![](https://capedge.com/proxy/8-K/0000914121-19-000775/image00007.jpg)
● | Net sales of $86.3 million, an increase of 3.0% year over year |
● | Gross margin declined 10 basis points year over year to 54.1% |
● | GAAP EPS of $0.02 per share; adjusted EPS of $0.19 per share |
● | Cash provided by operations of $8.3 million; capital expenditures of $0.9 million |
● | Received unconditional IDE approval from the FDA to initiate NanoKnife® DIRECT Clinical Study |
● | Won patent infringement dispute with Bard |
● | Oncology net sales were $13.9 million, an increase of 15.1% from $12.1 million a year ago, as strong sales of Solero, as well as the recent BioSentry and RadiaDyne acquisitions, more than offset weaker than anticipated NanoKnife capital sales during the quarter. |
● | Vascular Interventions and Therapies net sales in the third quarter of fiscal 2019 were $50.1 million, an increase of 3.3%, compared to $48.5 million a year ago, as strong growth in AngioVac was partially offset by a decelerating decline in the Venous Insufficiency business. |
● | Vascular Access net sales were $22.3 million, a decrease of 4.0% from $23.3 million a year ago, as lower sales of midlines, PICCs, and ports were somewhat offset by strong dialysis sales. |
● | Net sales were $263.2 million, an increase of 2.8%, compared to $256.0 million for the same period a year ago. |
● | The Company’s net income was $2.5 million, or $0.06 per share, compared to net income of $14.2 million, or $0.38 per share, a year ago. |
● | Gross margin improved 270 basis points to 53.3% from 50.6% a year ago. |
● | Excluding the items shown in the non-GAAP reconciliation table below, adjusted net income was $22.0 million, or $0.57 per share, compared to adjusted net income of $19.9 million, or $0.53 per share, a year ago. |
● | Adjusted EBITDAS, excluding the items shown in the reconciliation table below, was $43.9 million, compared to $41.5 million for the same period a year ago. |
Three months ended | Nine months ended | |||||||||||||||
February 28, 2019 | February 28, 2018 | February 28, 2019 | February 28, 2018 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Net sales | $ | 86,341 | $ | 83,851 | $ | 263,184 | $ | 255,968 | ||||||||
Cost of sales (exclusive of intangible amortization) | 39,650 | 38,403 | 122,917 | 126,560 | ||||||||||||
Gross profit | 46,691 | 45,448 | 140,267 | 129,408 | ||||||||||||
% of net sales | 54.1 | % | 54.2 | % | 53.3 | % | 50.6 | % | ||||||||
Operating expenses | ||||||||||||||||
Research and development | 7,210 | 6,457 | 22,235 | 19,005 | ||||||||||||
Sales and marketing | 19,413 | 18,009 | 59,115 | 56,378 | ||||||||||||
General and administrative | 8,780 | 7,723 | 26,612 | 23,319 | ||||||||||||
Amortization of intangibles | 5,342 | 4,191 | 14,646 | 12,433 | ||||||||||||
Change in fair value of contingent consideration | 609 | 31 | 865 | 218 | ||||||||||||
Acquisition, restructuring and other items, net | 2,550 | 4,177 | 9,700 | 11,932 | ||||||||||||
Total operating expenses | 43,904 | 40,588 | 133,173 | 123,285 | ||||||||||||
Operating income | 2,787 | 4,860 | 7,094 | 6,123 | ||||||||||||
Interest expense, net | (1,442 | ) | (740 | ) | (3,689 | ) | (2,223 | ) | ||||||||
Other income (expense), net | (266 | ) | (49 | ) | (72 | ) | 238 | |||||||||
Total other expense, net | (1,708 | ) | (789 | ) | (3,761 | ) | (1,985 | ) | ||||||||
Income before income taxes | 1,079 | 4,071 | 3,333 | 4,138 | ||||||||||||
Income tax expense (benefit) | 283 | (9,948 | ) | 866 | (10,095 | ) | ||||||||||
Net Income | $ | 796 | $ | 14,019 | $ | 2,467 | $ | 14,233 | ||||||||
Earnings per share | ||||||||||||||||
Basic | $ | 0.02 | $ | 0.38 | $ | 0.07 | $ | 0.38 | ||||||||
Diluted | $ | 0.02 | $ | 0.37 | $ | 0.06 | $ | 0.38 | ||||||||
Weighted average shares outstanding | ||||||||||||||||
Basic | 37,518 | 37,122 | 37,446 | 37,031 | ||||||||||||
Diluted | 38,338 | 37,442 | 38,350 | 37,358 |
Reconciliation of Net Income to non-GAAP Adjusted Net Income: | ||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
February 28, 2019 | February 28, 2018 | February 28, 2019 | February 28, 2018 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Net Income | $ | 796 | $ | 14,019 | $ | 2,467 | $ | 14,233 | ||||||||
Amortization of intangibles | 5,342 | 4,191 | 14,646 | 12,433 | ||||||||||||
Change in fair value of contingent consideration | 609 | 31 | 865 | 218 | ||||||||||||
Acquisition, restructuring and other items, net (1) | 2,550 | 4,177 | 9,700 | 11,932 | ||||||||||||
Tax effect of non-GAAP items (2) | (1,920 | ) | (13,766 | ) | (5,699 | ) | (18,889 | ) | ||||||||
Adjusted net income | $ | 7,377 | $ | 8,652 | $ | 21,979 | $ | 19,927 |
Reconciliation of Diluted Earnings Per Share to non-GAAP Adjusted Diluted Earnings Per Share: | ||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
February 28, 2019 | February 28, 2018 | February 28, 2019 | February 28, 2018 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Diluted earnings per share | $ | 0.02 | $ | 0.37 | $ | 0.06 | $ | 0.38 | ||||||||
Amortization of intangibles | 0.14 | 0.11 | 0.38 | 0.33 | ||||||||||||
Change in fair value of contingent consideration | 0.02 | 0.00 | 0.02 | 0.01 | ||||||||||||
Acquisition, restructuring and other items, net (1) | 0.07 | 0.11 | 0.25 | 0.32 | ||||||||||||
Tax effect of non-GAAP items (2) | (0.06 | ) | (0.36 | ) | (0.14 | ) | (0.51 | ) | ||||||||
Adjusted diluted earnings per share | $ | 0.19 | $ | 0.23 | $ | 0.57 | $ | 0.53 | ||||||||
Adjusted diluted share count | 38,338 | 37,442 | 38,350 | 37,358 |
Reconciliation of Net Income to EBITDAS and Adjusted EBITDAS: | ||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
February 28, 2019 | February 28, 2018 | February 28, 2019 | February 28, 2018 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Net Income | $ | 796 | $ | 14,019 | $ | 2,467 | $ | 14,233 | ||||||||
Income tax expense (benefit) | 283 | (9,948 | ) | 866 | (10,095 | ) | ||||||||||
Interest expense, net | 1,442 | 740 | 3,689 | 2,223 | ||||||||||||
Depreciation and amortization | 6,867 | 5,718 | 19,158 | 17,395 | ||||||||||||
Stock based compensation | 2,378 | $ | 2,058 | $ | 7,119 | $ | 5,821 | |||||||||
EBITDAS | $ | 11,766 | $ | 12,587 | $ | 33,299 | $ | 29,577 | ||||||||
Change in fair value of contingent consideration | $ | 609 | $ | 31 | $ | 865 | $ | 218 | ||||||||
Acquisition, restructuring and other items, net (1) | | 2,550 | 4,216 | 9,700 | 11,656 | |||||||||||
Adjusted EBITDAS | $ | 14,925 | $ | 16,834 | $ | 43,864 | $ | 41,451 | ||||||||
Per diluted share: | | | ||||||||||||||
EBITDAS | $ | 0.31 | $ | 0.34 | $ | 0.87 | $ | 0.79 | ||||||||
Adjusted EBITDAS | $ | 0.39 | $ | 0.45 | $ | 1.14 | $ | 1.11 |
Three months ended | Nine months ended | |||||||||||||||||||||||||||||||||||||||
Feb 28, 2019 | Feb 28, 2018 | % Growth | Currency Impact | Constant Currency Growth | Feb 28, 2019 | Feb 28, 2018 | % Growth | Currency Impact | Constant Currency Growth | |||||||||||||||||||||||||||||||
Net Sales by Product Category | ||||||||||||||||||||||||||||||||||||||||
Vascular Interventions & Therapies | $ | 50,115 | $ | 48,517 | 3.3 | % | $ | 152,603 | $ | 149,751 | 1.9 | % | ||||||||||||||||||||||||||||
Vascular Access | 22,348 | 23,279 | (4.0) | % | 69,861 | 69,091 | 1.1 | % | ||||||||||||||||||||||||||||||||
Oncology | 13,878 | 12,055 | 15.1 | % | 40,720 | 37,126 | 9.7 | % | ||||||||||||||||||||||||||||||||
Total | $ | 86,341 | $ | 83,851 | 3.0 | % | 0.0 | % | 3.4 | % | $ | 263,184 | $ | 255,968 | 2.8 | % | 0.0 | % | 3.1 | % | ||||||||||||||||||||
Net Sales by Geography | ||||||||||||||||||||||||||||||||||||||||
United States | $ | 68,331 | $ | 65,787 | 3.9 | % | 0.0 | % | 3.9 | % | $ | 207,898 | $ | 203,020 | 2.4 | % | 0.0 | % | 2.4 | % | ||||||||||||||||||||
International | 18,010 | 18,064 | (0.3) | % | 2.0 | % | 1.9 | % | 55,286 | 52,948 | 4.4 | % | 2.0 | % | 5.6 | % | ||||||||||||||||||||||||
Total | $ | 86,341 | $ | 83,851 | 3.0 | % | 0.0 | % | 3.4 | % | $ | 263,184 | $ | 255,968 | 2.8 | % | 0.0 | % | 3.1 | % |
February 28, 2019 | May 31, 2018 | |||||||
(unaudited) | (audited) | |||||||
Assets | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 41,704 | $ | 74,096 | ||||
Marketable securities | — | 1,317 | ||||||
Total cash and investments | 41,704 | 75,413 | ||||||
Accounts receivable, net | 44,208 | 39,401 | ||||||
Inventories | 52,388 | 48,916 | ||||||
Prepaid expenses and other | 4,440 | 4,302 | ||||||
Total current assets | 142,740 | 168,032 | ||||||
Property, plant and equipment, net | 41,207 | 42,461 | ||||||
Other assets | 3,610 | 3,417 | ||||||
Intangible assets, net | 166,564 | 130,310 | ||||||
Goodwill | 423,674 | 361,252 | ||||||
Total Assets | $ | 777,795 | $ | 705,472 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 18,443 | $ | 15,775 | ||||
Accrued liabilities | 21,929 | 34,426 | ||||||
Current portion of long-term debt | 6,250 | 5,000 | ||||||
Current portion of contingent consideration | 6,673 | 2,100 | ||||||
Total current liabilities | 53,295 | 57,301 | ||||||
Long-term debt, net of current portion | 126,837 | 86,621 | ||||||
Deferred income taxes | 17,834 | 17,173 | ||||||
Contingent consideration, net of current portion | 20,454 | 1,161 | ||||||
Other long-term liabilities | 5,296 | 621 | ||||||
Total Liabilities | 223,716 | 162,877 | ||||||
Stockholders’ equity | 554,079 | 542,595 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 777,795 | $ | 705,472 |
| Three months ended | Nine months ended | ||||||||||||||
| February 28, | February 28, | February 28, | February 28, | ||||||||||||
| (unaudited) | (unaudited) | ||||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net Income | $ | 796 | $ | 14,019 | $ | 2,467 | $ | 14,233 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
Depreciation and amortization | 6,867 | 5,718 | 19,158 | 17,395 | ||||||||||||
Stock based compensation | 2,378 | 2,058 | 7,119 | 5,821 | ||||||||||||
Change in fair value of contingent consideration | 609 | 31 | 865 | 218 | ||||||||||||
Deferred income taxes | 138 | (10,044 | ) | 633 | (10,150 | ) | ||||||||||
Change in accounts receivable allowances | (24 | ) | (315 | ) | (99 | ) | (35 | ) | ||||||||
Fixed and intangible asset impairments and disposals | 677 | 22 | 689 | 30 | ||||||||||||
Other | 12 | (78 | ) | (5 | ) | (635 | ) | |||||||||
Changes in operating assets and liabilities, net of acquisitions: | ||||||||||||||||
Accounts receivable | (785 | ) | 598 | (3,853 | ) | 2,897 | ||||||||||
Inventories | (1,747 | ) | (2,511 | ) | (2,702 | ) | (1,913 | ) | ||||||||
Prepaid expenses and other | (325 | ) | 155 | (1,508 | ) | (548 | ) | |||||||||
Accounts payable, accrued and other liabilities | (254 | ) | (5,338 | ) | (10,336 | ) | (9,797 | ) | ||||||||
Net cash provided by operating activities | 8,342 | 4,315 | 12,428 | 17,516 | ||||||||||||
Cash flows from investing activities: | ||||||||||||||||
Additions to property, plant and equipment | (887 | ) | (425 | ) | (2,303 | ) | (1,647 | ) | ||||||||
Acquisition of intangibles | — | (1,265 | ) | — | (1,265 | ) | ||||||||||
Cash paid in acquisition | — | — | (84,920 | ) | — | |||||||||||
Proceeds from sale of marketable securities | 1,350 | — | 1,350 | — | ||||||||||||
Net cash used in investing activities | 463 | (1,690 | ) | (85,873 | ) | (2,912 | ) | |||||||||
Cash flows from financing activities: | ||||||||||||||||
Proceeds from issuance of long-term debt | — | — | 55,000 | — | ||||||||||||
Repayment of long-term debt | (11,250 | ) | (1,250 | ) | (13,750 | ) | (3,750 | ) | ||||||||
Payment of contingent consideration previously established in purchase accounting | — | — | (2,100 | ) | (9,500 | ) | ||||||||||
Proceeds from exercise of stock options and employee stock purchase plan | 1,169 | 822 | 2,023 | 2,560 | ||||||||||||
Net cash provided by (used) in financing activities | (10,081 | ) | (428 | ) | 41,173 | (10,690 | ) | |||||||||
Effect of exchange rate changes on cash and cash equivalents | 160 | 239 | (120 | ) | 834 | |||||||||||
Increase (decrease) in cash and cash equivalents | (1,116 | ) | 2,436 | (32,392 | ) | 4,748 | ||||||||||
Cash and cash equivalents at beginning of period | 42,820 | 49,856 | 74,096 | 47,544 | ||||||||||||
Cash and cash equivalents at end of period | $ | 41,704 | $ | 52,292 | $ | 41,704 | $ | 52,292 |
Reconciliation of Free Cash Flows: | ||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
February 28, 2019 | February 28, 2018 | February 28, 2019 | February 28, 2018 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Net cash provided by operating activities | $ | 8,342 | $ | 4,315 | $ | 12,428 | $ | 17,516 | ||||||||
Additions to property, plant and equipment | (887 | ) | (425 | ) | (2,303 | ) | (1,647 | ) | ||||||||
Free Cash Flow | $ | 7,455 | $ | 3,890 | $ | 10,125 | $ | 15,869 |