Highlights: Second quarter revenues increased 46% to $6.0 million compared to the second quarter of 2007 703 TranS1 procedures performed in the quarter Gross margin was 80.9% for the quarter GAAP loss per share was $0.26 for the quarter Non-GAAP loss per share was $0.20 for the quarter Received FDA 510(k) Clearance for the AxiaLIF 2L, Two Level Percutaneous Lumbar Fusion System First Patients Treated with Percutaneous Nucleus Replacement, PNR(r), in Europe
WILMINGTON, N.C., July 31, 2008 (PRIME NEWSWIRE) -- TranS1 Inc. (Nasdaq:TSON), a medical device company focused on designing, developing and marketing products that implement its proprietary minimally invasive surgical approach to treat degenerative disc disease affecting the lower lumbar region of the spine, today announced its financial results for the second quarter ended June 30, 2008.
Revenues were $6.0 million in the second quarter of 2008, representing a 46% increase over revenues of $4.1 million in the second quarter of 2007. Gross margin was 80.9% in the second quarter, an increase from 78.7% in the second quarter of 2007.
Operating expenses were $10.8 million in the second quarter of 2008 compared to $5.8 million in the second quarter of 2007. The increase in operating expenses is primarily attributable to an increase in sales and marketing costs as a result of the continued expansion of the direct sales force, increased commissions as a result of increased sales and increased surgeon training costs. Additionally, general and administrative costs increased primarily due to the addition of personnel and increased legal and professional fees.
Net loss was $5.3 million and $2.4 million for the quarters ended June 30, 2008 and 2007, respectively. GAAP net loss per common share was $0.26 in the second quarter of 2008 compared to a net loss per share of $0.98 in the second quarter of 2007.
For the quarter ended June 30, 2008, on a non-GAAP basis, adjusting for non-cash stock compensation expense, net loss was $0.20 per common share based upon 20,212,000 weighted average common shares outstanding. For the quarter ended June 30, 2007, on a non-GAAP basis, adjusting for non-cash stock compensation expense, the issuance of 6.3 million shares of common stock from the company's initial public offering in October 2007 and the conversion of preferred stock into common stock in connection with the public offering, net loss was $0.09 per common share based upon 19,601,000 weighted average common shares outstanding.
Cash, cash-equivalents and investments were $87.8 million as of June 30, 2008.
Richard Randall, President and Chief Executive Officer of TranS1 said, "Although we fell short of our sales objectives for the quarter, I remain confident that the continued maturation of our sales force, combined with the addition of our 2-Level product, which addresses a much larger market at a higher average selling price, positions us for strong growth in 2008 and beyond."
Conference Call
TranS1 will host a conference call today at 4:30 pm EDT to discuss its second quarter financial results. To listen to the conference call on your telephone, please dial 877-440-5784 for domestic callers and 719-325-4943 for international callers approximately ten minutes prior to the start time. The call will be concurrently webcast. To access the live audio broadcast or the subsequent archived recording, visit the TranS1 Web site at www.trans1.com under the investor relations section.
Non-GAAP Measures
Management uses certain non-GAAP financial measures such as non-GAAP net loss and net loss per share, which exclude stock based compensation and include the assumed conversion of preferred stock to common stock. This non-GAAP presentation is given in part to enhance the understanding of the company's historical financial performance and comparability between periods. The company believes that the non-GAAP presentation to exclude stock-based compensation and the assumed conversion of preferred stock to common stock is relevant and useful information that will be widely used by investors and analysts. Accordingly, the company is disclosing this information to permit additional analysis of the company's performance. These non-GAAP measures are not in accordance with, or an alternative for, GAAP, and may be different from non-GAAP measures used by other companies. Investors should consider these non-GAAP measures in addition to, and not as a substitute for, financial performance measures in accordance with GAAP. A reconciliation of the GAAP financial measures to the comparable non-GAAP financial measure is included below.
About TranS1 Inc.
TranS1 is a medical device company focused on designing, developing and marketing products that implement its proprietary minimally invasive surgical approach to treat degenerative disc disease affecting the lower lumbar region of the spine. TranS1 currently markets two single-level fusion products, the AxiaLIF(r) and the AxiaLIF 360(tm), and a two-level fusion product, the AxiaLIF 2L(tm), in the U.S. and Europe. TranS1 was founded in May 2000 and is headquartered in Wilmington, North Carolina. For more information, visit www.trans1.com.
Forward-Looking Statements
This press release includes forward-looking statements, the accuracy of which is necessarily subject to risks and uncertainties. These risks and uncertainties include, among other things, risks associated with the adoption of a new technology by spine surgeons, product development efforts, regulatory requirements, maintenance and prosecution of adequate intellectual property protection and other economic and competitive factors. These forward-looking statements are based on the company's expectations as of the date of this press release and the company undertakes no obligation to update information provided in this press release. For a discussion of risks and uncertainties associated with TranS1's business, please review the company's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2007.
TranS1 Inc. Statements of Operations (in thousands, except per share amounts) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, ------------------ ------------------- 2008 2007 2008 2007 -------- -------- -------- -------- Revenue $ 5,951 $ 4,072 $11,929 $ 7,187 Cost of revenue 1,137 869 2,175 1,459 -------- -------- -------- -------- Gross profit 4,814 3,203 9,754 5,728 -------- -------- -------- -------- Operating expenses: Research and development 1,562 1,390 2,777 2,278 Sales and marketing 7,200 3,765 12,898 6,837 General and administrative 2,039 639 3,445 1,083 -------- -------- -------- -------- Total operating expenses 10,801 5,794 19,120 10,198 -------- -------- -------- -------- Operating loss (5,987) (2,591) (9,366) (4,470) Interest income 688 161 1,628 343 -------- -------- -------- -------- Net loss $(5,299) $(2,430) $(7,738) $(4,127) ======== ======== ======== ======== Net loss per common share - basic and diluted $ (0.26) $ (0.98) $ (0.39) $ (1.67) ======== ======== ======== ======== Weighted average common shares outstanding - basic and diluted 20,212 2,483 20,071 2,468 ======== ======== ======== ======== Stock-based compensation is included in operating expenses in the following categories: Cost of revenue $ 13 $ 14 $ 27 $ 26 Research and development 204 169 295 200 Sales and marketing 600 424 874 715 General and administrative 515 69 658 118 -------- -------- -------- -------- $ 1,332 $ 676 $ 1,854 $ 1,059 ======== ======== ======== ======== Reconciliation of Second Quarter Results (in thousands, except per share amounts) (Unaudited) 2008 2007 --------- --------- GAAP net loss $ (5,299) $ (2,430) Stock based compensation 1,332 676 --------- --------- Non-GAAP net loss $ (3,967) $ (1,754) ========= ========= Shares used in computing GAAP loss per share 20,212 2,483 Assumed issuance of common shares from initial public offering -- 6,325 Assumed conversion of preferred stock to common stock -- 10,793 --------- --------- Shares used in computing non-GAAP loss per share 20,212 19,601 ========= ========= Non-GAAP loss per share $ (0.20) $ (0.09) ========= ========= Reconciliation of Year-To-Date Results (in thousands, except per share amounts) (Unaudited) 2008 2007 --------- --------- GAAP net loss $ (7,738) $ (4,127) Stock based compensation 1,854 1,059 --------- --------- Non-GAAP net loss $ (5,884) $ (3,068) ========= ========= Shares used in computing GAAP loss per share 20,071 2,468 Assumed issuance of common shares from initial public offering -- 6,325 Assumed conversion of preferred stock to common stock -- 10,793 --------- --------- Shares used in computing non-GAAP loss per share 20,071 19,586 ========= ========= Non-GAAP loss per share $ (0.29) $ (0.16) ========= ========= TranS1 Inc. Balance Sheets (in thousands) (Unaudited) June 30, December 31, 2008 2007 ---------- ------------ Assets Current assets: Cash and cash equivalents $ 52,049 $ 64,676 Short-term investments 21,466 29,245 Accounts receivable, net 3,774 3,225 Inventory 3,964 4,025 Prepaid expenses and other assets 362 597 ---------- ---------- Total current assets 81,615 101,768 Property and equipment, net 1,337 1,088 Long-term investments 14,276 -- ---------- ---------- Total assets $ 97,228 $ 102,856 ========== ========== Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 2,017 $ 1,631 Accrued expenses 1,535 1,786 ---------- ---------- Total current liabilities 3,552 3,417 ---------- ---------- Stockholders' equity Common stock 2 2 Additional paid-in capital 132,300 130,325 Accumulated deficit (38,626) (30,888) ---------- ---------- Total stockholders' equity 93,676 99,439 ---------- ---------- Total liabilities and stockholders' equity $ 97,228 $ 102,856 ========== ========== TranS1 Inc. Statements of Cash Flows (in thousands) (Unaudited) Six Months Ended June 30, --------------------- 2008 2007 --------- --------- Cash flows from operating activities: Net loss $ (7,738) $ (4,127) Adjustments to reconcile net loss to net cash used in operating activities Depreciation 369 268 Stock-based compensation 1,854 1,059 Allowance for excess and obsolete inventory 34 85 Provision for bad debts 66 22 Changes in operating assets and liabilities: Increase in accounts receivable (615) (1,735) Decrease (increase) in inventory 27 (975) Decrease (increase) in prepaid expenses 235 (254) Increase in accounts payable 386 180 (Decrease) increase in accrued expenses (251) 1,029 --------- --------- Net cash used in operating activities (5,633) (4,448) --------- --------- Cash flows from investing activities: Purchase of property and equipment (618) (390) Purchases of short-term investments (27,012) (10,716) Sales of short-term investments 34,791 16,009 Purchases of long-term investments (14,276) -- --------- --------- Net cash provided by (used in) investing activities (7,115) 4,903 --------- --------- Cash flows from financing activities: Proceeds from issuance of common stock 121 48 --------- --------- Net cash provided by financing activities 121 48 --------- --------- Net increase (decrease) in cash and cash equivalents (12,627) 503 Cash and cash equivalents, beginning of period 64,676 5,034 --------- --------- Cash and cash equivalents, end of period $ 52,049 $ 5,537 ========= =========