Cyberonics net sales increase 14% to $190.5 million for fiscal 2011

Cyberonics, Inc. (NASDAQ: CYBX), a global leader in epilepsy management, today announced results for the fourth quarter and fiscal year ended April 29, 2011.  

Annual Highlights

Operating results for the fifty-two week fiscal 2011 compared with the fifty-three week fiscal 2010, without adjustment for the extra week in fiscal 2010, include:

• Net sales of $190.5 million, a 14% increase from $167.8 million;
• U.S. net sales increased by 19%;
• Income from operations of $49.2 million, an increase of 33%; and
• Cash flow from operations of $50 million, an increase of 16%.

For fiscal 2011, net income was $46.7 million, and income per diluted share was $1.64.  Comparisons to fiscal 2010 are impacted by significant tax benefits recorded in both fiscal years.  While the effective tax rate is expected to be approximately 40% in fiscal 2012, we continue to expect that cash payments for income taxes will not exceed 3% of income before tax during fiscal years 2012 and 2013.

Quarterly Highlights

Operating results and achievements for the thirteen-week fourth quarter fiscal 2011 compared to the fourteen-week fourth quarter of fiscal 2010, without adjustment for the extra week in fiscal 2010, include:

• Net sales increased by 7% to a record $51.1 million;
• U.S. net sales increased by 13%;
• Income from operations increased to a record $13.0 million;
• Successful limited commercial launch of the new AspireHC™ generator; and
• First implant of the AspireSR™ generator in the E-36 clinical trial to support regulatory approval in Europe.

"The fourth quarter of fiscal 2011 represented another record quarter for our company in both net sales revenue and operating profitability," commented Dan Moore, Cyberonics' President and Chief Executive Officer.  "We were particularly pleased with the robust sales growth in our U.S. epilepsy business, continuing the trends of recent quarters, driven by both higher volume and increased average selling prices.  Initial demand for the AspireHC™ generator, in limited commercial release, is encouraging.

"Fiscal 2011 provided further evidence of the underlying strength of our U.S. epilepsy business, in terms of both the number of new patients receiving the therapy and the number of current patients returning to replace their generators.  The combination of physician education programs, recently published data, and effective sales force execution resulted in another strong year.  The $160 million in fiscal 2011 revenues in our U.S. epilepsy business represents an increase of 97% from an estimated $82 million in fiscal 2007.

"Net sales in our international business remained below our expectations, although revenue of $7.1 million in the fourth quarter is consistent with the previous two quarters.  We have increased our investment in the European market and expect that growth will resume in fiscal 2012.  The tragic events in Japan have created uncertainty in that market.  We continue to monitor the situation in Japan closely, and we applaud the efforts of our partner, Nihon Kohden, during these difficult times.  

"We reported operating cash flow of $50 million for fiscal 2011.  Our available cash balance at year end fiscal 2011 was $89 million, an increase of $30 million compared to the end of fiscal 2010, giving us significant financial flexibility to expand our business over time."

Mr. Moore concluded, "This was another strong quarter and fiscal year for Cyberonics.  We continue to emphasize profitability and sustainable sales growth, along with effective market and product development, as our primary goals, so we were very gratified to see significant progress in all four areas.  Our expectations for fiscal 2012 include continued market penetration in the U.S., improved performance in our international markets, particularly Europe and Asia, a focus on clinical trial enrollments, and ongoing product development execution required to further enhance our product offering.  We are extremely proud of the accomplishments of the Cyberonics team."

Fiscal 2012 Guidance

Cyberonics is providing net sales guidance for fiscal year 2012 in the range from $212 million to $215 million.  In addition, the company expects that income from operations for fiscal year 2012 will be in the range from $54 million to $57 million.