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Exhibit 99.1

 

 

 

Cogentix Medical Reports 104% Revenue Growth for the Quarter Ended December 31; Achieves Cash Operating Profit Milestone

Conference Call Today at 4:30 p.m. ET

MINNEAPOLIS, MN, March 3, 2015 – Cogentix Medical, Inc. (NASDAQ: CGNT), a global medical device company with innovative and proprietary products serving urology and airway management markets, today announced financial results for the quarter and nine month fiscal year ended December 31, 2015.

·

Revenue of $13.6 million increased 104% from the year ago period (107% on a constant currency basis) and 18% from the pro forma combined revenue of Uroplasty and Vision-Sciences in the same period last year (19% on a constant currency basis).

·

U.S. revenue from Urgent® PC increased 30%, and U.S. revenue from endoscopy technologies increased 26% from the pro forma revenue in the year ago period.

·

Gross margin was 64.0%, a decline from the pro forma combined gross margin of 67.3% in the year ago quarter, primarily due to product mix.

·

Operating costs (excluding amortization and merger related costs) of $8.8 million declined $1.3 million compared to pro forma non-GAAP operating costs in the year ago quarter.

·

Cash operating profit of $0.6 million, excluding all non-cash items and merger related costs, increased from the cash operating loss of $1.2 million in the year ago period.

“As we noted in our preliminary results release in February, our U.S. sales organization continued to execute in the most recent quarter," said Rob Kill, President and CEO. “We saw particular strength in our U.S. Urgent PC and endoscopy product lines, which had growth of 30% and 26%, respectively, in the quarter. Our team also continued to effectively manage our expenses, which when combined with our revenue growth, allowed Cogentix to achieve our first ever quarterly cash operating profit.”

 

“In calendar year 2016, we expect to generate continued strong growth from our endoscopy product lines while Macroplastique revenue is expected to be approximately flat with 2015 levels,” continued Mr. Kill. “In addition, we expect the formal launch of a competitive PTNS technology from a large established medical device manufacturer later this month. As a result, we think it is possible this launch will cause some short term competitive disruption for Urgent PC. We believe the PTNS market will continue to grow, and after any initial competitive effects, we expect to compete effectively and grow our Urgent PC revenue. However, as this competitive launch is about to kick off, we feel that we should assess the competitive market dynamics post-launch before providing specific revenue guidance for 2016. Even with this competitive activity, we expect to generate a cash operating profit for the full year. This result would be a significant improvement over the calendar year 2015 pro forma cash operating loss of $3.7 million and the calendar year 2014 pro forma cash operating loss of $9.1 million.”

For the quarter ended December 31, 2015, total revenue of $13.6 million represented an increase of 104% as compared to $6.7 million in the prior year period. The growth is primarily attributable to the merger of Uroplasty and Vision-Sciences that was completed on March 31, 2015. In accordance with GAAP, the reported financials in the prior year’s quarter include only the results of Uroplasty, Inc. On a pro forma combined basis, revenue increased 18% over the prior year quarter. On a constant currency basis, overall pro forma combined revenue growth was 19% in the quarter. Global revenue from Urgent PC totaled $5.6 million, up 28% from the year ago period. Global revenue from endoscopy technologies totaled $6.0 million, up 22% from the pro forma revenue in the year ago period. Global Macroplastique revenue totaled $1.7 million, down 12% from the year ago period.

Gross margin for the quarter ended December 31, 2015 was 64.0%, down from the 67.3% gross margin in the year ago period on a pro forma non-GAAP basis. Operating expenses in the quarter, excluding $0.6 million of intangible amortization and $0.1 million of merger related costs, totaled $8.8 million.  This represents a decrease of $1.3 million from the comparable pro forma non-GAAP operating expense in the year ago period.

Cash operating profit was $0.6 million for the quarter ended December 31, 2015, excluding all non-cash items and merger related costs of $45,000. This is a significant improvement from the pro forma cash operating loss of $1.2 million in the year ago period. The GAAP loss per share was $0.04 in the quarter ended December 31, 2015, compared to a reported loss per share of $0.07 in the year ago period.

Results for the nine months ended December 31, 2015 represent a transition period beginning April 1, 2015. As previously announced, the Company’s Board of Directors approved a change in the Company’s fiscal year-end to December 31 to better align the Company’s financial reporting calendar with its customer base as well as industry peers. For the nine months ended December 31, 2015, total revenue grew 13% to $36.6 million on a pro forma basis, reflecting a 21% increase in global Urgent PC revenue to $15.4 million and a 16% increase in endoscopy technologies revenue to $14.9 million. Macroplastique revenue declined 7% to $5.6 million. Gross margin was 65.8% compared to 66.6% for the prior year period. Operating expenses totaled $27.2 million (exclusive of $1.9 million of intangible amortization and $1.0 million of merger related costs) for the nine months ended December 31, 2015, a decrease of $3.1 million from the comparable pro forma non-GAAP operating expense of $30.3 million in the prior year period. For the nine months ended December, 31, 2015 the cash operating loss was $1.5 million compared to a cash operating loss of $6.3 million in the prior year period.

 

The Company’s cash balance totaled $2.0 million as of December 31, 2015.There were no borrowings under the Company’s $7.0 million line of credit as of December 31, 2015.

Conference Call

Cogentix Medical will host a conference call and webcast today at 4:30 p.m. Eastern Time (3:30 p.m. Central Time). Rob Kill, President and Chief Executive Officer, and Darin Hammers, Chief Operating Officer, will host the event. Individuals wishing to participate in the conference call should dial 877-303-1595 with the conference ID number 46205276. To access a live webcast of the call, go to the investor relations section of Cogentix Medical’s website at ir.cogentixmedical.com.

 

An audio replay will be available for 30 days following the call at 855-859-2056 with the conference ID number 46205276. An archived webcast will also be available at ir.cogentixmedical.com.

About Cogentix Medical

Cogentix Medical, Inc., headquartered in Minnetonka, Minnesota, with additional operations in New York, Massachusetts, The Netherlands and the United Kingdom, is a global medical device company.  We design, develop, manufacture and market products for flexible endoscopy with our unique product lines featuring a streamlined visualization system and proprietary sterile disposable microbial barrier, known as EndoSheath technology, providing users with efficient and cost effective endoscope turnover while enhancing patient safety. We also commercialize the Urgent® PC Neuromodulation System, an FDA-cleared device that delivers percutaneous tibial nerve stimulation (PTNS) for the office-based treatment of overactive bladder (OAB). OAB is a chronic condition that affects approximately 42 million U.S. adults. The symptoms include urinary urgency, frequency and urge incontinence.  We also offer Macroplastique®, an injectable urethral bulking agent for the treatment of adult female stress urinary incontinence primarily due to intrinsic sphincter deficiency. For more information on Cogentix Medical and our products, please visit us at www.cogentixmedical.com. ‘CGNT-G’

For Further Information:

Doug Sherk/Brian Moore (Investors)

415-652-9100/310-579-6199

 

Cautionary Statements Related to Forward-Looking Statements

This press release includes forward-looking statements. These forward-looking statements generally can be identified by the use of words such as “anticipate,” “expect,” “plan,” “could,” “may,” “will,” “believe,” “estimate,” “forecast,” “goal,” “project,” and other words of similar meaning. Forward-looking statements in this press release include, but are not limited to, statements about the benefits of the merger; expected revenue growth rates; the anticipated timing of cash flow breakeven from operations and cash flow positive from operations; and our plans, objectives, expectations and intentions with respect to future operations, products and services. Each forward-looking statement contained in this press release is subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statement. Applicable risks and uncertainties include, among others, the effects of industry, economic or political conditions outside of our control; competitive market factors; the failure to realize synergies and cost-savings from the merger transaction or delay in realization thereof; the businesses of Uroplasty and Vision-Sciences may not be combined successfully, or such combination may take longer, be more difficult, time-consuming or costly to accomplish than expected; operating costs and business disruption following completion of the transaction, including adverse effects on employee retention and on our business relationships with third parties; transaction and merger-related costs; actual or contingent liabilities; the adequacy of our capital resources; and the risks identified under the heading “Risk Factors” in the annual report on Form 10-K, for the fiscal year ended March 31, 2015, filed with the Securities and Exchange Commission (“SEC”) on June 25, 2015, as well as our subsequent quarterly reports on Form 10-Q and other information filed by us with the SEC. We caution investors not to place considerable reliance on the forward-looking statements contained in this presentation. You are encouraged to read our filings with the SEC, available at www.sec.gov, for a discussion of these and other risks and uncertainties. The forward-looking statements in this presentation speak only as of the date of this release, and we undertake no obligation to update or revise any of these statements. Our businesses are subject to substantial risks and uncertainties, including those referenced above. Investors, potential investors, and others should give careful consideration to these risks and uncertainties.

 

		Three Months Ended December 31,								Nine Months Ended December 31,
		2015				2014				2015				2014
Net sales		$	13,637,956			$	6,666,905			$	36,622,355			$	19,506,164
Cost of goods sold			4,912,598				778,406				12,519,443				2,322,942
Gross profit			8,725,358				5,888,499				24,102,912				17,183,222
Operating expenses
General and administrative			1,701,895				2,283,333				5,530,909				5,148,998
Research and development			1,070,667				665,539				3,168,753				2,226,018
Selling and marketing			5,987,719				5,015,916				18,484,063				15,107,241
Merger related costs			45,000				-				950,469				-
Amortization of intangibles			634,191				7,584				1,902,573				24,136
			9,439,472				7,972,372				30,036,767				22,506,393
Operating loss			(714,114	)			(2,083,873	)			(5,933,855	)			(5,323,171	)
Other income (expense)
Interest income			455				1,761				-				6,606
Interest expense			(374,499	)			(250	)			(1,053,791	)			(250	)
Foreign currency exchange gain (loss)			9,803				(2,038	)			-				(3,317	)
			(364,241	)			(527	)			(1,053,791	)			3,039
Loss before income taxes			(1,078,355	)			(2,084,400	)			(6,987,646	)			(5,320,132	)
Income tax expense			11,722				20,938				39,832				55,785
Net loss		$	(1,090,077	)		$	(2,105,338	)		$	(7,027,478	)		$	(5,375,917	)
Basic and diluted net loss per common share		$	(0.04	)		$	(0.07	)		$	(0.28	)		$	(0.25	)
Weighted average common shares outstanding:
Basic and diluted			25,377,728				15,741,440				25,057,327				15,755,950

		December 31, 2015				March 31, 2015
Assets
Current assets:
Cash and cash equivalents		$	1,976,594			$	9,261,903
Accounts receivable, net			8,191,391				7,306,653
Inventories			4,584,844				4,825,984
Other			834,076				749,466
Total current assets			15,586,905				22,144,006
Property, plant, and equipment, net			2,554,822				1,813,343
Goodwill			18,749,888				18,749,888
Other intangible assets, net			11,846,009				13,748,582
Deferred tax assets and other			269,121				296,860
Total assets		$	49,006,745			$	56,752,679
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable		$	2,209,473			$	3,967,975
Income tax payable			20,866				25,998
Accrued liabilities:
Compensation			3,281,809				3,285,952
Other			949,497				2,450,058
Total current liabilities			6,461,645				9,729,983
Convertible debt – related party, net			23,336,854				22,529,497
Interest payable			757,615				523,743
Accrued pension liability			663,071				955,780
Deferred rent			671,088				-
Other			157,453				265,766
Total liabilities			32,047,726				34,004,769
Total shareholders’ equity			16,959,019				22,747,910
Total liabilities and shareholders’ equity		$	49,006,745			$	56,752,679

		Nine Months Ended December 31,
		2015				2014
Cash flows from operating activities:
Net loss		$	(7,027,478	)		$	(5,375,917	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			2,569,636				207,011
Loss on disposal of equipment			4,859				161
Amortization of premium on marketable securities			-				311
Share-based compensation expense			978,952				1,077,928
Amortization of discount on related party debt			807,356				-
Long term incentive plan expense (benefit)			(78,188	)			131,907
Tax expense			65,799				5,129
Deferred rent			636,615				23,556
Proceeds from restricted stock exchanged for taxes			(20,132	)			-
Changes in operating assets and liabilities:
Accounts receivable			(1,663,510	)			220,002
Inventories			246,273				73,626
Other current assets			696,742				48,142
Accounts payable			(1,759,500	)			295,113
Interest payable			233,873				-
Accrued compensation			(4,579	)			212,259
Accrued liabilities, other			(1,666,431	)			(59,459	)
Accrued pension liability			(29,940	)			(56,226	)
Deferred revenue			154,684				-
Net cash used in operating activities			(5,854,969	)			(3,196,457	)
Cash flows from investing activities:
Proceeds from maturity of available-for-sale instruments			-				3,450,000
Purchases of property, plant and equipment			(1,411,042	)			(206,498	)
Proceeds from sale of property, plant and equipment			-				3,104
Net cash (used in) provided by investing activities			(1,411,042	)			3,246,606
Cash flows from financing activities:
Proceeds from exercise of  stock options			-				67,850
Net cash provided by financing activities			-				67,850
Effect of exchange rates on cash and cash equivalents			(19,298	)			(95,819	)
Net (decrease) increase in cash and cash equivalents			(7,285,309	)			22,180
Cash and cash equivalents at beginning of period			9,261,903				8,681,609
Cash and cash equivalents at end of period		$	1,976,594			$	8,703,789
Supplemental disclosure of cash flow information:
Cash paid during the period for income tax		$	39,832			$	56,144
Cash paid during the period for interest		$	30,213				-

(dollars in thousands)
Market/Product		2015				2014				$ Change				% Change
Urology		$	3,511			$	2,746			$	765				27.9	%
Airway Management			1,068				1,107				(39	)			(3.5	%)
Industrial			1,411				1,067				344				32.2	%
Former VSCI Revenue			5,990				4,920				1,070				21.7	%
UPC			5,628				4,416				1,212				27.4	%
MPQ			1,749				1,975				(229	)			(11.6	%)
Other			271				276				(5	)			(1.8	%)
Former UPI Revenue			7,648				6,667				978				14.7	%
Combined Revenue		$	13,638			$	11,587			$	2,051				17.7	%

(dollars in thousands)		2015				2014				$ Change				% Change
Revenue		$	13,638			$	11,587			$	2,048				17.7	%
Gross profit			8,725				7,793				932				12.0	%
			64.0	%			67.3	%
Operating costs			8,760				10,030				(1,270	)			12.7	%
Amortization of intangibles			634				8				626				n/	m
Merger-related costs			45				1,282				(1,237	)			n/	m
Operating loss			(714	)			(3,527	)			2,813				79.8	%
Non cash operating costs			1,232				1,021				211				20.7	%
Merger-related costs			45				1,282				(1,237	)			n/	m
Cash net income (loss), excluding merger-related costs		$	563			$	(1,224	)		$	1,787				146.0	%

(dollars in thousands)
Market/Product		2015				2014				$ Change				% Change
Urology		$	9,294			$	7,015			$	2,279				32.5	%
Airway Management			2,721				3,167				(446	)			(14.1	%)
Industrial			2,840				2,600				240				9.2	%
Former VSCI Revenue			14,855				12,782				2,073				16.2	%
UPC			15,372				12,721				2,651				20.8	%
MPQ			5,571				5,982				(411	)			(6.9	%)
Other			824				803				21				2.6	%
Former UPI Revenue			21,767				19,506				2,261				11.6	%
Combined Revenue		$	36,622			$	32,288			$	4,334				13.4	%

(dollars in thousands)		2015				2014				$ Change				% Change
Revenue		$	36,622			$	32,288			$	4,334				13.4	%
Gross profit			24,103				21,493				2,610				12.1	%
			65.8	%			66.6	%
Operating costs			27,183				30,274				(3,091	)			(10.2	%)
Amortization of intangibles			1,903				24				1,879				n/	m
Merger-related costs			950				1,282				(332	)			n/	m
Operating loss			(5,933	)			(10,087	)			4,154				(41.2	%)
Non cash operating costs			3,476				2,553				923				36.2	%
Merger-related costs			950				1,282				(332	)			n/	m
Cash net loss, excluding merger-related costs		$	(1,507	)		$	(6,252	)		$	4,745				(75.9	%)