Exhibit 99.1
| Contact: | Tim Adams, Chief Financial Officer | |
| Anne Rivers, Investor Relations | ||
| Jeff Keene, Healthcare Media | ||
| Cytyc Corporation: 508-263-8765 | ||
| www.cytyc.com | ||
| Stephanie Carrington | ||
| The Ruth Group: 646-536-7017 | ||
| Shanti Skiffington/Wendy Ryan | ||
| Schwartz Communications: 781-684-0770 | ||
CYTYC REPORTS RECORD REVENUE OF $168.9 MILLION
FOR FIRST QUARTER 2007
Increases 2007 Revenue Guidance
Marlborough, Mass., April 25, 2007—Cytyc Corporation (Nasdaq: CYTC) today announced results for the first quarter ended March 31, 2007.
Revenue for the quarter ended March 31, 2007 rose 20 percent to $168.9 million compared to revenue of $140.5 million for the same period of 2006. Cytyc reported a net loss for the quarter of $(51.2) million, or $(0.45) per diluted share, reflecting in-process R&D charges totaling $89.5 million related to the acquisitions of Adeza Biomedical Corporation (“Adeza”), and Adiana Incorporated (“Adiana”). Excluding these charges, adjusted net income was $38.3 million, or $0.32 per diluted share. This compares with net income for the same period in 2006 of $29.4 million, or $0.24 per diluted share, a more than 30 percent increase. The Company’s cash balance at March 31, 2007 was $196.3 million.
First Quarter 2007 Highlights:
| — | Domestic surgical products revenue increased 33 percent over first quarter 2006 to $59.3 million, representing 35 percent of total revenue. |
| — | International revenue increased 35 percent over first quarter 2006 to $20.4 million. |
| — | Domestic diagnostic products revenue increased to $89.2 million, driven by a 38 percent increase in ThinPrep® Imaging System revenue over first quarter 2006, and included the shipment of 9 million ThinPrep® Pap Tests and 30 ThinPrep Imaging Systems. |
| — | Completed two strategic acquisitions, Adeza and Adiana, which add best-in-class products to our diagnostic products and surgical products divisions. |
| — | Signed new long-term contracts with Laboratory Corporation of America® and Quest Diagnostics Incorporated, which extend through 2010. |
Patrick J. Sullivan, Cytyc’s chairman, president, and chief executive officer, stated, “Once again, Cytyc delivered impressive financial and operating results for the quarter, fueled by more than
Cytyc Reports Record Revenue of $168.9 Million for First Quarter 2007
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30 percent growth in each of our surgical products and international divisions, as well as a 38 percent increase in ThinPrep Imaging System revenue. Domestically, our surgical products division continued its robust growth driven by market adoption of our NovaSure® Endometrial Ablation and Mammosite® Radiation Therapy products. Our domestic diagnostic products division benefited from the continued market conversion to the ThinPrep Imaging System and the strength of our ThinPrep Pap Test. Our international sales primarily benefited from increased adoption of our diagnostic products in Europe, Canada, and Asia.”
Mr. Sullivan added, “During the first quarter, Cytyc completed two strategic acquisitions, Adeza and Adiana, which we believe will deliver significant long-term value to our shareholders. Furthermore, we’ve signed new long-term contracts with our largest customers, LabCorp® and Quest, extending out to 2010. Overall, I am very pleased with the performance of each of our divisions as well as the success of our acquisition strategy and look forward to our continued growth.”
The Company is raising its 2007 revenue guidance from $690 to $710 million to $735 to $760 million to reflect estimated revenue from the sales of FullTerm®, The Fetal Fibronectin Test.
The Company recently filed a report with the SEC concerning the need to adjust the form of accounting for certain employee stock options that were outstanding during 1996 through 2002 and to restate its financial statements. This restatement is expected to be completed in the second quarter. As a result, the Company is not providing a condensed consolidated balance sheet or condensed consolidated statement of cash flows.
The revenue from the Company’s divisions was as follows:
Three Months Ended March 31, | ||||||||
| 2007 | 2006 | % Change | ||||||
| ($ in millions) | ||||||||
Domestic Diagnostic Products | $ | 89.2 | $ | 80.7 | 11% | |||
Domestic Surgical Products | 59.3 | 44.7 | 33% | |||||
International | 20.4 | 15.1 | 35% | |||||
Total Company Revenue | $ | 168.9 | $ | 140.5 | 20% | |||
Cytyc management will discuss first quarter 2007 results, business highlights, and future expectations during a conference call on April 26 at 8:30 a.m. (Eastern). The call will be hosted by Patrick J. Sullivan, Cytyc Corporation’s chairman, president, and chief executive officer, and Timothy M. Adams, chief financial officer. A live webcast of the call may be accessed at Cytyc’s website, http://ir.cytyc.com, and the event will be available for replay at this site approximately two hours following the call until May 10, 2007. Those without web access may
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access the call by dialing 877-407-0784 or 201-689-8560. A telephonic replay of the call will be available through May 10, 2007, by dialing 877-660-6853 or 201-612-7415; enter account # 3055 and conference ID # 238222.
About Cytyc
Cytyc Corporation is a diversified diagnostic and medical device company that designs, develops, manufactures, and markets innovative and clinically effective diagnostic and surgical products. Cytyc’s products cover a range of cancer and women’s health applications, including cervical cancer screening, preterm birth screening, treatment of excessive menstrual bleeding, radiation treatment of early-stage breast cancer, and radiation treatment of patients with malignant brain tumors.
Cytyc is traded on The NASDAQ Global Select Market under the symbol CYTC. Cytyc, ThinPrep, NovaSure, MammoSite, and FullTerm are registered trademarks of Cytyc Corporation.
Non-GAAP Information
In addition to disclosing results determined in accordance with generally accepted accounting principles, or GAAP, Cytyc also discloses adjusted, or non-GAAP, results of operations that exclude certain items. By disclosing this non-GAAP information, management intends to provide investors with additional information to further analyze Cytyc’s performance and underlying trends. In order to better assess operating trends, management utilizes a measure of adjusted net income and adjusted diluted net income per common share on a non-GAAP basis that excludes charges in the first quarter of 2007 for in-process research and development related to the acquisitions of Adeza and Adiana.
Management believes adjusted net income provides useful supplemental information to management and investors regarding the performance and underlying trends of Cytyc’s business operations and facilitates comparisons to its historical operating results. Management uses this information internally for forecasting, budgeting, evaluating the effectiveness of Cytyc’s operational strategies, and performance measurement for compensation of management and employees. Management believes it is important to provide investors with the same metrics used by management to measure operating performance, which assists investors in analyzing the underlying trends in Cytyc’s business over time.
Non-GAAP information should not be viewed as a substitute for, or superior to, net income or other data prepared in accordance with GAAP as measures of Cytyc’s profitability or liquidity. Users of this financial information should consider the types of events and transactions for which adjustments have been made. See the tables in this press release for a reconciliation of non-GAAP amounts to amounts reported under GAAP.
Safe Harbor
Forward-looking statements in this press release are made pursuant to the provisions of Section 21E of the Securities Exchange Act of 1934. Investors are cautioned that statements in this press release which are not strictly historical statements, including, without limitation, Cytyc’s future financial condition, operating results and economic performance, and management’s expectations regarding key customer relationships, future growth opportunities, product acceptance and business strategy, constitute forward-looking statements. These statements are based on current expectations, forecasts and assumptions of Cytyc that are subject to risks and uncertainties, which could cause actual outcomes and results to differ materially from those statements. Risks and uncertainties include, among others, the successful integration of Adeza and Adiana into Cytyc’s business, dependence on key personnel and customers as well as reliance on proprietary technology, uncertainty of product development efforts and timelines, management of growth, product diversification, and organizational change, entry into new market segments domestically, such as pharmaceuticals, and new markets internationally, risks associated with litigation, competition and competitive pricing pressures, risks associated with the FDA regulatory approval processes and healthcare reimbursement policies in the United States and abroad, introduction of technologies that are disruptive to Cytyc’s
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business and operations, the potential consequences of the Cytyc Audit Committee’s voluntary review of circumstances relating to certain employee stock option exercises, including the impact of the expected restatement of Cytyc’s financial statements, the associated costs and expenses, and any regulatory review or litigation relating to such matters, the impact of new accounting requirements and governmental rules and regulations, as well as other risks detailed in Cytyc’s and Adeza’s filings with the SEC, including those under the heading “Risk Factors” in Cytyc’s 2006 Annual Report on Form 10-K and Adeza’s 2006 Annual Report on Form 10-K, all as filed with the SEC. Cytyc cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date they were made. Cytyc disclaims any obligation to publicly update or revise any such statements to reflect any change in its expectations or events, conditions, or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.
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Cytyc Corporation
Condensed Consolidated Statements of (Loss) Income
(in thousands, except per share data)
| Three Months Ended March 31, | ||||||||
| 2007 | 2006 | |||||||
Net sales | $ | 168,884 | $ | 140,540 | ||||
Cost of sales (a) | 42,096 | 29,789 | ||||||
Gross profit | 126,788 | 110,751 | ||||||
Operating expenses: | ||||||||
Research and development (a) | 9,472 | 10,311 | ||||||
Sales and marketing | 41,169 | 40,133 | ||||||
General and administrative | 19,655 | 14,025 | ||||||
In-process research and development | 89,513 | — | ||||||
Total operating expenses | 159,809 | 64,469 | ||||||
(Loss) income from operations | (33,021 | ) | 46,282 | |||||
Other income (expense), net: | ||||||||
Interest income | 2,629 | 1,830 | ||||||
Interest expense | (2,394 | ) | (1,792 | ) | ||||
Other income (expense) | 772 | (77 | ) | |||||
Total other income (expense), net | 1,007 | (39 | ) | |||||
(Loss) income before provision for income taxes | (32,014 | ) | 46,243 | |||||
Provision for income taxes | 19,195 | 16,879 | ||||||
Net (loss) income | $ | (51,209 | ) | $ | 29,364 | |||
Net (loss) income per common and potential common share: | ||||||||
Basic | $ | (0.45 | ) | $ | 0.25 | |||
Diluted | $ | (0.45 | ) | $ | 0.24 | |||
Weighted average common and potential common shares outstanding: | ||||||||
Basic | 114,725 | 115,481 | ||||||
Diluted | 114,725 | 125,877 | ||||||
| (a) | Amortization expense in Q1 2007 of $3.2 million and $0.4 million related to acquired intangible assets is included in cost of sales and research and development expenses, respectively. Amortization expense in Q1 2006 of $2.4 million related to acquired intangible assets is included in research and development expenses. |
Cytyc Corporation
Reconciliation of Net (Loss) Income per Common Share
(in thousands, except per share data)
The following tables provide reconciliations of the net (loss) income and weighted average common shares used in calculating basic and diluted net (loss) income per share (using the if-converted method):
| Three Months Ended March 31, | |||||||
| 2007 | 2006 | ||||||
Numerator: | |||||||
Net (loss) income, as reported, for basic earnings per share | $ | (51,209 | ) | $ | 29,364 | ||
Interest expense on convertible debt, net of tax (1) | — | 1,138 | |||||
Net (loss) income, as adjusted, for diluted earnings per share | $ | (51,209 | ) | $ | 30,502 | ||
Denominator: | |||||||
Basic weighted average common shares outstanding | 114,725 | 115,481 | |||||
Dilutive effect of assumed exercise of stock options (1) | — | 1,970 | |||||
Dilutive effect of assumed conversion of convertible debt (1) | — | 8,426 | |||||
Weighted average common shares outstanding assuming dilution | 114,725 | 125,877 | |||||
Basic net (loss) income per common share | $ | (0.45 | ) | $ | 0.25 | ||
Diluted net (loss) income per common and potential common share | $ | (0.45 | ) | $ | 0.24 | ||
| (1) | In Q1 2007, these amounts were excluded from the calculation of diluted net loss per share as their effect would have been anti-dilutive. |
Reconciliation of Non-GAAP Measures
(in thousands, except per share data)
| Three Months Ended March 31, | |||||||
| 2007 | 2006 | ||||||
Net (loss) income reconciliation (all amounts net of tax): | |||||||
Net (loss) income as reported | $ | (51,209 | ) | $ | 29,364 | ||
In-process research and development (1) | 89,513 | — | |||||
Adjusted net income | $ | 38,304 | $ | 29,364 | |||
Net (loss) income per common share reconciliation: | |||||||
Net (loss) income per common share, diluted, as reported | $ | (0.45 | ) | $ | 0.24 | ||
In-process research and development (1) | 0.77 | — | |||||
Adjusted net income per common share, diluted | $ | 0.32 | $ | 0.24 | |||
Weighted average diluted shares outstanding reconciliation: | |||||||
Weighted average diluted shares outstanding, as reported | 114,725 | 125,877 | |||||
Dilutive effect of assumed exercise of stock options | 1,834 | — | |||||
Dilutive effect of assumed conversion of convertible debt | 8,426 | — | |||||
Adjusted weighted average diluted shares outstanding | 124,985 | 125,877 | |||||
| (1) | Nonrecurring charge to write off in-process research and development costs related to acquisitions of Adeza and Adiana in Q1 2007. |
