with adjusted pre-tax income of $0.6 million in the fourth quarter of 2009.
Pre-tax income in the fourth quarter of 2010 included a previously disclosed special item of $1.0 million. The pre-tax loss during the fourth quarter of 2009 included $6.1 million of special items. 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."
"Our Lead Management products continue to be the standard of care for removing problematic pacemaker or defibrillator leads and generated revenue growth in the United States of 14% during the fourth quarter of 2010 compared with the prior year. Full year worldwide revenue growth within Lead Management was 12%, consistent with our previously provided outlook," said Jason D. Hein, Senior Vice President of Sales and Marketing. "Vascular Intervention revenue for the full year declined by 3% and was also in the range of expectations outlined in our previously provided outlook. Vascular Intervention revenue during the fourth quarter reflected the planned transition associated with the realignment of certain sales territories in September 2010, which is now complete. As a result, I remain optimistic that we will improve upon fourth quarter Vascular Intervention revenue throughout 2011 and anticipate continued double-digit revenue growth in our market-leading Lead Management business in 2011."
Shar Matin, Senior Vice President of Operations, Product Development and International, commented, "Our operating focus in 2011 is to execute projects already underway that will drive revenue growth. Toward that end, we expect to introduce new products and product enhancements by the end of 2011, including a line extension of our Turbo Tandem peripheral atherectomy device and a next-generation laser-assisted lead extraction device. We are also moving forward on the FDA filing to initiate a randomized clinical study to treat in-stent restenosis, and are targeting enrollment of the first patient during the second quarter of 2011. We recently received FDA approval on the manufacturing site change for the CVX-300® laser system, a key aspect of our program to increase operating efficiency, and plan to complete the transition into our expanded manufacturing facility by the end of this year."
Net income for the fourth quarter of 2010 was $0.5 million, or $0.02 per diluted share, compared with a net loss of $(5.7) million, or $(0.17) per share, in the fourth quarter of 2009. Excluding the special items in both periods discussed above, adjusted net income for the fourth quarter of 2010 was $1.5 million, or $0.04 per diluted share, compared with adjusted net income of $0.4 million, or $0.01 per diluted share, in the fourth quarter of 2009.
Fourth Quarter Revenue Review
Lead Management revenue increased 6% (14% in the U.S.) to $10.6 million, laser equipment revenue increased 10% to $2.2 million, and service and other revenue was essentially flat at $2.5 million, all compared with the fourth quarter of 2009. Vascular Intervention sales declined 8% (7% in the U.S.) to $14.1 million and include three product lines: atherectomy (including peripheral and coronary), which decreased 4%, crossing solutions, which decreased 10%, and thrombectomy, which decreased 14%, all compared with the fourth quarter of 2009.
On a geographic basis, revenue in the United States was $24.7 million in the fourth quarter of 2010, an increase of 2% from the prior year fourth quarter. International revenue was $4.6 million, a decrease of 14% from the fourth quarter of 2009, or a decrease of 9% on a constant currency basis. The decrease in International revenue is primarily due to lower lead management revenue compared with a particularly strong fourth quarter of 2009.
Full Year 2010 Financial Results
Revenue for the year ended December 31, 2010 rose 3% to $117.9 million, from $114.8 million in 2009.
Lead Management revenue in 2010 was up 12% (14% in the U.S.) to $41.2 million, laser equipment revenue increased 5% to $7.2 million, and service and other revenue increased 1% to $9.4 million, all compared with 2009. Vascular Intervention revenue declined 3% (2% in the U.S.) to $60.2 million. Within Vascular Intervention sales, atherectomy was down 1%, crossing solutions decreased 4%, and thrombectomy decreased 8%, all compared with 2009.
On a geographic basis, revenue in the United States was $101.0 million during 2010, an increase of 4% from 2009. International revenue totaled $16.9 million, a decrease of 6% from 2009, or a decrease of 3% on a constant currency basis.
The pre-tax loss for 2010 was $(6.8) million, compared with a pre-tax loss of $(13.2) million in 2009. Excluding special items in both periods, adjusted pre-tax income was $2.5 million in 2010, compared with an adjusted pre-tax loss of $(1.5) million in 2009.
The pre-tax loss in 2010 and 2009, respectively, included $9.4 million and $11.8 million of special items. 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."
The net loss in 2010 was $(13.1) million, or $(0.39) per share, compared with a net loss of $(13.4) million, or $(0.41) per share, in 2009. The net loss in 2010 includes an increase in the valuation allowance of $6.1 million against the deferred tax asset. Excluding the increase in the valuation allowance against the deferred tax asset and special items discussed above, adjusted net income in 2010 was $2.4 million, or $0.07 per diluted share, compared with an adjusted net loss of $(1.6) million, or $(0.05) per share, in 2009.
Cash, cash equivalents and current investment securities were $33.7 million as of December 31, 2010, up from $19.1 million as of December 31, 2009. During the fourth quarter and year ended December 31, 2010, approximately $0.8 million and $6.2 million, respectively, of auction-rate securities were either sold or redeemed by the issuer. In addition, the remaining $3.6 million of auction rate securities held by the Company as of December 31, 2010 have been reclassified from "investment securities - non-current" to "cash, cash equivalents and investment securities" on the balance sheet due to the Company's expectation that these securities will either be redeemed or sold during 2011 at an amount that approximates the book value of the securities.
2011 Outlook
The Company's primary focus in 2011 is to improve the revenue growth rate while staying profitable. Revenue is anticipated to be within the range of $122.5 million to $126.5 million, which represents an increase over 2010 revenue of 4% to 7%.
Gross margin is expected to be approximately the same as 2010 levels of 71%, but important initiatives designed to improve manufacturing efficiencies in 2012 and beyond will be implemented this year.
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