Laserscope Reports 2005 First Quarter Results and Raises 2005
Guidance Urology Business Exceeds Expectations with Record
Worldwide Performance in Both System and Fiber Sales SAN JOSE,
Calif., April 27 /PRNewswire-FirstCall/ -- Laserscope
(NASDAQ:LSCP), a pioneer in the development and commercialization
of medical lasers and advanced fiber-optic devices, today reported
revenues of $28.2 million for its first quarter ended March 31,
2005, a 50.3% increase from $18.8 million in the first quarter of
2004. The increase in revenues was primarily attributable to
continued strong growth in sales of the Company's line of
GreenLight(TM) products for Photo-Selective Vaporization of the
Prostate ("PVP"). First quarter 2005 operating income grew 134.8%
to $6.1 million, from $2.6 million for the first quarter of 2004.
First quarter 2005 net income was $5.0 million, or $0.22 per
diluted share, a substantial increase from net income of $2.2
million, or $0.10 per diluted share, in the same quarter last year.
"We reported very strong results again this quarter, driven
primarily by exceptional growth in our urology business worldwide,"
said Eric Reuter, President and Chief Executive Officer of
Laserscope. "As our installed base of GreenLight laser systems
continues to expand around the globe, and as sales of our
single-use fiber-optic delivery device increase, we're gathering
more and more evidence that the PVP procedure using the GreenLight
laser system is gaining an increasing share of the BPH treatment
market, not just at the expense of highly invasive surgical
procedures such as Trans-Urethral Resection of the Prostate
("TURP"), but now at the expense of the so-called thermal therapies
and non-surgical treatment options, such as drug therapy, as well.
"While we also saw a year-over-year decline in aesthetic product
sales this quarter, we believe this development was largely due to
the short-term effects of several structural changes implemented in
our aesthetics sales organization during the first quarter of 2005,
changes that we hope will accommodate and drive future long-term
growth in our aesthetics business. As a result, we believe our
solid foundation of existing and upcoming light-based treatment
products, and continued strong customer demand in the aesthetic
treatment market, will enable us to move ahead in the current
quarter and in the foreseeable future, even in an ever more
competitive environment." Gross margin in the first quarter of 2005
grew to approximately 62%, compared with approximately 57% in the
first quarter of 2004. The increase in 2005 first quarter gross
margin percentage resulted from a higher mix of GreenLight
products. Selling, general and administrative (SG&A) expenses
were $9.9 million, or 35% of revenues, in the first quarter of
2005, compared with $6.8 million, or 36% of revenues in the first
quarter of 2004. Increased SG&A spending resulted primarily
from higher commissions paid commensurate with the increase in
revenues, higher marketing and clinical education expenses related
to expanding the presence of the Company's products in both
domestic and international markets, as well as increased costs
related to Sarbanes-Oxley Section 404 compliance. The Company's
effective tax rate for the first quarter of 2005 was 20%, compared
to 13% in the first quarter of 2004. The difference in the rates is
due to a lower relative benefit of net operating loss carry
forwards in the first quarter of 2005. The Company's financial
position remains strong. At March 31, 2005, Laserscope had no bank
borrowings and a cash position of $22.0 million, up significantly
from $16.0 million at December 31, 2004. Shareholders' equity
increased from $42.9 million at December 31, 2004 to $49.3 million
at March 31, 2005. Urology Business Update "Our urology business
continues to surpass our expectations as adoption of the PVP
procedure using the GreenLight laser system is increasing in all
major geographic regions of the world," said Mr. Reuter. "We sold
90 GreenLight laser systems during the first quarter and more than
16,000 single-use disposable fibers. GreenLight fiber sales growth
was impressive in both the United States and overseas, as we posted
135% and 222% gains, respectively, year-over-year. "We have long
said that the potential market for PVP is millions of men annually
and growing worldwide along with the aging population.
Additionally, we expect the worldwide demand for PVP to continue to
rise as more and more patients, physicians, and health care
insurers become aware of the combined outstanding clinical
outcomes, long-term durability, safety profile, and
cost-effectiveness of this procedure. We believe that the rapid
worldwide adoption of PVP using the GreenLight laser system
validates our contention that no other known therapy provides these
kinds of benefits to all the relevant stakeholders in the treatment
process. In the United States, current estimates show that
approximately 11 million men, or 30% of all men over the age of 50,
will suffer from the symptoms of BPH over the course of their
lifetimes, and further, that 20% of those men will require
treatment. Overseas the numbers are even more compelling, where the
ultimate market for our procedure is estimated at four to 10 times
that of the United States. We have made strong progress in
international markets to date, but believe there is still much work
to be done, and challenges to be overcome, to fulfill the
opportunity in our key international markets. We will continue to
educate health care system providers, patients, and physicians at
home and abroad about the safety profile and cost-effectiveness of
PVP over alternative therapies. Distribution agreements such as the
ones we've established in Germany, Russia, Latin America and the
Caribbean will help us penetrate new and underserved markets around
the globe, and throughout the year we'll be working to secure
additional relationships that provide market entry or an enhanced
presence in key geographies." Aesthetics Business Update "By
offering a full line of easy to use and competitively valued
aesthetics products, we believe Laserscope is well positioned to
capitalize on the growing worldwide demand for cosmetic
treatments," continued Mr. Reuter. "This demand, which is being
fueled by many factors, including the need by physicians to uncover
additional revenue streams, will be best satisfied by companies
that can provide versatile and multi-use systems that are quick,
efficacious, and provide patients with a high level of comfort and
satisfaction. Our Gemini(TM) system has already gained wide appeal
in the marketplace, while our newest product, the Solis(TM), has
received an enthusiastic welcome since its introduction a few
months ago at the American Academy of Dermatology Annual Meeting.
The Solis is expected to begin shipping sometime this summer. We
believe these two products will enable us to compete in the
challenging highly-competitive aesthetic treatment market." Full
Year 2005 Guidance The management of Laserscope has raised full
year 2005 guidance as follows: * 2005 full year revenues are
expected to be in the range of $130 million to $135 million. *
Reported pre-tax earnings are expected to be in the range of $30
million to $33 million. * Net income is expected to be in the range
of $0.79 to $0.87 per fully diluted share, assuming a fully taxed
basis of approximately 38%. This is without giving consideration to
the potential benefit of the deferred tax asset or its associated
reserve. The ultimate release of the deferred tax asset reserve
will depend on not only the level of achievement of our operating
projections but also the timing of other non-operating tax
deductions such as the exercise of employee stock options. We
intend to continue to evaluate the reserve each quarter consistent
with GAAP. * Sequential growth in 2005 revenues and earnings is
expected to be more heavily weighted to the second half of the
year, as was the case in 2003 and 2004. "Our overall business
strategy is driven by the considerable and growing market for the
treatment of conditions of aging. We are focused on improving the
quality and cost-effectiveness of healthcare by offering safe,
minimally invasive and clinically effective surgical solutions. As
a result, we believe Laserscope is well positioned to not only
create value for our shareholders, but to continue to make a
substantial difference in the quality of life for people throughout
the world," said Mr. Reuter. Management Conference Call Management
of Laserscope will hold a conference call on Wednesday, April 27,
2005 at 8:00 am PT / 11:00am ET to discuss results for the first
quarter of 2005. To participate in the call, please dial
800-257-6607 (303-262-2194 for international callers) at least five
minutes prior to the start time. Investors will also have the
opportunity to listen to the conference call live on the Internet
through Laserscope's website at http://www.laserscope.com/.
Investors should go to the website a few minutes early, as it may
be necessary to download audio software to access the conference
call. A replay of the conference call will be available through May
4, 2005 by dialing 800-405-2236 (303-590-3000 for international
callers), and entering passcode 11029057. A replay of the webcast
will also be available at Laserscope's website. About Laserscope
Laserscope designs, manufactures, sells and services on a worldwide
basis an advanced line of medical laser systems and related energy
delivery devices for the office, outpatient surgical center, and
hospital markets. More information about Laserscope can be found on
the Company's web site at http://www.laserscope.com/. Safe Harbor
Statement This press release contains forward-looking information
within the meaning of Section 21E of the Securities Exchange Act of
1934, and is subject to the safe harbor created by this section.
These forward-looking statements include: statements about
Laserscope's future profitability and operating results,
competition, expected continued momentum of Laserscope's business
and growth including new product offerings, worldwide adoption
rates of the PVP procedure using our GreenLight(TM) laser system
and market penetration opportunities in international markets such
as Germany, Russia and Latin America among others. These statements
are subject to a number of risks and uncertainties, including:
uncertainties regarding introduction of new technologies
competitive to our products and the degree to which our current and
new products are accepted by customers, which could affect the
level of demand for our products; our dependence on sole source
providers for key components and products; risk of reductions in
government and private insurance reimbursement of hospitals and
physicians for health care costs, which may negatively impact
hospitals and physicians decisions to purchase our products
reducing adoption rates and sales growth; risks that we may be
unable to protect adequately the integrity, safety and proper use
of our disposable fiber optic delivery device with the GreenLight
laser system, which could result in negative patient outcomes and
reduce our disposable fiber recurring revenue stream; risks that
patents and licenses that we hold may be challenged, invalidated or
circumvented or that we may become the subject of intellectual
property litigation; and uncertainties that new products will
receive regulatory approval in applicable jurisdictions. Actual
results may differ materially due to these and other factors. The
matters discussed in this press release also involve risks and
uncertainties described from time to time in Laserscope's filings
with the Securities and Exchange Commission. In particular, see the
Risk Factors described in Laserscope's most recent Quarterly Report
on Form 10-Q and Annual Report on Form 10-K. Copies of Laserscope's
public disclosure filings with the SEC, including the most recent
Annual Report on Form 10-K and the most recent forms 10-Q are
available upon request from its Investor Relations Department at
its website at http://www.laserscope.com/. Laserscope assumes no
obligation to update the forward- looking information contained in
this press release. At Laserscope: At Financial Relations Board:
Eric Reuter, President & CEO Tricia Ross Analyst/Investor
Contact Dennis LaLumandiere, CFO (617) 520-7064 (408) 943-0636
Laurie Berman, General Information (310) 854-8315 LASERSCOPE
GREENLIGHT PV(TM) FIBER SALES (UNITS) 2005 Q1 United States 11,792
International 4,463 Total 16,255 2004 Q1 Q2 Q3 Q4 Year United
States 5,018 6,908 7,024 10,211 29,161 International 1,385 1,582
2,967 2,269 8,203 Total 6,403 8,490 9,991 12,480 37,364 LASERSCOPE
FINANCIAL SUMMARY (Unaudited) Condensed Consolidated Statements of
Income Three Months Ended March 31, ($ in thousands except per
share amounts) 2005 2004 Net revenues $28,177 $18,750 Cost of sales
10,577 8,082 Gross margin 17,600 10,668 Operating expenses:
Research and development 1,518 1,239 Selling, general and
administrative 9,945 6,815 11,463 8,054 Operating income 6,137
2,614 Interest and other income (expense), net 79 (69) Income
before income taxes 6,216 2,545 Provision for income taxes 1,253
331 Net income $4,963 $2,214 Basic net income per share $0.23 $0.11
Diluted net income per share $0.22 $0.10 Shares used in basic per
share calculations 22,009 20,342 Shares used in diluted per share
calculations 22,986 22,682 Condensed Consolidated Balance Sheets
March 31, December 31, ($ in thousands) 2005 2004 Assets Current
assets: Cash & cash equivalents $21,970 $15,954 Accounts
receivable, net 22,245 20,342 Inventories 22,849 19,446 Prepayments
and other current assets 1,488 1,471 Total current assets 68,552
57,213 Property and equipment, net 3,789 3,457 Other assets 925 919
Total assets $73,266 $61,589 Liabilities and Shareholders' Equity
Current liabilities $23,982 $18,647 Capital leases 25 31
Shareholders' equity 49,259 42,911 Total liabilities and
shareholders' equity $73,266 $61,589 DATASOURCE: Laserscope
CONTACT: Eric Reuter, President & CEO, or Dennis LaLumandiere,
CFO, both of Laserscope, +1-408-943-0636; or Tricia Ross,
Analyst/Investor Contact, +1-617-520-7064, or Laurie Berman,
General Information, +1-310-854-8315, both of Financial Relations
Board, for Laserscope Web site: http://www.laserscope.com/
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