Exhibit 99.1
| INVESTOR RELATIONS CONTACTS: Patrick Spangler, CFO ev3 Inc. (763) 398-7000 pspangler@ev3.net Marian Briggs/Nancy Johnson Padilla Speer Beardsley (612) 455-1742 (612) 455-1745 |
ev3 Inc. Reports Fourth Quarter Sales Increase of 41% and
Net Loss Decline of 79% Compared to Year-Ago Period
ev3 Inc. also Achieves Fourth Quarter Positive EBITDA
Conference Call Scheduled for February 20, 2007 at 8 a.m. CST;
Simultaneous Webcast at www.ev3.net
PLYMOUTH, Minn. – February 20, 2007 –ev3 Inc. (NASDAQ: EVVV), a global endovascular device company, today reported financial results for its fiscal fourth quarter of 2006.
As reported on January 8, 2007, ev3’s net sales in the fourth quarter of 2006 increased 41% to $57.7 million versus net sales of $41.0 million in the fourth quarter of 2005. Fourth quarter sales growth was broad-based and reflected a strong contribution from each of ev3’s Cardio Peripheral and Neurovascular business segments as well as a strong contribution from both domestic and international markets.
For the fiscal year ended December 31, 2006, ev3’s net sales increased 51% to $202.4 million versus $133.7 million for the year ended December 31, 2005. Annual sales growth in 2006 also was generated internally and reflected net sales growth in each of ev3’s reportable business segments and geographic markets.
Jim Corbett, president and CEO of ev3 Inc., commented, “We are very pleased with yet another record quarter of sales growth which substantially outpaced that of our target markets. With the FDA approval and launch of our ProtegeRX carotid stent, used in combination with an ev3 embolic protection device for carotid stenting, we are optimistic about our prospects in 2007.”
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ev3’s net loss attributable to common shareholders for the fourth quarter of 2006 declined 79% to $4.6 million compared to $22.0 million in the fourth quarter of 2005. The company’s net loss attributable to common shareholders for the fiscal year ended December 31, 2006 declined 57% to $52.4 million compared to $122.1 million for the year ended December 31, 2005. ev3’s net loss per common share attributable to common shareholders for the fourth quarter of 2006 and fiscal year ended December 31, 2006 was $0.08 and $0.93 per common share, respectively, compared to $0.45 per common share in the fourth quarter of 2005 and $4.48 per common share in the full year ended December 31, 2005. Total weighted average common shares outstanding used in the per share calculations were 57.2 million and 56.6 million for the fourth quarter of 2006 and full year ended December 31, 2006, respectively and 49.2 million and 27.2 million for the fourth quarter of 2005 and full year ended December 31, 2005, respectively.
ev3’s earnings before interest, taxes, depreciation and amortization (EBITDA), excluding charges for non-cash stock-based compensation, improved approximately $19.5 million to a positive $3.0 million in the fourth quarter of 2006, compared to a loss of $16.5 million in the fourth quarter of 2005. ev3’s EBITDA loss, excluding charges for non-cash stock-based compensation, for the year ended December 31, 2006 improved $56.6 million or 71%, to a loss of $23.3 million, compared to a loss of $79.9 million for the year ended December 31, 2005. ev3 uses the non-GAAP financial measures, EBITDA and EBITDA, excluding charges for non-cash stock-based compensation, as supplemental measures of performance and believes that these measures facilitate operating performance comparisons from period to period and company to company.
EBITDA and EBITDA, excluding charges for non-cash stock-based compensation, for the fourth quarter and year ended December 31, 2006 and December 31, 2005 are reconciled to ev3’s net loss for the respective periods immediately following the detail of net sales by geography later in this press release.
Corbett continued,“Since our initial public offering in mid 2005, we have not had a more important financial objective than to achieve a positive EBITDA, excluding non-cash stock-based compensation charges, by the fourth quarter of 2006. Although we recognize that much work is yet to be done, we are gratified to report that ev3’s fourth quarter EBITDA was a positive $1.4 million and that fourth quarter EBITDA, excluding non-cash stock-based compensation, was a positive $3.0 million.”
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Sales Review
In the fourth quarter of 2006, ev3’s Neurovascular segment net sales increased 39% to $23.7 million versus $17.0 million in the fourth quarter of 2005. Within the Neurovascular business segment, sales of embolic products increased 49% to $12.0 million from $8.1 million, and sales of Neurovascular access and delivery products were up 30% to $11.7 million from $8.9 million. The primary growth drivers for the Neurovascular segment were the continued market penetration of both the Onyx Liquid Embolic System for the treatment of brain arterio-venous malformations (AVMs) and the Nexus family of embolic coils for the treatment of brain aneurysms.
Cardio Peripheral segment net sales in the fourth quarter of 2006 increased 42% to $34.0 million versus $24.0 million in the fourth quarter of 2005. Within the cardio Peripheral business segment, stent sales increased 53% to $18.5 million from $12.1 million. Sales of thrombectomy and embolic protection products increased 79% to $6.2 million from $3.5 million, while sales of procedural support and other Cardio Peripheral products increased 11% to $9.3 million from $8.4 million. The largest contributors to the growth in the Cardio Peripheral segment were ev3’s new EverFlex stent product and the SpideRX Embolic Protection Device.
On a geographic basis, ev3’s fourth quarter U.S. net sales increased 52% to $34.6 million, while fourth quarter international net sales increased 26% to $23.1 million, over the prior-year quarter. Changes in foreign currency exchange rates had a positive impact of approximately $1.2 million on fourth quarter 2006 net sales compared to the fourth quarter of the prior year.
Outlook
ev3 expects 2007 annual net sales to be in the range of approximately $262 to $278 million. ev3 expects first quarter of 2007 net sales to be in the range of $59 to $63 million. ev3 also expects its quarterly operating losses to be reduced during 2007, as compared to its quarterly operating losses for fiscal year 2006. With respect to EBITDA, excluding non-cash stock-based compensation, the Company expects to generate $10 to $15 million in 2007 representing an improvement of $33 to $38 million over a negative $23 million for 2006.
Earnings Call Information
ev3 will host a conference call today, February 20, 2007, beginning at 8 a.m. CST to review its results of operations for the fourth quarter of 2006 and other recent events and to discuss its 2007 business outlook. Discussions during the conference call may include forward-looking statements regarding such topics as,
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but not limited to, the company’s net sales, cost of goods sold, operating expenses, distribution arrangements, clinical studies, regulatory status, 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 Webcast at www.ev3.net. For those unable to listen to the Webcast, a playback of the Webcast will be available at www.ev3.net for approximately 90 days. Those without Internet access may join the call from within the United States by dialing 866-700-7173; outside the United States dial 617-213-8838 passcode 98675467. A playback of the conference call will be available from11 a.m. CST, February 20, 2007 until noon CST on February 27, 2007 by dialing 888-286-8010 (United States) or 617-801-6888 (International), passcode 12904482.
ev3 and the ev3 logo are trademarks of ev3 Inc., registered in the U.S. and other countries.
This press release contains other trademarks and trade names of ev3 Inc. and other third parties, which are the property of their respective owners.
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; delays in regulatory approvals and the introduction of new products; and success of clinical testing. More detailed information on these and additional factors which could affect ev3 Inc.’s operating and financial results is described in the company’s filings with the Securities and Exchange Commission, including its most recent quarterly report on Form 10-Q and annual report on Form 10-K. 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.
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ev3 Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
|
| For the Three Months Ended |
| For the Years Ended |
| ||||||||
|
| December 31, |
| December 31, |
| December 31, |
| December 31, |
| ||||
|
| 2006 |
| 2005 |
| 2006 |
| 2005 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net sales |
| $ | 57,675 |
| $ | 40,974 |
| $ | 202,438 |
| $ | 133,696 |
|
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|
|
|
|
|
|
| ||||
Operating expenses |
|
|
|
|
|
|
|
|
| ||||
Cost of goods sold (a) |
| 18,988 |
| 16,610 |
| 71,321 |
| 55,094 |
| ||||
Sales, general and administrative (a) |
| 32,612 |
| 35,604 |
| 141,779 |
| 130,427 |
| ||||
Research and development (a) |
| 6,868 |
| 8,627 |
| 26,725 |
| 39,280 |
| ||||
Amortization of intangible assets |
| 4,215 |
| 2,796 |
| 17,223 |
| 10,673 |
| ||||
Loss on sale or disposal of assets, net |
| 20 |
| (4 | ) | 162 |
| 200 |
| ||||
Acquired in-process research and development |
| — |
| — |
| 1,786 |
| 868 |
| ||||
Total operating expenses |
| 62,703 |
| 63,633 |
| 258,996 |
| 236,542 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Loss from operations |
| (5,028 | ) | (22,659 | ) | (56,558 | ) | (102,846 | ) | ||||
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Other (income) expense: |
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|
| ||||
Gain on sale of investments, net |
| — |
| — |
| (1,063 | ) | (4,611 | ) | ||||
Interest (income) expense, net |
| (224 | ) | (917 | ) | (1,695 | ) | 9,916 |
| ||||
Minority interest in loss of subsidiary |
| — |
| (801 | ) | — |
| (2,013 | ) | ||||
Other (income) expense, net |
| (584 | ) | 448 |
| (2,117 | ) | 3,360 |
| ||||
Loss before income taxes |
| (4,220 | ) | (21,389 | ) | (51,683 | ) | (109,498 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Income tax expense |
| 360 |
| 587 |
| 688 |
| 526 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net loss |
| (4,580 | ) | (21,976 | ) | (52,371 | ) | (110,024 | ) | ||||
|
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|
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|
|
|
|
|
| ||||
Accretion of preferred membership units to redemption value |
| — |
| — |
| — |
| (12,061 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Net loss attributable to common shareholders |
| $ | (4,580 | ) | $ | (21,976 | ) | $ | (52,371 | ) | $ | (122,085 | ) |
|
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|
|
|
|
|
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|
| ||||
Net loss per common share attributed to common shareholders (basic and diluted) (b) |
| $ | (0.08 | ) | $ | (0.45 | ) | $ | (0.93 | ) | $ | (4.48 | ) |
|
|
|
|
|
|
|
|
|
| ||||
Weighted average common shares outstanding (b) |
| 57,228,532 |
| 49,162,046 |
| 56,585,025 |
| 27,242,712 |
| ||||
|
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(a) Includes stock-based compensation charges of: |
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Cost of goods sold |
| $ | 134 |
| $ | 208 |
| $ | 630 |
| $ | 653 |
|
Sales, general and administrative |
| 1,314 |
| 1,236 |
| 5,868 |
| 3,141 |
| ||||
Research and development |
| 132 |
| 351 |
| 655 |
| 1,079 |
| ||||
|
| $ | 1,580 |
| $ | 1,795 |
| $ | 7,153 |
| $ | 4,873 |
|
(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.
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ev3 Inc.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
|
| December 31, |
| December 31, |
| ||
|
| 2006 |
| 2005 |
| ||
|
| (unaudited) |
|
|
| ||
|
|
|
|
|
| ||
Assets |
|
|
|
|
| ||
Current assets |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 24,053 |
| $ | 69,592 |
|
Short-term investments |
| 14,700 |
| 12,000 |
| ||
Accounts receivable, less allowance of $3,924 and $3,607, respectively |
| 45,137 |
| 28,519 |
| ||
Inventories |
| 42,124 |
| 32,987 |
| ||
Prepaid expenses and other assets |
| 7,162 |
| 7,042 |
| ||
Other receivables |
| 2,669 |
| 1,535 |
| ||
Total current assets |
| 135,845 |
| 151,675 |
| ||
|
|
|
|
|
| ||
Restricted cash |
| 2,022 |
| 3,102 |
| ||
Property and equipment, net |
| 24,072 |
| 17,877 |
| ||
Goodwill |
| 149,061 |
| 94,456 |
| ||
Other intangible assets, net |
| 40,014 |
| 26,230 |
| ||
Other assets |
| 1,812 |
| 3,488 |
| ||
Total assets |
| $ | 352,826 |
| $ | 296,828 |
|
|
|
|
|
|
| ||
Liabilities and stockholders’ equity |
|
|
|
|
| ||
Current liabilities |
|
|
|
|
| ||
Accounts payable |
| $ | 13,140 |
| $ | 11,716 |
|
Accrued compensation and benefits |
| 16,382 |
| 14,612 |
| ||
Accrued liabilities |
| 10,102 |
| 11,343 |
| ||
Current portion of long-term debt |
| 2,143 |
| — |
| ||
Total current liabilities |
| 41,767 |
| 37,671 |
| ||
|
|
|
|
|
| ||
Long-term debt |
| 5,357 |
| — |
| ||
Other long-term liabilities |
| 468 |
| 852 |
| ||
Total liabilities |
| 47,592 |
| 38,523 |
| ||
|
|
|
|
|
| ||
Minority interest |
| — |
| 12,850 |
| ||
Stockholders’ equity |
|
|
|
|
| ||
|
|
|
|
|
| ||
Common stock: $0.01 par value; 100,000,000 shares authorized; issued and outstanding: 57,594,742 and 49,350,647, respectively |
| 576 |
| 493 |
| ||
Additional paid in capital |
| 919,221 |
| 807,032 |
| ||
Accumulated deficit |
| (614,578 | ) | (562,207 | ) | ||
Accumulated other comprehensive income |
| 15 |
| 137 |
| ||
Total stockholders’ equity |
| 305,234 |
| 245,455 |
| ||
Total liabilities and stockholders’ equity |
| $ | 352,826 |
| $ | 296,828 |
|
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ev3 Inc.
SELECTED NET SALES INFORMATION
(Dollars in thousands, except per share amounts)
(unaudited)
|
| For the Three Months Ended |
|
|
| For the Years Ended |
|
|
| ||||||||
|
| December 31, |
| December 31, |
|
|
| December 31, |
| December 31, |
|
|
| ||||
NET SALES BY SEGMENT |
| 2006 |
| 2005 |
| % change |
| 2006 |
| 2005 |
| % change |
| ||||
Cardio Peripheral |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Stents |
| $ | 18,501 |
| $ | 12,079 |
| 53 | % | $ | 64,092 |
| $ | 37,871 |
| 69 | % |
Thrombectomy and embolic protection |
| 6,177 |
| 3,459 |
| 79 | % | 21,606 |
| 12,869 |
| 68 | % | ||||
Procedural support and other |
| 9,344 |
| 8,451 |
| 11 | % | 35,406 |
| 29,141 |
| 21 | % | ||||
Total cardio peripheral |
| 34,022 |
| 23,989 |
| 42 | % | 121,104 |
| 79,881 |
| 52 | % | ||||
|
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|
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| ||||
Neurovascular |
|
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|
|
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|
|
|
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| ||||
Embolic products |
| 12,026 |
| 8,046 |
| 49 | % | 38,998 |
| 22,463 |
| 74 | % | ||||
Neuro access and delivery products |
| 11,627 |
| 8,939 |
| 30 | % | 42,336 |
| 31,352 |
| 35 | % | ||||
Total neurovascular |
| 23,653 |
| 16,985 |
| 39 | % | 81,334 |
| 53,815 |
| 51 | % | ||||
|
|
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|
|
|
|
|
|
|
|
|
|
| ||||
Total company |
| $ | 57,675 |
| $ | 40,974 |
| 41 | % | $ | 202,438 |
| $ | 133,696 |
| 51 | % |
|
| For the Three Months Ended |
|
|
| For the Years Ended |
|
|
| ||||||||
|
| December 31, |
| December 31, |
|
|
| December 31, |
| December 31, |
|
|
| ||||
NET SALES BY GEOGRAPHY |
| 2006 |
| 2005 |
| % change |
| 2006 |
| 2005 |
| % change |
| ||||
United States |
| $ | 34,590 |
| $ | 22,707 |
| 52 | % | $ | 121,180 |
| $ | 71,848 |
| 69 | % |
International |
| 23,085 |
| 18,267 |
| 26 | % | 81,258 |
| 61,848 |
| 31 | % | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total net sales |
| $ | 57,675 |
| $ | 40,974 |
| 41 | % | $ | 202,438 |
| $ | 133,696 |
| 51 | % |
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ev3 Inc.
NON-GAAP FINANCIAL MEASURES
(Dollars in thousands)
(unaudited)
|
| For the Three Months Ended |
| For the Years Ended |
| ||||||||
|
| December 31, |
| December 31, |
| December 31, |
| December 31, |
| ||||
|
| 2006 |
| 2005 |
| 2006 |
| 2005 |
| ||||
|
|
|
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Reconciliation of net loss to EBITDA |
|
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| ||||
|
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|
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|
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| ||||
Net loss, as reported (GAAP basis) |
| $ | (4,580 | ) | $ | (21,976 | ) | $ | (52,371 | ) | $ | (110,024 | ) |
|
|
|
|
|
|
|
|
|
| ||||
Interest (income) expense, net |
| (224 | ) | (917 | ) | (1,695 | ) | 9,916 |
| ||||
Income tax expense |
| 360 |
| 587 |
| 688 |
| 526 |
| ||||
Depreciation and amortization |
| 5,854 |
| 4,026 |
| 22,878 |
| 14,816 |
| ||||
EBITDA |
| $ | 1,410 |
| $ | (18,280 | ) | $ | (30,500 | ) | $ | (84,766 | ) |
|
|
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|
|
|
|
|
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| ||||
Stock-based compensation |
| 1,580 |
| 1,795 |
| 7,153 |
| 4,873 |
| ||||
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EBITDA, adjusted for stock-based compensation |
| $ | 2,990 |
| $ | (16,485 | ) | $ | (23,347 | ) | $ | (79,893 | ) |
ev3 uses non-GAAP financial measures, as outlined above, as supplemental measures of performance and believes these measures facilitate operating performance comparisons from period to period and company to company by factoring out potential differences caused by variations in capital structure, tax positions, depreciation, non-cash charges and certain large and unpredictable charges. ev3 also believes that the presentation of these measures provides useful information to investors in evaluating the company’s operations, period over period. Non-GAAP measures have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analysis of the company’s results as reported under Generally Accepted Accounting Principles (GAAP).
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