Company Reports Earnings Per Share of $ 0.05 For Third Quarter and
$ 0.11 For First Nine Months of 2005 BURLINGTON, N.C., Nov. 10
/PRNewswire-FirstCall/ -- TriPath Imaging, Inc. (NASDAQ:TPTH) today
reported third quarter revenues of $21.5 million, a 19% increase
from the third quarter of 2004; gross profit of $15.2 million, a
21% increase from the third quarter of 2004; net income of $1.8
million, or $0.05 per share, a $0.8 million improvement from the
third quarter of 2004; and positive cash flow for the fifth
consecutive quarter. The Company also reported results for the nine
months ended September 30, 2005 with revenues of $62.1 million, a
24% increase from the comparable nine months in 2004, gross profit
of $43.5 million, a 25% increase from the comparable nine months in
2004, and net income of $4.2 million, or $0.11 per share, a $3.9
million improvement from the comparable nine months in 2004. The
Company estimates that the SurePath liquid based Pap test's market
share of all Pap tests performed in the U.S. increased to 21% in
the third quarter of 2005 from 18% in the second quarter of 2005
and from 14% in the third quarter of 2004. "We achieved a very
significant sales milestone in the third quarter of 2005 as the
estimated U.S. market share for the SurePath liquid based Pap test
was approximately 21%, exceeding our initial goal for year-end
2005," said Paul R. Sohmer, M.D., Chairman, President and CEO of
TriPath Imaging. "SurePath tests sold in the U.S. during the third
quarter of 2005 increased over 45% from the third quarter of 2004.
World-wide sales of our higher margin reagents and disposables
increased over 31% from the third quarter of 2004 and drove the
operating income generated by our Commercial Operations (cytology)
segment to $5.5 million in the third quarter of 2005, a 25%
increase from the third quarter of 2004, and, overall, an 82%
improvement in net income from the third quarter of 2004." Three
Months Results Total revenues for the third quarter of 2005
increased 19% to $21.5 million, from $18.0 million in the third
quarter of 2004. In the third quarter of 2005, worldwide sales of
reagents and disposables increased 31% from the third quarter of
2004, accounting for 83% of total revenues in the third quarter of
2005 as compared to 75% of total revenues in the third quarter of
2004. Instrument sales represented 6% of sales in the third quarter
of 2005 compared to 11% in the third quarter of 2004. Gross profit
for the third quarter of 2005 increased 21% to $15.2 million, or
nearly 71% of sales, from $12.5 million, or 69% of sales, in the
third quarter of 2004. Net income improved significantly in the
third quarter of 2005 to $1.8 million or $0.05 per share. This
compares with net income of $1.0 million, or $0.02 per diluted
share, in the third quarter of 2004. Cash and cash equivalents at
September 30, 2005 were $21.1 million. The Company generated
$157,000 in positive cash flow in the third quarter of 2005.
"Revenues generated from the sale of reagents and disposables grew
37% in the U.S.", Dr. Sohmer continued. "U.S. SurePath sales were
again primarily driven by increased penetration among large
commercial laboratories. SurePath tests sold to large commercial
laboratories increased 149% from the third quarter of 2004 and
nearly 34% from the second quarter of 2005. Dr. Sohmer continued,
"That being said, total revenues grew 19% in the third quarter of
2005 from the third quarter of 2004, as compared to growth of
nearly 26% in the first half of 2005 from the first half of 2004.
Our continued strong growth in revenues generated from sales of our
SurePath reagents and disposables from the large commercial
laboratories in the third quarter was partially offset by
decelerated growth from our more fully penetrated traditional
customer base and lower than expected instrument sales. SurePath
tests sold to our traditional customer base in the third quarter of
2005 increased by slightly more than 7% from the third quarter of
2004. We observed a similar pattern of decelerated growth from our
traditional customer base in 2004, although we believe that this
pattern was exaggerated in the third quarter of 2005 due to the
impact of hurricanes in the Gulf Coast and the southeastern United
States. Instrument sales, which have historically accounted for
approximately 10% of total revenues, declined and accounted for
slightly over 6% of total revenues generated in the third quarter
of 2005. This relative decline as a percentage of total revenues
resulted from continued strong growth in sales of reagents and
disposables as a percentage of total revenues, a decline in
instrument sales primarily outside the United States, and a slower
than expected ramp in sales derived from our interactive histology
imaging system. Also, our instrument sales have historically
reflected significant variability due to the fact that the sale of
capital equipment is a one time event that is not associated with a
recurring revenue stream, the expense associated with the purchase
of capital equipment, and the attendant length of the selling
cycle. The slower than expected ramp up in revenues derived from
our interactive histology imaging system primarily reflects the
timing related to the appropriate FDA clearances for applications
that define the clinical utility of the product. We expect that
this ramp up will accelerate now that the appropriate FDA
clearances are in place." Nine Month Results Reported revenues for
the nine months ended September 30, 2005 increased 24% to $62.1
million from $50.3 million for the nine months ended September 30,
2004. Worldwide sales of reagents and disposables increased 30% for
the first nine months of 2005 from the first nine months of 2004.
As a percent of total revenues, worldwide reagent and disposable
sales for the first nine months of the year increased to 80% in
2005 from 76% in 2004. Gross profit for the first nine months of
2005 increased 25% to $43.5 million, or 70% of sales, from $34.8
million, or 69% of sales for the first nine months of 2004. The
Company reported net income of $4.2 million, or $0.11 per share, in
the first nine months of 2005 compared to a net income of $297,000,
or $0.01 per share, for the same period in 2004. In regard to the
Company's molecular diagnostic and imaging development programs,
Dr. Sohmer commented, "we remain on track for all of our targeted
development goals, including the initiation of clinical trials of
our breast staging and cervical screening molecular reagents later
this year. We achieved a number of significant milestones in the
quarter, not the least of which was the acquisition of our first
customers for our ProEx C analyte specific reagent as well as the
first public presentations of the results of external and new
in-house research studies that incorporated our molecular markers.
We continue to believe that these developing molecular diagnostic
and imaging products will drive our business well into the future."
Outlook and Guidance Dr. Sohmer concluded, "Given the decelerated
growth from our more fully penetrated traditional customer base and
the lower-than-expected instrument sales that we experienced in the
third quarter, we have adjusted our revenue guidance for the full
year 2005. We expect revenues for 2005 to range from $ 85 million
to $88 million, with full year earnings per share (EPS) to range
from $0.15 to $0.17. We expect a strong finish to the year, with
fourth quarter 2005 revenues increasing at least 25% compared to
the fourth quarter of 2004, exceeding the rate of year-over-year
growth reported in the first nine months of 2005." The Company has
previously announced its preliminary guidance for 2006. It expects
revenue growth in 2006 of approximately 20% from its updated
guidance range for the full year 2005. Given planned investments
related to the ongoing development of its molecular oncology
product pipeline and other clinical trial and marketing related
activities, the Company expects that full year EPS in 2006 will be
comparable to its currently estimated range for 2005. These
earnings estimates for 2006 exclude the impact of expensing
stock-based compensation under FAS 123(R), which the Company will
adopt beginning January 1, 2006. Conference Call Details TriPath
Imaging's management will host a conference call today at 9:00 a.m.
ET to discuss the Company's full third quarter financial results,
business highlights and future expectations. The call will be
available by dialing (888) 344-3716. International participants
should call (706) 634- 4926. For interested parties unable to
participate during the live call, a telephone replay will be
available beginning two hours after the completion of the call
until November 18, 2005. To access this replay, U.S. participants
should call (800) 642-1687. International participants should call
(706) 645- 9291. Individuals accessing the replay must enter the
conference call ID number 1926229. A live web cast and replay of
TriPath Imaging's call will also be available online at
http://www.tripathimaging.com/. Analyst Day Details Starting at
12:00pm ET today, the Company will host an Analyst Day conference
in New York City. Management will review the results of research
studies employing the Company's ProEx C molecular markers that will
have been presented in conjunction with the October meeting of the
European Congress of Cytology in Paris and the early November
meeting of the American Society of Cytopathology in San Diego. This
review will include the results of studies performed by
investigators from three major academic centers as well as the
results of new in-house research studies. The Company will also
review the potential clinical and commercial value of its
developing pipeline in the area of molecular diagnostic products
and imaging systems, as well as business highlights and future
expectations. A live web cast and replay of TriPath Imaging's
Analyst Day conference will be available online at
http://www.videonewswire.com/event.asp?id=31318. TriPath Imaging,
Inc., headquartered in Burlington, North Carolina, develops,
manufactures, markets and sells innovative solutions to improve the
clinical management of cancer, including detection, diagnosis,
staging and treatment. TriPath Oncology, a wholly owned subsidiary
of TriPath Imaging, develops and manages the market introduction of
molecular diagnostic and pharmacogenomic products and services for
malignant melanoma and cancers of the cervix, breast, ovary and
prostate. Investors are cautioned that statements in this press
release that are not strictly historical statements constitute
forward-looking statements which involve risks and uncertainties
that could cause actual results and outcomes to differ materially
from what is expressed in those forward-looking statements. Such
forward-looking statements include, without limitation, those
related to our forecasted full year 2005 and 2006 results; our
anticipated trend in composition of sales; our expected ramp up in
revenues from our interactive histology imaging system; our mission
to create solutions that redefine the early detection and clinical
management of cancer; our future profitability and our future
growth opportunities and development efforts. Important factors
that may affect such forward-looking statements specifically and
TriPath Imaging's operating results generally include, without
limitation: TriPath Imaging may not receive revenues when or in the
amounts anticipated; TriPath Imaging may be unable to increase
sales and revenues at its historical rates, may be unable to
increase its penetration of the large commercial laboratory segment
to the extent it expects, and may not achieve revenues to the
degree expected from its relationship with Ventana and the sale of
reagents and instrument systems derived from its molecular oncology
development program; TriPath Imaging's expanded sales and marketing
presence may not have the expected impact; expenses may exceed
expectations and TriPath Imaging may not maintain profitability;
TriPath Imaging's results and profitability in any particular
period may be impacted by the timing of certain non-cash sales
discounts that TriPath Imaging will record in connection with the
vesting of certain warrants; the impact of our adoption of FAS
123(R) beginning on January 1, 2006 may have a greater than
anticipated impact on our results of operations; changes in general
economic conditions or the healthcare industry may occur that
adversely affect TriPath Imaging's customers' purchasing plans;
TriPath Imaging may be unable to successfully develop and
commercialize new products and services when anticipated, if at
all; TriPath Imaging's products may not achieve or maintain market
acceptance to the degree anticipated; competition and competitive
pricing pressures may limit TriPath Imaging's flexibility with
respect to the pricing of its products; TriPath Imaging may need to
obtain additional financing in the future; TriPath Imaging may not
be able to develop and to protect adequately its proprietary
technology; TriPath Imaging and TriPath Oncology's products may not
receive FDA or other required regulatory approval when expected, if
at all, and the failure to achieve such approvals may materially
impact our results of operations; and other risks detailed in
TriPath Imaging's filings with the Securities and Exchange
Commission, including those described in TriPath Imaging's Annual
Report on Form 10-K for the year ended December 31, 2004. Contacts
Stephen P. Hall, Chief Financial Officer TriPath Imaging
336-290-8721 TriPath Imaging, Inc. Condensed Consolidated
Statements of Operations (Unaudited) (In thousands, except per
share amounts) Three months ended Nine months ended September 30,
September 30, 2005 2004 2005 2004 Revenues $21,525 $18,028 $62,105
$50,259 Cost of revenues 6,349 5,529 18,642 15,442 Gross profit
15,176 12,499 43,463 34,817 Operating expenses: Research and
development 2,890 3,077 9,253 8,236 Regulatory 834 730 2,422 3,117
Sales and marketing 6,457 4,465 17,189 13,699 General and
administrative 3,222 3,307 10,638 9,678 13,403 11,579 39,502 34,730
Operating income 1,773 920 3,961 87 Interest income 154 62 411 223
Interest expense - (4) (5) (13) Income before taxes 1,927 978 4,367
297 Income taxes 148 - 148 - Net income $1,779 $978 $4,219 $297
Earnings per common share Basic $0.05 $0.03 $0.11 $0.01 Diluted
$0.05 $0.02 $0.11 $0.01 Weighted average shares Basic 38,236 38,047
38,184 37,982 Diluted 39,393 39,220 39,321 39,317 TriPath Imaging,
Inc. Condensed Consolidated Balance Sheets (In thousands, except
share and per share amounts) September 30, December 31, 2005 2004
(Unaudited) Current assets: Cash and cash equivalents $21,137
$18,949 Accounts and notes receivable, net 16,295 13,643 Inventory,
net 12,900 10,723 Other current assets 2,097 1,582 Total current
assets 52,429 44,897 Customer use assets, net 7,656 7,688 Property
and equipment, net 4,247 3,290 Other assets 3,809 3,777 Intangible
assets 7,251 7,882 Total assets $75,392 $67,534 Current
liabilities: Accounts payable $5,195 $3,668 Accrued expenses 5,000
3,750 Deferred revenue and customer deposits 1,630 1,551 Current
portion of debt -- 19 Total current liabilities 11,825 8,988
Stockholders' equity: Common stock 383 381 Additional paid-in
capital 291,378 290,114 Treasury stock (81) -- Deferred
compensation (3) (11) Accumulated deficit (228,196) (232,415)
Accumulated other comprehensive income 86 477 Total stockholders'
equity 63,567 58,546 Total liabilities and stockholders' equity
$75,392 $67,534 DATASOURCE: TriPath Imaging, Inc. CONTACT: Stephen
P. Hall, Chief Financial Officer of TriPath Imaging,
+1-336-290-8721 Web site: http://www.tripathimaging.com/
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