COLORADO SPRINGS, Colo., Feb. 27, 2014 (GLOBE NEWSWIRE) -- The Spectranetics Corporation (Nasdaq:SPNC) today reported financial results for the quarter and year ended December 31, 2013. Highlights of the quarter (all compared with the quarter ended December 31, 2012) include:
- Vascular Intervention revenue growth of 23%, led by U.S. peripheral atherectomy revenue growth of 35%
- Lead Management revenue growth of 6% (5% constant currency1)
- U.S. revenue increased 12% to $34.5 million; International revenue increased 25% to $7.4 million (22% constant currency)
- Gross margin reached 75%, up from 73% a year ago
"In the fourth quarter, we extended our track record of double digit revenue growth through strong commercial and operational execution by our team," said President and Chief Executive Officer, Scott Drake. "We are pleased to have achieved the statistical endpoints of the EXCITE ISR adjunct analysis; we anticipate filing our 510(k) within the next 45 days. This is an important milestone toward achieving the in-stent restenosis indication and providing clinical data that changes clinical practice. We are executing on several compelling growth drivers across our business, including lead management market development, meaningful new product launches, pursuit of the ISR indication and expansion of our commercial footprint."
Revenue for the three months ended December 31, 2013 rose 14% to $41.9 million, from $36.8 million in the 2012 period. Vascular Intervention revenue increased 23% to $20.6 million, Lead Management revenue increased 6% (5% constant currency) to $16.3 million, and laser system, service and other revenue increased 8% to $5.1 million.
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1Constant currency is a non-GAAP financial measure. See "Reconciliation of Non-GAAP Financial Measures" later in this release.
Geographically, revenue in the United States was $34.5 million, an increase of 12% from the three months ended December 31, 2012. International revenue totaled $7.4 million, an increase of 25% as reported (22% constant currency), from the three months ended December 31, 2012.
Net income for the three months ended December 31, 2013 was $883,000, or $0.02 per diluted share, compared with net income of $673,000, or $0.02 per diluted share, for the three months ended December 31, 2012. Adjusted EBITDA2 was $4.6 million for the three months ended December 31, 2013 compared with $3.8 million for the three months ended December 31, 2012. Adjusted EBITDA provides for comparability between periods and represents an additional measure of the operating performance of the business.
Full Year 2013 Financial Results
Revenue for the year ended December 31, 2013 rose 13% to $158.8 million, from $140.3 million for the year ended December 31, 2012. Vascular Intervention revenue increased 12% to $75.6 million, Lead Management revenue increased 13% to $62.5 million, and laser system, service and other revenue increased 16% to $20.7 million.
Geographically, revenue in the United States was $130.1 million, an increase of 11% from the year ended December 31, 2012. International revenue totaled $28.7 million, an increase of 26% as reported (24% constant currency), from the year ended December 31, 2012.
Net loss for the year ended December 31, 2013 was $370,000, or a loss of $0.01 per diluted share, compared with net income of $2.2 million, or $0.06 per diluted share, for the year ended December 31, 2012. Adjusted EBITDA was $13.3 million for the year ended December 31, 2013 compared with $13.1 million for the year ended December 31, 2012.
2014 Outlook
Spectranetics management projects revenue for 2014 to be in the range of $177.5 to $180.0 million, an increase of 12% to 13% over 2013. No revenue is included in our outlook for mechanical tools or the ISR indication. The mechanical tools are pending FDA clearance, and the 510(k) application for the ISR indication will be submitted shortly.
Net loss for 2014 is expected to be in the range of $3.0 - $5.0 million, or $0.07 - $0.12 per share. The investment in the field sales team expansion will contribute to a net loss in the first half of 2014 projected to be in the range of $8.0 - $9.0 million.
The 2014 Adjusted EBITDA projection is anticipated to be in the range of $8.0 - $10.0 million in 2014, compared with Adjusted EBITDA of $11.2 million in 2013. The medical device tax is included in both periods.
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2Adjusted EBITDA is a non-GAAP financial measure. See "Reconciliation of Non-GAAP Financial Measures" later in this release.
Conference Call
Management will host an investment community conference call today beginning at 2:30 p.m. Mountain Time, 4:30 p.m. Eastern Time, to discuss these results and answer questions. Individuals interested in listening to the conference call may dial (877) 561-2747 for domestic callers, or (973) 409-9689 for international callers, or from the webcast on the investor relations section of the Company's Web site at: www.spectranetics.com. The webcast will be available on the Company's Web site for 14 days following the completion of the call.
About Spectranetics
Spectranetics develops, manufactures, markets and distributes single-use medical devices used in minimally invasive procedures within the cardiovascular system. The Company's products are sold in over 40 countries and are used to treat arterial blockages in the heart and legs, and the removal of pacemaker and defibrillator leads.
The Company's Vascular Intervention (VI) products include a range of laser catheters for ablation of blockages in arteries above and below the knee. The Company also markets support catheters to facilitate crossing of peripheral and coronary arterial blockages, and retrograde access and guidewire retrieval devices used in the treatment of peripheral arterial blockages, including chronic total occlusions. The Company markets aspiration and cardiac laser catheters to treat blockages in the heart.
The Lead Management (LM) product line includes excimer laser sheaths and cardiac lead management accessories for the removal of pacemaker and defibrillator cardiac leads.
For more information, visit www.spectranetics.com
Safe Harbor Statement
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. You can identify these statements because they do not relate strictly to historical or current facts. Such statements may include words such as "anticipate," "will," "estimate," "expect," "look forward," "strive," "project," "intend," "should," "plan," "believe," "hope," "enable," "potential," and other words and terms of similar meaning in connection with any discussion of, among other things, future operating or financial performance, strategic initiatives and business strategies, clinical trials, regulatory or competitive environments, our intellectual property and product development. These forward-looking statements include, but are not limited to, statements regarding our expectation of continued growth and the reasons for that growth, growth rates, and 2014 outlook including projected revenue, net income and Adjusted EBITDA. Such statements are based on current assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements and to note they speak only as of the date of this release. These risks and uncertainties may include market acceptance of excimer laser atherectomy technology and our lead removal products, increasing price and product competition, increased pressure on expense levels resulting from expanded sales, marketing, product development and clinical activities, uncertain success of our strategic direction, dependence on new product development, uncertain success of or delays in our clinical trials, adverse results in any ongoing legal proceeding, or any legal proceeding in which we may become involved, adverse impact to our business of the healthcare reform and related legislation or regulations, including changes in reimbursements, continued or worsening adverse conditions in the general domestic and global economic markets and continued volatility and disruption of the credit markets, which affects the ability of hospitals and other health care systems to obtain credit and may impede our access to capital, intellectual property claims of third parties, availability of inventory from suppliers, adverse outcome of FDA inspections, the receipt of FDA approval to market new products or applications and the timeliness of any approvals, market acceptance of new products or applications, product defects, ability to manufacture sufficient volumes to fulfill customer demand, availability of vendor-sourced components at reasonable prices, unexpected delays or costs associated with any planned improvements to our manufacturing processes, and share price volatility due to the initiation or cessation of coverage, or changes in ratings, by securities analysts. For a further list and description of such risks and uncertainties that could cause our actual results, performance or achievements to materially differ from any anticipated results, performance or achievements, please see our previously filed SEC reports, including those risks set forth in our 2012 Annual Report on Form 10-K. We disclaim any intention or obligation to update or revise any financial or other projections or other forward-looking statements, whether because of new information, future events or otherwise.
Use of Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP), we use certain non-GAAP financial measures in this release. Reconciliations of the non-GAAP financial measures used in this release to the most directly comparable GAAP measures for the respective periods, and an explanation of our use of these non-GAAP measures, can be found in "Reconciliation of Non-GAAP Financial Measures" immediately following the financial tables. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP.
-Financial tables follow-
| THE SPECTRANETICS CORPORATION | ||||
| Condensed Consolidated Statements of Operations | ||||
| (in thousands, except per share data and percentages) | ||||
| (unaudited) | ||||
|
Three Months Ended December 31, |
Twelve Months Ended December 31, |
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| 2013 | 2012 | 2013 | 2012 | |
| Revenue | $ 41,920 | $ 36,751 | $ 158,811 | $ 140,285 |
| Cost of products sold | 10,359 | 9,815 | 41,356 | 37,927 |
| Gross profit | 31,561 | 26,936 | 117,455 | 102,358 |
| Gross margin % | 75% | 73% | 74% | 73% |
| Operating expenses: | ||||
| Selling, general and administrative | 23,661 | 20,967 | 91,750 | 82,254 |
| Research, development and other technology | 5,760 | 4,712 | 22,080 | 16,846 |
| Medical device excise tax | 570 | — | 2,138 | — |
| Acquisition-related intangible asset amortization | 245 | — | 901 | — |
| Contingent consideration expense | 229 | — | 867 | — |
| Intangible asset impairment and change in contingent consideration liability, net | (675) | — | (675) | — |
| Acquisition related costs | — | 311 | — | 311 |
| Total operating expenses | 29,790 | 25,990 | 117,061 | 99,411 |
| Operating income | 1,771 | 946 | 394 | 2,947 |
| Other (expense) income, net | (3) | 2 | 16 | 13 |
| Income before taxes | 1,768 | 948 | 410 | 2,960 |
| Income tax expense | 885 | 275 | 780 | 734 |
| Net income (loss) | $ 883 | $ 673 | $ (370) | $ 2,226 |
| Net income (loss) per common share: | ||||
| Basic | $ 0.02 | $ 0.02 | $ (0.01) | $ 0.06 |
| Diluted | 0.02 | 0.02 | (0.01) | 0.06 |
| Weighted average shares outstanding: | ||||
| Basic | 41,108 | 34,698 | 38,941 | 34,377 |
| Diluted | 42,741 | 36,299 | 38,941 | 35,767 |
| THE SPECTRANETICS CORPORATION | ||
| Condensed Consolidated Balance Sheets | ||
| (in thousands) | ||
| (unaudited) | ||
| 12/31/2013 | 12/31/2012 | |
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $ 128,395 | $ 37,775 |
| Accounts receivable, net | 26,766 | 19,945 |
| Inventories, net | 9,476 | 9,288 |
| Deferred income taxes, current portion, net | 445 | 313 |
| Other current assets | 2,748 | 2,506 |
| Total current assets | 167,830 | 69,827 |
| Property and equipment, net | 28,281 | 27,006 |
| Goodwill and intangible assets | 20,455 | 13,316 |
| Other assets | 591 | 620 |
| Total assets | $ 217,157 | $ 110,769 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities | $ 23,225 | $ 20,193 |
| Non-current liabilities | 3,932 | 1,879 |
| Stockholders' equity | 190,000 | 88,697 |
| Total liabilities and stockholders' equity | $ 217,157 | $ 110,769 |
| THE SPECTRANETICS CORPORATION | |||||
| Supplemental Financial Information | |||||
| (Unaudited) | |||||
| Financial Summary | 2012 | 2013 | |||
| (000's, except laser sales and installed base amounts) | 4th Qtr | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr |
| Disposable products revenue: | |||||
| Vascular Intervention revenue | $ 16,684 | $ 17,193 | $ 18,897 | $ 18,956 | $ 20,555 |
| Lead Management revenue | 15,374 | 15,079 | 15,078 | 16,075 | 16,286 |
| Total disposable products revenue | 32,058 | 32,272 | 33,975 | 35,031 | 36,841 |
| Service and other revenue | 2,757 | 2,878 | 2,888 | 2,851 | 2,795 |
| Laser revenue: | |||||
| Equipment sales | 772 | 1,381 | 1,395 | 906 | 1,153 |
| Rental fees | 1,164 | 1,144 | 1,195 | 975 | 1,131 |
| Total laser revenue | 1,936 | 2,525 | 2,590 | 1,881 | 2,284 |
| Total revenue | 36,751 | 37,675 | 39,453 | 39,763 | 41,920 |
| Net income (loss) | 673 | (959) | (728) | 434 | 883 |
| Adjusted EBITDA (1) | 3,766 | 1,812 | 2,656 | 4,321 | 4,554 |
| Cash flow generated by (used in) operating activities | 5,703 | (6,377) | 2,048 | 3,513 | 5,029 |
| Total cash and cash equivalents at end of quarter | 37,775 | 25,228 | 119,356 | 123,570 | 128,395 |
| Laser sales summary: | |||||
| Laser sales from inventory | 6 | 8 | 9 | 9 | 5 |
| Laser sales from evaluation/rental units | — | 7 | 5 | — | 5 |
| Total laser sales | 6 | 15 | 14 | 9 | 10 |
| (1) Adjusted EBITDA is a non-GAAP financial measure. Please refer to the non-GAAP reconciliation tables following this table for the reconciliation to the most comparable GAAP measure. | |||||
| Worldwide Installed Base Summary: | |||||
| Laser sales from inventory | 6 | 8 | 9 | 9 | 5 |
| Rental placements | 30 | 20 | 28 | 27 | 29 |
| Evaluation placements | 6 | 11 | 11 | 4 | 9 |
| Laser placements during quarter | 42 | 39 | 48 | 40 | 43 |
| Buy-backs/returns during quarter | (24) | (25) | (23) | (26) | (18) |
| Net laser placements during quarter | 18 | 14 | 25 | 14 | 25 |
| Total lasers placed at end of quarter | 1,066 | 1,080 | 1,105 | 1,119 | 1,144 |
Reconciliation of Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements prepared in accordance with GAAP, we use certain non-GAAP financial measures in this release. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures for the respective periods can be found in the tables below. An explanation of the manner in which our management uses these non-GAAP measures to conduct and evaluate our business and the reasons management believes these non-GAAP measures provide useful information to investors are provided following the reconciliation tables.
| THE SPECTRANETICS CORPORATION | |||||||
| Reconciliation of revenue by geography to non-GAAP revenue by geography | |||||||
| on a constant currency basis | |||||||
| (in thousands, except percentages) | |||||||
| (unaudited) | |||||||
| Three Months Ended | |||||||
| December 31, 2013 |
December 31, 2012 |
Change | |||||
|
Revenue, as reported |
Foreign exchange impact as compared to prior period |
Revenue on a constant currency basis |
Revenue, as reported |
As reported |
Constant currency basis |
||
| United States | $ 34,493 | $ — | $ 34,493 | $ 30,819 | 12% | 12% | |
| International | 7,427 | (185) | 7,242 | 5,932 | 25% | 22% | |
| Total revenue | $ 41,920 | $ (185) | $ 41,735 | $ 36,751 | 14% | 14% | |
| Twelve Months Ended | |||||||
| December 31, 2013 |
December 31, 2012 |
Change | |||||
|
Revenue, as reported |
Foreign exchange impact as compared to prior period |
Revenue on a constant currency basis |
Revenue, as reported |
As reported |
Constant currency basis |
||
| United States | $ 130,126 | $ — | $ 130,126 | $ 117,436 | 11% | 11% | |
| International | 28,685 | (370) | 28,315 | 22,849 | 26% | 24% | |
| Total revenue | $ 158,811 | $ (370) | $ 158,441 | $ 140,285 | 13% | 13% | |
| Reconciliation of revenue by product line to non-GAAP revenue by product line | ||||||
| on a constant currency basis (in thousands, except percentages) (unaudited) | ||||||
| Three Months Ended | ||||||
| December 31, 2013 |
December 31, 2012 |
Change | ||||
|
Revenue, as reported |
Foreign exchange impact as compared to prior period |
Revenue on a constant currency basis |
Revenue, as reported |
As reported |
Constant currency basis |
|
| Vascular Intervention | $ 20,555 | $ (66) | $ 20,489 | $ 16,684 | 23% | 23% |
| Lead Management | 16,286 | (129) | 16,157 | 15,374 | 6% | 5% |
| Laser System, Service & Other | 5,079 | 10 | 5,089 | 4,693 | 8% | 8% |
| Total revenue | $ 41,920 | $ (185) | $ 41,735 | $ 36,751 | 14% | 14% |
| Twelve Months Ended | ||||||
| December 31, 2013 |
December 31, 2012 |
Change | ||||
|
Revenue, as reported |
Foreign exchange impact as compared to prior period |
Revenue on a constant currency basis |
Revenue, as reported |
As reported |
Constant currency basis |
|
| Vascular Intervention | $ 75,601 | $ (85) | $ 75,516 | $ 67,336 | 12% | 12% |
| Lead Management | 62,518 | (263) | 62,255 | 55,186 | 13% | 13% |
| Laser System, Service & Other | 20,692 | (22) | 20,670 | 17,763 | 16% | 16% |
| Total revenue | $ 158,811 | $ (370) | $ 158,441 | $ 140,285 | 13% | 13% |
| THE SPECTRANETICS CORPORATION | |||||||||
| Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA | |||||||||
| (in thousands) | |||||||||
| (unaudited) | |||||||||
|
December 31, 2012 |
March 31, 2013 |
June 30, 2013 |
September 30, 2013 |
December 31, 2013 |
|||||
| Net income (loss), as reported | $ 673 | $ (959) | $ (728) | $ 434 | $ 883 | ||||
| Income tax expense (benefit) | 275 | (575) | 64 | 406 | 885 | ||||
| Interest expense (income), net | — | 4 | (6) | 1 | (2) | ||||
| Depreciation and amortization | 2,507 | 2,454 | 2,369 | 2,463 | 2,419 | ||||
| Acquisition-related intangible asset amortization (1) | — | 164 | 246 | 246 | 245 | ||||
| EBITDA | 3,455 | 1,088 | 1,945 | 3,550 | 4,430 | ||||
| Medical device excise tax (2) | — | 522 | 509 | 537 | 570 | ||||
| Contingent consideration expense (1) | — | 202 | 202 | 234 | 229 | ||||
| Intangible asset impairment and change in contingent consideration liability, net (1) | — | — | — | — | (675) | ||||
| Acquisition-related costs (3) | 311 | — | — | — | — | ||||
| Adjusted EBITDA | $ 3,766 | $ 1,812 | $ 2,656 | $ 4,321 | $ 4,554 | ||||
| Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA | ||
| (in thousands) | ||
| (unaudited) | ||
| Twelve Months Ended | ||
| December 31, 2013 | December 31, 2012 | |
| Net (loss) income, as reported | $ (370) | $ 2,226 |
| Income tax expense | 780 | 734 |
| Interest income, net | (3) | (8) |
| Depreciation and amortization | 9,705 | 9,854 |
| Acquisition-related intangible asset amortization (1) | 901 | — |
| EBITDA | 11,013 | 12,806 |
| Medical device excise tax (2) | 2,138 | — |
| Contingent consideration expense (1) | 867 | — |
| Intangible asset impairment and change in contingent consideration liability, net (1) | (675) | — |
| Acquisition-related costs (3) | — | 311 |
| Adjusted EBITDA | $ 13,343 | $ 13,117 |
| Reconciliation of 2014 Projected Net Loss and 2013 Net Loss to EBITDA | |||
| and Adjusted EBITDA | |||
| (in thousands) | |||
| (unaudited) | |||
| Twelve Months Ended | |||
| Projected Range | |||
|
December 31, 2014 |
December 31, 2014 |
December 31, 2013 |
|
| Net loss, GAAP | $ (5,000) | $ (3,000) | $ (370) |
| Income tax expense | 900 | 900 | 780 |
| Interest income, net | — | — | (3) |
| Depreciation and amortization | 11,300 | 11,300 | 9,705 |
| Acquisition-related intangible asset amortization (1) | 600 | 600 | 901 |
| EBITDA | 7,800 | 9,800 | 11,013 |
| Contingent consideration expense (1) | 200 | 200 | 867 |
| Intangible asset impairment and change in contingent consideration liability, net (1) | — | — | (675) |
| Adjusted EBITDA | $ 8,000 | $ 10,000 | $ 11,205 |
| __________________ | |||
| 1) Acquisition-related intangible asset amortization relates to intangible assets acquired from Upstream Peripheral Technologies Ltd. ("Upstream") in January 2013. Contingent consideration expense represents the accretion of the estimated contingent consideration liability related to amounts payable to Upstream in 2014, 2015 and 2016, primarily based on sales of the products acquired. At the acquisition date, we recorded a contingent consideration liability, representing the estimated fair value of the future contingent payments we expected to make at that time. As of December 31, 2013, based on our assessment that we are not likely to generate the level of revenues from sales of the Upstream products that we anticipated at the acquisition date, we remeasured the contingent consideration liability to its fair value and reduced it by approximately $5.2 million. As a result of lower projected revenues for these products, we reviewed the recoverability of the intangible assets acquired. This review resulted in an impairment charge of approximately $4.5 million related to those assets, based on their revised fair value using current cash flow assumptions. Although we have lowered our revenue expectations, we continue to expect these products to have a positive effect on future profitability. Further, we believe these products are important niche products that strategically complement and complete our crossing solutions chronic total occlusion (CTO) portfolio. | |||
| 2) The medical device excise tax, which was included as part of the Patient Protection and Affordable Care Act and which took effect on January 1, 2013, represents 2.3% of a majority of our U.S. sales. During 2013, the medical device excise tax is shown in the reconciliation of net income to Adjusted EBITDA to provide for comparability with 2012 results. Beginning in 2014, we will no longer add back the medical device excise tax in our calculation of Adjusted EBITDA. | |||
| 3) In the fourth quarter of 2012, we incurred $0.3 million in legal and other costs related to acquiring certain product lines from Upstream. Further information regarding this matter is in our 2012 Annual Report on Form 10-K. | |||
Management uses the non-GAAP financial measures as supplemental measures to analyze the underlying trends in our business, assess the performance of our core operations, establish operational goals and forecasts that are used in allocating resources and evaluate our performance period over period and in relation to our competitors' operating results.
The impact of foreign exchange rates is highly variable and difficult to predict. We use a constant currency basis to show the impact from foreign exchange rates on current period revenue compared to prior period revenue using the prior period's foreign exchange rates. In order to properly understand the underlying business trends and performance of our ongoing operations, we believe that investors may find it useful to consider the impact of excluding changes in foreign exchange rates from our revenue.
We believe that presenting the non-GAAP financial measures used in this release provides investors greater transparency to the information used by our management for financial and operational decision-making and allows investors to see our results "through the eyes" of management. We also believe that providing this information better enables our investors to understand our operating performance and evaluate the methodology used by management to evaluate and measure such performance.
Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. Some limitations associated with using these non-GAAP financial measures are provided below:
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Management exercises judgment in determining which types of charges or other items should be excluded from the non-GAAP financial measures used.
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Depreciation and amortization expense, while not requiring cash settlement, are ongoing and recurring expenses and have a material impact on GAAP net income and reflect economic costs to us not reflected in Adjusted EBITDA. The intangible asset impairment, while not requiring cash settlement, reflects an economic cost to us not reflected in Adjusted EBITDA.
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Items such as the contingent consideration expense, acquisition-related costs, and the medical device excise tax excluded from Adjusted EBITDA can have a material impact on cash flows, GAAP net income, and net income per share and reflect economic costs to us not reflected in Adjusted EBITDA.
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Revenue growth rates stated on a constant currency basis, by their nature, exclude the impact of changes in foreign currency exchange rates, which may have a material impact on GAAP revenue.
- Non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles and therefore other companies may calculate similarly titled non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.