The Spectranetics Corporation (NASDAQ:SPNC) today reported
financial results for the three months and year ended
December 31, 2016. Highlights of the quarter, all
compared with the three months ended December 31, 2015,
include:
- Revenue of $71.9 million increased 10% (both as reported and
constant currency1)
- Vascular Intervention revenue of $47.6 million increased 11%
(both as reported and constant currency)
- Lead Management revenue of $19.8 million increased 8% (9% in
constant currency)
Net loss for the three months ended December 31, 2016 was
$12.6 million, or $0.29 per share, compared with net loss of $10.5
million, or $0.25 per share, for the three months ended
December 31, 2015. Non-GAAP net loss2 for the three months
ended December 31, 2016 was $9.4 million, or $0.21 per share,
compared with non-GAAP net loss of $8.2 million, or $0.20 per
share, for the three months ended December 31, 2015.
“I’m pleased with our fourth quarter results and the consistent
performance of our team throughout 2016. The impact of our
innovation pipeline is increasing and our clinical data puts us in
a unique position in the marketplace,” said Scott Drake, President
and CEO. “Looking ahead, 2017 is a very important year as we
execute on new product launches and anticipate the approval and
launch of Stellarex in the US. We have exciting prospects in both
lead management and vascular intervention, and we are well
positioned with our commercial team to capitalize on these
opportunities.”
Full Year 2016 ResultsRevenue for the year
ended December 31, 2016 increased 10% to $270.8 million from $246.0
million for the year ended December 31, 2015. Vascular
Intervention revenue increased 13% in both reported and constant
currency, to $181.6 million. Lead Management revenue increased 5%
in both reported and constant currency, to $73.3 million. Laser,
service and other revenue increased 2% (3% constant currency) to
$16.0 million.
Net loss for the year ended December 31, 2016 was $58.1 million,
or $1.35 per share, compared with net loss of $59.5 million, or
$1.40 per share, for the year ended December 31, 2015. Non-GAAP net
loss for the year ended December 31, 2016 was $43.8 million, or
$1.03 per share, compared with non-GAAP net loss of $37.1 million,
or $0.88 per share, for the year ended December 31, 2015.
2017 Financial OutlookSpectranetics’ management
is providing the following full year 2017 financial outlook:
- Revenue is projected to be within a range of $293 million to
$306 million, an increase of 8% to 13% over 2016
- Gross margin is projected to be within the range of 73.8% to
74.4% of sales
- Research and Development expense is expected to be in the range
of 25% to 26% of sales
- Selling, General, and Administrative expense is projected to be
in the range of 60% to 62% of sales
- Net loss is projected to be within a range of $57 million to
$63 million
- Loss per share is projected to be within a range of $1.31 to
$1.43, based on an outstanding share count of 43.9 million
1Constant currency is a non-GAAP financial measure. See
“Reconciliation of Non-GAAP Financial Measures” later in this
release.2Non-GAAP net loss is a non-GAAP financial measure. See
“Reconciliation of Non-GAAP Financial Measures” later in this
release.
Conference CallManagement will host an
investment community conference call today beginning at 2:30 pm MST
/ 4:30 pm EST. Individuals interested in listening to the
conference call may dial (877) 561-2747 for domestic callers, or
(973) 409-9689 for international callers. The conference ID is
57629416. The call may also be accessed on the webcast in the
investor relations section of the Company’s website at
www.spectranetics.com. The webcast will be available on the
Company’s website for 14 days following the completion of the
call.
About SpectraneticsThe Spectranetics
Corporation develops, manufactures, markets and distributes medical
devices used in minimally invasive procedures within the
cardiovascular system. The Company's products are available in over
65 countries and are used to treat arterial blockages in the heart
and legs and in the removal of pacemaker and defibrillator
leads.
The Company's Vascular Intervention (VI) products include a
range of laser catheters for ablation of blockages in arteries
above and below the knee, the AngioSculpt scoring balloon used in
both peripheral and coronary procedures, and the Stellarex
drug-coated balloon peripheral angioplasty platform, which received
European CE mark approval in December 2014. The Company also
markets support catheters to facilitate crossing of peripheral and
coronary arterial blockages, and retrograde access and guidewire
retrieval devices used in the treatment of peripheral arterial
blockages, including chronic total occlusions. The Company markets
aspiration and cardiac laser catheters to treat blockages in the
heart.
The Lead Management (LM) product line includes excimer laser
sheaths, dilator sheaths, mechanical sheaths and accessories for
the removal of pacemaker and defibrillator cardiac leads.
For more information, visit www.spectranetics.com.
This release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, Section 21E
of the Securities Exchange Act of 1934 and the Private Securities
Litigation Reform Act of 1995. You can identify these statements
because they do not relate strictly to historical or current facts.
Such statements may include words such as “anticipate,” “will,”
“estimate,” “expect,” “look forward,” “strive,” “project,”
“intend,” “should,” “plan,” “believe,” “hope,” “see,” “enable,”
“potential,” and other words and terms of similar meaning in
connection with any discussion of, among other things, future
operating or financial performance, strategic initiatives and
business strategies, clinical trials and regulatory approvals,
regulatory or competitive environments, outcome of litigation, our
intellectual property and product development. These
forward-looking statements include, but are not limited to,
statements regarding our competitive position, product innovation
and development, and commercialization schedule, expectation of
continued growth and the reasons for that growth, growth rates,
strength, integration and product launches, regulatory approvals,
and 2017 outlook and projected results including projected revenue
and expenses, gross margin, net loss and loss per share. Such
statements are based on current assumptions that involve risks and
uncertainties that could cause actual outcomes and results to
differ materially. You are cautioned not to place undue reliance on
these forward-looking statements and to note they speak only as of
the date of this presentation. These risks and uncertainties may
include financial results differing from guidance; our need to
comply with complex and evolving laws and regulations; intense and
increasing competition and consolidation in our industry; the
impact of rapid technological change; slower revenue growth and
continued losses; the inaccuracy of our assumptions regarding
AngioScore and Stellarex; market acceptance of our technology and
products; our inability to manage growth; increased pressure on
expense levels resulting from expanded sales, marketing, product
development and clinical activities; uncertain success of our
strategic direction; dependence on new product development and
successful commercialization of new products; loss of key
personnel; uncertain success of or delays in our clinical trials;
costs of and adverse results in any ongoing or future legal
proceedings; adverse impact to our business from healthcare reform
and related legislation and regulations, including changes in
reimbursements and the impact of fraud and abuse and information
privacy laws and regulations; adverse conditions in the general
domestic and global economic markets and volatility and disruption
of the credit markets or other factors that prevent us from
obtaining funding; our inability to protect our intellectual
property and intellectual property claims of third parties;
availability of inventory and components from suppliers, including
sole source suppliers; adverse outcome of FDA inspections,
including FDA warning letters and any remediation efforts; the
receipt of FDA clearance and other regulatory approvals to market
new products or applications and the timeliness of any clearance
and approvals; product defects or recalls and product liability
claims; cybersecurity breaches; interruptions of our manufacturing
operations and other events that affect our ability to manufacture
sufficient volumes to fulfill customer demand; our dependence on
third party vendors, suppliers, consultants and physicians; risks
associated with international operations, including international
sales using distributors and the impact of “Brexit” on our European
sales and operations; risks associated with any future
acquisitions; our ability to use net operating loss carryovers and
potential impairment charges; lack of cash necessary to satisfy our
cash obligations under our outstanding 2.625% Convertible Senior
Notes due 2034 and our term loan and revolving loan facilities; our
debt adversely affecting our financial health and preventing us
from fulfilling our debt service and other obligations; and share
price volatility due to the initiation or cessation of coverage, or
changes in ratings, by securities analysts. For a further list and
description of such risks and uncertainties that could cause our
actual results, performance or achievements to materially differ
from any anticipated results, performance or achievements, please
see our previously filed SEC reports, including those risks set
forth in our 2015 Annual Report on Form 10-K and our Quarterly
Report on Form 10-Q for the three months ended June 30, 2016. We
disclaim any intention or obligation to update or revise any
financial or other projections or other forward-looking statements,
whether because of new information, future events or otherwise.
Use of Non-GAAP Financial MeasuresTo supplement
our condensed consolidated financial statements prepared in
accordance with U.S. generally accepted accounting principles
(GAAP), we use certain non-GAAP financial measures in this release.
Reconciliations of the non-GAAP financial measures used in this
release to the most directly comparable GAAP measures for the
respective periods, and an explanation of our use of these non-GAAP
measures, can be found in “Reconciliation of Non-GAAP Financial
Measures” immediately following the financial tables. Non-GAAP
financial measures have limitations as analytical tools and should
not be considered in isolation or as a substitute for our financial
results prepared in accordance with GAAP.
-Financial tables follow-
THE SPECTRANETICS CORPORATION |
Condensed Consolidated Statements of Operations |
(in thousands, except per share data) |
(unaudited) |
|
|
|
Three Months EndedDecember 31, |
|
Twelve Months EndedDecember 31, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Revenue |
|
$ |
71,926 |
|
|
$ |
65,197 |
|
|
$ |
270,823 |
|
|
$ |
245,956 |
|
Cost of products
sold |
|
18,377 |
|
|
16,358 |
|
|
68,326 |
|
|
62,883 |
|
Amortization of
acquired inventory step-up |
|
— |
|
|
— |
|
|
— |
|
|
251 |
|
Gross profit |
|
53,549 |
|
|
48,839 |
|
|
202,497 |
|
|
182,822 |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Selling,
general and administrative |
|
42,120 |
|
|
36,735 |
|
|
164,289 |
|
|
143,355 |
|
Research,
development and other technology |
|
16,747 |
|
|
16,589 |
|
|
67,480 |
|
|
64,436 |
|
Acquisition transaction, integration and legal costs |
|
307 |
|
|
2,572 |
|
|
1,922 |
|
|
29,472 |
|
Intangible asset amortization |
|
2,919 |
|
|
3,203 |
|
|
12,227 |
|
|
13,275 |
|
Contingent consideration expense |
|
6 |
|
|
200 |
|
|
214 |
|
|
2,671 |
|
Reduction
in fair value of contingent consideration liability |
|
— |
|
|
(3,763 |
) |
|
— |
|
|
(25,819 |
) |
Intangible asset impairment |
|
— |
|
|
— |
|
|
— |
|
|
2,496 |
|
Medical
device excise tax |
|
— |
|
|
922 |
|
|
— |
|
|
3,465 |
|
Total operating
expense |
|
62,099 |
|
|
56,458 |
|
|
246,132 |
|
|
233,351 |
|
Operating loss |
|
(8,550 |
) |
|
(7,619 |
) |
|
(43,635 |
) |
|
(50,529 |
) |
Other
expense |
|
(3,761 |
) |
|
(2,558 |
) |
|
(13,698 |
) |
|
(8,219 |
) |
Loss before income tax
expense |
|
(12,311 |
) |
|
(10,177 |
) |
|
(57,333 |
) |
|
(58,748 |
) |
Income
tax expense |
|
300 |
|
|
283 |
|
|
787 |
|
|
726 |
|
Net loss |
|
$ |
(12,611 |
) |
|
$ |
(10,460 |
) |
|
$ |
(58,120 |
) |
|
$ |
(59,474 |
) |
|
|
|
|
|
|
|
|
|
Net loss per common
share: |
|
|
|
|
|
|
|
|
Basic and
diluted |
|
$ |
(0.29 |
) |
|
$ |
(0.25 |
) |
|
$ |
(1.35 |
) |
|
$ |
(1.40 |
) |
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
Basic and
diluted |
|
43,182 |
|
|
42,613 |
|
|
42,935 |
|
|
42,430 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE SPECTRANETICS CORPORATION |
Condensed Consolidated Balance Sheets |
(in thousands) |
(unaudited) |
|
|
December 31,2016 |
|
December 31,2015 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
57,237 |
|
|
$ |
84,594 |
|
Accounts
receivable, net |
43,565 |
|
|
43,359 |
|
Inventories, net |
27,642 |
|
|
25,155 |
|
Other
current assets |
7,088 |
|
|
5,171 |
|
Total current
assets |
135,532 |
|
|
158,279 |
|
Property
and equipment, net |
44,827 |
|
|
44,719 |
|
Goodwill
and intangible assets |
247,040 |
|
|
263,072 |
|
Other
assets |
2,679 |
|
|
1,929 |
|
Total assets |
$ |
430,078 |
|
|
$ |
467,999 |
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Borrowings under revolving line of credit |
$ |
24,712 |
|
|
$ |
24,232 |
|
Other
current liabilities |
42,230 |
|
|
39,447 |
|
Total current
liabilities |
66,942 |
|
|
63,679 |
|
Convertible debt, net of debt issuance costs |
225,095 |
|
|
224,076 |
|
Term
loan, net of debt issuance costs |
59,664 |
|
|
59,601 |
|
Other
non-current liabilities |
4,054 |
|
|
3,674 |
|
Stockholders’ equity |
74,323 |
|
|
116,969 |
|
Total liabilities and
stockholders’ equity |
$ |
430,078 |
|
|
$ |
467,999 |
|
|
|
|
|
|
|
|
|
THE SPECTRANETICS CORPORATION |
Supplemental Financial Information |
(Unaudited) |
|
Financial Summary |
|
2015 |
|
2016 |
(000’s,
except laser placement information and percentages) |
|
4th Qtr |
|
1st Qtr |
|
2nd Qtr |
|
3rd Qtr |
|
4th Qtr |
Disposable products
revenue: |
|
|
|
|
|
|
|
|
|
|
Vascular
Intervention |
|
$ |
42,967 |
|
|
$ |
41,912 |
|
|
$ |
46,218 |
|
|
$ |
45,906 |
|
|
$ |
47,566 |
|
Lead
Management |
|
18,250 |
|
|
17,096 |
|
|
17,767 |
|
|
18,616 |
|
|
19,786 |
|
Total disposable products |
|
61,217 |
|
|
59,008 |
|
|
63,985 |
|
|
64,522 |
|
|
67,352 |
|
Laser, service, and
other |
|
3,980 |
|
|
3,876 |
|
|
3,763 |
|
|
3,743 |
|
|
4,574 |
|
Total revenue |
|
$ |
65,197 |
|
|
$ |
62,884 |
|
|
$ |
67,748 |
|
|
$ |
68,265 |
|
|
$ |
71,926 |
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin |
|
75 |
% |
|
74 |
% |
|
75 |
% |
|
75 |
% |
|
74 |
% |
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(10,460 |
) |
|
$ |
(17,291 |
) |
|
$ |
(14,906 |
) |
|
$ |
(13,312 |
) |
|
$ |
(12,611 |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash flow used in
operating activities |
|
$ |
(16,691 |
) |
|
$ |
(12,444 |
) |
|
$ |
(1,873 |
) |
|
$ |
(5,878 |
) |
|
$ |
(4,238 |
) |
Total cash and cash
equivalents at end of quarter |
|
$ |
84,594 |
|
|
$ |
67,494 |
|
|
$ |
64,343 |
|
|
$ |
58,895 |
|
|
$ |
57,237 |
|
|
|
|
|
|
|
|
|
|
|
|
Worldwide
Installed Base Summary: |
|
|
|
|
|
|
|
|
|
|
Laser placements during
quarter |
|
46 |
|
|
44 |
|
|
45 |
|
|
52 |
|
|
53 |
|
Buy-backs/returns
during quarter |
|
(26 |
) |
|
(18 |
) |
|
(21 |
) |
|
(16 |
) |
|
(20 |
) |
Net laser placements
during quarter |
|
20 |
|
|
26 |
|
|
24 |
|
|
36 |
|
|
33 |
|
Total lasers placed at
end of quarter |
|
1,392 |
|
|
1,418 |
|
|
1,442 |
|
|
1,478 |
|
|
1,511 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Financial
Measures
To supplement our condensed consolidated financial statements
prepared in accordance with GAAP, we use certain non-GAAP financial
measures in this release. Reconciliations of these non-GAAP
financial measures to the most directly comparable GAAP measures
for the respective periods can be found in the tables below.
An explanation of the manner in which our management uses these
non-GAAP measures to conduct and evaluate our business and the
reasons management believes these non-GAAP measures provide useful
information to investors are provided following the reconciliation
tables.
Reconciliation of revenue by geography to non-GAAP
revenue by geographyon a constant currency basis(in thousands,
except percentages)(unaudited) |
|
|
Three Months Ended |
|
|
|
|
|
December 31, 2016 |
|
December 31,2015 |
|
% Change |
|
Revenue,as reported |
|
Foreignexchangeimpact ascomparedto priorperiod |
|
Revenueon aconstantcurrencybasis |
|
Revenue, asreported |
|
Asreported |
|
Constantcurrencybasis |
United
States |
$ |
58,978 |
|
|
$ |
— |
|
|
$ |
58,978 |
|
|
$ |
54,554 |
|
|
8 |
% |
|
8 |
% |
International |
12,948 |
|
|
80 |
|
|
13,028 |
|
|
10,643 |
|
|
22 |
% |
|
22 |
% |
Total
revenue |
$ |
71,926 |
|
|
$ |
80 |
|
|
$ |
72,006 |
|
|
$ |
65,197 |
|
|
10 |
% |
|
10 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve months ended |
|
|
|
|
|
|
|
December 31, 2016 |
|
December 31,2015 |
|
% Change |
|
Revenue,as reported |
|
Foreignexchangeimpact ascomparedto priorperiod |
|
Revenueon aconstantcurrencybasis |
|
Revenue, asreported |
|
Asreported |
|
Constantcurrencybasis |
United
States |
$ |
225,300 |
|
|
$ |
— |
|
|
$ |
225,300 |
|
|
$ |
206,683 |
|
|
9 |
% |
|
9 |
% |
International |
45,523 |
|
|
172 |
|
|
45,695 |
|
|
39,273 |
|
|
16 |
% |
|
16 |
% |
Total
revenue |
$ |
270,823 |
|
|
$ |
172 |
|
|
$ |
270,995 |
|
|
$ |
245,956 |
|
|
10 |
% |
|
10 |
% |
Reconciliation of revenue by product line to non-GAAP
revenue by product lineon a constant currency basis(in thousands,
except percentages)(unaudited) |
|
|
Three Months Ended |
|
|
|
|
December 31, 2016 |
|
December 31,2015 |
|
% Change |
|
Revenue,as reported |
|
Foreignexchangeimpact ascomparedto priorperiod |
|
Revenue ona constantcurrencybasis |
|
Revenue, asreported |
|
As reported |
Constantcurrencybasis |
Vascular
Intervention |
$ |
47,566 |
|
|
$ |
(13 |
) |
|
$ |
47,553 |
|
|
$ |
42,967 |
|
|
11 |
% |
11 |
% |
Lead Management |
19,786 |
|
|
93 |
|
|
19,879 |
|
|
18,250 |
|
|
8 |
% |
9 |
% |
Laser, service, and
other |
4,574 |
|
|
— |
|
|
4,574 |
|
|
3,980 |
|
|
15 |
% |
15 |
% |
Total
revenue |
$ |
71,926 |
|
|
$ |
80 |
|
|
$ |
72,006 |
|
|
$ |
65,197 |
|
|
10 |
% |
10 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Twelve months ended |
|
|
|
|
December 31, 2016 |
|
December 31,2015 |
|
% Change |
|
Revenue,as reported |
|
Foreignexchangeimpact ascomparedto priorperiod |
|
Revenue ona constantcurrencybasis |
|
Revenue, asreported |
|
As reported |
Constantcurrencybasis |
Vascular
Intervention |
$ |
181,602 |
|
|
$ |
(115 |
) |
|
$ |
181,487 |
|
|
$ |
160,480 |
|
|
13 |
% |
13 |
% |
Lead Management |
73,265 |
|
|
261 |
|
|
73,526 |
|
|
69,899 |
|
|
5 |
% |
5 |
% |
Laser, service, and
other |
15,956 |
|
|
26 |
|
|
15,982 |
|
|
15,577 |
|
|
2 |
% |
3 |
% |
Total
revenue |
$ |
270,823 |
|
|
$ |
172 |
|
|
$ |
270,995 |
|
|
$ |
245,956 |
|
|
10 |
% |
10 |
% |
Reconciliation of Net Loss to Non-GAAP Net Loss(in
thousands) (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve months ended |
|
|
December 31,2016 |
|
December 31,2015 |
|
December 31,2016 |
|
December 31,2015 |
Net loss, as
reported |
|
$ |
(12,611 |
) |
|
$ |
(10,460 |
) |
|
$ |
(58,120 |
) |
|
$ |
(59,474 |
) |
Acquisition
transaction, integration and legal costs (1) |
|
307 |
|
|
2,572 |
|
|
1,922 |
|
|
29,472 |
|
Acquisition-related
intangible asset amortization (2) |
|
2,919 |
|
|
3,203 |
|
|
12,227 |
|
|
13,275 |
|
Contingent
consideration expense (3) |
|
6 |
|
|
200 |
|
|
214 |
|
|
2,671 |
|
Change in fair value of
contingent consideration liability (4) |
|
— |
|
|
(3,763 |
) |
|
— |
|
|
(25,819 |
) |
Intangible asset
impairment (4) |
|
— |
|
|
— |
|
|
— |
|
|
2,496 |
|
Amortization of
acquired inventory step-up (5) |
|
— |
|
|
— |
|
|
— |
|
|
251 |
|
Non-GAAP net loss |
|
$ |
(9,379 |
) |
|
$ |
(8,248 |
) |
|
$ |
(43,757 |
) |
|
$ |
(37,128 |
) |
Reconciliation of Net Loss Per Share to Non-GAAP Net
Loss Per Share(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve months ended |
|
|
December 31,2016 |
|
December 31,2015 |
|
December 31,2016 |
|
December 31,2015 |
Net loss per share, as
reported |
|
$ |
(0.29 |
) |
|
$ |
(0.25 |
) |
|
$ |
(1.35 |
) |
|
$ |
(1.40 |
) |
Acquisition
transaction, integration and legal costs (1) |
|
0.01 |
|
|
0.06 |
|
|
0.04 |
|
|
0.69 |
|
Acquisition-related
intangible asset amortization (2) |
|
0.07 |
|
|
0.08 |
|
|
0.28 |
|
|
0.31 |
|
Contingent
consideration expense (3) |
|
— |
|
|
— |
|
|
— |
|
|
0.06 |
|
Change in fair value of
contingent consideration liability (4) |
|
— |
|
|
(0.09 |
) |
|
— |
|
|
(0.61 |
) |
Intangible asset
impairment (4) |
|
— |
|
|
— |
|
|
— |
|
|
0.06 |
|
Amortization of
acquired inventory step-up (5) |
|
— |
|
|
— |
|
|
— |
|
|
0.01 |
|
Non-GAAP net loss per
share (6) |
|
$ |
(0.21 |
) |
|
$ |
(0.20 |
) |
|
$ |
(1.03 |
) |
|
$ |
(0.88 |
) |
______________
1) Acquisition transaction, integration and other costs
relate to the AngioScore and Stellarex acquisitions, which closed
on June 30, 2014 and January 27, 2015, respectively, and included
investment banking fees, accounting, consulting, and legal fees,
severance and retention costs, and non-recurring costs associated
with establishing manufacturing operations to support the Stellarex
program. In addition, these costs included $0.3 million and
$1.8 million for the three and twelve months ended
December 31, 2016, for legal fees, including legal fees
associated with patent and breach of fiduciary duty matters. During
the three and twelve months ended December 31, 2015, these costs
included $1.0 million and $19.9 million for legal fees, including
legal fees associated with patent and breach of fiduciary duty
matters, and costs advanced associated with the breach of fiduciary
duty matter.
2) Acquisition-related intangible asset amortization
relates primarily to intangible assets acquired in the AngioScore
acquisition in June 2014 and the Stellarex acquisition in January
2015.
3) Contingent consideration expense primarily represents
the accretion of the estimated contingent consideration liability
related to future amounts payable to former AngioScore
stockholders, based on sales of the AngioScore products and
achievement of regulatory milestones.
4) During 2015, the Company remeasured the contingent
consideration liability related to the AngioScore acquisition to
its fair value and reduced it by approximately $25.8 million. Of
this amount,$21.5 million was a result of a decrease in future
revenue estimates for the AngioSculpt products. The remaining $4.3
million was related to the AngioScore regulatory milestones. We
also recorded a $2.5 million intangible asset impairment for a
partial impairment of the in-process research and development
intangible assets acquired as part of the AngioScore
acquisition.
5) Amortization of acquired inventory step-up relates to
the inventory acquired in the AngioScore acquisition.
6) Per share amounts may not add due to rounding.
Management uses the non-GAAP financial measures as supplemental
measures to analyze the underlying trends in our business, assess
the performance of our core operations, establish operational goals
and forecasts that are used in allocating resources and evaluate
our performance period over period and in relation to our
competitors’ operating results.
The impact of foreign exchange rates is highly variable and
difficult to predict. We use a constant currency basis to show the
impact from foreign exchange rates on current period revenue
compared to prior period revenue using the prior period’s foreign
exchange rates. In order to properly understand the underlying
business trends and performance of our ongoing operations, we
believe that investors may find it useful to consider the impact of
excluding changes in foreign exchange rates from our revenue.
We believe presenting the non-GAAP financial measures used in
this release provides investors greater transparency to the
information used by our management for financial and operational
decision-making and allows investors to see our results “through
the eyes” of management. We also believe providing this information
better enables our investors to understand our operating
performance and evaluate the methodology used by management to
evaluate and measure such performance.
Non-GAAP financial measures have limitations as analytical tools
and should not be considered in isolation or as a substitute for
our financial results prepared in accordance with GAAP. Some
limitations associated with using these non-GAAP financial measures
are provided below:
- Management exercises judgment in determining which types of
charges or other items should be excluded from the non-GAAP
financial measures used.
- Amortization expense, while not requiring cash settlement, is
an ongoing and recurring expense and has a material impact on GAAP
net loss and reflects costs to us not reflected in non-GAAP net
loss.
- Items such as the acquisition transaction and integration costs
and contingent consideration expense excluded from non-GAAP net
loss can have a material impact on cash flows and GAAP net loss and
reflect economic costs to us not reflected in non-GAAP net
loss.
- Revenue growth rates stated on a constant currency basis, by
their nature, exclude the impact of changes in foreign currency
exchange rates, which may have a material impact on GAAP
revenue.
- Non-GAAP financial measures are not based on any comprehensive
set of accounting rules or principles and therefore other companies
may calculate similarly titled non-GAAP financial measures
differently than we do, limiting the usefulness of those measures
for comparative purposes.
Investor Relations Contacts
Zach Stassen
Investor.relations@spnc.com
(719) 447-2292
Michaella Gallina
Investor.relations@spnc.com
(719) 246-1713
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