RANCHO CORDOVA, Calif.--(BW HealthWire)--Oct. 23, 1997--
EndoSonics Corp. (NASDAQ:ESON), a leading developer and marketer of
intravascular ultrasound and flow measurement products, today
reported a net loss of $45,441,000, or $(2.94) per share, for its
third quarter ended Sept. 30, 1997, which reflects write-offs
totaling $49.3 million related to the Company's July acquisition of
Cardiometrics Inc., including $9.5 million of integration and other
charges.
Excluding the write-offs and the integration and other charges,
as well as the company's share of the net loss of its former
subsidiary, CardioVascular Dynamics Inc. (CVD)(NASDAQ:CCVD), the
company reported net income of $1,148,000, or $0.07 per share for the
quarter. This compares with a third quarter 1996 net loss of
$51,000, or $(0.00) per share, not including the Company's share of
CVD net losses.
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*T
(Dollars in 000s except per share amounts)
ESON (Excluding CVD, write-offs 3 Mos. Ended Sept. 30,
and other charges) 1997 1996
Revenue $10,420 $5,493
Net Income (loss) 1,148 (51)
Per Share $0.07 ($0.00)
ESON Reported
Revenue $10,262 $5,493
Net (loss) (45,441) (372)
Per Share ($2.94) ($0.03)
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Total revenues, which include revenue from former Cardiometrics
products, were $10.4 million. This compares with revenue of $5.5
million in the third quarter of 1996, following the change to the
equity method of accounting for CVD and prior to the acquisition of
Cardiometrics.
Reinhard Warnking, President and CEO of EndoSonics, commented,
"We have spent most of the past nine months focusing on the
acquisition and integration of Cardiometrics, which we expect will
bring substantial sales synergies and operating efficiencies
beginning in 1998. Year-over-year, the products of both companies
have gained acceptance in the marketplace, which is reflected in
revenue results for the quarter and the nine months.
"However, revenues did not meet our objectives for the quarter,
which we attribute to two factors: Delay of the WaveWire(TM) product,
which had been expected to contribute to revenue during the quarter;
and the loss of several Cardiometrics salespeople during the
protracted acquisition process.
"The integration of manufacturing and administrative systems is
ahead of plan, as reflected in lower than expected operating expenses
and improved margins for the quarter, and we are now able to devote
increasing energy to clinical and sales efforts.
"During the quarter, we accomplished our objectives for
production volumes and yields on EndoSonics' all-electronic Five-64
catheters. We are now able to meet market demand for the catheters,
and are on track with additional projects to reduce manufacturing
costs planned for implementation in the fourth quarter.
"We also have seen excellent results from clinical studies for
our IVUS and functional testing products. Based on an early report
from our DESTINI-CFR clinical study, our FloWire(R) product should
play a key role in selecting the patients whose clinical outcomes
will likely improve with stenting, versus those who will have good
outcomes with IVUS-guided balloon angioplasty alone.
"This is part of our overall strategy and our vision of the Cath
Lab of the future -- making interventional cardiology procedures more
cost effective by using IVUS and functional testing to guide and
select the most appropriate therapies."
The acquisition-related write-offs for the quarter include
$39,842,000 of acquired in-process research and development, and
$9,500,000 of other charges. Excluding these write-offs and charges,
the Company's gross margin improved to 55% from 41% for the third
quarter a year ago. Excluding these items, operating expenses as a
percentage of revenue decreased to 47% from 50% in the same quarter
last year.
EndoSonics develops, manufactures and markets intravascular
ultrasound (IVUS) imaging systems and catheters to assist in the
diagnosis and treatment of cardiovascular and peripheral vascular
disease. EndoSonics' IVUS imaging products enhance the effectiveness
of the diagnosis and treatment of the coronary artery by providing
important diagnostic information not available from conventional
x-ray angiography.
The information includes the location, amount and composition of
atherosclerotic plaque and enables physicians to identify lesion
characteristics, select an optimum form of treatment, position
therapeutic devices and promptly assess the results of treatment.
EndoSonics owns 24% of CVD, which develops and markets
site-specific delivery catheters, combined angioplasty-drug delivery
catheters, stent delivery systems, advanced therapeutic catheters and
vascular access products.
The recently completed merger of Cardiometrics Inc. adds
products that measure blood flow impairment caused by coronary artery
disease.
Cardometrics' principle products, the FloWire(R) Doppler guide
wire and FloMap(R) ultrasound instrument, represent a significant
clinical advance -- on-line functional testing of blood flow
impairment in the Cath Lab -- enabling cardiologists to evaluate the
appropriateness of angioplasty interventions and assess
post-procedural results.
For additional information on EndoSonics, please visit our Web
site at endosonics.com .
This press release contains forward-looking statements that
involve risks and uncertainties. The Company's actual results may
differ significantly from the results discussed in the
forward-looking statements. For a discussion of factors that might
result in different outcomes, see the Company's Form 10K/A, form
10-Q, and the Registration Statement on Form S-4 filed with the
Securities and Exchange Commission on June 13, 1997.
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ENDOSONICS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share and per share amounts)
Three Months Ended Sept. 30
With Acquisition
Operations and One Time charges
1997 1997 1996
Total revenue $10,420 $10,262 $5,493
Cost of sales 4,739 5,996 3,270
Gross Profit 5,681 4,266 2,223
Operating expenses:
Other research, development
and clinical 854 1,379 1,052
Marketing and sales 1,737 2,420 803
General and administrative 2,088 4,215 905
Restructuring -- -- --
Acquired in-process research
and development -- 39,842 --
Acquisition write-off -- 5,331 --
Goodwill amortization 208 208 --
Total operating expenses 4,887 53,395 2,760
(Loss) from operations 794 (49,129) (537)
Equity in net loss of CCVD (502) (502) (321)
Other income (expense):
Interest income 392 392 454
Gain on CCVD stock -- 3,936 --
Other (38) (138) 32
Total other income 354 4,190 486
Net (loss) $646 ($45,441) ($372)
Net (loss) per share $0.04 ($2.94) ($0.03)
Shares used in the calculation
of net (loss) per share 15,461,563 15,461,563 13,455,841
Nine Months Ended Sept. 30
With Acquisition
Operations and One Time charges
1997 1997 1996
Total revenue $23,884 $23,726 $18,266
Cost of sales 11,977 13,234 12,072
Gross Profit 11,907 10,492 6,194
Operating expenses:
Other research, development
and clinical 2,779 3,304 4,897
Marketing and sales 3,670 4,353 4,497
General and administrative 3,778 5,905 3,567
Restructuring -- -- 518
Acquired in-process research
and development -- 39,842 --
Acquisition write-off -- 5,331 --
Goodwill amortization 208 208 --
Total operating expenses 10,435 58,943 13,479
(Loss) from operations 1,472 (48,451) (7,285)
Equity in net loss of CCVD (1,028) (1,028) (370)
Other income (expense):
Interest income 1,493 1,493 1,640
Gain on CCVD stock -- 3,936 --
Other (35) (135) 16
Total other income 1,458 5,294 1,656
Net (loss) $1,902 ($44,185) ($5,999)
Net (loss) per share $0.12 $(3.11) ($0.45)
Shares used in the calculation
of net (loss) per share 15,461,563 14,186,661 13,340,895
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CONTACT:
EndoSonics
Reinhard Warnking, 916/638-8008
or
Morgen-Walke Associates Inc.
Doug Sherk/John Swenson, 415/296-7383
Sandra Badurina/Joshua Passman, 212/850-5600
KEYWORD: CALIFORNIA
BW0011 OCT 23,1997 |
