Exhibit 99.1
FOR IMMEDIATE RELEASE |
Agency Contact: | Company Contact: | |
Neil Berkman Associates | Chris Chavez, President & CEO | |
(310) 277-5162 | (972) 309-8000 | |
info@BerkmanAssociates.com | www.ANSmedical.com |
Advanced Neuromodulation Systems
Reports Record Third Quarter Net Income
As Neuro Product Sales Increase 78%
Management Again Increases Guidance for 2003
DALLAS, TEXAS, October 23, 2003 —Advanced Neuromodulation Systems, Inc. (ANS) (NASDAQ:ANSI)announced today that revenue for the three months ended September 30, 2003 increased 63% to a record $23,419,000 from $14,328,000 for the third quarter of 2002. Sales of ANS’ neuromodulation products for the treatment of chronic pain increased 78% to a record $20,612,000 from $11,604,000 a year earlier. Net income for this year’s third quarter increased 104% to a record $3,953,000, or $0.19 per diluted share, which included other income of $969,000 pre-tax, or $0.03 per diluted share after tax, from the reversal of an accrued tax abatement liability. This compares to net income of $1,942,000, or $0.10 per diluted share, for the third quarter of 2002.
For the nine months ended September 30, 2003, revenue increased 67% to a record $65,414,000 from $39,224,000 for the same period last year. Neuro product revenue increased 80% to $56,587,000 from $31,422,000. Net income increased 125% to a record $9,496,000, or $0.46 per diluted share, compared to $4,228,000, or $0.24 per diluted share, for the first nine months of 2002.
At September 30, 2003, cash and equivalents and marketable securities totaled approximately $96.6 million. ANS has no debt.
Third Quarter Operations Review
Gross margin rose to a record 72.7% for this year’s third quarter compared to 66.1% last year, reflecting the increase in sales volume and the positive impact of transitioning to a direct sales force in two former distributors’ territories. Operating margin increased to a record 22.1% from 17.7%, even after substantial increases in R&D and marketing expenses to support the planned expansion of ANS’ neuromodulation product portfolio and the continued enhancement of its market position.
“Our commitment to developing new products and building our operating platform has fueled ANS’ rapid growth in the past. We will continue making these investments to support further growth in the future. ANS’ success is a team effort, and our excellent third quarter results reflect outstanding performance by everyone at our company,” said Chief Executive Officer Chris Chavez.
“Sales of ANS’ Genesis® and GenesisXPTM Totally Implantable Pulse Generator (IPG) Spinal Cord Stimulators and Renew® radio frequency (RF) neurostimulation system all increased in the third quarter versus last year, demonstrating that our products are continuing to gain acceptance from a growing number of interventional pain physicians who place their trust in ANS by prescribing our products for their patients,” Chavez said. “We are dedicated to expanding our product offerings to address current and emerging neuromodulation applications. This is the right formula for ANS’ to achieve sustained long-term growth in the neuromodulation industry, a market that will soon approach $1 billion and is growing rapidly.”
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ADVANCED NEUROMODULATION SYSTEMS, INC.
6501 WINDCREST DRIVE, SUITE 100 / PLANO, TEXAS 75024 / (972) 309-8000 / FAX: (972) 309-8150
Advanced Neuromodulation Systems Reports Record Third Quarter Net Income
As Neuro Product Sales Increase 78%
October 23, 2003
Page Two
ANS to Transition Sole Remaining U.S. Distributor to Direct Sales Force
ANS also announced that it has agreed to acquire the assets of its sole remaining U.S. distributor, State of the Art Medical Products of Clifton, New Jersey, relating to that distributor’s sale of ANS products. Six of State of the Art Medical’s direct sales people will join ANS’ direct sales force in the same roles. State of the Art Medical (SOTA) purchased $5.3 million of ANS products in 2002 and $6.1 million in the first nine months of 2003. Terms of the asset acquisition were not disclosed.
“SOTA did a great job as ANS’ exclusive distributor in New York, New Jersey, Delaware, and Eastern Pennsylvania. These are key territories and we welcome our newest team members to ANS as we expand our presence and our investment in these important states,” Chavez said.
Management Increases Guidance for 2003
ANS currently expects revenue for 2003 in the range of $88 million to $89.5 million and net income of between $0.63 and $0.64 per diluted share, including the $0.03 per share impact of the reversal of the accrued tax abatement liability.
Conference Call
ANS has scheduled a conference call today at 11:00 AM ET. The simultaneous webcast is available at www.ANS-medical.com/investors/index.html. A replay will be available after 1:00 PM ET at this same Internet address. For a telephone replay, dial (800) 633-8284, reservation #21162435, after 1:00 PM ET.
About Advanced Neuromodulation Systems
Advanced Neuromodulation Systems designs, develops, manufactures and markets implantable systems used to manage chronic intractable pain and other disorders of the central nervous system.Forbesmagazine recently recognized ANS as one of America’s 200 Best Small Companies andFortunemagazine recently recognized ANS as one of Fortune’s Top 100 Fastest-Growing Small Companies in the United States. Frost & Sullivan, an international strategic market research firm, also recently presented ANS with its Product Innovation Award, recognizing ANS as the technology innovation leader in the neurostimulation market and ANS’ Genesis® Implantable Pulse Generator system as the most advanced fully implantable spinal cord stimulator on the market. Additional information is available at www.ans-medical.com.
“Safe harbor” statement under the Private Securities Litigation Reform Act of 1995:
Statements contained in this document that are not based on historical facts are “forward-looking statements.” Terms such as “plan,” “should,” “would,” “anticipate,” “believe,” “intend,” “estimate,” “expect,” “predict,” “scheduled,” “new market,” “potential market applications” and similar expressions are intended to identify forward-looking statements. Such statements are by nature subject to uncertainties and risks, including but not limited to: continued market acceptance of theGenesis®IPG andGenesisXPTM IPG; competition from Medtronic, Inc. and future competitors; continued market acceptance of ourRenew®system following the launches of theGenesisIPG and GenesisXP IPG; patient or physician selection of less invasive or less expensive alternatives; adverse changes in coverage or reimbursement amounts by Medicare, Medicaid, private insurers, managed care organizations or workers’ comp programs; intellectual property protection and potential infringement issues; obtaining necessary government approvals for new products or applications and maintaining compliance with FDA product and manufacturing requirements; product liability; reliance on single suppliers for certain components; completion of research and development projects in an efficient and timely manner; the satisfactory completion of clinical trials and/or market tests prior to the introduction of new products; successful integration of acquired businesses, products and technologies; international trade risks; and other risks detailed from time to time in the Company’s SEC filings. Consequently, if such management assumptions prove to be incorrect or such risks or uncertainties materialize, anticipated results could differ materially from those forecast in forward-looking statements. Such forward-looking statements speak only as of the date on which they are made and the company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release.
(tables attached)
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ADVANCED NEUROMODULATION SYSTEMS, INC. and SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||||
September 30, | September 30, | |||||||||||||||||
2003 | 2002 | 2003 | 2002 | |||||||||||||||
Net revenue | $ | 23,418,505 | $ | 14,327,505 | $ | 65,413,557 | $ | 39,223,522 | ||||||||||
Cost of revenue | 6,384,445 | 4,853,409 | 20,317,415 | 14,430,996 | ||||||||||||||
Gross profit | 17,034,060 | 9,474,096 | 45,096,142 | 24,792,526 | ||||||||||||||
Operating expenses: | ||||||||||||||||||
Research and development | 2,552,951 | 1,518,610 | 6,597,850 | 4,186,833 | ||||||||||||||
Sales and marketing | 6,970,941 | 3,802,840 | 18,460,993 | 10,091,204 | ||||||||||||||
Amortization of intangibles | 472,821 | 229,464 | 1,278,093 | 686,094 | ||||||||||||||
General and administrative | 1,871,833 | 1,390,308 | 5,504,084 | 3,971,617 | ||||||||||||||
11,868,546 | 6,941,222 | 31,841,020 | 18,935,748 | |||||||||||||||
Income from operations | 5,165,514 | 2,532,874 | 13,255,122 | 5,856,778 | ||||||||||||||
Other income (expenses): | ||||||||||||||||||
Interest expense | — | (2,514 | ) | — | (10,759 | ) | ||||||||||||
Other income | 969,204 | — | 969,204 | — | ||||||||||||||
Interest income | 200,243 | 374,991 | 776,370 | 595,685 | ||||||||||||||
1,169,447 | 372,477 | 1,745,574 | 584,926 | |||||||||||||||
Income before income taxes | 6,334,961 | 2,905,351 | 15,000,696 | 6,441,704 | ||||||||||||||
Income taxes | 2,382,109 | 963,048 | 5,504,915 | 2,213,984 | ||||||||||||||
Net income | $ | 3,952,852 | $ | 1,942,303 | $ | 9,495,781 | $ | 4,227,720 | ||||||||||
Basic income per share: | ||||||||||||||||||
Net income | $ | 0.20 | $ | 0.11 | $ | 0.50 | $ | 0.27 | ||||||||||
Number of basic shares | 19,382,991 | 18,140,091 | 19,040,105 | 15,682,565 | ||||||||||||||
Diluted income per share: | ||||||||||||||||||
Net income | $ | 0.19 | $ | 0.10 | $ | 0.46 | $ | 0.24 | ||||||||||
Number of diluted shares | 20,860,041 | 19,764,149 | 20,441,351 | 17,379,035 | ||||||||||||||
ADVANCED NEUROMODULATION SYSTEMS, INC. and SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
September 30, | December 31, | |||||||||
2003 | 2002 | |||||||||
Assets | ||||||||||
Current assets: | ||||||||||
Cash, certificates of deposit and short-term investments | $ | 96,609,356 | $ | 96,769,918 | ||||||
Receivable, trade net | 15,424,550 | 10,847,237 | ||||||||
Receivable, other | 146,758 | 189,017 | ||||||||
Inventories | 19,844,840 | 13,722,946 | ||||||||
Deferred income taxes | 2,919,571 | 1,122,617 | ||||||||
Income tax receivable | 321,378 | — | ||||||||
Prepaid expenses and other current assets | 1,142,111 | 1,032,883 | ||||||||
Total current assets | 136,408,564 | 123,684,618 | ||||||||
Net property, plant and equipment | 15,419,187 | 10,607,991 | ||||||||
Patents, trademarks, purchased technology & other assets, net | 30,407,864 | 24,051,518 | ||||||||
Total assets | $ | 182,235,615 | $ | 158,344,127 | ||||||
Liabilities and Stockholders’ Equity | ||||||||||
Current liabilities: | ||||||||||
Accounts payable | $ | 2,175,187 | $ | 2,392,579 | ||||||
Accrued salary and employee benefit costs | 2,843,650 | 3,077,603 | ||||||||
Deferred revenue | 561,066 | 646,577 | ||||||||
Commissions payable | 1,228,473 | 794,521 | ||||||||
Accrued tax abatement liability | — | 969,204 | ||||||||
Income taxes payable | — | 822,228 | ||||||||
Warranty reserve | 354,029 | 402,259 | ||||||||
Other accrued expenses | 520,264 | 299,905 | ||||||||
Total current liabilities | 7,682,669 | 9,404,876 | ||||||||
Deferred income taxes | 4,502,743 | 3,731,939 | ||||||||
Non-current deferred revenue | 937,243 | 162,504 | ||||||||
Total stockholders’ equity | 169,112,960 | 145,044,808 | ||||||||
Total liabilities and stockholders’ equity | $ | 182,235,615 | $ | 158,344,127 | ||||||