Nov 5 2009
Micrus Endovascular Corporation (Nasdaq: MEND) today reported financial results for the three and six months ended September 30, 2009 and increased fiscal 2010 revenue guidance.
Highlights for the second quarter and first six months of fiscal 2010 include the following (comparisons are with the comparable periods in fiscal 2009):
- Neurovascular revenues from the United States increased 15% to a record $11.2 million in the second quarter, and increased 16% to $21.3 million in the first six months
- Revenues from Europe increased 5% (or 8% in constant currencies) to $6.4 million in the second quarter, and increased 9% (or 18% in constant currencies) to $12.7 million in the first six months
- Revenues from Asia Pacific decreased $0.5 million to $2.8 million in the second quarter, and increased 18% to $6.5 million in the first six months
- Total revenues increased 3% (or 4% in constant currencies) to $21.5 million in the second quarter, and increased to 9% (or 12% in constant currencies) to $42.7 million in the first six months
- Operating income increased $4.1 million to $2.1 million in the second quarter compared with an operating loss of $2.0 million in the prior-year period; operating income for the six months increased $13.0 million to $4.1 million versus an operating loss of $8.9 million in the prior-year period
- Total cash as of September 30, 2009 of $24.3 million increased $7.2 million from March 31, 2009
Net income for the second quarter of fiscal 2010 was $3.6 million, or $0.22 per diluted share on 16.4 million weighted-average shares outstanding, and included $1.5 million or $0.09 per diluted share of non-cash stock-based compensation expense. The net loss for the second quarter of fiscal 2009 was $2.7 million, or $0.17 per share on 15.7 million weighted-average shares outstanding, and included $1.6 million or $0.10 per share of non-cash stock-based compensation expense.
“Our year-to-date neurovascular sales increase of 16% in the highly competitive U.S. market and 18% in constant currencies in Europe is extremely rewarding. Our growth was fueled by new products such as DeltaPaq™ and our ability to sell into new accounts. We continued to make significant progress toward full-year profitability by effectively managing operating expenses while growing revenues and we have $24.3 million in total cash after our third consecutive quarter of positive cash flow from operations,” said John Kilcoyne, Chairman and CEO of Micrus Endovascular Corporation.
“We are exceptionally pleased with the rapid adoption of both our bare platinum and Cerecyte® DeltaPaq™ filling microcoils, which represented 18% of our second quarter revenues. We continue on track for additional product introductions in the coming months providing us potential access to new accounts and incremental revenue opportunities.”
Fiscal Second Quarter Financial Results
Gross margin for the second quarter of fiscal 2010 was 77%, compared with 73% in the second quarter of fiscal 2009. The improvement was primarily due to increased direct sales of higher-margin products.
Research and development expenses for the second quarter of fiscal 2010 were $2.7 million, down from $2.9 million for the comparable prior-year period. The decrease was primarily due to lower consulting, materials and supplies, and personnel expenses, partially offset by a $500,000 upfront payment to Flexible Stenting Solutions Inc. to jointly develop a flow diversion product.
Sales and marketing expenses for the second quarter of fiscal 2010 were $6.6 million, down from $8.0 million for the second quarter of fiscal 2009. The decrease was primarily due to lower travel, personnel and sales incentive expenses, and a decrease in meeting and conference costs.
General and administrative expenses for the second quarter of fiscal 2010 were $5.1 million, down from $6.4 million for the comparable prior-year period. The decrease is primarily due to lower legal fees as well as lower personnel and travel costs, and a decline in consulting expenses.
Operating income for the second quarter of fiscal 2010 was $2.1 million, compared to an operating loss of $2.0 million for the second quarter of fiscal 2009.
Other income, net, of $1.8 million for the second quarter of fiscal 2010 included the recognition of a deferred gain of $1.9 million in connection with the sale of non-neurological assets to Merit Medical Systems, Inc. in January 2008. This compares with other expense, net, of $0.7 million for the second quarter of fiscal 2009.
Year-to-Date Financial Results
For the six months ended September 30, 2009, total revenues were $42.7 million, up 9% from $39.1 million in the comparable prior-year period, reflecting higher sales of microcoil products. Gross margin for the first six months of fiscal 2010 was 76%, compared with 74% in the first six months of fiscal 2009. Operating expenses for the first half of fiscal 2010 were $28.2 million, down from $37.9 million in the prior-year period. Operating income for the first half of fiscal 2010 was $4.1 million compared with an operating loss of $8.9 million in the prior-year period. Other income, net, was $2.6 million for the six months ended September 30, 2009, compared with other expense, net, of $0.7 million for the first six months of the prior fiscal year.
Net income for the six months ended September 30, 2009 was $5.9 million, or $0.36 per diluted share on 16.3 million weighted-average shares outstanding. Net income included $3.3 million or $0.21 per share of non-cash stock-based compensation expense. This compares with a net loss of $9.3 million, or $0.60 per share on 15.6 million weighted-average shares outstanding, in the comparable prior-year period. The net loss included $3.1 million or $0.20 per share of non-cash stock-based compensation expense.
As of September 30, 2009, Micrus had total cash of $24.3 million, stockholders’ equity of $53.6 million and working capital of $35.5 million. As of September 30, 2009, Micrus had outstanding borrowings of $2.5 million under its line of credit, unchanged from December 31, 2008.
Use of Non-GAAP Financial Information
A reconciliation of the Company’s non-GAAP financial measures to the corresponding GAAP measures, and an explanation of the use of non-GAAP measures, is included at the end of this news release. 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 reconciliation of the non-GAAP financial measure provided in the attached schedule.
Fiscal Year 2010 Financial Guidance
Micrus Endovascular raised its expectation for total revenues for fiscal 2010 to be in the range of $84 million to $87 million. This compares with prior guidance for total revenues to be in the range of $82 million to $86 million.