DATE: April 28, 2005
FOR IMMEDIATE RELEASE
AMERICAN MEDICAL SYSTEMS REVENUE
EXCEEDS $62 MILLION IN FIRST QUARTER OF 2005
Earnings Growth of 40% Yields Record Income Level
MINNEAPOLIS, April 28 2005 — American Medical Systems Holdings, Inc. (NASDAQ: AMMD) reported record sales of $62.1 million for the first quarter of 2005, a 31.3 percent increase over sales of $47.3 million in the comparable quarter of 2004 (with 1.5 percentage points of the increase coming from currency exchange rate changes). Net income in the quarter was a record $11.2 million, or $0.16 per share, up 40.1 percent from $8.0 million or $0.12 per share, in the comparable quarter of 2004.
Martin J. Emerson, President and Chief Executive Officer, commented, “We are pleased with the significant first quarter growth realized worldwide across our broad product portfolio. New products contributed significantly to our fast start in 2005. We are also proud of the operating leverage delivered in the quarter as operating income grew to more than 27 percent of sales. Record cash flow from operations of $17.8 million resulted in a quarter ending balance in cash and short term investments of $70.5 million.”
Mr. Emerson added, “First quarter growth of 32 percent in our men’s pelvic health business reflected significant contribution from both internally developed and acquired products. Our continued focus on delivering improvements to the field of erectile restoration generated record sales in that core business. Increases in our prostate treatment revenues were driven by our TherMatrx in-office BPH therapy that continues to reach more patients through an increasing physician base.”
“Continued focus on physician training for our women’s pelvic health products resulted in 31 percent growth in that business for the quarter,” said Emerson. “Our long term commitment to delivering innovative surgical solutions to both the incontinence and prolapse markets attracted over 600 physicians to our female pelvic health training courses in the quarter. Through 2005, our portfolio of prolapse products will broaden as we continue to pioneer surgical options for the treatment of this complex medical condition.”
Outlook
For the year 2005, the Company expects annual revenue growth in the range of 25 to 27 percent, or revenue of $260 to $265 million. The Company has increased its estimated earnings per share on these revenues to the range of $0.64 to $0.67. In the second quarter of 2005, AMS expects revenues to be in the range of $63 to $65 million, representing a 28 to 32 percent increase versus the second quarter of 2004, with earnings per share of $0.16 to $0.17.
Earnings Call Information
American Medical Systems will host a conference call today at 5:00 p.m. eastern time to discuss its first quarter results for 2005. Those without internet access may join the call from within the U.S. by dialing 800-886-7217; outside the U.S., dial 706-679-3821.
A live webcast of the call will be available through the Company’s corporate website at www.AmericanMedicalSystems.com and available for replay three hours after the completion of the call.
About American Medical Systems
American Medical Systems, headquartered in Minnetonka, Minnesota is a diversified supplier of medical devices and procedures to cure erectile dysfunction, benign prostatic hyperplasia, incontinence, menorrhagia, prolapse and other pelvic disorders in men and women. These disorders can significantly diminish one’s quality of life and profoundly affect social relationships. In recent years, the number of people seeking treatment has increased markedly as a result of longer lives, higher quality-of-life expectations and greater awareness of new treatment alternatives. American Medical Systems’ products reduce or eliminate the incapacitating effects of these diseases, often through minimally invasive therapies. The Company’s products were used to treat over 132,000 patients in 54 countries during 2004.
Forward-Looking Statements
Statements about the Company’s market opportunities, future products, sales and financial results are forward-looking statements subject to risks and uncertainties such as the timing and success of new product introductions; physician acceptance, endorsement, and use of the Company’s products; regulatory matters; competitor activities; changes in and adoption of reimbursement rates; potential product recalls and other risks and uncertainties described in the Company’s Annual Report on Form 10-K for the year ended January 1, 2005 and its other SEC filings. Actual results may differ materially from anticipated results.
More information about the Company and its products can be found at its website www.AmericanMedicalSystems.com and in the Company’s Annual Report on Form 10-K for 2004 and its other SEC filings.
Contact: | Carmen Diersen | |
| Executive Vice President and Chief Financial Officer 952-930-6495 Carmen.Diersen@AmericanMedicalSystems.com | ||
| Marty Emerson President and Chief Executive Officer 952-930-6334 Marty.Emerson@AmericanMedicalSystems.com |
American Medical Systems Holdings, Inc.
Statements of Operations
(In thousands, except per share data)
| Three Months Ended | ||||||||
| April 2, 2005 | April 3, 2004 | |||||||
| Net sales | $ | 62,145 | $ | 47,313 | ||||
| Cost of sales | 11,020 | 8,930 | ||||||
| Gross profit | 51,125 | 38,383 | ||||||
| Operating expenses | ||||||||
| Marketing and selling | 21,656 | 16,493 | ||||||
| Research and development | 4,638 | 3,584 | ||||||
| General and administrative | 5,789 | 4,876 | ||||||
| Amortization of intangibles | 1,790 | 1,061 | ||||||
| Total operating expenses | 33,873 | 26,014 | ||||||
| Operating income (loss) | 17,252 | 12,369 | ||||||
| Other income (expense) | ||||||||
| Royalty income | 478 | 491 | ||||||
| Interest income | 274 | 138 | ||||||
| Interest expense | (55 | ) | (201 | ) | ||||
| Other income (expense) | (463 | ) | (156 | ) | ||||
| Total other income (expense) | 234 | 272 | ||||||
| Income (loss) before income taxes | 17,486 | 12,641 | ||||||
| Provision for income taxes | 6,243 | 4,614 | ||||||
| Net income (loss) | $ | 11,243 | $ | 8,027 | ||||
| Net income (loss) per share | ||||||||
| Basic | $ | 0.16 | $ | 0.12 | ||||
| Diluted | $ | 0.16 | $ | 0.12 | ||||
| Weighted average common shares used in calculation | ||||||||
| Basic | 68,552 | 66,484 | (A) | |||||
| Diluted | 71,250 | 69,998 | (A) | |||||
Note
(A) April 3, 2004 average common shares reflect the effect of the stock split effective March 21, 2005.
American Medical Systems Holdings, Inc.
Condensed Balance Sheets
(In thousands)
| April 2, 2005 | January 1, 2005 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and short-term investments | $ | 70,484 | $ | 51,168 | ||||
| Accounts receivable, net | 46,566 | 46,984 | ||||||
| Inventories | 21,088 | 21,719 | ||||||
| Deferred taxes and other current assets | 7,932 | 7,956 | ||||||
| Total current assets | 146,070 | 127,827 | ||||||
| Property, plant and equipment, net | 21,921 | 22,065 | ||||||
| Goodwill and intangibles, net | 146,934 | 147,157 | ||||||
| Deferred taxes and other assets | 2,545 | 3,501 | ||||||
| Total assets | $ | 317,470 | $ | 300,550 | ||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 5,236 | $ | 4,237 | ||||
| Accrued liabilities and taxes | 43,452 | 44,015 | ||||||
| Total current liabilities | 48,688 | 48,252 | ||||||
| Other long term liabilities | 3,126 | 3,126 | ||||||
| Total liabilities | 51,814 | 51,378 | ||||||
| Stockholders’ equity | 265,656 | 249,172 | ||||||
| Total liabilities and stockholders’ equity | $ | 317,470 | $ | 300,550 | ||||
American Medical Systems Holdings, Inc.
Condensed Statements of Cash Flows
(In thousands)
| Three Months Ended | ||||||||
| April 2, 2005 | April 3, 2004 | |||||||
| Cash flows from operating activities | ||||||||
| Net income | $ | 11,243 | $ | 8,027 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation | 1,515 | 1,678 | ||||||
| Loss on asset disposals | 25 | 10 | ||||||
| Amortization of intangibles, including deferred financing costs | 1,790 | 1,105 | ||||||
| Non-cash deferred compensation | 9 | 8 | ||||||
| Income tax benefit related to stock option plans | 2,355 | 763 | ||||||
| Change in net deferred taxes | 1,089 | (290 | ) | |||||
| Changes in operating assets and liabilities | (235 | ) | 2,261 | |||||
| Net cash provided by operating activities | 17,791 | 13,562 | ||||||
| Cash flows from investing activities | ||||||||
| Purchase of property, plant and equipment | (1,421 | ) | (165 | ) | ||||
| Purchase of business, net of cash acquired | (684 | ) | — | |||||
| Purchase of investments in technology | (750 | ) | — | |||||
| Purchase of short-term investments | (2,600 | ) | — | |||||
| Sale of short-term investments | 5,728 | — | ||||||
| Net cash used in investing activities | 273 | (165 | ) | |||||
| Cash flows from financing activities | ||||||||
| Issuance of common stock | 3,822 | 1,674 | ||||||
| Payments on long-term debt | — | (1,637 | ) | |||||
| Net cash used in financing activities | 3,822 | 37 | ||||||
| Effect of exchange rates | 558 | (17 | ) | |||||
| Net increase (decrease) in cash and cash equivalents | $ | 22,444 | $ | 13,417 | ||||
| Cash and cash equivalents at beginning of period | $ | 35,689 | $ | 58,953 | ||||
| Cash and cash equivalents at end of period | $ | 58,133 | $ | 72,370 | ||||
American Medical Systems Holdings, Inc.
Selected Sales Information
(In thousands)
| Three Months Ended | ||||||||
| April 2, 2005 | April 3, 2004 | |||||||
| Sales | ||||||||
| Product line | ||||||||
| Men’s health | ||||||||
| Erectile restoration | $ | 20,694 | $ | 17,465 | ||||
| Male continence | 13,248 | 12,166 | ||||||
| Prostate treatments | 6,647 | 1,166 | ||||||
| Total men’s health | 40,589 | 30,797 | ||||||
| Women’s health | 21,556 | 16,516 | ||||||
| Total | $ | 62,145 | $ | 47,313 | ||||
| Geography | ||||||||
| United States | $ | 48,333 | $ | 36,598 | ||||
| International | 13,812 | 10,715 | ||||||
| Total | $ | 62,145 | $ | 47,313 | ||||
| Percent of total sales | ||||||||
| Product line | ||||||||
| Men’s health | ||||||||
| Erectile restoration | 33 | % | 37 | % | ||||
| Male continence | 21 | % | 26 | % | ||||
| Prostate treatments | 11 | % | 2 | % | ||||
| Total men’s health | 65 | % | 65 | % | ||||
| Women’s health | 35 | % | 35 | % | ||||
| Total | 100 | % | 100 | % | ||||
| Geography | ||||||||
| United States | 78 | % | 77 | % | ||||
| International | 22 | % | 23 | % | ||||
| Total | 100 | % | 100 | % | ||||