- Net sales increase 5.0% and adjusted EBITDA increase
13.8% in second quarter of 2012
- U.S. Essure-only sales grow 6.5% in second quarter of
2012 and 10.7% in first six months of 2012
- Constant currency international sales up approximately
16% in second quarter of 2012
Conceptus, Inc. (Nasdaq:CPTS), developer of the
Essure® procedure, the leading non-surgical permanent birth control
method, today reported financial results for the three months ended
June 30, 2012.
Net sales for the second quarter of 2012 were $35.5 million, an
increase of 5.0% compared with net sales for the second quarter of
2011 of $33.8 million.
Net income for the second quarter of 2012 was $0.1 million, or
$0.00 per diluted share. This compares with net income for
the second quarter of 2011 of $0.5 million, or $0.01 per diluted
share.
Adjusted earnings before interest, taxes, depreciation,
amortization and stock-based compensation ("adjusted EBITDA") for
the second quarter of 2012 were $6.6 million, an increase of 13.8%
compared with adjusted EBITDA for the second quarter of 2011 of
$5.8 million.
"Our second quarter financial results were solid across the
board and reflect good progress on a variety of commercial
initiatives to restore growth. While still investing heavily
in future growth, we have also implemented more rigorous spending
and investment disciplines in all areas of our business to increase
operating leverage and profitability," said D. Keith Grossman,
president and chief executive officer of Conceptus. "We are
executing the strategic, tactical and cultural changes as planned
during this important transition year and expect to be very well
positioned in 2013."
Second Quarter Highlights
Total domestic sales were $26.1 million for the second quarter
of 2012, compared with $24.8 million for the second quarter of
2011, representing an increase of $1.3 million or 5.2%. Essure-only
domestic sales increased 6.5% during the second quarter.
In the second quarter of 2012, the Company expanded U.S.
physician penetration by entering 377 physicians into
preceptorship, certifying 273 physicians and transitioning 88
physicians to performing Essure procedures in the office
setting. To date approximately 15,200 U.S. physicians have
performed an Essure procedure.
International sales were $9.4 million for the second quarter of
2012, compared with $9.0 million for the second quarter of 2011,
representing a gain of 4.4%. International growth was
negatively impacted by unfavorable currency translation such that
on a constant currency, growth would have been approximately
16%.
Gross profit was $29.1 million or 82.0% of net sales for the
second quarter of 2012, compared with $27.7 million or 81.9% of net
sales for the second quarter of 2011.
Operating expenses were $26.4 million for the second quarter of
2012, compared with $25.8 million for the second quarter of
2011. The year-over-year increase reflects
costs attributable to the Company's direct to consumer ("DTC")
advertising campaign, costs related to product development of the
next-generation Essure device and clinical trials for the Essure
Transvaginal Ultrasound confirmation study, partially offset by
reduced expenses attributable to lower domestic sales
headcount.
In the second quarter of 2012, the Company recorded an income
tax provision of $1.5 million on pre-tax income of $1.6 million for
the three months ended June 30, 2012. The significant tax rate
increase was primarily due to an adjustment in tax deductions for
equity-based compensation expense when the actual gain to the
employee was less than the originally projected value of the option
under stock-based compensation guidance. The resulting adjustment
was taken through the tax provision for the three months ended June
30, 2012.
Cash, cash equivalents and investments were $60.9 million as of
June 30, 2012, an increase of $0.8 million from March 31, 2012 and
a decrease of $42.6 million from December 31, 2011. The
Company generated positive cash flow from operations in the second
quarter of 2012 of $0.7 million despite a much larger adjusted
EBITDA, owing to an increase in working capital associated with the
increase in sales. On February 15, 2012, the Company redeemed
its 2027 senior convertible notes for cash including full principal
and accrued interest of $36.6 million. In December 2011 $50.0
million of the original 2027 notes were refinanced and are due in
2031.
Six Month Highlights
For the six months ended June 30, 2012, Conceptus reported net
sales of $64.5 million, an increase of 6.8% compared with the
comparable period in 2011. Total domestic sales were $47.8
million for the six months ended June 30, 2012, compared with $43.7
million for the comparable period of 2011, representing an increase
of $4.1 million or 9.4%. Essure-only domestic sales increased
10.7% for the six month period. International sales were $16.7
million for the six months ended June 30, 2012, compared with $16.7
million for the comparable period of 2011. International
growth was negatively impacted by unfavorable currency translation
such that on a constant currency, year to date growth would have
been approximately 8%.
Gross profit for the six months ended June 30, 2012 was $53.0
million or 82.2% of net sales, compared with $49.1 million or 81.3%
of net sales for the comparable period of 2011.
Operating expenses for the six months ended June 30, 2012 were
$54.2 million, compared with $50.8 million for the comparable
period of 2011, for an increase of 6.7%. This increase
reflects costs attributable to the Company's direct to consumer
("DTC") advertising campaign, costs related to product development
of the next-generation Essure device and clinical trials for the
Essure Transvaginal Ultrasound confirmation study, partially offset
by reduced expenses attributable to lower domestic sales
headcount.
Net loss for the six months ended June 30, 2012 was $2.8
million, or ($0.09) per diluted share. This compares with net
loss for the comparable period of 2011 of $2.5 million, or ($0.08)
per diluted share.
Adjusted EBITDA for the six month ended June 30, 2012 were $6.6
million, an increase of 11.9% compared with adjusted EBITDA for the
comparable period of 2011 of $5.9 million.
2012 Financial Guidance
Conceptus reaffirmed its 2012 financial guidance as follows:
- Net sales: the Company expects 2012 net sales to be in the
range of $140 million to $144 million. This is unchanged from
the guidance provided on April 30, 2012.
- Adjusted EBITDA: the Company expects 2012 adjusted EBITDA
to be in the range of $26 million to $28 million. This is
unchanged from the guidance provided on April 30, 2012.
"We are positioning the business to take advantage of recent
positive developments, such as the market withdrawal of our direct
competitor, and refocusing the organization to improve commercial
execution. We expect our efforts to result in accelerating
growth, particularly in our domestic market, and achievement of our
annual financial guidance," said Mr. Grossman. "We believe the
opportunity to move Essure up the adoption curve towards the
standard of care in permanent birth control has never been more
achievable and we are confident in our ability to drive top-line
growth and operating leverage over the long term."
Conference Call
Conceptus will host an investment community conference call
beginning at 4:30 p.m. Eastern time today to discuss results and
answer questions. Conference call dial-in information is as
follows:
- U.S. callers: (888) 803-8296
- International callers: (706) 634-1250
- Conference ID Number (U.S. and international): 97249487
Individuals interested in listening to the live conference call
via the Internet may do so by logging on to the Company's website,
www.conceptus.com.
A telephone replay will be available from 6:30 p.m. Eastern time
on July 31, 2012, through 11:59 p.m. Eastern time on August 3,
2012. Replay dial-in information is as follows:
- U.S. callers: (855) 859-2056
- International callers: (404) 537-3406
- Conference ID number (U.S. and international): 97249487
- The replay will also be available at www.conceptus.com
Use of Non-GAAP Financial Measures
The Company has supplemented its GAAP net income/loss with a
non-GAAP measure of adjusted EBITDA. Management believes that this
non-GAAP financial measure provides useful supplemental information
to management and investors regarding the performance of the
Company, facilitates a more meaningful comparison of results for
current periods with previous operating results, and assists
management in analyzing future trends, making strategic and
business decisions and establishing internal budgets and forecasts.
A reconciliation of non-GAAP adjusted EBITDA to GAAP net
income/loss in the most directly comparable GAAP measure is
provided in the schedule below.
There are limitations in using this non-GAAP financial measure
because it is not prepared in accordance with GAAP and may be
different from non-GAAP financial measures used by other
companies. This non-GAAP financial measure should not be
considered in isolation or as a substitute for GAAP financial
measures. Investors and potential investors should consider
non-GAAP financial measures only in conjunction with the Company's
consolidated financial statements prepared in accordance with GAAP
and the reconciliations of the non-GAAP financial measure provided
in the schedule below.
About the Essure® Procedure
The Essure procedure, FDA approved since 2002, is the first
permanent birth control method that can be performed in the comfort
of a physician's office in less than 10 minutes (average
hysteroscopic time) without hormones, cutting, burning or the risks
associated with general anesthesia or tubal ligation. Soft,
flexible inserts are placed in a woman's fallopian tubes through
the cervix without incisions. Over the next three months, the body
forms a natural barrier around and through the inserts to prevent
sperm from reaching the egg. Three months after the Essure
procedure, a doctor is able to perform an Essure Confirmation Test
to confirm that the inserts are properly placed and that the
fallopian tubes are fully blocked, allowing the patient to rely
upon Essure for permanent birth control.
The Essure procedure is 99.83% effective based on five years of
follow up with zero pregnancies reported in clinical trials, making
it the most effective form of permanent birth control on the
market. Essure's 10-year commercial data tracks closely with
its five-year clinical results, and Essure has been proven and
trusted by physicians since 2002. The Essure procedure is
covered in the U.S. by most public and private insurance plans and
approximately 660,000 women worldwide have undergone the
procedure.
About Conceptus®, Inc.
Conceptus, Inc. is the leader in the development of innovative
device-based solutions in permanent birth control. The Company
manufactures and markets the Essure procedure. The Essure
procedure is available in the United States, Europe, Australia, New
Zealand, Canada, Mexico, Central and South America and the Middle
East.
Please visit www.essure.com for more information on the Essure
procedure. Patients may call the Essure Information Center at
1-877-ESSURE-1 with questions or to find a physician in their
area.
The Conceptus, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=7961
Forward Looking Statements
Except for the historical information contained herein, the
matters discussed in this press release include forward-looking
statements, the accuracy of which is subject to known and unknown
risks and uncertainties. These forward-looking statements
include, without limitation, discussions regarding projected net
sales and adjusted earnings before interest, taxes, depreciation,
amortization and stock-based compensation ("adjusted EBITDA") for
the full year 2012, our ability to improve commercial execution and
increase sales growth rates and profitability, and our ability to
make the Essure procedure the standard of care in permanent birth
control. These discussions and other forward-looking
statements included herein may differ significantly from actual
results. Such differences may be based upon factors such as changes
in strategic planning decisions by management, re-allocation of
internal resources, changes in the impact of domestic and global
macroeconomic pressures, reimbursement decisions by insurance
companies and domestic and foreign governments, scientific advances
by third parties, litigation risks, and attempts to amend or repeal
all or part of the Patient Protection and Affordable Care Act of
2010 as amended, as well as those factors set forth in the
Company's most recent Annual Report on Form 10-K and most recent
Quarterly Report on Form 10-Q, and other filings with the
Securities and Exchange Commission. These forward-looking
statements speak only as to the date on which the statements were
made. We undertake no obligation to update or revise publicly
any forward-looking statements, whether as a result of new
information, future events, or otherwise.
Conceptus,
Inc. |
Condensed Consolidated
Statements of Operations |
(Unaudited) |
(In thousands, except
per share amounts) |
|
|
|
|
|
|
Three Months
Ended |
Six Months
Ended |
|
June
30, |
June
30, |
|
2012 |
2011 |
2012 |
2011 |
|
|
|
|
|
Net sales |
$ 35,497 |
$ 33,805 |
$ 64,526 |
$ 60,375 |
Cost of goods sold |
6,389 |
6,114 |
11,567 |
11,315 |
Gross profit |
29,108 |
27,691 |
52,959 |
49,060 |
|
|
|
|
|
Operating expenses: |
|
|
|
|
Research and
development |
2,185 |
1,669 |
4,688 |
3,430 |
Selling, general and
administrative |
24,249 |
24,107 |
49,468 |
47,399 |
Total operating
expenses |
26,434 |
25,776 |
54,156 |
50,829 |
|
|
|
|
|
Operating income (loss) |
2,674 |
1,915 |
(1,197) |
(1,769) |
Interest and other income (expense),
net |
(1,074) |
(1,626) |
(2,514) |
(3,173) |
Income (loss) before provision
(benefit) for income taxes |
1,600 |
289 |
(3,711) |
(4,942) |
|
|
|
|
|
Provision (benefit) for income
taxes |
1,539 |
(165) |
(934) |
(2,468) |
|
|
|
|
|
Net income (loss) |
$ 61 |
$ 454 |
$ (2,777) |
$ (2,474) |
|
|
|
|
|
Basic income (loss) per
share |
$ 0.00 |
$ 0.01 |
$ (0.09) |
$ (0.08) |
Shares used in computing basic net
income (loss) |
31,425 |
31,190 |
31,365 |
31,167 |
|
|
|
|
|
Diluted income (loss) per
share |
$ 0.00 |
$ 0.01 |
$ (0.09) |
$ (0.08) |
Shares used in computing diluted net
income (loss) |
32,355 |
31,487 |
31,365 |
31,167 |
|
|
|
|
|
Conceptus,
Inc. |
Condensed Consolidated
Balance Sheets |
(Unaudited) |
(In
thousands) |
|
|
|
|
June 30, |
December 31, |
|
2012 |
2011 |
|
|
|
Cash and cash equivalents |
$ 15,907 |
$ 42,237 |
Short-term investments |
44,178 |
59,203 |
Accounts receivable, net |
20,457 |
17,321 |
Inventories, net |
4,638 |
4,187 |
Short-term deferred tax asset |
5,560 |
4,735 |
Other current assets |
5,804 |
6,655 |
Total current assets |
96,544 |
134,338 |
|
|
|
Property and equipment, net |
8,304 |
9,465 |
Intangible assets, net |
21,168 |
23,092 |
Long-term investments |
795 |
2,000 |
Goodwill |
16,093 |
16,570 |
Long-term deferred tax asset |
76,203 |
75,877 |
Other assets |
1,936 |
2,242 |
Total assets |
$ 221,043 |
$ 263,584 |
|
|
|
Total liabilities |
65,207 |
109,458 |
Common stock and additional paid in
capital |
322,455 |
317,675 |
Other comprehensive loss |
(3,557) |
(3,264) |
Accumulated deficit |
(163,062) |
(160,285) |
Total stockholders' equity |
155,836 |
154,126 |
Total liabilities and stockholders'
equity |
$ 221,043 |
$ 263,584 |
|
|
|
Conceptus,
Inc. |
Reconciliation of Net
Income (loss) to Adjusted Earnings Before Interest, Taxes,
Depreciation, Amortization and Stock-Based Compensation (Adjusted
EBITDA) |
(Unaudited) |
(In
thousands) |
|
|
|
|
|
|
Three Months
Ended |
Six Months
Ended |
|
June
30, |
June
30, |
|
2012 |
2011 |
2012 |
2011 |
|
|
|
|
|
Net Income (Loss), as
reported |
$ 61 |
$ 454 |
$ (2,777) |
$ (2,474) |
|
|
|
|
|
Adjustments to net income
(loss): |
|
|
|
|
Interest and other income
(expense), net (a) |
1,074 |
1,626 |
2,514 |
3,173 |
Provision (benefit) for income
taxes |
1,539 |
(165) |
(934) |
(2,468) |
Amortization of intangibles
(b) |
899 |
819 |
1,802 |
1,632 |
Stock-based compensation
(c) |
1,690 |
1,727 |
3,385 |
3,422 |
Depreciation expense
(d) |
1,348 |
1,388 |
2,626 |
2,631 |
|
|
|
|
|
Adjustments to net income
(loss) |
6,550 |
5,395 |
9,393 |
8,390 |
|
|
|
|
|
Adjusted EBITDA |
$ 6,611 |
$ 5,849 |
$ 6,616 |
$ 5,916 |
|
|
|
|
|
|
|
|
|
|
(a) Consists of
interest from available-for-sale securities, interest expense
associated with our convertible debt and foreign exchange currency
transactions |
(b) Consists of
amortization of intangible assets, primarily licenses and customer
relationships |
(c) Consists of
stock-based compensation in accordance with ASC 718 |
(d) Consists of
depreciation, primarily on property, plant and
equipment |
|
Conceptus,
Inc. |
Reconciliation of
Forward-Looking Guidance For Non-GAAP |
Financial Measures To
Projected GAAP Net Income |
(Unaudited) |
|
|
|
|
Twelve Months
Ending |
|
December
31, 2012 |
|
From |
To |
|
|
|
Net Income Guidance |
$ 2,564 |
$ 3,704 |
|
|
|
Estimated Non-GAAP
Guidance |
|
|
Interest and other income (expense), net
(a) |
4,514 |
4,514 |
Provision for income taxes |
3,095 |
3,955 |
Amortization of intangibles (b) |
3,618 |
3,618 |
Stock-based compensation (c) |
6,708 |
6,708 |
Depreciation expense (d) |
5,501 |
5,501 |
Adjustments to net income |
$ 23,436 |
$ 24,296 |
|
|
|
Adjusted EBITDA |
$ 26,000 |
$ 28,000 |
|
|
|
|
|
|
(a) Consists of interest from
available-for-sale securities, interest expense associated with our
convertible debt and foreign exchange currency transactions |
(b) Consists of amortization
of intangible assets, primarily licenses and customer
relationships |
(c) Consists of stock-based
compensation in accordance with ASC 718 |
(d) Consists of depreciation,
primarily on property, plant and equipment |
© 2012 Conceptus, Inc. – All rights reserved. Conceptus and
Essure are trademarks or registered trademarks of Conceptus,
Inc.
CONTACT: Investor and Public Relations Contact:
Cindy Klimstra
(650) 962-4032
cindy_klimstra@conceptus.com
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