Laserscope Announces Acquisition of Fiber Optics Manufacturer InnovaQuartz, Inc.
May 01 2006 - 6:13AM
PR Newswire (US)
Acquisition Extends Medical Disposables Product Line, Improves
GreenLight PV(R) Fiber Optic Profit Margins, Enhances Fiber Optics
R&D Capability, and Expands Manufacturing Capabilities SAN
JOSE, Calif., May 1 /PRNewswire-FirstCall/ -- Laserscope
(NASDAQ:LSCP), a leader in the development and commercialization of
minimally-invasive medical devices, including medical lasers and
advanced fiber-optic delivery devices, today announced that it has
acquired InnovaQuartz, Inc. ("IQ") of Phoenix, Arizona. Founded in
1991, InnovaQuartz, a privately held company, is a leading
developer, vertically integrated manufacturer and commercial
supplier of advanced medical devices for multiple medical
procedures including those used in the treatment of kidney,
bladder, and other urinary stones. InnovaQuartz's medical devices
include fiber optics, sterile fiber optic delivery devices, optical
components and optical subassemblies. Laserscope acquired all of
the capital stock of InnovaQuartz for approximately $7.5 million in
cash, the assumption of approximately $1.1 million in debt and
future cash payments contingent on the financial performance of IQ
over approximately three years. Eric Reuter, President and CEO of
Laserscope said, "The acquisition of IQ is exciting for Laserscope
for three important strategic reasons. The first is that the
addition of IQ's newest fiber optic product line provides us an
immediate entry with leading technology into another important
urological market -- the intracorporeal treatment of kidney,
bladder, and other urinary stones that use holmium laser
technology. Entry into this large, growth market is consistent with
our strategy to become a complete player in the field of urology,
and the treatment of stones is one of the highest volume urological
surgical procedures in the U.S. outside of the treatment of benign
prostatic hyperplasia ("BPH"). IQ's new line of stone fibers
incorporates patented technology and know-how which provides for
superior flexibility and strength. Going forward, the IQ products
will be sold through our US and international urology distribution
channels for use with Laserscope's own StoneLight(R) holmium laser
as well as for use with many of the substantial worldwide installed
base of other holmium lasers. Additionally, we expect to maintain
certain of IQ's key distribution and OEM relationships. IQ's
licensed technology and vertical manufacturing expertise bolsters
Laserscope's leading position in the design and manufacture of
disposable fiber optic delivery devices for high volume procedures
in urology. We expect that IQ fiber optic product line revenues can
be grown substantially over the next several years as the IQ fiber
optic product line gains recognition as the standard for treating
stones with holmium laser technology. We intend to pursue an
aggressive marketing and sales strategy for bringing these products
to the large existing installed base of holmium lasers worldwide.
"The second reason that this acquisition is so important,"
continued Mr. Reuter, "is that it serves a key operational
objective which is the swift realization of savings in fiber
materials costs for our main fiber optic product line, the
GreenLight PV delivery device. Since 2002, IQ has been a reliable,
high quality supplier of a key component of Laserscope's GreenLight
PV fiber optic delivery device used for the treatment of BPH. We
therefore expect the acquisition will enable us to realize an
immediate reduction in the cost of goods of our single use products
and we anticipate that IQ's manufacturing and design capabilities
will contribute further reductions in the costs of our fiber optic
disposable products in the future. "Thirdly, IQ's R&D expertise
and focus in specialty assemblies and components and rapid
proto-typing will support Laserscope's existing R&D efforts to
develop new, technologically superior and lower cost fiber optic
medical devices. The benefits we expect to realize through the
addition of InnovaQuartz's expertise fully support Laserscope's
long term fiber optic strategy to become the world's leading
provider of competitively priced and high quality medical fiber
optic technology for high volume medical procedures," said Mr.
Reuter. The InnovaQuartz acquisition is expected to be accretive
beginning in 2007. IQ will be managed and operated as a wholly
owned subsidiary of Laserscope for the foreseeable future. The
Intracorporeal Stone Market IQ is one of the few vertically
integrated developers, manufacturers, and commercializers of
advanced medical fiber optics in the world. IQ recently acquired
proprietary intellectual property and manufacturing expertise,
which it uses to produce a line of technologically advanced sterile
fiber optic delivery devices available for use in intracorporeal
laser lithotripsy, or the endoscopic treatment of kidney, bladder,
and other urinary stones using holmium laser technology. In the
U.S. alone more than 200,000 intracorporeal stone treatment
procedures are performed each year using various technologies with
a larger number performed internationally. Sources predict that the
number of holmium stone treatment procedures in the United States
is expected to grow at approximately 15% per year through 2008
given the ease of use, speed, and relative safety of the holmium
laser technology relative to other technologies used for breaking
up the hard materials that make up urinary stones. This growth rate
exceeds the approximately 6% compounded procedural growth rate
expected considering the aging population, dietary changes and
other dynamics. According to industry sources, the total market
size for holmium laser capital equipment and disposable and
reusable delivery devices for these procedures exceeds $50 million
per year in the U.S. There are several thousand holmium stone
treatment lasers already installed worldwide and over 300 holmium
lasers are expected to be sold and installed in the U.S. each year
through 2008. Over 50,000 holmium laser fiber optic delivery
devices are sold each year in the U.S. typically at prices ranging
between $300 and $500/fiber. IQ's new fiber optic product line can
be used on many if not most of the worldwide installed base of
holmium laser systems. Given the technological superiority and
competitive price of these products over other methods of
performing intracorporeal lithotripsy, this translates to an
immediate market opportunity. "InnovaQuartz's disposable and
reusable stone fiber revenue has grown at a tremendous rate over
the past two years. Given the favorable market dynamics and strong
OEM relationships that InnovaQuartz has established, coupled with
Laserscope's growing urology distribution expertise, we expect
strong, consistent revenue growth from this new product line for
the foreseeable future," Mr. Reuter concluded. Special Investor
Relations Forum Announced Laserscope will be holding a special
Investor Relations Forum coinciding with the 2006 American
Urological Association Meeting on May 22nd, 2006. At this meeting,
Laserscope will be discussing current and future R&D and
business development initiatives for our urology and aesthetic
product lines as well as unveiling the latest new additions to the
Laserscope urology product line. Investors are invited to attend
in-person or via a web-cast which will be announced prior to the
event. Those planning to attend in person should contact
Laserscope's IR representatives as attendance will be limited.
Management Conference Call Management of Laserscope will hold a
conference call today, Monday, May 1, 2006 at 8:00am PT / 11:00am
ET to discuss results for the 2006 first quarter. To participate in
the call, please dial 800-218-0204 (303-262-2050 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 Monday, May 8, 2006, by dialing
800-405-2236 (303-590-3000 for international callers), and entering
passcode 11059316. An archive will also be available at
Laserscope's website. About Laserscope Laserscope designs,
manufactures, sells and services on a worldwide basis an advanced
line of minimally-invasive medical products including 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 its 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 the expected future benefits
resulting from the acquisition of InnovaQuartz, such as increased
sales of the IQ stone fiber line and other IQ products,
manufacturing and engineering improvements in our existing products
designed to reduce the cost of goods sold, enhanced fiber optic
R&D and manufacturing capabilities; statements about
Laserscope's future profitability and operating results, expected
continued momentum of Laserscope's business and growth including
new product offerings, such as the InnovaQuartz products, worldwide
adoption rates of the treatment of stones, especially
intracorporeal lithotripsy, our ability to compete with similar
product offerings and other therapies for the treatment of stones,
market penetration opportunities in advanced fiber optics. These
statements are subject to a number of risks and uncertainties,
including: the risk that the InnovaQuartz acquisition may not
provide us the expected benefits and could disrupt our business and
harm our financial condition, results of operations and cash flows;
uncertainties regarding introduction of new technologies
competitive to Laserscope's 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, including the IQ
products; uncertainties regarding the impact that competitive
products and therapies as well as private and public payer
reimbursement levels for stone procedures could have on the
competitiveness of our current pricing programs, which could
adversely impact our financial results; 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 patents and
licenses that we or InnovaQuartz hold may be challenged,
invalidated or circumvented or that we may become the subject of
intellectual property litigation; the risk that we may be unable to
maintain favorable relationships with InnovaQuartz's current
customers, uncertainties regarding our ability to compete with
companies that have significantly greater financial, technical,
research and development, manufacturing and marketing resources
than we have; 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/ and at the SEC's website:
http://www.sec.gov/ . 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 Derek Bertocci, CFO
(617) 520-7064 (408) 943-0636 DATASOURCE: Laserscope CONTACT: Eric
Reuter, President & CEO, or Derek Bertocci, CFO, both of
Laserscope, +1-408-943-0636; or Tricia Ross, Analyst/Investor
Contact, Financial Relations Board, +1-617-520-7064 Web site:
http://www.laserscope.com/
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