ArthroCare Corp. (NASDAQ: ARTC), a leader in developing state-of-the-art, minimally invasive surgical products, announced its financial results for the first quarter ended March 31, 2010 as follows:
FIRST QUARTER 2010 HIGHLIGHTS
- First quarter 2010 total revenue of $90.6 million
- Product margin of 68.9 percent
- Operating income of $15.1 million
- Net income available to common stockholders of $8.0 million, or $0.24 per diluted share
REVENUE
Total revenue for the first quarter of 2010 was $90.6 million, compared to $78.8 million for the first quarter of 2009. Product sales increased in both the Company's core Sports Medicine and ENT businesses and across all geographies. Sports Medicine product sales for the Americas included the recognition of $6.6 million of product sales from prior periods that were deferred pending resolution of certain contract issues with customers which were resolved in the first quarter. Additionally, product sales increased due to higher contract manufacturing volume.
Product sales in the first quarter of 2010 increased by $3.1 million in the Company's direct International markets while sales to distributors, a significant portion of which were in U.S. dollars, decreased by $0.9 million when compared to the first quarter of 2009. Product sales were also affected by changes in foreign exchange rates used to translate foreign currency sales from international markets to the Company's U.S. dollar reporting currency. Changes in exchange rates increased the U.S. dollar reported value by approximately $1.8 million.
PRODUCT MARGIN
Product margin was 68.9 percent for the first quarter of 2010 compared to 71.2 percent for the first quarter of 2009. Product margin was lower due to adjustments made to the carrying value of inventory for excess and obsolete items and higher royalty costs incurred in the first quarter of 2010 as a result of the arbitration matter involving Gyrus and Ethicon. The deferred revenue recognized in the first quarter of 2010 increased net product margin by $4.2 million. Additionally, product margin for the first quarter of 2010 was impacted by higher contract manufactured product sales, which generally realize lower margins.
INCOME (LOSS) FROM OPERATIONS