~ U.S. Urgent PC Sales Up 19% in Fiscal Third Quarter ~

~ Total Sales Increase by 14% to $6.4 Million~

 

MINNEAPOLIS, January 23, 2014 -- Uroplasty, Inc. (NASDAQ: UPI), a medical device company that develops, manufactures and markets innovative proprietary products to treat voiding dysfunctions, today reported strong financial results for the fiscal 2014 third quarter ended December 31, 2013.

Total revenues for the fiscal third quarter 2014 were $6.4 million, up 14% from the same quarter in the prior year. Sales of the Company’s Urgent^® PC Neuromodulation System in the United States grew 19% to $3.2 million, as compared to $2.7 million in the third quarter of the prior year.  Sales of Macroplastique in the United States grew 11% to $1.5 million in the third quarter of fiscal 2014.  Total net sales outside of the U.S. grew 11% to $1.6 million.

“Successful execution of the sales strategies we implemented earlier this fiscal year drove our continued sequential and year-over-year improvement,” said Rob Kill, President and Chief Executive Officer of Uroplasty.  “We are encouraged with the growth results generated to date for U.S. Urgent PC sales and expect recent trends to continue during the fourth quarter.  Our sales force is gaining momentum following our investment in ongoing training during the third quarter and, as a result, we are forecasting 25-30% year-over-year revenue growth for Urgent PC in the U.S. for the fourth quarter of fiscal 2014.”

The Company generated a gross margin of 87.8% in the recent fiscal third quarter compared with 86.9% in the same quarter a year ago.  Operating expenses for the period totaled $6.3 million compared to $5.5 million in the same quarter last year.  The increase was due primarily to higher sales and marketing costs reflecting higher personnel expenses resulting from the expansion and reorganization of the Company’s selling and marketing team, costs for increased marketing programs, and the  new medical device tax.

The operating loss of $0.7 million in the fiscal third quarter compares with a $0.7 million operating loss in the same quarter last year.  Excluding non-cash charges for share-based compensation and depreciation and amortization expense, the non-GAAP operating loss was $0.3 million in the third quarter of fiscal 2014, compared with a $0.1 million non-GAAP operating loss in the third quarter a year ago.

For the nine-month period ended December 31, 2013, sales grew 8% to $18.2 million, reflecting a 9% increase in U.S. sales and a 5% increase in sales outside the U.S. In the U.S., sales of Urgent PC increased 13% to $9.0 million.  At December 31, 2103, cash, cash equivalents and cash investments totaled $12.6 million.

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Conference Call

Uroplasty will host a conference call and webcast today at 4:30 p.m. Eastern Time (3:30 p.m. Central Time) to discuss these results. Rob Kill, President and Chief Executive Officer, and Brett Reynolds, Chief Financial Officer, will host the call. Individuals wishing to participate in the conference call should dial 877-941-8604. No passcode is necessary.  To access a live webcast of the call, go to Uroplasty’s website at www.uroplasty.com and click on the Investor Relations section.

An audio replay will be available for 30 days following the call at 800-406-7325 with the passcode 4660925#.  An archived webcast will also be available at investor.uroplasty.com.

About Uroplasty, Inc.

Forward-Looking Information

This press release contains forward-looking statements that reflect our best estimates regarding future events and financial performance. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from our anticipated results. We discuss in detail the factors that may affect the achievement of our forward-looking statements in our Annual Report on Form 10-K filed with the SEC.  In particular, we cannot be certain that we will ever achieve sustained profitability, that the rate of reimbursement for PTNS treatments will be adequate to justify the cost of our product, that other Medicare carriers or private payers will provide coverage for this treatment or that existing carriers and payers will not change their coverage decisions, that the rate of adoption of our products by new customers will continue, or that any of the other risks identified in our 10-K will not adversely affect our expectations as described in these forward-looking statements.

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		Three Months Ended								Nine Months Ended
		December 31								December 31
		2013				2012				2013				2012
Net sales		$	6,398,675			$	5,590,431			$	18,216,391			$	16,877,394
Cost of goods sold		$	778,267				734,171				2,268,156				2,264,721
Gross profit			5,620,408				4,856,260				15,948,235				14,612,673
Operating expenses
General and administrative			1,194,882				1,058,558				5,166,255				3,178,239
Research and development			526,224				533,867				1,434,647				1,695,841
Selling and marketing			4,546,100				3,725,530				13,496,593				11,424,407
Amortization			7,873				215,681				22,347				646,971
			6,275,079				5,533,636				20,119,842				16,945,458
Operating loss			(654,671	)			(677,376	)			(4,171,607	)			(2,332,785	)
Other income (expense)
Interest income			3,836				12,315				18,576				35,824
Foreign currency exchange gain (loss)			(506	)			445				(4,540	)			(3,432	)
			3,330				12,760				14,036				32,392
Loss before income taxes			(651,341	)			(664,616	)			(4,157,571	)			(2,300,393	)
Income tax expense			19,491				12,708				50,033				35,812
Net loss		$	(670,832	)		$	(677,324	)		$	(4,207,604	)		$	(2,336,205	)
Basic and diluted net loss per common share		$	(0.03	)		$	(0.03	)		$	(0.20	)		$	(0.11	)
Weighted average common shares outstanding:
Basic and diluted			21,258,736				20,798,997				21,035,874				20,768,632

		December 31, 2013				March 31, 2013
Assets
Current assets:
Cash and cash equivalents		$	8,164,251			$	3,533,864
Short-term investments			4,452,234				7,936,605
Accounts receivable, net			2,534,929				2,553,447
Inventories			469,094				718,933
Other			554,412				566,536
Total current assets			16,174,920				15,309,385
Property, plant and equipment, net			1,051,857				1,033,085
Intangible assets, net			119,455				100,502
Long-term investments			-				3,451,711
Deferred tax assets			153,347				146,052
Total assets		$	17,499,579			$	20,040,735
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable		$	645,170			$	618,916
Current portion – deferred rent			12,351				35,000
Income tax payable			18,242				7,729
Accrued liabilities:
Compensation			1,836,589				1,550,846
Other			354,719				476,287
Total current liabilities			2,867,071				2,688,778
Deferred rent – less current portion			-				5,141
Accrued pension liability			666,818				660,580
Total liabilities			3,533,889				3,354,499
Total shareholders’ equity			13,965,690				16,686,236
Total liabilities and shareholders’ equity		$	17,499,579			$	20,040,735

		Nine Months Ended
		December 31
		2013				2012
Cash flows from operating activities:
Net loss		$	(4,207,604	)		$	(2,336,205	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			267,369				864,227
(Gain) loss on disposal of equipment			(5,000	)			3,035
Amortization of premium on marketable securities			7,562				39,551
Share-based consulting expense			-				1,623
Share-based compensation expense			1,210,201				608,953
Deferred income tax expense			3,245				5,473
Deferred rent			(27,790	)			(27,638	)
Changes in operating assets and liabilities:
Accounts receivable, net			79,428				228,768
Inventories			255,207				(138,862	)
Other current assets			16,868				(70,401	)
Accounts payable			21,724				(82,514	)
Accrued compensation			274,139				199,936
Accrued liabilities, other			(120,881	)			67,147
Accrued pension liability, net			(39,011	)			5,074
Net cash used in operating activities			(2,264,543	)			(631,833	)
Cash flows from investing activities:
Proceeds from maturity of available-for-sale investments			2,750,000				3,200,000
Proceeds from maturity of held-to-maturity investments			4,180,000				5,000,000
Purchases of available-for-sale investments			-				(4,921,036	)
Purchases of held-to-maturity investments			-				(2,500,000	)
Purchases of property, plant and equipment			(221,769	)			(137,101	)
Proceeds from sale of property, plant and equipment			6,773				7,038
Payments for intangible assets			(41,300	)			(4,440	)
Net cash provided by investing activities			6,673,704				644,461
Cash flows from financing activities:
Proceeds from exercise of options			172,485				150,000
Net cash provided by financing activities			172,485				150,000
Effect of exchange rate changes on cash and cash equivalents			48,741				(6,313	)
Net increase in cash and cash equivalents			4,630,387				156,315
Cash and cash equivalents at beginning of period			3,533,864				4,653,226
Cash and cash equivalents at end of period		$	8,164,251			$	4,809,541

						Expense Adjustments
Three-Months Ended		GAAP				Share-based Expense				Depreciation			Amortization of Intangibles					Non-GAAP
December 31, 2013
Gross profit		$	5,620,000			$	6,000			$	8,000							$	5,634,000
% of net sales			87.8	%															88.1	%
Operating expenses
General and administrative			1,195,000				(197,000	)			(50,000	)							948,000
Research and development			526,000				(11,000	)			(1,000	)							514,000
Selling and marketing			4,546,000				(75,000	)			(22,000	)							4,449,000
Amortization			8,000												(8,000	)			-
			6,275,000				(283,000	)			(73,000	)			(8,000	)			5,911,000
Operating loss		$	(655,000	)		$	289,000			$	81,000			$	8,000			$	(277,000	)
December 31, 2012
Gross profit		$	4,856,000			$	8,000			$	8,000							$	4,872,000
% of net sales			86.9	%															87.2	%
Operating expenses
General and administrative			1,059,000				(146,000	)			(50,000	)							863,000
Research and development			534,000				(14,000	)			(1,000	)							519,000
Selling and marketing			3,725,000				(87,000	)			(13,000	)							3,625,000
Amortization			216,000											$	(216,000	)			-
			5,534,000				(247,000	)			(64,000	)			(216,000	)			5,007,000
Operating loss		$	(678,000	)		$	255,000			$	72,000			$	216,000			$	(135,000	)

						Expense Adjustments
Nine-Months Ended		GAAP				Share-based Expense				Depreciation			Amortization of Intangibles					Non-GAAP
December 31, 2013
Gross profit		$	15,948,000			$	20,000			$	26,000							$	15,994,000
% of net sales			87.5	%															87.8	%
Operating expenses
General and administrative			5,166,000				(952,000	)			(153,000	)							4,061,000
Research and development			1,435,000				(36,000	)			(3,000	)							1,396,000
Selling and marketing			13,497,000				(202,000	)			(63,000	)							13,232,000
Amortization			22,000											$	(22,000	)			-
			20,120,000				(1,190,000	)			(219,000	)			(22,000	)			18,689,000
Operating loss		$	(4,172,000	)		$	1,210,000			$	245,000			$	22,000			$	(2,695,000	)
December 31, 2012
Gross profit		$	14,613,000			$	23,000			$	26,000							$	14,662,000
% of net sales			86.6	%															86.9	%
Operating expenses
General and administrative			3,178,000				(340,000	)			(146,000	)							2,692,000
Research and development			1,696,000				(40,000	)			(2,000	)							1,654,000
Selling and marketing			11,425,000				(208,000	)			(43,000	)							11,174,000
Amortization			647,000											$	(647,000	)			-
			16,946,000				(588,000	)			(191,000	)			(647,000	)			15,520,000
Operating loss		$	(2,333,000	)		$	611,000			$	217,000			$	647,000			$	(858,000	)