Exhibit 99.1
| Patrick D. Spangler, CFO | |
|
| ev3 Inc. |
|
| 4600 Nathan Lane North |
|
| Plymouth, Minnesota 55442 |
|
| (763) 398-7000 |
|
| pspangler@ev3.net |
ev3 Inc. Reports Third Quarter Financial Results
Net Sales Grow by 70% Compared to Year-Ago Period
—Conference Call Scheduled for October 27, 2005 at 9:00 a.m. EDT;
Simultaneous Webcast at www.ev3.net —
Plymouth, MN—October 27, 2005—ev3 Inc. (NASDAQ: EVVV), a global endovascular device company, reported today its financial results for its fiscal third quarter ended October 2, 2005.
As reported on October 5, 2005, ev3’s net sales in the third quarter of 2005 were $33.5 million, an increase of 70% versus net sales of $19.7 million in the third quarter of 2004. This growth was generated internally and reflected strong net sales growth in each of ev3’s reportable business segments and geographic markets. New products and an expansion of the ev3 world-wide sales and distribution organization were the important growth drivers. Reported net sales for ev3 include the consolidated net sales of the company’s majority-owned subsidiary, Micro Therapeutics, Inc. (NASDAQ: MTIX), an endovascular device company focused on neurovascular disease and disorders.
For the nine months ended October 2, 2005, ev3’s net sales were $92.7 million, an increase of 52% compared to net sales in the first nine months of 2004. Sales growth in the first nine months of 2005 also was generated internally and reflected net sales growth in each of ev3’s reportable business segments and geographic markets.
James Corbett, President and CEO of ev3 Inc. and Chairman of the Board of MTI, commented, “We are extremely pleased that ev3’s third quarter net sales results reflected significant growth across all lines of the company’s cardio peripheral and neurovascular products globally. ev3’s United States net sales benefited specifically from the launch of the Diver C.E. aspiration catheter in the cardio peripheral segment and the Onyx Embolic System in the neurovascular segment.”
Cost of goods sold as a percentage of net sales for the third quarter of 2005 decreased to 40.6% of sales from 47.5% in the third quarter of 2004. ev3’s improvement in cost of goods sold as a percentage of net sales continues to reflect the benefits of increased production volumes, recently completed plant consolidations, in-house manufacturing of certain stent components, and other cost reduction initiatives.
The Company’s loss from operations of $21.9 million in the third quarter of 2005 represents a decrease of $4.8 million, or 18%, from the third quarter of 2004 when considering the $14.5 million gain realized in the third quarter of 2004 on the sale of certain intellectual property. The as reported Q3 ‘04 loss from operations, including the above referenced gain, was $12.2 million.
ev3’s net loss attributable to common shareholders for the third quarter of 2005 was $20.5 million or $0.42 per common share, compared to $21.3 million or $8.35 per common share in the third quarter 2004. ev3’s net loss attributable to common shareholders for the first nine months of 2005 was $100.1 million or $4.99 per common share, compared to $86.7 million or $43.07 per common share for the first nine months of 2004. ev3’s net loss attributable to common shareholders for the third quarter of 2004 and for the first nine months of 2004 was reduced by the $14.5 million gain noted above. Total weighted average common shares outstanding used in the per share calculations were 49,099,357 for the third quarter of 2005 and 2,547,809 for the third quarter of 2004. ev3’s operating expenses for the third quarter of 2005 included $1.4 million in stock-based compensation charges.
Corbett continued, “ev3’s third quarter operating loss narrowed to $21.9 million compared to $29.0 million in the second quarter of 2005, primarily due to operating expense reductions and improved operating leverage. We expect our operating loss to continue to narrow in future quarters as our sales growth allows us to leverage our investments in our world-wide sales and marketing infrastructure, manufacturing capabilities and corporate general and administrative support.”
Proposal to Acquire Public Minority Stake in Micro Therapeutics, Inc.
As previously announced on October 10, 2005 ev3 delivered a proposal to Micro Therapeutics, Inc. (MTI) to acquire all of the outstanding shares of common stock of MTI that ev3 does not already own. ev3 currently owns approximately 70.2% of MTI’s outstanding common stock. Under the terms of the proposal, ev3 would issue approximately 6.6 million new shares of its common stock, bringing ev3’s total pro forma outstanding shares to approximately 56 million.
Sales Review
By segment, ev3’s third quarter net sales of cardio peripheral products were $19.8 million, representing an increase of 65% versus the year-ago quarter, and net sales of neurovascular products were $13.7 million, representing an increase of 80% versus the year-ago quarter. On a geographic basis, ev3’s third quarter United States net sales were $19.1 million, representing an increase of 87% versus the year-ago quarter, and third quarter international net sales were $14.4 million, representing an increase of 52% versus the year-ago quarter.
Outlook
ev3 expects its net sales in the fourth quarter and full year 2005 to be in the range of $38 to $42 million and $131 to $135 million, respectively. ev3 also expects its quarterly operating loss to be reduced during the final quarter of 2005 as compared to its operating loss in the third quarter of 2005.
Earnings Call Information
ev3 will host a conference call today, October 27, 2005, beginning at 9:00 a.m. EDT to review its results of operations for the third quarter of 2005 and other recent events and to discuss its fourth quarter 2005 business outlook. Discussions during the conference call may include forward-looking statements regarding such topics as, but not limited to, the company’s net sales, cost of goods sold, operating expenses, distribution arrangements, clinical studies, regulatory status, and financial position, and comments the company may make about its future in response to questions from participants on the conference call. Any interested party may listen to the conference call through a live audio Internet broadcast at www.ev3.net. For those unable to listen to the live broadcast, a playback of the webcast will be available at www.ev3.net for approximately one year. Those without Internet access may join the call from within the U.S. by dialing 866-250-3615; outside the U.S. dial 706-645-9291, pass code 8233174. A playback of the conference call will be available from 11:00 p.m. EDT, October 27, 2005 until 6:00 p.m. EDT on November 26, 2005.
ev3 and the ev3 logo are trademarks of ev3 Inc., registered in the U.S. and other countries.
Statements contained in this press release that are not historical information are forward-looking statements as defined within the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected or implied. Such potential risks and uncertainties relate, but are not limited, to, in no particular order: product demand and market acceptance; the impact of competitive products and pricing; success of clinical testing; and the risks associated with ev3’s proposal to acquire the public minority stake in MTI, including the recommendation of the transaction by MTI’s special committee, the
result of the review of the proposed transaction by various regulatory agencies and any conditions imposed on ev3 in connection with consummation of the transaction, and satisfaction of various conditions to the closing of the transaction. More detailed information on these and additional factors which could affect ev3 Inc.’s operating and financial results are described in the company’s filings with the Securities and Exchange Commission, including its most recent quarterly report on Form 10-Q. ev3 Inc. urges all interested parties to read these reports to gain a better understanding of the many business and other risks that the company faces. Additionally, ev3 Inc. undertakes no obligation to publicly release the results of any revisions to these forward-looking statements, which may be made to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events.
Additional Information and Where to Find It. In connection with ev3’s proposed acquisition of the public minority stake in MTI, a registration statement on Form S-4, containing a prospectus, will be filed with the SEC. MTI STOCKHOLDERS ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE PROSPECTUS THAT WILL BE PART OF THE REGISTRATION STATEMENT, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION. The final prospectus will be mailed to stockholders of MTI. Investors and security holders will be able to obtain the registration statement containing the prospectus (and the filings with the SEC that will be incorporated by reference into such documents) free of charge at the SEC’s web site, www.sec.gov, and from ev3 Investor Relations at (763) 398-7000.
ev3 Inc.
COMBINED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
|
| For the three months ended |
| For the nine months ended |
| ||||||||
|
| October 2, |
| October 3, |
| October 2, |
| October 3, |
| ||||
|
| 2005 |
| 2004 |
| 2005 |
| 2004 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net sales |
| $ | 33,500 |
| $ | 19,654 |
| $ | 92,722 |
| $ | 60,803 |
|
|
|
|
|
|
|
|
|
|
| ||||
Operating expenses |
|
|
|
|
|
|
|
|
| ||||
Cost of goods sold (a) |
| 13,590 |
| 9,327 |
| 38,484 |
| 27,484 |
| ||||
Sales, general and administrative (a) |
| 30,666 |
| 24,003 |
| 94,823 |
| 71,960 |
| ||||
Research and development (a) |
| 8,436 |
| 10,577 |
| 30,653 |
| 30,320 |
| ||||
Amortization of intangible assets |
| 2,674 |
| 2,438 |
| 7,877 |
| 7,416 |
| ||||
(Gain) loss on sale or disposal of assets, net |
| 40 |
| (14,514 | ) | 204 |
| (14,495 | ) | ||||
Acquired in-process research and development |
| — |
| — |
| 868 |
| — |
| ||||
Total operating expenses |
| 55,406 |
| 31,831 |
| 172,909 |
| 122,685 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Loss from operations |
| (21,906 | ) | (12,177 | ) | (80,187 | ) | (61,882 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Other (income) expense: |
|
|
|
|
|
|
|
|
| ||||
Gain on sale of investments, net |
| — |
| — |
| (4,611 | ) | (1,728 | ) | ||||
Interest (income) expense, net |
| (953 | ) | 9,802 |
| 10,833 |
| 20,415 |
| ||||
Minority interest in loss of subsidiary |
| (486 | ) | (6,910 | ) | (1,212 | ) | (11,982 | ) | ||||
Other (income) expense, net |
| (8 | ) | 213 |
| 2,912 |
| 319 |
| ||||
Loss before income taxes |
| (20,459 | ) | (15,282 | ) | (88,109 | ) | (68,906 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Income tax benefit |
| (2 | ) | — |
| (61 | ) | — |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net loss |
| (20,457 | ) | (15,282 | ) | (88,048 | ) | (68,906 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Accretion of preferred membership units to redemption value |
| — |
| 5,988 |
| 12,061 |
| 17,792 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net loss attributable to common shareholders |
| $ | (20,457 | ) | $ | (21,270 | ) | $ | (100,109 | ) | $ | (86,698 | ) |
|
|
|
|
|
|
|
|
|
| ||||
Net loss per common share attributed to common shareholders (basic and diluted) (b) |
| $ | (0.42 | ) | $ | (8.35 | ) | $ | (4.99 | ) | $ | (43.07 | ) |
|
|
|
|
|
|
|
|
|
| ||||
Weighted average common shares outstanding (b) |
| 49,099,357 |
| 2,547,809 |
| 20,069,139 |
| 2,012,829 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
(a)Includes stock based compensation charges of: |
|
|
|
|
|
|
|
|
| ||||
Cost of goods sold |
| $ | 198 |
| $ | 45 |
| $ | 445 |
| $ | 143 |
|
Sales, general and administrative |
| 859 |
| 192 |
| 1,904 |
| 1,565 |
| ||||
Research and development |
| 295 |
| 179 |
| 729 |
| 577 |
| ||||
|
| $ | 1,352 |
| $ | 416 |
| $ | 3,078 |
| $ | 2,285 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)Net loss per common share attributed to common shareholders and weighted average common shares outstanding reflect the June 21, 2005 1-for-6 reverse stock split for all periods presented. |
| ||||||||||||
ev3 Inc.
COMBINED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
(unaudited)
|
| October 2, |
| December 31, |
| ||
|
| 2005 |
| 2004 |
| ||
|
|
|
|
|
| ||
Assets |
|
|
|
|
| ||
Current assets |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 94,762 |
| $ | 20,131 |
|
Short-term investments |
| 12,010 |
| — |
| ||
Accounts receivable, less allowance of $3,342 and $2,694, respectively |
| 23,132 |
| 18,956 |
| ||
Inventories |
| 31,911 |
| 22,500 |
| ||
Prepaid expenses and other assets |
| 5,784 |
| 4,576 |
| ||
Other receivables |
| 949 |
| 2,446 |
| ||
Total current assets |
| 168,548 |
| 68,609 |
| ||
|
|
|
|
|
| ||
Restricted cash |
| 3,363 |
| 2,638 |
| ||
Property and equipment, net |
| 15,816 |
| 9,130 |
| ||
Goodwill |
| 94,456 |
| 94,514 |
| ||
Other intangible assets, net |
| 28,511 |
| 31,851 |
| ||
Other assets |
| 3,860 |
| 5,304 |
| ||
Total assets |
| $ | 314,554 |
| $ | 212,046 |
|
|
|
|
|
|
| ||
Liabilities and stockholders’ equity (deficit) |
|
|
|
|
| ||
Current liabilities |
|
|
|
|
| ||
Accounts payable |
| $ | 10,967 |
| $ | 8,931 |
|
Accrued compensation and benefits |
| 12,922 |
| 9,523 |
| ||
Accrued liabilities |
| 12,110 |
| 13,821 |
| ||
Accrued acquisition consideration |
| — |
| 3,750 |
| ||
Total current liabilities |
| 35,999 |
| 36,025 |
| ||
|
|
|
|
|
| ||
Demand notes payable - related parties |
| — |
| 299,453 |
| ||
Other long-term liabilities |
| 482 |
| 702 |
| ||
Total liabilities |
| 36,481 |
| 336,180 |
| ||
|
|
|
|
|
| ||
Commitments and contingencies |
| — |
| — |
| ||
|
|
|
|
|
| ||
Class A preferred membership units: stated value $3.56; 24,040,718 units authorized; issued and outstanding: zero and 24,040,718, respectively |
| — |
| 95,105 |
| ||
Class B preferred membership units: stated value $3.56; 41,077,336 units authorized; issued and outstanding: zero and 41,077,336, respectively |
| — |
| 158,923 |
| ||
|
|
|
|
|
| ||
Minority interest |
| 13,329 |
| 16,310 |
| ||
|
|
|
|
|
| ||
Stockholders’ equity (deficit) |
|
|
|
|
| ||
|
|
|
|
|
| ||
Members’ capital |
| — |
| 47,927 |
| ||
Common stock: $0.01 par value; 100,000,000 shares authorized; issued and outstanding: 49,147,954 and zero, respectively |
| 491 |
| — |
| ||
Additional paid in capital |
| 805,086 |
| — |
| ||
Accumulated deficit |
| (540,663 | ) | (440,705 | ) | ||
Accumulated other comprehensive loss |
| (170 | ) | (1,694 | ) | ||
Total stockholders’ equity (deficit) |
| 264,744 |
| (394,472 | ) | ||
Total liabilities and stockholders’ equity (deficit) |
| $ | 314,554 |
| $ | 212,046 |
|
ev3 Inc.
COMBINED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands, except per share amounts)
(unaudited)
|
| For the nine months ended |
| ||||
|
| October 2, |
| October 3, |
| ||
|
| 2005 |
| 2004 |
| ||
|
|
|
|
|
| ||
Operating activities |
|
|
|
|
| ||
Net loss |
| $ | (88,048 | ) | $ | (68,906 | ) |
Adjustments to reconcile net loss to net cash used in operating activities |
|
|
|
|
| ||
Depreciation and amortization |
| 10,790 |
| 10,416 |
| ||
Provision for bad debts |
| 393 |
| 1,179 |
| ||
Provision for inventory obsolescence |
| 1,775 |
| 1,416 |
| ||
Acquired in-process research and development |
| 868 |
| — |
| ||
(Gain) loss on disposal of assets |
| 217 |
| (14,493 | ) | ||
Amortization of beneficial conversion feature and non-cash interest expense |
| — |
| 6,778 |
| ||
Gain on sale of investment |
| (4,611 | ) | (1,728 | ) | ||
Stock compensation expense |
| 3,078 |
| 2,285 |
| ||
Minority interest in loss of subsidiary |
| (1,212 | ) | (11,982 | ) | ||
Increase (decrease) in cash resulting from changes in operating assets and liabilities |
|
|
|
|
| ||
Accounts receivable |
| (5,854 | ) | (3,389 | ) | ||
Inventories |
| (11,318 | ) | (7,050 | ) | ||
Prepaids and other assets |
| 2,474 |
| (5,424 | ) | ||
Accounts payable |
| 3,012 |
| 389 |
| ||
Accrued expenses and other liabilities |
| 1,984 |
| 2,710 |
| ||
Accrued interest on notes payable |
| 12,156 |
| 13,660 |
| ||
Net cash used in operating activities |
| (74,296 | ) | (74,139 | ) | ||
|
|
|
|
|
| ||
Investing activities |
|
|
|
|
| ||
Purchase of short-term investments |
| (12,010 | ) | — |
| ||
Purchase of property and equipment |
| (9,913 | ) | (2,033 | ) | ||
Purchase of patents and licenses |
| (1,150 | ) | (1,094 | ) | ||
Proceeds from sale of assets |
| 8 |
| 10,278 |
| ||
Proceeds from sale of investments |
| 4,611 |
| 1,728 |
| ||
Acquisitions, net of cash acquired |
| (1,626 | ) | (3,750 | ) | ||
Restricted cash |
| (527 | ) | (208 | ) | ||
Other |
| 840 |
| — |
| ||
Net cash (used in) provided by investing activities |
| (19,767 | ) | 4,921 |
| ||
|
|
|
|
|
| ||
Financing activities |
|
|
|
|
| ||
Issuance of demand notes payable |
| 49,100 |
| 59,314 |
| ||
Payments on demand notes payable |
| (36,475 | ) | — |
| ||
Proceeds from issuance of notes payable, net of costs |
| — |
| 21,008 |
| ||
Proceeds from exercise of stock options |
| 931 |
| 79 |
| ||
Proceeds from issuance of subsidiary stock to minority shareholders |
| 294 |
| 178 |
| ||
Proceeds from initial public offering, net |
| 154,946 |
| — |
| ||
Other |
| — |
| (1,187 | ) | ||
Net cash provided by financing activities |
| 168,796 |
| 79,392 |
| ||
|
|
|
|
|
| ||
Effect of exchange rate changes on cash |
| (102 | ) | (75 | ) | ||
|
|
|
|
|
| ||
Net increase in cash and cash equivalents |
| 74,631 |
| 10,099 |
| ||
Cash and cash equivalents, beginning of year |
| 20,131 |
| 23,625 |
| ||
Cash and cash equivalents, end of year |
| $ | 94,762 |
| $ | 33,724 |
|
ev3 Inc.
SELECTED SALES INFORMATION
(Dollars in thousands, except per share amounts)
(unaudited)
|
| For the three months ended |
| For the nine months ended |
| ||||||||
|
| October 2, |
| October 3, |
| October 2, |
| October 3, |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
SALES BY SEGMENT |
|
|
|
|
|
|
|
|
| ||||
Cardio Peripheral |
|
|
|
|
|
|
|
|
| ||||
Stents |
| $ | 9,913 |
| $ | 4,772 |
| $ | 25,792 |
| $ | 14,777 |
|
Thrombectomy and embolic protection |
| 2,949 |
| 1,748 |
| 9,410 |
| 5,683 |
| ||||
Procedural support and other |
| 6,981 |
| 5,528 |
| 20,690 |
| 17,320 |
| ||||
Total Cardio Peripheral |
| 19,843 |
| 12,048 |
| 55,892 |
| 37,780 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Neurovascular |
|
|
|
|
|
|
|
|
| ||||
Embolic products |
| 6,220 |
| 2,850 |
| 14,417 |
| 8,337 |
| ||||
Neuro access and delivery products |
| 7,437 |
| 4,756 |
| 22,413 |
| 14,686 |
| ||||
Total Neurovascular |
| 13,657 |
| 7,606 |
| 36,830 |
| 23,023 |
| ||||
Total Company |
| $ | 33,500 |
| $ | 19,654 |
| $ | 92,722 |
| $ | 60,803 |
|
|
|
|
|
|
|
|
|
|
| ||||
|
| For the three months ended |
| For the nine months ended |
| ||||||||
|
| October 2, 2005 |
| October 3, 2004 |
| October 2, 2005 |
| October 3, 2004 |
| ||||
SALES BY GEOGRAPHY |
|
|
|
|
|
|
|
|
| ||||
United States |
| $ | 19,081 |
| $ | 10,178 |
| $ | 49,141 |
| $ | 30,888 |
|
International |
| 14,419 |
| 9,476 |
| 43,581 |
| 29,915 |
| ||||
Total net sales |
| $ | 33,500 |
| $ | 19,654 |
| $ | 92,722 |
| $ | 60,803 |
|
# # #