As Martha Stewart says, "this is a good thing". Unfortunately I seem to be talking to myself.
Revenues Up 140% in Fourth Quarter and 59% YTD
Somnus Medical Technologies Reports Record Revenues and
improved Operating Results for Fourth Quarter and 1999 Year End
SUNNYVALE, Calif., Feb. 17 /PRNewswire/ -- Somnus Medical Technologies, Inc. (Nasdaq: SOMN) today reported results for the fourth quarter and year ended December 31, 1999.
For the fourth quarter of 1999, Somnus reported record net revenues of $3.2 million, a 140 % increase compared with net revenues of $1.3 million for the fourth quarter of 1998.
Somnus improved its net loss for the fourth quarter of 1999 by 61% to $2.8 million, or $0.19 per share on 14.4 million weighted average shares outstanding during the quarter, compared with a net loss of $7.2 million, or $0.51 per share on 13.9 million weighted average shares outstanding, in the fourth quarter of 1998.
The company reduced operating expenses to $4.5 million in the fourth quarter of 1999 from $7.4 million in the year-ago fourth quarter, and to $19.8 million in fiscal 1999 from $23.2 million in fiscal 1998. Improvements in operating expenses were due to Somnus' continued focus on cost management, and, within spending, a shift from R&D to SG&A as more efforts are expended on marketing and promotional campaigns. The fourth quarter of 1998 and fiscal 1998 operating expenses included non-recurring charges of approximately $1.3 and $1.6 million, respectively.
For the 1999 fiscal year, Somnus reported record revenues of $11.7 million, a 59% increase over revenues of $7.4 million in 1998. The net loss for the year improved 32% to $13.2 million, or $0.92 per share on 14.2 million weighted average shares outstanding for the year. This compared with a net loss of $19.3 million, or $1.41 per share on 13.7 million weighted average shares outstanding, in 1998.
As of December 31, 1999, Somnus had cash, cash equivalents and short-term investments of $19.9 million, working capital of $15.1 million, total assets of $24.8 million, and no long-term debt.
"We made tremendous strides during 1999 achieving our key milestones," said John Schulte, Somnus President and Chief Executive Officer. "We significantly strengthened our clinical foundation, grew our installed base by over 90% and increased the consumption rate of disposable handpieces. We strengthened our management team and Board of Directors, expanded our international distribution network and educated physicians on our technology and the clinical and economic benefits of using the Somnoplasty(TM) System to treat upper airway disorders."
Consumption Rate Reaches Record Level
During the Fourth Quarter of 1999, the company focused on the sales of disposable handpieces, which boosted the domestic consumption rate to 5.5 handpieces per installed base for the quarter from approximately 4.0 a year ago. Globally Somnus shipped almost 35,000 disposable handpieces during the year, more than 10,000 of them in the Fourth Quarter. Somnus ended the year with a domestic installed base of 568 control units compared with 297 a year ago.
"Through the Device Acquisition Program and a greater focus on clinics and hospitals, we experienced an accelerated shift in our product mix toward disposables, which grew from roughly 50% of revenues in the Third Quarter and accounted for approximately 60% of revenues domestically in Fourth Quarter. We are encouraged at the rate by which our customers are increasing their usage of our Somnoplasty system within their practices", stated Schulte.
Strengthened Clinical Foundation
Somnus continued to build the clinical foundation for the Somnoplasty(R) Procedure in 1999. The company now has nine articles published across all three FDA indications -- chronic nasal obstruction, obstructive sleep apnea, and habitual snoring giving Somnus a broad clinical foundation. The most recent article was published in the November issue of The Laryngoscope, written by Dr. Timothy L. Smith. The article outlined a new study about the long-term effectiveness of the Somnoplasty Procedure in treating chronic nasal obstructions. Patients in the study showed a significant decrease in the degree and frequency of nasal obstructions for one year following Somnoplasty Treatment.
"In 1999, we had five new articles published in peer reviewed journals and three more articles have been submitted and accepted. We are also currently completing additional trials for publication this year, further strengthening our clinical foundation," Schulte said.
Differentiating the Somnoplasty System
"Temperature-controlled radiofrequency energy for shrinking tissue is unique to Somnus and is well protected through worldwide patents. We believe that our technology for the treatment and cure of multiple upper airway disorders using temperature-controlled RF technology unique. The benefits are crucial to reducing pain and achieving a predictable and consistent tissue volume reduction during treatment. We believe that no other technology in our market has the solid clinical foundation of Somnoplasty," said Schulte.
"We believe we offer patients and physicians a curative solution for the treatment of upper airway disorders and are going to continue to work diligently toward making Somnus technology the standard of care in our field. We're extremely excited about our prospects for 2000 and beyond, and believe that we will continue to make significant strides in education and adoption of the Somnoplasty System," Schulte concluded.
Company Profile
Somnus Medical Technologies, Inc. is pioneering a new standard of care for the treatment of upper airway disorders. The company's Somnoplasty System provides physicians with a suite of products that utilize its proprietary temperature-controlled radiofrequency (TCRF) technology to reduce excess tissue in the upper airway in a minimally invasive procedure. In 1998, the company received 510(k) clearance for use of the Somnoplasty(SM) System in the treatment of obstructive sleep apnea. The Somnoplasty System is also being used for the treatment of habitual snoring (uvula and soft palate) and chronic nasal obstruction (enlarged inferior turbinates). Clinical evaluations are underway to further expand the indications for the treatment of other upper airway obstructions.
Forward-Looking Statements
This news release contains forward-looking statements that involve risks and uncertainties that could cause actual results or events to differ materially from those in such forward-looking statements. Potential risks and uncertainties include, without limitation, the risks and uncertainties associated with the nature and timing of reimbursement, product acceptance and adoption, consumption rates, outcome of clinical trials and the strength of the patent portfolio, as well as those set forth in the company's annual report on Form 10-K dated December 31, 1998, filed with the Securities and Exchange Commission, and the company's most recent quarterly report for the quarter ended September 30, 1999, filed with the Securities and Exchange Commission. Copies of the annual report on Form 10-K and the most recent quarterly report on Form 10-Q are available by calling the company's investor relations contact, Janet Nelson, at 415-296-2274.
Somnus is headquartered in Sunnyvale, Calif., and its stock is traded on the Nasdaq National Market System under the symbol SOMN. The company's Web site address is somnus.com . For information on Somnus Medical Technologies via fax at no cost, dial 800-PRO-INFO (732-544-2850 outside the U.S.).
Somnus, Somnoplasty and the Somnus Medical Technologies logo are registered trademarks or servicemarks of Somnus Medical Technologies, Inc. Patents pending.
SOMNUS MEDICAL TECHNOLOGIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(in thousands except per share data)
Three Months Ended Twelve Months Ended
(unaudited)
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1999 1998 1999 1998
Revenue* $3,181 $1,325 $11,665 $7,356
Cost of sales 1,755 1,576 6,468 5,565
Gross profit 1,426 (251) 5,197 1,791
Operating expenses:
Research and development 1,485 2,228 5,733 8,220
Sales, marketing, general,
and administrative 3,038 5,183 14,053 14,953
Total operating
expenses 4,523 7,411 19,786 23,173
Loss from operations (3,097) (7,662) (14,589) (21,382)
Interest and other income 310 498 1,439 2,059
Interest expense 0 (1) 0 (5)
Net loss $(2,787) $(7,165) $(13,150) $(19,328)
Net loss per share $(0.19) $(0.51) $(0.92) $(1.41)
Shares used in computing
per share amounts;
basic and diluted 14,357 13,941 14,242 13,717
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
Dec. 31, 1999 Dec. 31, 1998
Cash and Cash Equivalents $14,888 $32,280
Short Term Investments $4,972 $0
Working Capital $15,138 $27,742
Total Assets $24,798 $36,512
Shareholders' Equity $16,825 $29,428
* Revenue for the three and twelve months ended December 31, 1999
includes related party revenue of $0 and $445,000, respectively.
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