For Immediate Release
For further information contact:
Fern Lazar/David Carey
Lazar Partners Ltd.
1-212-867-1768
flazar@lazarpartners.com/
dcarey@lazarpartners.com
GIVEN IMAGING REPORTS FIRST QUARTER 2008 RESULTS
- First Quarter 2008 Revenues Increase 18% to $27.1 Million -
- Company Reaffirms 2008 Revenue and Non-GAAP EPS Guidance -
YOQNEAM, Israel, May 13, 2008 - Given Imaging Ltd. (NASDAQ: GIVN) today announced financial results for the first quarter ended March 31, 2008.
Worldwide sales increased by 18% to $27.1 million in the first quarter of 2008, from $23.1 million in the first quarter of 2007.
On a GAAP basis, net income increased to $1.1 million, or $0.03 per share on a fully-diluted basis in the first quarter of 2008, compared to net income of $0.1 million, or $0.00 per share on a fully diluted basis in the first quarter of 2007.
On a non-GAAP basis the Company reported net income of $0.1 million, or $0.00 per share on a fully diluted basis in the first quarter of 2008, compared to net income of $1.6 million, or $0.05 per share on a fully diluted basis in the first quarter of 2007.
“We are pleased that we achieved an 18% increase in first quarter revenues. We reported strong sales growth from the EMEA and APAC regions, showing the success of our strategy to diversify revenues globally. We achieved this growth, even though the first quarter is typically a seasonally soft quarter. In addition, expense controls helped push non-GAAP net income to just above break even, beating our expectations of a first quarter loss,” said Homi Shamir, president and CEO of Given Imaging. “Looking ahead, to further diversify and expand revenues, we will continue to advance reimbursement in the largest European countries. At the same time, we are expanding our outreach in Japan to ensure that we penetrate that market as quickly as possible. In the Americas, our most important market, we’re focused on increasing the use of PillCam SB for established indications including obscure GI bleeding, suspected Crohn’s disease and iron deficiency anemia. In addition, we’re leveraging new clinical data to expand utilization of PillCam SB for celiac disease and PillCam ESO for esophageal varices.”
The following table reconciles GAAP and non-GAAP results for the first quarter 2008 (in millions of U.S. dollars, except for EPS):
| | | First Qtr. 2008 | | First Qtr. 2007 | |
GAAP net income (loss) | | $ | 1.1 | | $ | 0.1 | |
| InScope gain | | | (5.4 | ) | | | |
| Compensation expenses (FAS123R) | | | 1.5 | | | 1.1 | |
| IP Litigation expenses | | | 2.9 | | | (*)0.4 | |
Non-GAAP net income | | $ | 0.1 | | | (*)$1.6 | |
Non-GAAP EPS | | $ | 0.00 | | $ | 0.05 | |
(*)Reclassified to a non-GAAP item. The Company did not report this amount as a non-GAAP item when it reported first quarter 2007 results.
Gross margin in the first quarter of 2008 was 71.1%, compared to 73.9% in the first quarter of 2007.
For the first quarter of 2008, net cash provided by operating activities totaled $6.9 million. Cash and cash equivalents, short-term investments and marketable securities at March 31, 2008 totaled $109.2 million.
First Quarter 2008 Revenue Analysis
Sales in the Americas region were $15.8 million, up 2% from the $15.4 million in the same period in 2007. EMEA sales increased 39% to $8.2 million compared to $5.9 million in the same period in 2007, while APAC sales increased 75% to $3.1 million from $1.8 million in the same period in 2007.
Worldwide PillCam SB sales were 46,100 in the first quarter of 2008, an increase of 9.5% compared to the same period last year. PillCam SB sales in the Americas were 29,900 in the first quarter of 2008 compared to 30,200 in the first quarter of 2007. Reorders of PillCam SB in the Americas region grew 5.7% to 29,300 compared to 27,700 the first quarter of 2007. PillCam SB sales in the EMEA region increased 12.7% and sales in APAC regions more than doubled compared to the first quarter of 2007. The increase in PillCam SB sales in the APAC region is mainly attributable to sales in Japan.
PillCam sales accounted for 85% of total revenues compared to 87% of total sales in the same period of last year. Reorders of PillCam SB increased 15% to approximately 44,600 compared to approximately 38,700 in the first quarter of 2007.
Supplemental first quarter data can be found at www.givenimaging.com in the Investor Relations section.
2008 Guidance
The Company reaffirms its fiscal 2008 revenue guidance of $130 - $136 million and non-GAAP, fully-diluted earnings per share of $0.44 to $0.52.
Upon signing the final intellectual property settlement agreement with Olympus Corporation in the near term, the Company expects full year 2008 GAAP, fully-diluted earnings per share to be in the range of $0.26 and $0.34. This guidance does not take into account the $2.33 million pre-tax payment the Company expects to receive from Olympus Corporation once the settlement is finalized, which may result in additional pre-tax earnings per share of up to $0.08.
The following table reconciles GAAP and non-GAAP EPS guidance for fiscal 2008:
| | | 2008 | |
GAAP EPS | | $ | 0.26 - $0.34 | |
| InScope gain | | | (0.17 | ) |
| Compensation expenses (FAS123R) | | | 0.23 | |
| IP Litigation expenses | | | 0.12 | |
Non-GAAP EPS | | $ | 0.44 - $0.52 | |
Conference Call / Webcast Information
U.S. Call / Webcast
Given Imaging will host a conference call Wednesday, May 14, 2008, at 9:00 a.m. Eastern time to discuss first quarter 2008 results. To participate in the teleconference, please dial 1-800-289-0544 fifteen minutes before the conference begins. International callers should dial 913-312-1402. The call will also be webcast live at www.givenimaging.com. A replay of the call will be available for two weeks on the company’s website, or until May 28, 2008 by dialing 888-203-1112. International callers should dial 719-457-0820. The replay participant code is 4237742.
Hebrew Call
The company will host a separate conference call in Hebrew on May 14 at 7:00 a.m. Eastern time. To access this call, please dial +972-3-9180650 ten minutes before the conference is scheduled to begin. A replay of the call will be available until May 16 by dialing +972-3-9255939.
About Given Imaging Ltd.
Given Imaging is redefining gastrointestinal diagnosis by developing, producing and marketing innovative, patient-friendly products for detecting gastrointestinal disorders. The company's technology platform is the PillCam® Platform, featuring the PillCam video capsule, a disposable, miniature video camera contained in a capsule, which is ingested by the patient, a sensor array, data recorder and RAPID® software. Given Imaging has a number of available capsules: the PillCam SB video capsule to visualize the entire small intestine which is currently marketed in the United States and in more than 60 other countries; the PillCam ESO video capsule to visualize the esophagus; the Agile’ patency capsule to determine the free passage of the PillCam capsule in the GI tract and the PillCam COLON video capsule to visualize the colon that has been cleared for marketing in the European Union. PillCam COLON has received a CE Mark, but is not cleared for marketing or available for commercial distribution in the USA. More than 700,000 patients worldwide have benefited from the PillCam capsule endoscopy procedure. Given Imaging's headquarters, manufacturing and R&D facilities are located in Yoqneam, Israel. It has operating subsidiary companies in the United States, Germany, France, Japan, Australia and Singapore. Given Imaging's largest shareholders include Elron Electronic Industries (NASDAQ & TASE: ELRN). For more information, visit http://www.givenimaging.com.
Use of Non-GAAP Measures
This press release provides financial measures for net income and basic and diluted earnings per share that exclude stock-based compensation expense and patent litigation expenses and are therefore not calculated in accordance with generally accepted accounting principals (GAAP). Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance that enhances management's and investors' ability to evaluate the Company's net income and earnings per share and to compare it with historical net income and earnings per share prior to the adoption of FAS 123R and the beginning of our patent litigation in the U.S.
The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management uses both GAAP and non-GAAP measures when evaluating the business internally and therefore felt it is important to make these non-GAAP adjustments available to investors.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, projections about our business and our future revenues, expenses and profitability. Forward-looking statements may be, but are not necessarily, identified by the use of forward-looking terminology such as "may," "anticipates," "estimates," "expects," "intends," "plans," "believes," and words and terms of similar substance. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual events, results, performance, circumstances or achievements of the Company to be materially different from any future events, results, performance, circumstances or achievements expressed or implied by such forward-looking statements. Factors that could cause actual events, results, performance, circumstances or achievements to differ from such forward-looking statements include, but are not limited to, the following: (1) satisfactory results of clinical trials with PillCam COLON (2) our ability to receive regulatory clearance or approval to market our products or changes in regulatory environment, (3) our success in implementing our sales, marketing and manufacturing plans, (4) protection and validity of patents and other intellectual property rights, (5) the impact of currency exchange rates, (6) the effect of competition by other companies, (7) the outcome of future litigation, including patent litigation with Olympus Corporation, (8) our ability to obtain reimbursement for our product from government and commercial payors, (9) quarterly variations in operating results, (10) the possibility of armed conflict or civil or military unrest in Israel, and (11) other risks and factors disclosed in our filings with the U.S. Securities and Exchange Commission, including, but not limited to, risks and factors identified under such headings as "Risk Factors," "Cautionary Language Regarding Forward-Looking Statements" and "Operating Results and Financial Review and Prospects" in the Company's Annual Report on Form 20-F for the year ended December 31, 2007. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except for the Company's ongoing obligations to disclose material information under the applicable securities laws, it undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.
# # #
(Financial Tables Follow)
Given Imaging Ltd. and its Consolidated Subsidiaries
Consolidated Balance Sheets
In thousands except share data
| | | March 31, | | December 31, | |
| | | 2008 | | 2007 | |
| | | (Unaudited) | | (Audited) | |
| | | | | | |
Assets | | | | | |
| | | | | | |
Current assets | | | | | |
| Cash and cash equivalents | | $ | 43,117 | | $ | 37,103 | |
| | | | | | | | |
| Short-term investments | | | 23,594 | | | 23,191 | |
| Accounts receivable: | | | | | | | |
| Trade (Net of provisions for doubtful debts of $286 | | | | | | | |
| and of $329 as of March 31, 2008 and December 31, | | | | | | | |
| 2007, respectively) | | | 18,364 | | | 23,315 | |
| Other | | | 3,466 | | | 10,385 | |
| Inventories | | | 16,560 | | | 15,960 | |
| Prepaid expenses | | | 1,206 | | | 1,289 | |
| Deferred tax assets | | | 1,188 | | | 1,350 | |
| Advances to suppliers | | | 253 | | | 190 | |
| | | | | | | | |
Total current assets | | | 107,748 | | | 112,783 | |
| | | | | | | | |
Deposits | | | 916 | | | 892 | |
| | | | | | | | |
Assets held for employee severance payments | | | 3,477 | | | 3,007 | |
| | | | | | | | |
Marketable Securities | | | 42,235 | | | 41,629 | |
| | | | | | | | |
Fixed assets, at cost, less accumulated depreciation | | | 15,408 | | | 15,422 | |
| | | | | | | | |
Other assets, at cost, less accumulated amortization | | | 3,663 | | | 3,583 | |
| | | | | | | | |
Total Assets | | $ | 173,447 | | $ | 177,316 | |
Given Imaging Ltd. and its Consolidated Subsidiaries
Consolidated Balance Sheets
In thousands except share data
| | | March 31, | | December 31, | |
| | | 2008 | | 2007 | |
| | | (Unaudited) | | (Audited) | |
| | | | | | |
Liabilities and shareholders' equity | | | | | |
| | | | | | |
Current liabilities | | | | | |
| | | | | | |
| Current installments of obligation under capital lease | | $ | 133 | | $ | 121 | |
| Accounts payable | | | | | | | |
| Trade | | | 9,781 | | | 7,275 | |
| Other | | | 16,593 | | | 21,012 | |
| Deferred income | | | 2,887 | | | 9,379 | |
Total current liabilities | | | 29,394 | | | 37,787 | |
| | | | | | | | |
Long-term liabilities | | | | | | | |
| Deferred income | | | - | | | - | |
| Obligation under capital lease, net | | | 561 | | | 448 | |
| Liability in respect of employees’ severance payments | | | 4,071 | | | 3,490 | |
Total long-term liabilities | | | 4,632 | | | 3,938 | |
Total liabilities | | | 34,026 | | | 41,725 | |
| | | | | | | | |
Minority interest | | | 2,679 | | | 1,996 | |
| | | | | | | | |
Shareholders’ equity | | | | | | | |
Share capital: | | | | | | | |
| Ordinary Shares, NIS 0.05 par value each (90,000,000 | | | | | | | |
| shares authorized; 29,252,785 and 29,241,785 shares | | | | | | | |
| issued and fully paid as of March 31, 2008 and | | | | | | | |
| December 31, 2007, respectively) | | | 343 | | | 343 | |
| Additional paid-in capital | | | 168,520 | | | 166,813 | |
| Capital reserve | | | 2,166 | | | 2,166 | |
| Accumulated other comprehensive income | | | 364 | | | - | |
| Accumulated deficit | | | (34,651 | ) | | (35,727 | ) |
| Total shareholders' equity | | | 136,742 | | | 133,595 | |
| | | | | | | | |
Total liabilities and shareholders' equity | | $ | 173,447 | | $ | 177,316 | |
Given Imaging Ltd. and its Consolidated Subsidiaries
Consolidated Statements of Operations
In thousands except share and per share data
| | | Three month period ended | | Year ended | |
| | | March 31, | | December 31, | |
| | | 2008 | | 2007 | | 2007 | |
| | | (Unaudited) | | (Unaudited) | | (Audited) | |
| | | | | | | | |
Revenues | | $ | 27,124 | | $ | 23,052 | | $ | 112,868 | |
| | | | | | | | | | | |
Cost of revenues | | | (7,835 | ) | | (6,022 | ) | | (29,721 | ) |
| Early repayment of royalty bearing government grants | | | - | | | - | | | (4,843 | ) |
| | | | | | | | | | | |
Gross profit | | | 19,289 | | | 17,030 | | | 78,304 | |
| | | | | | | | | | | |
Operating expenses | | | | | | | | | | |
| Research and development, gross | | | (3,796 | ) | | (2,783 | ) | | (12,847 | ) |
| Royalty and non-royalty bearing grants | | | 420 | | | 93 | | | 1,242 | |
| Research and development, net | | | (3,376 | ) | | (2,690 | ) | | (11,605 | ) |
| | | | | | | | | | | |
| Sales and marketing | | | (14,962 | ) | | (11,506 | ) | | (55,446 | ) |
| General and administrative | | | (7,279 | ) | | (3,943 | ) | | (20,981 | ) |
| Termination of marketing agreement | | | 5,443 | | | - | | | 22,860 | |
| Other | | | - | | | - | | | (422 | ) |
| | | | | | | | | | | |
| Total operating expenses | | | (20,174 | ) | | (18,139 | ) | | (65,594 | ) |
| | | | | | | | | | | |
Operating income (loss) | | | (885 | ) | | (1,109 | ) | | 12,710 | |
| Financing income, net | | | 1,596 | | | 1,202 | | | 5,520 | |
| | | | | | | | | | | |
Profit before taxes on income and minority share | | | 711 | | | 93 | | | 18,230 | |
| Income tax expense | | | (159 | ) | | (247 | ) | | (4,548 | ) |
| | | | | | | | | | | |
Profit (loss) before minority share | | | 552 | | | (154 | ) | | 13,682 | |
| | | | | | | | | | | |
| Minority share in losses of subsidiary | | | 524 | | | 225 | | | 1,503 | |
| | | | | | | | | | | |
Net profit | | $ | 1,076 | | $ | 71 | | $ | 15,185 | |
| | | | | | | | | | | |
Earnings per share | | | | | | | | | | |
| | | | | | | | | | | |
| Basic Earnings per Ordinary Share | | $ | 0.04 | | $ | 0.00 | | $ | 0.52 | |
| | | | | | | | | | | |
| Diluted Earnings per Ordinary Share | | $ | 0.03 | | $ | 0.00 | | $ | 0.49 | |
| | | | | | | | | | | |
| Weighted average number of Ordinary Shares used | | | | | | | | | | |
| to compute basic profit per Ordinary share | | | 29,250,952 | | | 28,659,520 | | | 28,961,968 | |
| | | | | | | | | | | |
| Weighted average number of Ordinary Shares used | | | | | | | | | | |
| to compute dilute Earnings per Ordinary share | | | 31,094,578 | | | 30,503,871 | | | 31,030,458 | |
Given Imaging Ltd. and its Consolidated Subsidiaries
Consolidated Statements of Cash Flows
In thousands except share and per share data
| | | Three month period ended | | Year ended | |
| | | March 31, | | December 31, | |
| | | 2008 | | 2007 | | 2007 | |
| | | (Unaudited) | | (Unaudited) | | (Audited) | |
| | | | | | | | |
Cash flows from operating activities: | | | | | | | |
| Net profit | | $ | 1,076 | | $ | 71 | | $ | 15,185 | |
| | | | | | | | | | | |
Adjustments required to reconcile net profit to | | | | | | | | | | |
net cash used in operating activities: | | | | | | | | | | |
| | | | | | | | | | | |
| Minority share in losses of subsidiary | | | (524 | ) | | (225 | ) | | (1,503 | ) |
| Depreciation and amortization | | | 1,265 | | | 1,150 | | | 4,771 | |
| Deferred tax assets | | | 162 | | | (239 | ) | | 24 | |
| Stock options compensation | | | 1,511 | | | 1,109 | | | 5,651 | |
| Excess tax benefits related to stock based compensation | | | - | | | - | | | (693 | ) |
| Other | | | 172 | | | 73 | | | 380 | |
| Net decrease (increase) in trading securities | | | (89 | ) | | 3,078 | | | 5,092 | |
| Decrease (increase) in accounts receivable - trade | | | 4,951 | | | 2,139 | | | (4,428 | ) |
| Decrease (increase) in accounts receivable - other | | | 7,550 | | | (745 | ) | | (8,922 | ) |
| Decrease (increase) in prepaid expenses | | | 83 | | | (426 | ) | | 51 | |
| Increase in advances to suppliers | | | (63 | ) | | (43 | ) | | (108 | ) |
| Decrease (Increase) in inventories | | | (600 | ) | | 781 | | | 2,208 | |
| Increase (decrease) in accounts payable | | | (2,088 | ) | | (3,601 | ) | | 8,570 | |
| Increase (decrease) in deferred income | | | (6,492 | ) | | 42 | | | (14,903 | ) |
Net cash provided by operating activities | | | 6,914 | | | 3,164 | | | 11,375 | |
| | | | | | | | | | | |
Cash flows from investing activities: | | | | | | | | | | |
| Purchase of fixed assets and intangible assets | | | (1,247 | ) | | (692 | ) | | (5,772 | ) |
| Deposits | | | (25 | ) | | (11 | ) | | (355 | ) |
| Proceeds from sales of marketable securities | | | 18,446 | | | - | | | 18,753 | |
| Proceeds from sales of fixed assets | | | 25 | | | | | | | |
| Acquisition of marketable securities | | | (19,627 | ) | | (17,358 | ) | | (36,584 | ) |
Net cash used in investing activities | | | (2,428 | ) | | (18,061 | ) | | (23,958 | ) |
| | | | | | | | | | | |
Cash flows from financing activities: | | | | | | | | | | |
| Principal payments on capital lease obligation | | | (50 | ) | | (3 | ) | | (37 | ) |
| Proceeds from the issuance of Ordinary Shares | | | 196 | | | 352 | | | 4,280 | |
| Excess tax benefits related to stock based compensation | | | - | | | - | | | 693 | |
| Issuance of shares by consolidated company to the minority | | | 1,207 | | | - | | | - | |
Net cash provided by financing activities | | | 1,353 | | | 349 | | | 4,936 | |
| | | | | | | | | | | |
Effect of exchange rate changes on cash | | | 175 | | | 49 | | | 240 | |
| | | | | | | | | | | |
Increase (decrease) in cash and cash equivalents | | | 6,014 | | | (14,499 | ) | | (7,407 | ) |
Cash and cash equivalents at beginning of period | | | 37,103 | | | 44,510 | | | 44,510 | |
| | | | | | | | | | | |
Cash and cash equivalents at end of period | | $ | 43,117 | | $ | 30,011 | | $ | 37,103 | |
| | | | | | | | | | | |
Supplementary cash flow information | | | | | | | | | | |
| Income taxes paid | | $ | 77 | | $ | 75 | | $ | 1,098 | |
| | | | | | | | | | | |
| Assets acquired under capital lease | | $ | 109 | | $ | - | | $ | 569 | |
