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.ANS-medical.com |
Advanced Neuromodulation Systems
Reports Record First Quarter Results
Net Income Increases 51% on 46% Increase in Neuro Sales
DALLAS, TEXAS, April 22, 2004 —Advanced Neuromodulation Systems, Inc. (ANS) (NASDAQ:ANSI)today announced record revenue and net income for the first quarter, as sales of ANS’ neuromodulation products for the treatment of chronic pain extended a strong upward trend.
First Quarter Results
For the three months ended March 31, 2004, revenue increased 35% to a record $26,633,000 from $19,671,000 for the first quarter of 2003. Sales of neuro products increased 46% to a record $24,228,000 from $16,627,000 a year earlier. Gross margin improved to 74% from 65% last year, and operating margin increased to 22% from 19%, despite higher sales and marketing expense incurred to support anticipated future growth. Net income for this year’s first quarter increased 51% to $3,969,000, or $0.19 per diluted share. This compares to net income of $2,620,000, or $0.13 per diluted share, for the first quarter of 2003.
At March 31, 2004, cash and equivalents and marketable securities totaled approximately $93 million. ANS has no debt.
Operations Review
“The rapid increase in neuro sales is a testament to the hard work and dedication of the entire ANS team, and the strong relationships we have forged with a growing list of interventional pain physicians who trust ANS’ products and people to help them care for chronic pain patients in need of advanced solutions,” said Chief Executive Officer Chris Chavez. He said that ANS’ Genesis® and GenesisXPTM implantable spinal cord stimulation (SCS) systems and its Renew® radio frequency (RF) SCS system continued to perform well in the first quarter.
“The pain and other neuromodulation markets we serve will soon reach $1 billion, offering us exciting opportunities for sustained growth,” Chavez said. “We are positioning ANS to take full advantage of these opportunities by adding resources and making other investments in infrastructure. We also made good progress in the first quarter in our new product development and regulatory approval programs, and we recently announced that we will file with the FDA for approval of our first generation rechargeable IPG in the current quarter.
“During the past two quarters we accelerated our investments in people and in our operating platform. We have added a total of 74 people to our team during this period, including 41 sales reps, regional sales managers and clinical specialists in sales and marketing. While this significant increase in our human resources affected profitability in the first quarter, we expect to leverage the investment over the next few quarters as our new team members ramp up productivity this year. In addition, we recently concluded the acquisition of the sales and marketing assets of another distributor, Medtel Pty Limited in Australia. These sales and marketing, product development and platform investments position us to achieve our aggressive growth plans for the remainder of the year and into the future.”
Advanced Neuromodulation Systems Reports Record First Quarter Results
April 22, 2004
Page Two
Announces Closing of microHelix Transaction
ANS also announced that it has completed the acquisition previously announced on March 8, 2004 of the assets of the Cable and Wire Division from microHelix, Inc. for approximately $2 million in cash and assumed liabilities. The acquisition closed on April 21, 2004. microHelix previously supplied coated fine wire, antennas, and certain other products to ANS and its wholly-owned subsidiary, Hi-Tronics Designs, Inc. “This acquisition assures a continued supply of important wire and cable components. More importantly, it provides ANS with additional engineering resources and intellectual property for the design, development and manufacturing of new products, notably leads, extensions, trial cables and related products,” Chavez said.
Files Lawsuit
ANS also announced that it has filed a lawsuit in U.S. District Court for the Eastern District of Texas, Sherman Division, against Advanced Bionics Corporation for patent infringement and misappropriation of ANS trade secrets. Ken Hawari, General Counsel of ANS, said that ANS’ special litigation counsel has advised the company not to comment on the specifics of the lawsuit, but stated that the complaint is on file and is of public record. “ANS will actively defend the intellectual property portfolio that we have spent considerable time, effort and financial resources to build,” Hawari said.
Management Reiterates Guidance for 2004
As previously announced, ANS’ management currently expects revenue for 2004 in the range of $116 to $121 million, and net income in the range of $0.87 to $0.91 per diluted share.
Conference Call
ANS has scheduled a conference call today at 11:00 a.m. EDT. The simultaneous webcast is available at
www.ANS-medical.com/investors/index.html. A replay will be available at this same Internet address, or at (800) 633-8284, reservation #21193368, after 1:00 p.m. EDT.
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 the Genesis® IPG and GenesisXPTM IPG; competition from Medtronic, Inc. and future competitors; continued market acceptance of our Renew® system following the launches of the Genesis IPG 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 our rechargeable IPGs and other 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; the cost, uncertainty and other risks inherent in patent and intellectual property litigation; 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.
Advanced Neuromodulation Systems, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2004 | 2003 | |||||||
Net revenue | $ | 26,632,863 | $ | 19,670,591 | ||||
Cost of revenue | 6,965,532 | 6,881,691 | ||||||
Gross profit | 19,667,331 | 12,788,900 | ||||||
Operating expenses: | ||||||||
Research and development | 2,314,950 | 1,692,431 | ||||||
Sales and marketing | 8,564,046 | 5,159,908 | ||||||
Amortization of other intangibles | 574,874 | 354,934 | ||||||
General and administrative | 2,316,740 | 1,765,918 | ||||||
13,770,610 | 8,973,191 | |||||||
Income from operations | 5,896,721 | 3,815,709 | ||||||
Other income (expense): | ||||||||
Foreign currency transaction loss | (29,347 | ) | — | |||||
Interest and other income | 251,329 | 281,655 | ||||||
221,982 | 281,655 | |||||||
Income before income taxes | 6,118,703 | 4,097,364 | ||||||
Income taxes | 2,150,112 | 1,477,550 | ||||||
Net income | $ | 3,968,591 | $ | 2,619,814 | ||||
Basic income per share: | ||||||||
Net income | $ | .20 | $ | .14 | ||||
Number of basic shares | 19,928,946 | 18,618,911 | ||||||
Diluted income per share: | ||||||||
Net income | $ | .19 | $ | .13 | ||||
Number of diluted shares | 21,187,163 | 19,992,147 | ||||||
ADVANCED NEUROMODULATION SYSTEMS, INC. and SUBSIDIARIES
Condensed Consolidated Balance Sheets
March 31, | December 31, | |||||||
2004 | 2003 | |||||||
(Unaudited) | (Audited) | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and marketable securities | $ | 93,001,356 | $ | 94,802,122 | ||||
Receivable, trade net | 18,706,313 | 17,892,416 | ||||||
Receivable, interest and other | 293,010 | 259,687 | ||||||
Inventories | 22,988,816 | 22,113,159 | ||||||
Deferred income taxes | 2,160,650 | 1,423,228 | ||||||
Income tax receivable | 1,303,359 | 1,324,001 | ||||||
Prepaid expenses and other current assets | 1,369,892 | 1,007,244 | ||||||
Total current assets | 139,823,396 | 138,821,857 | ||||||
Net property, plant and equipment | 25,515,440 | 21,150,010 | ||||||
Minority equity investments in preferred stock | 1,104,000 | 1,104,000 | ||||||
Goodwill, patents, trademarks, purchased technology & other assets, net | 34,486,984 | 33,730,420 | ||||||
Total assets | $ | 200,929,820 | $ | 194,806,287 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 3,710,924 | $ | 5,717,222 | ||||
Accrued salary and employee benefit costs | 1,456,927 | 4,045,361 | ||||||
Deferred revenue | 346,645 | 503,093 | ||||||
Accrued commissions | 1,305,312 | 1,424,471 | ||||||
Warranty reserve | 252,989 | 294,290 | ||||||
Other accrued expenses | 361,540 | 400,159 | ||||||
Total current liabilities | 7,434,337 | 12,384,596 | ||||||
Deferred income taxes | 3,761,828 | 3,389,255 | ||||||
Non-current deferred revenue | 862,162 | 907,513 | ||||||
Total stockholders’ equity | 188,871,493 | 178,124,923 | ||||||
Total liabilities and stockholders’ equity | $ | 200,929,820 | $ | 194,806,287 | ||||