ArthroCare Corp. (NASDAQ: ARTC), a leader in developing state-of-the-art, minimally invasive surgical products, announced its financial results for the fourth quarter and year ended December 31, 2012.
FOURTH QUARTER 2012 SUMMARY
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Total revenue of $96.9 million.
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Income from operations of $15.1 million, or operating margin of 15.6 percent.
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Net income applicable to common stockholders of $10.3 million, or $0.30 per diluted share.
FULL YEAR 2012 SUMMARY
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Total revenue of $368.5 million.
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Income from operations of $64.1 million, or operating margin of 17.4 percent.
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Net income applicable to common stockholders of $42.8 million, or $1.25 per diluted share.
REVENUE - FOURTH QUARTER
Total revenue for the fourth quarter of 2012 was $96.9 million, compared to $92.4 million for the fourth quarter of 2011, an increase of 4.9 percent.
Product sales for the fourth quarter of 2012 were $92.2 million compared to $88.5 million in the fourth quarter of 2011, an increase of 4.3 percent. Product sales increased 4.5 percent in constant currency over the same quarter of the prior year.
Worldwide sales of Sports Medicine products increased $1.2 million or 1.9 percent in the fourth quarter of 2012 when compared to the fourth quarter of 2011. In constant currency, Sports Medicine product sales increased 2.1 percent. In the fourth quarter of 2012 proprietary Sports Medicine product sales in the Americas increased $1.5 million, or 4.5 percent and International Sports Medicine product sales increased $1.9 million, or 9.5 percent as compared to the fourth quarter of 2011. Contract manufactured product sales decreased $2.2 million, or 28.0 percent in the fourth quarter.
Worldwide ENT product sales increased $2.5 million, or 10.6 percent in the fourth quarter of 2012 compared to the fourth quarter of 2011. Americas ENT product sales increased $0.8 million or 4.3 percent and International ENT product sales increased $1.7 million or 37.1 percent as a result of increased product sales in Asia Pacific markets, most notably in Australia and China in the fourth quarter.
Across all product areas International product sales increased $3.8 million, or 14.0 percent in the fourth quarter of 2012 as compared to the same quarter of 2011. Had the same foreign currency rates been in effect in the fourth quarter of 2012 as were in effect in the fourth quarter in 2011, the U.S. dollar reported value of product sales would have been higher by $0.2 million for the current quarter.
REVENUE - FULL YEAR
Total revenue from continuing operations in 2012 was $368.5 million, compared to $354.9 million for 2011.
Worldwide Sports Medicine product sales increased $7.4 million or 3.3 percent in 2012 compared to 2011 and increased 4.5 percent in constant currency. Sports Medicine product sales in the Americas increased $6.2 million in 2012 compared to 2011 as proprietary product sales increased $5.9 million or 4.6 percent in 2012. International Sports Medicine product sales increased $1.3 million or 1.6 percent in 2012 compared to 2011. Contract manufactured product sales increased $0.3 million, or 1.4 percent in 2012.
Worldwide ENT product sales increased $5.5 million or 5.5 percent in 2012 compared to 2011 and increased 6.0 percent in constant currency. ENT product sales in the Americas increased $1.1 million or 1.3 percent and International ENT product sales increased $4.4 million or 23.9 percent in 2012 compared to 2011.
Worldwide other product sales decreased $0.6 million in 2012 when compared to 2011 and represented less than 3 percent of total product sales in 2012.
Management believes percentage sales growth in constant currency is an important metric for evaluating our operations because the impact of changing foreign currency exchange rates may not provide an accurate baseline for analyzing trends in our business. Percentage sales growth in constant currency is calculated by translating current year sales at prior year average foreign currency exchange rates. Constant currency is a non-GAAP measure and it should not be considered as a substitute for measures prepared in accordance with GAAP.
INCOME FROM OPERATIONS - FOURTH QUARTER
Income from operations for the fourth quarter of 2012 was $15.1 million compared to a loss from operations of $51.4 million for the same period in 2011. The loss from operations for the fourth quarter of 2011 included a charge of $74.0 million for the settlement of securities class actions pending against the Company.
Gross product margin as a percentage of product sales was 69.9 percent for the fourth quarter of 2012 compared to 69.3 percent for the fourth quarter of 2011.