2005 Full Year and First Quarter Guidance
Given Imaging announced that in 2005 the company expects annual revenues of $95 - $105 million, representing a 46% - 62% growth over 2004 revenues.
Gross margin for 2005 is expected to be in the range of 72% to 75% of revenue. This reflects an increase over 2004 due to higher capsule production volumes, that will be somewhat offset by the 3% royalty paid to the Israeli Government's Office of the Chief Scientist on sales of Given Systems and PillCam ESO and the significant reduction offered on the combined purchase price of the PillCam ESO and DataRecorder 2.0 as part of the launch of a campaign in the U.S. for accelerating adoption of these products following receipt of FDA marketing clearance for the PillCam ESO.
Research and development spending is forecast to be in the range of $9 million to $11 million, reflecting continued investment in new products, including PillCam video capsules for the colon and the stomach, as well as clinical trials to drive continued expansion of reimbursement for PillCam SB worldwide.
Selling and marketing expenses are expected to grow. Under the strategic marketing alliance agreement with Ethicon Endo-Surgery, the Company will pay Ethicon Endo-Surgery's InScope division commissions on revenue from sales in the U.S. of PillCam ESO at the rate of 50% and on system sales at the rate of 10%. These commissions will be recorded as marketing expenses. In addition, the Company will be increasing its investment in market development, including further expansion of the sales force in the United States, increasing infrastructure to support InScope selling activities and building a robust operation in Japan in anticipation of the approval of PillCam SB this year.
Net income in 2005 is expected to be in the range of $13 million to $16 million. Fully diluted earnings per share based on 32 million outstanding shares are expected to be in the range of $0.40 to $0.50.
For the first quarter of 2005 the company expects sales between $22 and $24 million and earnings between $0.02 and $0.05 per share. These expected earnings reflect the planned increases in expenses in 2005 as described above and an increase of InScope sales of PillCam ESO. In addition, the company expects to complete in the first quarter the promotional campaign to launch PillCam ESO and DataRecorder 2.0 as well as the upgrade of its U.S. installed base to the new Rapid 3 software.
This projected increase in diluted earnings per share does not give effect to the non-cash impact from the implementation in the third quarter 2005 of accounting for share-based payments (Statement of Financial Accounting Standards No.123R) which is expected to have a material impact on our projected earnings.
"We enter 2005 positioned for continued high growth, with an installed base of more than 1,300 workstations in the United States and approximately 2,300 worldwide" said Gavriel D. Meron, president and CEO. "In anticipation of the opportunities we see in the market, we already increased our sales force in the U.S. and are strengthening our organization in Japan in preparation for marketing approval."
Fourth Quarter Webcast Information
Given Imaging will host a conference call tomorrow, Wednesday, February 9, 2005, at 9:00 am Eastern Time to discuss fourth quarter and 2004 results. The conference call will be webcast through the Company's website givenimaging.com.
Midas |
