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| 8-K - SOMANETICS CORP | v177632_8k.htm |
Somanetics
Reports First Quarter 2010 Results
-
Updates Guidance Based on Better than Expected Q1 Performance -
TROY,
Mich., March 17 /PRNewswire-FirstCall/ --
First Quarter
Highlights
|
·
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Net
revenues of $13.1 million, up 18
percent.
|
|
·
|
Income
before income taxes of $3.1 million, up 45
percent.
|
|
·
|
Net
income of $2.0 million, up 57 percent; $0.16 per diluted
share.
|
|
·
|
Somanetics
adjusts full-year guidance to net revenues increasing 12 to 15 percent
over 2009 to approximately $56 million to $57.5 million, and operating
margin to be approximately 17 to 20 percent, excluding litigation
expense.
|
Somanetics
Corporation (Nasdaq: SMTS) reported net revenues of $13.1 million for the first
quarter ended February 28, 2010, an 18 percent increase from $11.2 million in
the same period of 2009.
U.S. net
revenues increased 20 percent to $10.5 million from $8.7 million in the same
period last year. International net revenues increased 11 percent to
$2.7 million from $2.4 million.
First
quarter income before income taxes was $3.1 million, compared to $2.1 million
for the first quarter of 2009. Net income was $2.0 million, or $0.16
per diluted share, compared with net income of $1.3 million, or $0.10 per
diluted share, in the first quarter of 2009.
Gross
margin was 87 percent in the first quarter, compared with 86 percent in the
first quarter of 2009. As of February 28, 2010, Somanetics' cash,
marketable securities and long-term investments balance was $76.8 million, with
no borrowings.
In the
first quarter Somanetics purchased 401,992 common shares pursuant to its stock
repurchase plan for approximately $6.4 million including
commissions. Somanetics has approximately $7.1 million remaining
under its $45 million stock repurchase program.
"We are
off to a solid start for the year with sales and earnings exceeding our internal
plans for the first quarter," said Bruce Barrett, Somanetics' president and
chief executive officer.
"We also
are continuing to execute our investments to increase the size of our U.S. field
sales and clinical education team and implement technological advances that
promise to further our lead in this developing marketplace."
Company to Participate in
Upcoming Medical Conferences
Somanetics
will participate in approximately 20 medical conferences during the second
quarter, including the 2010 annual meeting of the American Association for
Thoracic Surgery and various regional and state cardiothoracic, perfusion,
anesthesia, pediatric cardiac and neonatology association
meetings. At the International Anesthesia Research Society (IARS)
meeting this month, a number of abstracts will be presented on the use of the
INVOS System in cardiac and carotid endarterectomy surgery.
At the
Anesthesia Patient Safety Foundation's Excellence in Safety Research Symposium,
being held in conjunction with the IARS, John Murkin, MD will receive the
"Excellence in Device Innovations" award and speak on the topic of Clinical Uses
of Non-Invasive Cerebral Oximetry.
New Clinical Data
Published
In
January, Sean Bailey, MD and colleagues from New York University School of
Medicine published study results in the American Journal of
Perinatology. They studied cerebral and somatic regional
saturation of oxygen (rSO2) using the INVOS System before and after transfusion
of packed red blood cells (PBRCs) and found that transfusions of PBRCs in anemic
preterm infants were associated with significant increases in both cerebral and
splanchnic (abdominal) oxygen saturation, an indication of increased oxygen
delivery. Additionally, neither cerebral nor splanchnic (abdominal)
rSO2 correlated with hemoglobin concentration in the blood, a relatively
insensitive marker that is sometimes used to evaluate the need for
transfusion. Because there currently is no universal method for
determining when a transfusion is necessary, the study highlights the importance
of monitoring organ perfusion as a means of evaluating the benefits of
transfusion in this population. These results were essentially the
same as those of Carlo Dani, MD and colleagues at
Careggi University Hospital in Florence, Italy, whose publication in
the journal Transfusion
appeared at the same time.
In
addition, Somanetics expects other articles will be published in the next few
months, on such topics as the establishment of rSO2 baseline values for
cerebral, peri-renal and abdominal monitoring in neonates and the management of
surgical neonatal patients with necrotizing enterocolitis.
"We
believe that peer-reviewed articles will continue to build the foundation of
clinical evidence of the benefits of using the INVOS Cerebral/Somatic Oximeter
in the neonatal ICU," Barrett said.
Technological
Advances
Somanetics
has developed a sensor for use in the neonatal ICU that has features that are
important to the customers including a smaller size, more flexibility and a
lighter weight than the current model. The sensor is expected to be
introduced to customers beginning in the second quarter.
Work is
continuing on the development of a single integrated INVOS System and Vital Sync
System device for bedside data collection, storage, display and
analysis. In addition, pursuant to the rights Somanetics recently
obtained to new cerebral autoregulation technology developed at The Johns
Hopkins University, Somanetics is working on the integration of the technology
into the INVOS System, which would yield the first noninvasive monitor providing
cerebral autoregulation data for routine clinical use.
Business
Outlook
Based on
its first quarter results and the current outlook for the year, Somanetics is
adjusting its financial guidance for fiscal year 2010. Somanetics is
currently forecasting:
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·
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Fiscal
2010 net revenues increasing 12 to 15 percent over 2009 to approximately
$56 million to $57.5 million; Somanetics previously guided to revenue
growth of 12 percent.
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·
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Gross
margin of approximately 87 percent and operating margin of approximately
17 to 20 percent, excluding litigation expense; Somanetics previously
guided to gross margin of approximately 87 percent and operating margin of
approximately 17 percent, excluding litigation
expense.
|
Current
estimates are based on market and economic conditions, including the assumption
that the recovery in capital spending at hospitals will be slow to
develop. These estimates reflect management's plan to invest in the
clinical research, medical education and research and development projects
focused on the pediatric and neonatal ICU markets, the development of new
technologies and the addition of employees in sales, research and development
and administration. Somanetics undertakes no obligation to update its
estimates.
Somanetics to Host
Conference Call
Somanetics
will webcast its 2010 first quarter conference call at 10:00 a.m. (ET)
today. To join the web cast, visit the Presentations & Webcasts
page in the Investor Relations section of Somanetics' website at www.somanetics.com
and click on the "Q1 2010 Somanetics Corporation Conference Call"
link. The call also will be archived on the website.
About
Somanetics
Somanetics
Corporation (Nasdaq: SMTS) develops, manufactures and markets the INVOS®
Cerebral/Somatic Oximeter which noninvasively provides accurate, real-time blood
oxygen measurements in patients greater than 2.5 kilograms, and trend monitoring
of this parameter for individuals of any weight. The INVOS System is
the only commercially-available cerebral/somatic oximeter proven to improve
outcomes. Surgeons, anesthesiologists and other medical professionals
can use data provided by the INVOS System, in conjunction with other available
data, to identify oxygen imbalances in brain or other body tissue beneath the
sensor and take necessary corrective action, potentially improving patient
outcomes and reducing the costs of care. The INVOS System is the
clinical reference standard in cerebral/somatic oximetry, with a 12-year market
track record, more than 750 clinical references and implementation at
approximately 800 U.S. hospitals. Somanetics also develops,
manufactures and markets the Vital Sync™ System, a device that integrates data
from bedside devices into a single system for enhanced patient assessment and
decision making, data management and data storage. Somanetics
supports its customers through a direct U.S. sales force and clinical education
team. Covidien markets INVOS System products in Europe, Canada, the
Middle East and South Africa and Edwards Lifesciences represents INVOS System
products in Japan. For more information visit www.somanetics.com.
Safe-Harbor
Statement
Except
for historical information contained herein, the matters discussed in this news
release, including financial guidance for fiscal year 2010, are forward-looking
statements, the accuracy of which is necessarily subject to risks and
uncertainties. Actual results may differ significantly from results
discussed in the forward-looking statements and may be affected by, among other
things, economic conditions in general and in the healthcare market, including
the current global economic difficulties, the demand for and market acceptance
of our products in existing market segments and in new market segments we plan
to pursue, our current dependence on the INVOS Cerebral/Somatic Oximeter and
disposable sensors, our dependence on distributors for a substantial portion of
our sales, our dependence on single-source suppliers, potential competition, the
effective management of our growth, our ability to attract and retain key
personnel, the potential for products liability claims, government regulation of
our business, future equity compensation expenses, the challenges associated
with developing new products and obtaining and maintaining regulatory approvals
if necessary, research and development activities, the lengthy sales cycle for
our products, sales employee turnover, changes in our actual or estimated future
taxable income, changes in accounting rules, enforceability and the costs of
enforcement of our patents, potential infringements of others' patents and the
other factors set forth from time to time in Somanetics' Securities and Exchange
Commission filings, including Somanetics' 2009 Annual Report on Form 10-K filed
on February 3, 2010.
(Tables
to follow)
SOMANETICS
CORPORATION
BALANCE
SHEETS
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February 28,
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November 30,
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||||||
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2010
|
2009
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||||||
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(Unaudited)
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(Audited)
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||||||
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ASSETS
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||||||||
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CURRENT
ASSETS:
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||||||||
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Cash
and cash equivalents
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$ | 24,660,515 | $ | 28,964,273 | ||||
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Marketable
securities
|
8,381,289 | 24,763,854 | ||||||
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Accounts
receivable
|
7,374,943 | 8,878,942 | ||||||
|
Inventory
|
3,336,832 | 3,622,531 | ||||||
|
Prepaid
expenses
|
545,819 | 1,087,450 | ||||||
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Accrued
interest receivable
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94,483 | 138,099 | ||||||
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Deferred
tax asset - current
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51,060 | 51,060 | ||||||
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Total
current assets
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44,444,941 | 67,506,209 | ||||||
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PROPERTY
AND EQUIPMENT (at cost):
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||||||||
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Demonstration
and no capital cost
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||||||||
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sales
equipment at customers
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4,407,883 | 4,285,163 | ||||||
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Machinery
and equipment
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2,058,911 | 1,886,582 | ||||||
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Furniture
and fixtures
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990,817 | 545,796 | ||||||
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Leasehold
improvements
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454,423 | 197,450 | ||||||
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Total
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7,912,034 | 6,914,991 | ||||||
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Less
accumulated depreciation and
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||||||||
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amortization
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(3,787,422 | ) | (3,966,645 | ) | ||||
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Net
property and equipment
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4,124,612 | 2,948,346 | ||||||
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OTHER
ASSETS:
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||||||||
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Long-term
investments
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43,792,506 | 26,004,995 | ||||||
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Deferred
tax asset – non-current
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2,961,381 | 2,795,963 | ||||||
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Intangible
assets, net
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230,924 | 234,003 | ||||||
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Goodwill
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1,783,712 | 1,783,712 | ||||||
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Other
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15,000 | 15,000 | ||||||
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Total
other assets
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48,783,523 | 30,833,673 | ||||||
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TOTAL
ASSETS
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$ | 97,353,076 | $ | 101,288,228 | ||||
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
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||||||||
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CURRENT
LIABILITIES:
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||||||||
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Accounts
payable
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$ | 1,301,686 | $ | 1,466,497 | ||||
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Accrued
liabilities
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$ | 703,021 | $ | 1,788,552 | ||||
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Deferred
rent
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102,153 | – | ||||||
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Total
current liabilities
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2,106,860 | 3,255,049 | ||||||
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COMMITMENTS
AND CONTINGENCIES
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||||||||
| SHAREHOLDERS' EQUITY: | ||||||||
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Preferred
shares; authorized, 1,000,000
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||||||||
|
shares
of $.01 par value;
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||||||||
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no
shares issued or outstanding
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– | – | ||||||
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Common
shares; authorized, 20,000,000
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||||||||
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shares
of $.01 par value; issued and
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||||||||
|
outstanding,
11,909,200 shares at
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||||||||
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February
28, 2010, and 12,104,462 shares
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||||||||
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at
November 30, 2009
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119,092 | 121,045 | ||||||
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Additional
paid-in capital
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92,864,993 | 97,696,229 | ||||||
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Retained
Earnings
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2,262,131 | 215,905 | ||||||
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Total
shareholders' equity
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95,246,216 | 98,033,179 | ||||||
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TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY
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$ | 97,353,076 | $ | 101,288,228 | ||||
SOMANETICS
CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
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For
the Three-Month
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Periods
Ended
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|||||||
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February 28,
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February 28,
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2010
|
2009
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||||||
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NET
REVENUES
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$ | 13,139,684 | $ | 11,155,354 | ||||
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COST
OF SALES
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1,745,454 | 1,580,481 | ||||||
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Gross
Margin
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11,394,230 | 9,574,873 | ||||||
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OPERATING
EXPENSES:
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||||||||
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Research,
development and engineering
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613,153 | 423,161 | ||||||
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Selling,
general and administrative
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7,976,276 | 7,314,699 | ||||||
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Total
operating expenses
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8,589,429 | 7,737,860 | ||||||
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OPERATING
INCOME
|
2,804,801 | 1,837,013 | ||||||
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OTHER
INCOME:
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||||||||
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Interest
income
|
252,468 | 271,386 | ||||||
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Total
other income
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252,468 | 271,386 | ||||||
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INCOME
BEFORE INCOME TAXES
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3,057,269 | 2,108,399 | ||||||
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INCOME
TAX EXPENSE
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(1,011,044 | ) | (806,220 | ) | ||||
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NET
INCOME
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$ | 2,046,225 | $ | 1,302,179 | ||||
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NET
INCOME PER COMMON SHARE – BASIC
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$ | .17 | $ | .11 | ||||
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NET
INCOME PER COMMON SHARE – DILUTED
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$ | .16 | $ | .10 | ||||
|
WEIGHTED
AVERAGE SHARES OUTSTANDING – BASIC
|
12,029,231 | 12,038,368 | ||||||
|
WEIGHTED
AVERAGE SHARES OUTSTANDING – DILUTED
|
12,907,776 | 12,898,920 | ||||||
CONTACT: Mary
Ann Victor, Vice President and Chief Administrative Officer, +1-248-244-1409,
Bill Iacona, Chief Financial Officer, +1-248-244-1423