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 |
FOR IMMEDIATE RELEASE
CYTYC REPORTS RECORD REVENUE OF $188.8 MILLION
FOR SECOND QUARTER 2007
26 Percent Revenue Growth
Marlborough, Mass., July 30, 2007—Cytyc Corporation (Nasdaq: CYTC) today announced results for the second quarter ended June 30, 2007.
Revenue for the quarter ended June 30, 2007, rose 26 percent to $188.8 million compared to revenue of $150.4 million for the same period of 2006. Reported net income for the quarter was $33.5 million, or $0.27 per diluted share, which includes a net of tax charge of $4.4 million related to costs associated with the Company’s proposed merger with Hologic, Inc. Excluding this charge, adjusted net income was $37.9 million, or $0.31 per diluted share. This compares with reported net income for the same period in 2006 of $31.7 million, or $0.27 per diluted share, a 20 percent increase in adjusted net income.
Second Quarter 2007 Highlights:
— | Domestic surgical products revenue increased 32 percent over second quarter of 2006 to $65.9 million, representing 35 percent of total Company revenue. |
— | International revenue increased 39 percent over second quarter of 2006 to $22.6 million. |
— | Driven by a 33 percent increase in ThinPrep® Imaging System revenue over the second quarter of 2006, and the first full quarter of FullTerm® product revenue, domestic diagnostic products revenue increased 19 percent to $100.3 million, and included the shipment of 9 million ThinPrep® Pap Tests and 37 ThinPrep Imaging Systems. |
— | As of June 30, the Company had repaid $145.3 million of the $200.5 million borrowed under its line of credit, reducing the outstanding balance to $55.2 million. |
— | In May, the five-year follow-up results for the initial clinical trial of the MammoSite® Radiation Therapy System were presented at the Annual Meeting of the American Society of Breast Surgeons. The results showed no local recurrences of breast cancer five years after treatment. |
Cytyc Reports Record Revenue of $188.8 Million for Second Quarter 2007
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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 a 32 percent growth in our surgical products division and 39 percent growth in our international division. 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 first full quarter of FullTerm product sales, as well as continued market conversion to the ThinPrep Imaging System and the consistent strength of our ThinPrep Pap Test. At the end of the second quarter, nearly half of all ThinPrep slides were imaged, and Laboratory Corporation of America’s imaged conversion reached more than two-thirds.”
Mr. Sullivan added, “During the second quarter, we announced a definitive agreement to combine Cytyc Corporation and Hologic, Inc., forming one of the largest companies in the world focused exclusively on advanced technology in women’s health. Once the transaction is closed, the combined company will offer a comprehensive line of best-in-class products providing healthcare solutions for women throughout their lifetime. We believe our shareholders will also benefit from the operational synergies of the merger, which should drive significant revenue upside and expanded profitability. Overall, we are extremely excited about this opportunity and believe it will enhance our combined ability to improve women’s health through earlier and better detection, improved diagnosis, less invasive treatment, and improved outcomes.”
The following table sets forth the Company’s revenue by division:
Three Months Ended | Six Months Ended | |||||||||||||||||
June 30, | June 30, | |||||||||||||||||
2007 | 2006 | % Change | 2007 | 2006 | % Change | |||||||||||||
($ in millions) | ($ in millions) | |||||||||||||||||
Domestic Diagnostic Products | $ | 100.3 | $ | 84.1 | 19 | % | $ | 189.5 | $ | 164.8 | 15 | % | ||||||
Domestic Surgical Products | 65.9 | 50.0 | 32 | % | 125.1 | 94.7 | 32 | % | ||||||||||
International | 22.6 | 16.3 | 39 | % | 43.1 | 31.4 | 37 | % | ||||||||||
Total Company Revenue | $ | 188.8 | $ | 150.4 | 26 | % | $ | 357.7 | $ | 290.9 | 23 | % | ||||||
Cytyc management will discuss second quarter 2007 results, business highlights, and future expectations during a conference call on July 31 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 August 14, 2007. Those without web access may access the call by dialing 877-407-0784 or 201-689-8560. A telephonic replay of the call
Cytyc Reports Record Revenue of $188.8 Million for Second Quarter 2007
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will be available through August 14, 2007, by dialing 877-660-6853 or 201-612-7415; enter account # 3055 and conference ID # 247340.
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 second quarter of 2007 for the merger with Hologic, and 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 constitute forward-looking statements. These statements include, without limitation: (1) Cytyc’s future financial condition, operating results
Cytyc Reports Record Revenue of $188.8 Million for Second Quarter 2007
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and economic performance, and management’s expectations regarding key customer relationships, future growth opportunities, product acceptance and business strategy; and (2) the anticipated benefits of the business combination transaction with Hologic, Inc., including future financial and operating results, the expected permanent financing for the transaction, the combined company’s plans, objectives, expectations and intentions and other statements that are not historical facts, and the timing of the completion of the transaction. These statements are based on current expectations, forecasts and assumptions of Cytyc and Hologic 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 completion of the business combination transaction with Hologic; 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 business and operations; the impact of new accounting requirements and governmental rules and regulations; as well as other risks detailed in Cytyc’s filings with the SEC, including those under the heading “Risk Factors” in Cytyc’s 2006 Annual Report on Form 10-K, and in Hologic’s Registration Statement on Form S-4 (File No. 333-144238) filed with the SEC, as it may be amended from time to time, including those under the heading “Risk Factors” and “Appendix B—Risks Factors.” 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 Income
(in thousands, except per share data)
(unaudited)
Three Months Ended June 30, | ||||||||
2007 | 2006 | |||||||
Net sales | $ | 188,837 | $ | 150,397 | ||||
Cost of sales | 48,283 | 33,063 | ||||||
Gross profit | 140,554 | 117,334 | ||||||
Operating expenses: | ||||||||
Research and development | 11,371 | 10,681 | ||||||
Sales and marketing | 48,183 | 41,989 | ||||||
General and administrative | 27,042 | 14,809 | ||||||
Total operating expenses | 86,596 | 67,479 | ||||||
Income from operations | 53,958 | 49,855 | ||||||
Other income (expense), net: | ||||||||
Interest income | 713 | 1,826 | ||||||
Interest expense | (3,765 | ) | (1,792 | ) | ||||
Other expense | (11 | ) | — | |||||
Total other (expense) income, net | (3,063 | ) | 34 | |||||
Income before provision for income taxes | 50,895 | 49,889 | ||||||
Provision for income taxes | 17,355 | 18,209 | ||||||
Net income | $ | 33,540 | $ | 31,680 | ||||
Net income per common and potential common share: | ||||||||
Basic | $ | 0.29 | $ | 0.28 | ||||
Diluted | $ | 0.27 | $ | 0.27 | ||||
Weighted average common and potential common shares outstanding: | ||||||||
Basic | 115,656 | 114,356 | ||||||
Diluted | 127,398 | 123,582 | ||||||
Cytyc Corporation
Condensed Consolidated Statements of (Loss) Income
(in thousands, except per share data)
(unaudited)
Six Months Ended June 30, | ||||||||
2007 | 2006 | |||||||
Net sales | $ | 357,721 | $ | 290,937 | ||||
Cost of sales | 90,379 | 62,852 | ||||||
Gross profit | �� | 267,342 | 228,085 | |||||
Operating expenses: | ||||||||
Research and development | 21,063 | 20,992 | ||||||
Sales and marketing | 89,352 | 82,122 | ||||||
General and administrative | 46,490 | 28,834 | ||||||
In process research and development | 89,500 | — | ||||||
Total operating expenses | 246,405 | 131,948 | ||||||
Income from operations | 20,937 | 96,137 | ||||||
Other expense, net: | ||||||||
Interest income | 3,342 | 3,656 | ||||||
Interest expense | (6,159 | ) | (3,584 | ) | ||||
Other expense | 761 | (77 | ) | |||||
Total other expense, net | (2,056 | ) | (5 | ) | ||||
Income before provision for income taxes | 18,881 | 96,132 | ||||||
Provision for income taxes | 36,550 | 35,088 | ||||||
Net (loss) income | $ | (17,669 | ) | $ | 61,044 | |||
Net (loss) income per common and potential common share: | ||||||||
Basic | $ | (0.15 | ) | $ | 0.53 | |||
Diluted | $ | (0.15 | ) | $ | 0.51 | |||
Weighted average common and potential common shares outstanding: | ||||||||
Basic | 115,197 | 114,917 | ||||||
Diluted | 115,197 | 125,014 | ||||||
Cytyc Corporation
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
June 30, 2007 | December 31, 2006 | |||||||
Assets: | ||||||||
Current assets: | ||||||||
Cash and investment securities | $ | 33,323 | $ | 297,710 | ||||
Accounts receivable, net | 113,742 | 94,943 | ||||||
Inventories, net | 32,653 | 29,503 | ||||||
Other current assets | 39,961 | 14,997 | ||||||
Total current assets | 219,679 | 437,153 | ||||||
Property and equipment: | ||||||||
Property and equipment | 148,135 | 135,272 | ||||||
Equipment under customer usage agreements | 103,115 | 92,136 | ||||||
Less: accumulated depreciation and amortization | (94,247 | ) | (78,401 | ) | ||||
Total property and equipment, net | 157,003 | 149,007 | ||||||
Goodwill and other intangible assets, net | 912,059 | 569,010 | ||||||
Other assets, net | 10,079 | 9,544 | ||||||
Total Assets | $ | 1,298,820 | $ | 1,164,714 | ||||
Liabilities and Stockholders’ Equity: | ||||||||
Current liabilities | $ | 137,869 | $ | 74,137 | ||||
Long-term debt and other non-current liabilities | 369,612 | 331,604 | ||||||
Stockholders’ equity | 791,339 | 758,973 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 1,298,820 | $ | 1,164,714 | ||||
Cytyc Corporation
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Six Months Ended June 30, | ||||||||
2007 | 2006 | |||||||
Cash flows from operating activities: | ||||||||
Net (loss) income | $ | (17,669 | ) | $ | 61,044 | |||
Stock-based compensation expense pursuant to SFAS No. 123R | 9,190 | 11,763 | ||||||
Amortization of intangible assets | 8,768 | 4,904 | ||||||
Depreciation and amortization of property and equipment and other non-cash expense | 27,356 | 11,134 | ||||||
Accounts receivable | (9,878 | ) | (2,630 | ) | ||||
Inventories | (2,070 | ) | (2,374 | ) | ||||
Other assets and liabilities | (24,641 | ) | (12,916 | ) | ||||
Acquired in-process research and development | 89,500 | — | ||||||
Tax benefit from exercise of stock options and employee stock purchase plan | 4,770 | 1,682 | ||||||
Net cash provided by operating activities | 85,326 | 72,607 | ||||||
Cash flows from investing activities: | ||||||||
Acquisition of Adeza, net | (427,950 | ) | — | |||||
Acquisition of Adiana, net | (58,385 | ) | — | |||||
Acquisition of Proxima, net | (3,613 | ) | (21,074 | ) | ||||
Increase in other assets | (291 | ) | (981 | ) | ||||
Increase in equipment under customer usage agreements | (12,400 | ) | (13,458 | ) | ||||
Purchases of property and equipment, net | (9,479 | ) | (8,624 | ) | ||||
Sales and maturities of investment securities, net | 227,022 | 7,406 | ||||||
Increase in patents and developed technology | (250 | ) | (473 | ) | ||||
Net cash used in investing activities | (285,346 | ) | (37,204 | ) | ||||
Cash flows from financing activities: | ||||||||
Net proceeds from line-of-credit | 55,015 | (609 | ) | |||||
Purchase of treasury shares | (16,454 | ) | (78,577 | ) | ||||
Proceeds from exercise of stock options and issuance of shares under employee stock purchase plan | 44,046 | 18,816 | ||||||
Excess tax benefit from exercise of stock options and employee stock purchase plan | 8,582 | 1,386 | ||||||
Net cash provided (used) in financing activities | 91,189 | (58,984 | ) | |||||
Effect of exchange rate changes on cash | (581 | ) | 145 | |||||
Net decrease in cash and cash equivalents | (109,412 | ) | (23,436 | ) | ||||
Net decrease in investment securities | (154,975 | ) | (7,346 | ) | ||||
(264,387 | ) | (30,782 | ) | |||||
Beginning cash and investment securities | 297,710 | 220,619 | ||||||
Ending cash and investment securities | $ | 33,323 | $ | 189,837 | ||||
Cytyc Corporation
Reconciliation of Net Income (Loss) per Common Share
(in thousands, except per share data)
(unaudited)
The following tables provide reconciliations of the net income (loss) and weighted average common shares used in calculating basic and diluted net income (loss) per share (using the if-converted method):
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||
2007 | 2006 | 2007 | 2006 | ||||||||||
Numerator: | |||||||||||||
Net income (loss), as reported, for basic earnings per share | $ | 33,540 | $ | 31,680 | $ | (17,669 | ) | $ | 61,044 | ||||
Interest expense, net of tax | 1,181 | 1,138 | — | 2,276 | |||||||||
Net income (loss), as adjusted, for diluted earnings per share | $ | 34,721 | $ | 32,818 | $ | (17,669 | ) | $ | 63,320 | ||||
Denominator: | |||||||||||||
Basic weighted average common shares outstanding | 115,656 | 114,356 | 115,197 | 114,917 | |||||||||
Dilutive effect of assumed exercise of stock options and restricted stock units | 3,316 | 800 | — | 1,671 | |||||||||
Dilutive effect of assumed conversion of convertible debt | 8,426 | 8,426 | — | 8,426 | |||||||||
Weighted average common shares outstanding assuming dilution | 127,398 | 123,582 | 115,197 | 125,014 | |||||||||
Basic net income (loss) per common share | $ | 0.29 | $ | 0.28 | $ | (0.15 | ) | $ | 0.53 | ||||
Diluted net income (loss) per common and potential common share | $ | 0.27 | $ | 0.27 | $ | (0.15 | ) | $ | 0.51 | ||||
Cytyc Corporation
Reconciliation of Non-GAAP Measures
(in thousands, except per share data)
(unaudited)
Three Months Ended June 30, | ||||||
2007 | 2006 | |||||
Net income reconciliation: | ||||||
Net income, as reported | $ | 33,540 | $ | 31,680 | ||
Hologic related merger costs (1) | 4,355 | — | ||||
Adjusted net income | $ | 37,895 | $ | 31,680 | ||
Net income per common share reconciliation: | ||||||
Net income per common share, diluted, as reported | $ | 0.27 | $ | 0.27 | ||
Hologic related merger costs (1) | 0.04 | — | ||||
Adjusted net income per common share, diluted | $ | 0.31 | $ | 0.27 | ||
(1) | Charge in the second quarter of 2007 related to the proposed merger with Hologic, which was $6.2 million, offset by the related tax benefit. |
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Cytyc Corporation
Reconcilliation of Non-GAAP Measures
(in thousands, except per share data)
(unaudited)
Six Months Ended June 30, | |||||||
2007 | 2006 | ||||||
Net income reconciliation: | |||||||
Net (loss) income, as reported | $ | (17,669 | ) | $ | 61,044 | ||
In process research and development (1) | 89,500 | — | |||||
Hologic related merger costs (2) | 4,355 | — | |||||
Adjusted net income | $ | 76,186 | $ | 61,044 | |||
Net income per common share reconciliation: | |||||||
Net (loss) income per common share, diluted, as reported | $ | (0.15 | ) | $ | 0.51 | ||
In process research and development (1) | 0.73 | — | |||||
Hologic related merger costs (2) | 0.04 | — | |||||
Adjusted net income per common share, diluted | $ | 0.62 | $ | 0.51 | |||
Weighted average diluted shares outstanding reconciliation: | |||||||
Weighted average diluted shares outstanding, as reported | 115,197 | 114,917 | |||||
Dilutive effect of assumed exercise of stock options and restricted stock units | 2,621 | 1,671 | |||||
Dilutive effect assumed conversion of convertible debt | 8,426 | 8,426 | |||||
Adjusted weighted average diluted shares outstanding | 126,244 | 125,014 | |||||
(1) | Charges in the first quarter of 2007 related to the acquisitions of Adeza Biomedical Corp and Adiana, Inc., which totaled $89.5 million. |
(2) | Charge in the second quarter of 2007 related to the proposed merger with Hologic, which was $6.2 million, offset by the related tax benefit. |
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