>>SAN DIEGO, March 1 /PRNewswire-FirstCall/ -- CardioDynamics (Nasdaq: CDIC - News), the innovator and leader of Impedance Cardiography (ICG) technology, announced today its financial results for the fourth quarter and full fiscal year 2004. Highlights included a 35% increase in fiscal year 2004 sales over the prior year, the 26th consecutive quarter of year-over-year quarterly sales growth, and the Company's third consecutive profitable year.
2004 Fourth Quarter and Year-End Results:
Net sales for the fourth quarter fiscal 2004 were $11.6 million, an increase of 31% over net sales of $8.9 million for the same quarter last year. Full year fiscal 2004 sales were $41.0 million, an increase of 35% over sales of $30.3 million reported for fiscal year 2003.
In the fourth quarter of 2004, CardioDynamics generated operating income of $96,000 compared with $1.0 million in the fourth quarter 2003. Operating income for fiscal year 2004 grew 26% to $2.9 million compared to $2.3 million in fiscal 2003. In the fourth quarter of 2004, the Company recorded a one-time, non-cash tax benefit resulting from a full reduction of the valuation allowance for U.S. deferred taxes. Including the tax benefit, CardioDynamics reported net income in the fourth quarter of $7.4 million, or $0.15 per diluted share, compared with net income of $ 1.0 million, or $0.02 per diluted share, reported in the fourth quarter 2003. Net income for the full year 2004 was $10.1 million, or $0.21 per diluted share, compared to net income of $2.5 million, or $0.05 per diluted share, for the same period in 2003.
As a result of improving operating performance over the past several years and expectations for generating future taxable income, the Company recognized a non-cash benefit of approximately $7.4 million in fourth quarter 2004 associated with the removal of its valuation allowance against deferred tax assets. The valuation allowance adjustment does not affect cash flow until all federal net operating loss carry forwards, which approximated $23.3 million at November 30, 2004, are fully utilized or have expired.
Operating expenses for fourth quarter 2004 grew 40% to $8.1 million compared with $5.8 million for the same quarter in 2003. The growth was due to a number of factors including: the additions of Vermed and Medis; a 30% increase in research and development costs principally associated with the BioZ Dx, the recently FDA-cleared, co-developed product with Philips Medical Systems; a 31% increase in selling and marketing expenses primarily as a result of increased investment in the Company's sales and clinical personnel; and 108% increase in general and administrative expenses, the majority of which are related to regulatory compliance costs associated with Section 404 of the Sarbanes-Oxley Act. Operating expenses during the quarter were also impacted by adjustments to the accounts receivable allowance and employee benefit costs for the Company's recently established self-funded medical plan. For the fiscal year of 2004, operating expenses grew 27% to $26.4 million compared with $20.9 million for fiscal year 2003.
Operating Highlights:
ICG devices sold during fourth quarter 2004 totaled 283 units, including 267 ICG monitors and 16 ICG modules, an increase of 19% from the same quarter last year. Included in shipments for the fourth quarter were five BioZ systems under the Company's rental and guarantee programs and 19 Medis ICG monitors. The number of ICG systems and modules sold to date now totals over 5,000. As of November 30, 2004, the Company employed 88 field sales associates, including 56 U.S. territory managers and 22 clinical application specialists.
Combined ICG and electrocardiograph (ECG) sensor revenue for fourth quarter 2004 was $3.9 million, representing 34% of total net sales. During the quarter, Vermed contributed $2.3 million to net sales. ICG sensor revenue for fourth quarter 2004 was $1.6 million (17% of total ICG net sales), an increase of 6%, compared to $1.5 million (15% of total ICG net sales) in the same quarter 2003. In fiscal 2004, overall ICG sensor revenue was $6.5 million, an increase of 26% from $5.2 million in fiscal 2003.
Cash flow from operations for fiscal year 2004 was $4.4 million (an increase of 96%), an improvement of $2.2 million over 2003. The Company ended the year with $6.8 million in cash and cash equivalents.
Total gross margin for the fourth quarter 2004 was 71%; gross margin for the ICG business was 79% and for the Vermed ECG business was 38%. This compares to 77% for ICG business in the same quarter last year before Vermed was acquired. The decrease in overall gross margin during fourth quarter 2004 was largely a result of lower gross margins associated with Vermed's ECG sensor products. The improvement in gross margin for the ICG business in the quarter was attributable to lower estimated warranty repair costs and improved manufacturing efficiencies.
CEO Comments and Outlook:
Michael K. Perry, CardioDynamics' Chief Executive Officer, commented, "2004 was a year of strategic growth and innovation for CardioDynamics. The Company achieved 35% revenue growth in 2004 and, excluding incremental Sarbanes-Oxley expenses, earnings from operations grew 55%. We made two acquisitions enabling us to expand beyond our core ICG business, increase our presence in Europe, and reduce the manufacturing costs of our sensors by 30%. We strengthened our sales and clinical organization and presented the results from our multi-center study demonstrating ICG to be the most powerful predictor of heart failure. Our close collaboration with Philips Medical Systems produced the third generation state-of-the-art ICG monitor, the BioZ Dx."
Perry added, "We enter 2005 a larger, stronger, and more diversified company and are currently focused on launching our new flagship product, the BioZ Dx. We are optimistic about our new sales partnership programs with PSS (Physician Sales and Service) and Caligor (a division of Henry Schein) from which we expect to receive increasing benefits throughout 2005 and beyond. Collectively, these companies have 1,100 sales representatives that will assist our expanded sales team in introducing ICG technology to approximately 100,000 physician office customers. We look forward to a strong and profitable year as we deliver growing value to our shareholders and customers."
Fiscal 2004 Highlights and Accomplishments:
* Acquisitions: Acquisition of Vermed, the fourth largest manufacturer
of electrocardiograph (ECG) electrodes in the United States, and 80%
of Medis, GmbH, a privately-held European cardiology and vascular
diagnostic device company.
* Clinical Studies and Medical Meetings:
* Presentation of the Company's PREDICT (Prospective Evaluation and
Identification of Decompensation by ICG Test) study, demonstrating
a significant relationship between BioZ ICG parameters and the
occurrence of a major heart failure event (emergency department
visit, hospitalization or death).
* Publication of seven peer-reviewed articles in the March/April 2004
Congestive Heart Failure supplement, confirming the important role
of ICG in clinical practice.
* Presentation to over 500 cardiologists and heart failure
professionals at the American College of Cardiology 53rd Scientific
Sessions, New Orleans, demonstrating accuracy and value of ICG
technology in management of heart failure patients.
* Presentation by Frank Peacock, M.D., Director of Clinical
Operations, Emergency Department at the Cleveland Clinic, of
updated and improved data from the ED-IMPACT (Emergent Dyspnea
Impedance Cardiography-aided Assessment Changes Therapy) study.
* Publication of an ICG hypertension study in the February 2004 issue
of Congestive Heart Failure demonstrating a 57% blood pressure
control rate in previously uncontrolled hypertensive patients in a
generalist physician setting.
* Appointments: Appointment of Neil W. Treister, MD, MBA, FACC and Mark
S. Florence to the newly-created positions of Medical Director and
Vice President of Sales, respectively.
* New Analyst Coverage: Initiation of coverage by Daniel Owczarski of
Belmont Harbor Capital with a "buy" recommendation and Jolene Furdek
of Southwest Securities with a "strong buy" recommendation.
* Awards and Recognition: Ranking of 21 in the 2004 Deloitte & Touche
Technology Fast 50, a ranking of the 50 fastest growing technology
companies in San Diego/Orange County (317% five-year revenue growth).
Conference Call and Webcast Information:
Michael K. Perry, Chief Executive Officer, and Steve P. Loomis, Chief Financial Officer, will host a summary of CardioDynamics' fourth quarter results and outlook for 2005 in a conference call today at 4:30 PM (EST). To access the conference call, dial 800-346-7359 (Code 7784). International participants can call 973-528-0008 (Code 7784). A replay of the call will be available for one month following the call at 800-332-6854 (Code 7784). The international replay number is 973-528-0005 (Code 7784). A webcast of the call is available at irconnect.com. <<
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Well, sequentially, organic revenue is actually down a wee tad. I would think this is a product transition issue that will pass. But then I said that about Ciphergen. Here, however, there are no reproducibility issues; the product definitely works as advertised. So I have more confidence in saying this will pass, and I'm considering buying more here.
Thoughts, anybody.
Cheers, Tuck |
