>>Conceptus Reports Record Fourth Quarter Financial Results
Tuesday February 27, 4:05 pm ET
Annual Sales of the Essure System Increase 98%
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 12 months ended December 31, 2006.
Net sales for the fourth quarter of 2006 were $12.9 million, up 91% over net sales of $6.8 million for the fourth quarter of 2005 and up 17% over net sales of $11.0 million for the third quarter of 2006. These results were in line with the Company's updated guidance issued on February 5, 2007. The net loss for the fourth quarter of 2006 was $3.9 million, or $0.13 per share, including charges of $1.6 million, or $0.06 per share, for stock-based compensation. The net loss for the fourth quarter of 2005 was $4.4 million, or $0.15 per share, and the net loss for the third quarter of 2006 was $3.4 million, or $0.12 per share. The third quarter of 2006 net loss figure included $1.5 million in stock-based compensation expense. The net loss for the 2006 fourth quarter was better than the Company's updated guidance for a net loss of $4.0 million to $4.4 million.
For the 12 months ended December 31, 2006, the Company reported net sales of $41.9 million, up 98% over 2005 net sales of $21.2 million. The net loss for 2006 decreased to $18.5 million, or $0.64 per share, from the net loss for 2005 of $21.8 million, or $0.82 per share. The net loss for 2006 includes stock based compensation expense of $6.2 million, or $0.21 per share.
The increase in net sales for the 2006 fourth quarter and full year over the comparable 2005 periods was due to higher commercial sales worldwide of the Essure system, and reflects both 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 fourth quarter of 2006 increased 98% and international sales increased 36% over the comparable prior-year periods. During the fourth quarter of 2006, 565 physicians entered into training and 318 physicians were certified to perform the Essure procedure.
"The numbers of physicians seeking and completing training on the Essure system continue to outperform our expectations, setting new records each quarter, and validate our initiatives for accelerating physician adoption," commented Mark Sieczkarek, president and chief executive officer of Conceptus. "At year end we had 804 physicians performing the Essure procedure in their offices which represents a growth of 125% over the numbers at the end of 2005 and of 25% over the previous quarter's end. We are very pleased that patients, physicians and payers in such increasing numbers are realizing the benefits of our technology in this preferred site of service - the physician's office."
Gross profit for the fourth quarter of 2006 was $8.9 million, or 69% of net sales. This compares favorably with gross margin for the fourth quarter of 2005 of 62% of net sales and with gross margin for the third quarter of 2006 of 68%. 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 $1.1 million for the fourth quarter of 2006, down slightly from $1.2 million for the fourth quarter of 2005 and up slightly from the $1.0 million for the third quarter of 2006. 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 $0.1 million in the fourth quarter of 2006 and $0.2 million in the third quarter of 2006 for stock-based compensation expense.
Selling, general and administrative expenses were $12.1 million for the fourth quarter of 2006, up from $7.7 million for the fourth quarter of 2005 and up from the $10.3 million for the third quarter of 2006. SG&A expense includes $1.5 million for the fourth quarter of 2006 and $1.3 million in the third quarter of 2006 for stock-based compensation expense. The Company had 77 sales reps at year end as compared with 63 as of September 30, 2006. The increase in SG&A expenses quarter to quarter was due primarily to increased expenses to support the company's growing business and sales.
Cash, cash equivalents, short-term investments and restricted cash were $25.8 million as of December 31, 2006 and September 30, 2006. This slight net cash positive during the quarter compares with a usage of $4.5 million for the fourth quarter of 2005 and cash generation of $0.2 million for the third quarter of 2006.
"The financial performance of the business is improving right on track with our expectations and, with the last two quarters having been cash positive, are closing out a stellar year on a high note," added Mark Sieczkarek. "Given the leverage we are generating, we expect the financial metrics of the business to continue improving in 2007 as we move to being a profitable enterprise by the last quarter of this year as well. This is particularly noteworthy given our small share size relative to the permanent birth control market, and leads us to conclude that our efforts to make the Essure procedure the gold standard will be very profitable."
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 February 27, 2007 through 11:59 p.m. Eastern Time on March 1, 2007 by dialing (800) 642-1687 (domestic) or (706) 645-9291 (international) and entering conference ID number 9317795.
About the Essure Procedure
The Essure procedure deploys a soft micro-insert into the fallopian tube through the cervix using a minimally invasive transcervical tubal access catheter. Once in place, the device is designed to elicit tissue growth in and around the micro-insert to form an occlusion or blockage in the fallopian tube. An Essure procedure does not require cutting or penetrating the abdomen and can be performed in a less costly procedure setting without general anesthesia. A woman is able to return home about 45 minutes after the procedure is completed. There is a three-month waiting period after the procedure during which women must use another form of birth control. The Essure procedure is 99.80% effective after four years of follow-up. The Essure procedure has been demonstrated in a small portion of the women undergoing clinical studies to be 99.74% effective based on five years of follow-up. Five year follow-up of all patients in clinical trials is ongoing.<<
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Misses on eps by a few cents, but at the high side of revenue expectations. Think I saw a competitor munched recently.
Cheers, Tuck |
