>>Conceptus Third Quarter Net Sales Double
Thursday October 26, 4:05 pm ET
$11 Million in Net Sales Significantly Narrows Operating Loss
Increases 2006 Financial Guidance
MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--Conceptus, Inc. (Nasdaq:CPTS - News), developer of the Essure® procedure, the first and only non-incisional permanent birth control method available, today reported financial results for the three and nine months ended September 30, 2006.
Net sales for the third quarter of 2006 were $11.0 million, up 100% over net sales of $5.5 million for the third quarter of 2005 and up 10% over net sales of $10.0 million for the second quarter of 2006. These results exceeded the Company's guidance for third quarter 2006 net sales of $10.0 million. The net loss for the third quarter of 2006 was $3.4 million, or $0.12 per share, including charges of $1.5 million, or $0.05 per share, for stock-based compensation due to SFAS 123R. The net loss for the third quarter of 2005 was $5.0 million, or $0.18 per share, and the net loss for the second quarter of 2006 was $5.3 million, or $0.18 per share. The net loss for the 2006 third quarter, excluding stock-based compensation of $1.9 million was better than the Company's guidance for a net loss of $3.6 million to $3.8 million excluding stock-based compensation expense.
Net sales growth during the 2006 third quarter was due to higher commercial sales of the Essure system worldwide, and reflects increasing numbers of physicians entering and completing training in the use of the procedure and higher utilization by trained physicians. Domestic sales of the Essure system for the third quarter of 2006 increased 102% and international sales increased 77%, both compared with the comparable prior-year period. During the third quarter of 2006, 474 physicians entered into training and 252 physicians were certified to perform the Essure procedure.
"Sales of the Essure device continue to exceed our expectations and validate our strategic initiatives for accelerating physician adoption," commented Mark Sieczkarek, president and chief executive officer of Conceptus. "Physicians interested in being trained and physicians seeking to transition the procedure to their offices are coming in record numbers. We currently have 641 physicians performing the Essure procedure in the office, which represents an increase of 26% in just three months and those doctors represent about one-third of all cases being performed by certified physicians."
Gross profit for the third quarter of 2006 was $7.5 million, or 68% of net sales. This compares favorably with gross margin for the third quarter of 2005 of 64% of net sales and with gross margin for the second quarter of 2006 also of 64%. Gross margin improvement is related to lower manufacturing costs associated with higher unit volume and a domestic price increase instituted during the first quarter of 2006.
Research and development expenses were $1.0 million for the third quarter of 2006, down slightly from $1.1 million in both the 2005 third quarter and the 2006 second quarter. R&D expenses reflect product development, clinical, and manufacturing engineering expenditures, which are substantially related to the ongoing development of improvements to the Essure device. R&D expense includes $0.2 million in each of the second and third quarters of 2006 for SFAS 123R stock-based compensation expense.
Selling, general and administrative expenses were $10.3 million for the third quarter of 2006, up from $7.6 million for the third quarter of 2005 and down from the $10.9 million for the second quarter of 2006. SG&A expense includes $1.3 million in each of the second and third quarters of 2006 for SFAS 123R stock-based compensation expense. The Company currently has 63 sales representatives as compared with 59 as of June 30, 2006. The Company is continuing to expand its sales force and expects to have 65 to 70 sales representatives by December 31, 2006. The decline in SG&A expenses quarter to quarter was due primarily to lower general and administrative and certain marketing expenditures.
Cash, cash equivalents, short-term investments and restricted cash were $25.8 million as of September 30, 2006, up from $25.6 million as of June 30, 2006. This net cash generation of $0.2 million during the quarter compares with a usage of $5.7 million, excluding the impact of the private equity placement, for the third quarter of 2005 and cash usage of $3.0 million for the second quarter of 2006. The net cash generation for the third quarter of 2006 is due in part to proceeds of $1.7 million associated with stock option exercises.
"We are delighted to have posted our first cash flow breakeven quarter even though we don't expect to remain in the black for several more quarters," added Mark Sieczkarek. "It does highlight for investors, however, the near-term financial direction our business is heading and the long-term earnings potential of the Essure device, given our current tubal market penetration of only 4%. Being the pioneer of the first and only non-incisional permanent birth control available is a role all of us at Conceptus are very enthusiastic about and we will continue to devote our energies to making the Essure procedure the gold standard."
For the nine months ended September 30, 2006, Conceptus reported net sales of $29.0 million, up 101% over net sales of $14.4 million during the comparable nine-month period in 2005. The net loss for the first nine months of 2006 of $14.6 million, or $0.50 per share, compares favorably with the net loss of $17.4 million, or $0.67 per share, for the first nine months of 2005. Included in the net loss for the first nine months of 2006 are charges of $4.5 million, or $0.16 per share, for stock-based compensation due to the adoption of SFAS 123R.
Financial Guidance
The Company also announced financial guidance for the fourth quarter of 2006, and raised full-year 2006 net sales and lowered full-year 2006 net loss guidance, excluding the effects of SFAS 123R.
Conceptus expects net sales in the fourth quarter to be approximately $12.0 million, resulting primarily from increases in domestic sales. Net sales for the full year are now expected to be approximately $41.0 million, compared with previous guidance of $39.0 million, which was issued on July 25, 2006. The net loss for the fourth quarter, excluding stock-based compensation, is expected to be $3.1 million to $3.5 million. The Company is lowering full-year net loss guidance to a range of $13.1 million to $13.5 million, or $0.45 to $0.47 per share, based on an estimated 29.0 million shares outstanding. This full-year net loss range compares with previous guidance for a net loss of $15.0 million to $15.3 million, or $0.52 to $0.53 per share, also on an estimated 29.0 million shares outstanding. Net loss guidance excludes the effects of SFAS 123R.
These statements are only effective as of the date of this press release and Conceptus undertakes no duty to publicly revise or update these forward-looking statements, whether as a result of new information, future developments or otherwise.
Conference Call
Management will host an investment-community conference call beginning at 4:30 p.m. Eastern Time today to discuss these results and to answer questions. To participate in the live call by telephone, please dial (888) 803-8296 from the U.S., or (706) 634-1250 from outside the U.S. Individuals interested in listening to the live conference call via the Internet may do so by logging on to the Company's website, www.conceptus.com. A replay will be available on the website for 14 days.
A telephone replay will be available from 6:30 p.m. Eastern Time October 26, 2006 through 11:59 p.m. Eastern Time on October 28, 2006 by dialing (800) 642-1687 (domestic) or (706) 645-9291 (international) and entering conference ID number 8326228.<<
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I've noticed that CPTS seems to be conservative in their guidance, since they've surprised to the upside for the fourth consecutive quarter. Looks as though they'll finally be profitable in about a year.
Cheers, Tuck |
