The Spectranetics Corporation (NASDAQ:SPNC) (“the Company”) today
reported financial results for the three months ended
March 31, 2017. Highlights of the quarter, all compared with
the three months ended March 31, 2016, include:
- Revenue of $69.7 million increased 11%
- Vascular Intervention revenue of $46.4 million increased
11%
- Lead Management revenue of $19.0 million increased 11% (12%
constant currency1)
Net loss for the three months ended March 31, 2017 was
$18.5 million, or $0.43 per share, compared with net loss of $17.3
million, or $0.40 per share, for the three months ended
March 31, 2016.
“Q1 was another strong quarter for Spectranetics, evidenced by
double-digit revenue growth in both of our business units,” said
Scott Drake, President and CEO. “We are driving growth globally in
our effort to improve patients’ lives. In addition to the solid
top-line performance, we continue to make progress on our
innovation pipeline and are focused on the opportunities that lie
ahead.”
2017 Financial OutlookThe Company reiterates
its previously given, 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.
Conference CallManagement will host an
investment community conference call today beginning at 2:30 pm MTN
/ 4:30 pm EDT. 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
3440087. 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 Spectranetics
The 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 to remove and support 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, including
the Bridge™ Occlusion Balloon.
For more information, visit www.spectranetics.com.
Safe Harbor Statement
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 release. 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 2016 Annual Report on Form 10-K. 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 a non-GAAP financial measure regarding constant
currency in this release. Reconciliations of the non-GAAP financial
measure used in this release to the most directly comparable GAAP
measure for the respective periods, and an explanation of our use
of this non-GAAP measure, 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 Ended March 31, |
|
|
2017 |
|
2016 |
Revenue |
|
$ |
69,680 |
|
|
$ |
62,884 |
|
Cost of products
sold |
|
18,051 |
|
|
16,082 |
|
Gross profit |
|
51,629 |
|
|
46,802 |
|
Operating
expenses: |
|
|
|
|
Selling,
general and administrative |
|
45,656 |
|
|
40,789 |
|
Research,
development and other technology |
|
17,850 |
|
|
16,337 |
|
Acquisition transaction, integration and legal costs |
|
187 |
|
|
292 |
|
Acquisition-related intangible asset amortization |
|
2,919 |
|
|
3,203 |
|
Contingent consideration expense |
|
— |
|
|
100 |
|
Total operating
expense |
|
66,612 |
|
|
60,721 |
|
Operating loss |
|
(14,983 |
) |
|
(13,919 |
) |
Other
expense |
|
(3,292 |
) |
|
(3,167 |
) |
Loss before income tax
expense |
|
(18,275 |
) |
|
(17,086 |
) |
Income
tax expense |
|
249 |
|
|
205 |
|
Net loss |
|
$ |
(18,524 |
) |
|
$ |
(17,291 |
) |
|
|
|
|
|
Net loss per common
share: |
|
|
|
|
Basic and
diluted |
|
$ |
(0.43 |
) |
|
$ |
(0.40 |
) |
Weighted average shares
outstanding: |
|
|
|
|
Basic and
diluted |
|
43,491 |
|
|
42,697 |
|
THE SPECTRANETICS CORPORATION |
Condensed Consolidated Balance Sheets |
(in thousands) |
(unaudited) |
|
|
|
March 31, 2017 |
|
December 31, 2016 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and
cash equivalents |
|
$ |
43,942 |
|
|
$ |
57,237 |
|
Accounts
receivable, net |
|
43,869 |
|
|
43,565 |
|
Inventories, net |
|
28,864 |
|
|
27,642 |
|
Other
current assets |
|
6,658 |
|
|
7,088 |
|
Total current
assets |
|
123,333 |
|
|
135,532 |
|
Property
and equipment, net |
|
45,461 |
|
|
44,827 |
|
Goodwill
and intangible assets |
|
244,274 |
|
|
247,040 |
|
Other
assets |
|
2,667 |
|
|
2,679 |
|
Total assets |
|
$ |
415,735 |
|
|
$ |
430,078 |
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
Borrowings under revolving line of credit |
|
$ |
27,103 |
|
|
$ |
24,712 |
|
Other
current liabilities |
|
38,964 |
|
|
42,230 |
|
Total current
liabilities |
|
66,067 |
|
|
66,942 |
|
Convertible debt, net of debt issuance costs |
|
225,355 |
|
|
225,095 |
|
Term
loan, net of debt issuance costs |
|
59,682 |
|
|
59,664 |
|
Other
non-current liabilities |
|
4,178 |
|
|
4,054 |
|
Stockholders’ equity |
|
60,453 |
|
|
74,323 |
|
Total liabilities and
stockholders’ equity |
|
$ |
415,735 |
|
|
$ |
430,078 |
|
THE SPECTRANETICS CORPORATION |
Supplemental Financial Information |
(in thousands, except laser placement and
percentages) |
(Unaudited) |
|
Financial Summary |
|
2016 |
|
2017 |
|
|
1st Qtr |
|
2nd Qtr |
|
3rd Qtr |
|
4th Qtr |
|
1st Qtr |
Disposable products
revenue: |
|
|
|
|
|
|
|
|
|
|
Vascular
Intervention |
|
$ |
41,912 |
|
|
$ |
46,218 |
|
|
$ |
45,906 |
|
|
$ |
47,566 |
|
|
$ |
46,448 |
|
Lead
Management |
|
17,096 |
|
|
17,767 |
|
|
18,616 |
|
|
19,786 |
|
|
19,033 |
|
Total disposable products |
|
59,008 |
|
|
63,985 |
|
|
64,522 |
|
|
67,352 |
|
|
65,481 |
|
Laser, service, and
other |
|
3,876 |
|
|
3,763 |
|
|
3,743 |
|
|
4,574 |
|
|
4,199 |
|
Total revenue |
|
$ |
62,884 |
|
|
$ |
67,748 |
|
|
$ |
68,265 |
|
|
$ |
71,926 |
|
|
$ |
69,680 |
|
Gross margin
percentage |
|
74 |
% |
|
75 |
% |
|
75 |
% |
|
74 |
% |
|
74 |
% |
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(17,291 |
) |
|
$ |
(14,906 |
) |
|
$ |
(13,312 |
) |
|
$ |
(12,611 |
) |
|
$ |
(18,524 |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash flow used in
operating activities |
|
$ |
(12,444 |
) |
|
$ |
(1,873 |
) |
|
$ |
(5,878 |
) |
|
$ |
(4,238 |
) |
|
$ |
(14,086 |
) |
Total cash and cash
equivalents at end of quarter |
|
$ |
67,494 |
|
|
$ |
64,343 |
|
|
$ |
58,895 |
|
|
$ |
57,237 |
|
|
$ |
43,942 |
|
|
|
|
|
|
|
|
|
|
|
|
Worldwide
Installed Laser Base Summary: |
|
|
|
|
|
|
|
|
|
|
Laser placements during
quarter |
|
44 |
|
|
45 |
|
|
52 |
|
|
53 |
|
|
43 |
|
Buy-backs/returns
during quarter |
|
(18 |
) |
|
(21 |
) |
|
(16 |
) |
|
(20 |
) |
|
(14 |
) |
Net laser placements
during quarter |
|
26 |
|
|
24 |
|
|
36 |
|
|
33 |
|
|
29 |
|
Total lasers placed at
end of quarter |
|
1,418 |
|
|
1,442 |
|
|
1,478 |
|
|
1,511 |
|
|
1,540 |
|
Reconciliation of Non-GAAP Financial
Measures
To supplement our condensed consolidated financial statements
prepared in accordance with GAAP, we use a certain non-GAAP
financial measure in this release regarding revenue on a constant
currency basis. Reconciliations of this non-GAAP financial measure
to the most directly comparable GAAP measure for the respective
periods can be found in the tables below. An explanation of the
manner in which our management uses this non-GAAP measure to
conduct and evaluate our business and the reasons management
believes this non-GAAP measure provides 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 March 31, |
|
|
|
|
|
2017 |
|
2016 |
|
% Change |
|
|
Revenue, asreported |
|
Foreignexchangeimpact ascomparedto priorperiod |
|
Revenue ona constantcurrencybasis |
|
Revenue, asreported |
|
As reported |
|
Constantcurrencybasis |
United
States |
|
$ |
58,413 |
|
|
$ |
— |
|
|
$ |
58,413 |
|
|
$ |
52,982 |
|
|
10 |
% |
|
10 |
% |
International |
|
11,267 |
|
|
254 |
|
|
11,521 |
|
|
9,902 |
|
|
14 |
% |
|
16 |
% |
Total
revenue |
|
$ |
69,680 |
|
|
$ |
254 |
|
|
$ |
69,934 |
|
|
$ |
62,884 |
|
|
11 |
% |
|
11 |
% |
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 March 31, |
|
|
|
|
|
2017 |
|
2016 |
|
% Change |
|
|
Revenue, asreported |
|
Foreignexchangeimpact ascomparedto priorperiod |
|
Revenue ona constantcurrencybasis |
|
Revenue, asreported |
|
As reported |
|
Constantcurrencybasis |
Vascular
Intervention |
|
$ |
46,448 |
|
|
$ |
109 |
|
|
$ |
46,557 |
|
|
$ |
41,912 |
|
|
11 |
% |
|
11 |
% |
Lead Management |
|
19,033 |
|
|
122 |
|
|
19,155 |
|
|
17,096 |
|
|
11 |
% |
|
12 |
% |
Laser, service, and
other |
|
4,199 |
|
|
23 |
|
|
4,222 |
|
|
3,876 |
|
|
8 |
% |
|
9 |
% |
Total
revenue |
|
$ |
69,680 |
|
|
$ |
254 |
|
|
$ |
69,934 |
|
|
$ |
62,884 |
|
|
11 |
% |
|
11 |
% |
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 measure 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:
- 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) 447-2417
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