[MISONIX LOGO]
FOR IMMEDIATE RELEASE
---------------------
Misonix Contact: Investor Relations Contact:
Richard Zaremba Jordan M. Darrow
Chief Financial Officer Darrow Associates, Inc.
631-694-9555 631-367-1866
invest@misonix.com jdarrow@optonline.net
MISONIX REPORTS FIRST QUARTER RESULTS FOR THE PERIOD ENDED SEPTEMBER 30, 2006
FARMINGDALE, N.Y. -- NOVEMBER 14, 2006 -- Misonix, Inc. (NASDAQ: MSON), a
developer of ultrasonic medical device technology for the treatment of cancer
and other chronic health conditions, today reported fiscal results for the three
months ended September 30, 2006. Highlights of the first quarter of fiscal 2007
and other Company initiatives to date include:
o First quarter 2007 revenues increase year-over-year and sequentially
o Total operating expenses reduced by over 7% from year-ago quarter and
over 13% from fourth quarter of fiscal 2006
o Top line improvement and expense management drive significant reduction
in net loss
o Commercially launched the Ultrasonic Wound Care Systems/Sonic One with
Medline
o Established Distribution of the Sonablate(R) 500 ("SB500") using HIFU
for prostate cancer in 10 countries throughout Europe
o Increasing market share of fee-per-use sites and procedures
o Continued 5 site clinical studies with SB500
o Received 510(k) for Bone Shaver product for neurosurgery
o Successful laparoscopic HIFU kidney cancer clinicals
o Distributor selection process commenced for Osteotome "Bone Cutter"
o Commercially launched new compliant Labcaire Endoscopic Disinfectant
Unit, "ISIS"
Revenues for the three months ended September 30, 2006 were $9.6 million, a 6%
increase when compared to revenues of $9.1 million for the same period in fiscal
2006. The Company recorded a net loss for the first fiscal quarter 2007 of
($542,000) or ($.08) loss per fully diluted share, compared to a net loss of
($1.3) million or ($.19) loss per fully diluted share, for the same period in
fiscal 2006. Medical device product revenues decreased 3% to $4.8 million and
laboratory and scientific product revenues increased 16% to $4.8 million. The
decrease in
medical device product revenues was attributable to a 12% reduction in
diagnostic medical device revenues, partially offset by the increase in
therapeutic medical device revenues, primarily the result of increased
fee-per-use revenues from Sonablate 500 procedures in Europe. The increase in
laboratory and scientific product revenues was primarily due to additional
product sales of the Labcaire Guardian endoscopic disinfectant systems and
service revenue.
The backlog of unfilled orders as of September 30, 2006 was $8.2 million,
including medical device product backlog of $5.6 million and laboratory and
scientific product backlog of $2.6 million.
Commenting on the Company's financial results and recent developments, Michael
A. McManus Jr., President and Chief Executive Officer, said, "The improved
performance for Misonix in the first quarter of fiscal 2007 reflects our solid
execution on several fronts. Among our achievements in the quarter was the
return of top line growth. With the first sales by Medline of our new Ultrasonic
Wound Care System we are very encouraged and view this product as just one new
medical device that we will launch in fiscal 2007. As our new products receive
industry recognition supporting the many benefits of ultrasound technology and
the exceptional development and manufacturing capabilities of Misonix, we look
for continued contribution to our base of revenues with continued traction in
very large and important healthcare markets. In the U.S alone there are more
than 4.5 million annual cases of hospitalization because of chronic wounds.
"While increasing our revenues in the first quarter, concerted efforts were made
to contain costs and maximize our cash flow. To this end, we are pleased to have
increased our gross profit margin by over 14% from the prior year period and by
30% from the fourth quarter of fiscal 2006. Meanwhile, we reduced our total
operating expenses by over 7% from the year-ago quarter and by over 13% as
compared to the fourth quarter of fiscal 2006. The higher revenues and improved
margin along with careful management of our spending enabled the Company to
reduce the quarterly operating loss by 50% as compared to the first quarter 2006
and sequentially by 65%.
"Cash management and expense controls will remain an integral component of our
plan. However, the overall progress achieved in the first quarter reflects the
execution of our five-pronged strategy for fiscal 2007. We made considerable
progress year to date in executing this strategy. The five elements of the
strategy include: 1) Continued progress in marketing the SB500 for high
intensity focused ultrasound ("HIFU") treatment of prostate cancer in Europe; 2)
Completion of clinicals and other regulatory/development efforts that leverage
our HIFU technology for the treatment of kidney cancer; 3) Supporting Medline
and related initiatives in the marketing and sales of the SonicOne medical
device; 4) Completion of clinicals and selection of a distributor for the launch
of our Bone Cutter medical device; and 5) Introduction of the Bone Shaver.
"On the SB500 for HIFU treatment of prostate cancer, we continue to make
significant progress. At the end of the quarter, we had distributors in place in
10 countries. We now have 49 sites, 17 certified physicians, 32 physicians in
training and approximately 320 patients treated in the first nine months of
calendar 2006 as compared to 269 for the entire year in 2005. Importantly, we
are moving closer to completing a five site clinical trial in Europe for which
the results to date have been encouraging and show a favorable comparison to
other HIFU procedures in terms of higher success rates in the treatment of
cancer and the reduction in PSA levels. Patient outcomes at all of our trial
sites using the SB500 show lower incidences of impotence and incontinence than
other HIFU treatments. This fiscal year we expect to sign new distributors and
to increase the number of units sold and patients treated on our fee-per-use
model. The message is loud and clear that after only 2 years we are gaining
momentum in the medical community as the HIFU product of choice for prostate
cancer treatment. Although later to market, we believe the SB500 is making up
market share using visually directed HIFU as compared to an estimated energy
exposure, an algorithm based approach. The SB500 does not require an invasive
procedure to reduce the size of the prostate prior to treatment.
"Focus Surgery continues to make progress on the clinical program required for
FDA approval for the use of HIFU for the treatment of prostate cancer in the
U.S. Necessary financial support is being provided by USHIFU which also
continues to grow market share. Together with Focus Surgery, we will be making
progress in the U.S. on both prostate and kidney cancer.
"By leveraging our HIFU technology, we had previously announced our intent to
develop a product for the treatment of kidney cancer. An initial 510(k)
clearance from the U.S. Food and Drug Administration was received for
laparoscopic HIFU using our newly developed medical device, the Sonatherm 600.
We have now completed a variety of clinicals on the kidney both in the U.S. and
internationally and will use this data along with product modifications for the
submission of an addendum to our 510(k) that will allow us to market the product
specifically for treatment of kidney cancer. Kidney cancer is a global market of
approximately $100 million, with the majority of this market residing outside of
the U.S. We remind you we are the only Company in the world that has a product
using minimally invasive HIFU for kidney cancer. We expect to begin work on the
treatment of live cancer in the near future. It is important to note that we are
not just a one product company.
"Another exciting new entrant for Misonix is the SonicOne Ultrasonic Wound Care
System. The SonicOne establishes a new standard in chronic wound care and
ensures the best healing trajectory possible, which assists in minimizing health
care costs. As previously announced, we entered into a U.S. distribution
agreement with Medline. Medline has commenced sales of the product and also is
very active in marketing initiatives intended to accelerate market adoption of
this unique device. They are supporting the product through advertising in trade
publications as well as in conference appearances. Targeting the $3 billion
wound care market with the near epidemic concerns of diabetes as a catalyst,
Medline is proving to be an excellent partner. Studies
have also shown that the use of ultrasonic debridement provides an additional
benefit of bioburden eradication to promote faster healing of tissue.
"Among other products in our diverse pipeline, our new OsteoSculpt bone shaver,
which will be used to accelerate sales of our neuroaspirator, has recently
received 510(k) clearance from the U.S. Food and Drug Administration. The bone
shaver is a consumable product that can only be used once per treatment,
therefore delivering a recurring revenue stream. We expect to launch this
product domestically through our current distributor Aesculap in the first
quarter of calendar 2007. The ultrasonic Osteotome or "bone cutter" has been
used successfully in a variety of clinicals and is expected to be launched
following the selection of a distributor in the middle of calendar 2007. This
product will be introduced into the estimated $100 million global laminectomy
market. There are more than 240,000 cases of laminectomies in the U.S. each
year.
"Delivering on the five-pronged strategy for fiscal 2007 will firmly position
Misonix with the most powerful ultrasonic medical device platform in the world.
Our current strategy is intended to place Misonix on a trajectory for years of
revenue growth due to the large market sizes and importance of the many products
in our medical device pipeline. With the substantial investments in research and
development for many of these products and higher than normal spending to create
a supportive sales and marketing infrastructure of the past few years, we are
very encouraged by our progress in the first quarter and the opportunities ahead
of the Company for the balance of fiscal 2007 and beyond.
"Your Company has the largest platform of ultrasonic medical devices that I am
aware of and each of them has substantial near term potential. We expect 100%
growth in the number of fee-per-use procedures using the SB500 for prostate
cancer. Together with Focus Surgery we will move forward to complete clinicals
in the U.S. for FDA approval for the treatment of prostate cancer. While these
accomplishments are substantial, we will also compete and begin to see products
using ultrasound in very large markets for wound care, bone shaving, bone
cutting and HIFU for kidney and liver cancer. All of these products will be sold
by Misonix throughout the world."
As previously announced, the Company has scheduled a conference call and web
cast to discuss its first quarter fiscal year 2007 financial results today,
November 14, 2006, at 4:30 PM Eastern time. The conference call will be
broadcast live on the Internet via the Investor Relations section of the
Company's Web site at www.misonix.com. Alternatively, participants may join the
conference call by dialing 866-202-0886 (domestic) or 617-213-8841
(international) and entering the reservation code 75645092. Participants should
use these access methods about 10 minutes prior to the start time.
For those unable to attend the live broadcasts, replays will be available
beginning approximately one hour after the events. Replay information will be
posted on the Misonix Web site following the conclusion of the live broadcasts.
There is no charge for participants to access the live broadcasts or replays.
About Misonix:
Misonix, Inc. (NASDAQ: MSON) designs, develops, manufactures, and markets
medical, scientific, and industrial ultrasonic equipment, laboratory safety
equipment, and air pollution control products. Misonix's ultrasonic platform is
the basis for several innovative medical technologies. Misonix has a minority
equity position in Focus Surgery, Inc. which uses high intensity focused
ultrasound technology to destroy deep-seated cancerous tissues without affecting
surrounding healthy tissue. Addressing a combined market estimated to be in
excess of $3 billion annually, Misonix's proprietary ultrasonic medical devices
are used for wound debridement, cosmetic surgery, neurosurgery, laparoscopic
surgery, and other surgical and medical applications. Additional information is
available on the Company's Web site at www.misonix.com.
# # #
With the exception of historical information contained in this press release,
content herein may contain "forward looking statements" that are made pursuant
to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of
1995. These statements are based on management's current expectations and are
subject to uncertainty and changes in circumstances. Investors are cautioned
that forward-looking statements involve risks and uncertainties that could cause
actual results to differ materially from the statements made. These factors
include general economic conditions, delays and risks associated with the
performance of contracts, uncertainties as a result of research and development,
potential acquisitions, consumer and industry acceptance, litigation and/or
court proceedings, including the timing and monetary requirements of such
activities, regulatory risks including approval of pending and/or contemplated
510(k) filings, the ability to achieve and maintain profitability in the
Company's business lines, and other factors discussed in the Company's Annual
Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K.
* * *
(tables to follow)
MISONIX, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Unaudited
Three Months Ended
September 30,
2006 2005
================== ==================
Net sales $9,642,878 $9,111,572
Cost of goods sold 5,711,012 5,675,041
-------------------------------------
Gross profit 3,931,866 3,436,531
Selling expenses 1,597,239 1,561,634
General and administrative expenses 2,404,283 2,734,862
Research and development expenses 820,217 916,740
-------------------------------------
Total operating expenses 4,821,739 5,213,236
-------------------------------------
Loss from operations (889,873) (1,776,705)
Total other income 133,658 174,859
-------------------------------------
Loss before minority interest and
income taxes (756,215) (1,601,846)
Minority interest in net income of
consolidated subsidiaries 31,339 16,339
-------------------------------------
Loss before income taxes (787,554) (1,618,185)
Income tax benefit (245,138) (312,822)
-------------------------------------
Net loss ($542,416) ($1,305,363)
=====================================
Net loss per share-basic ($0.08) ($0.19)
=====================================
Net loss per share-diluted ($0.08) ($0.19)
=====================================
Weighted average common shares-basic 6,900,369 6,832,622
=====================================
Weighted average common shares-diluted 6,900,369 6,832,622
=====================================
MISONIX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
UNAUDITED AUDITED
SEPTEMBER 30, 2006 JUNE 30, 2006
-------------------- -----------------
ASSETS
- ------
Current Assets:
Cash $1,936,652 $675,400
Accounts receivable, net of allowance
for doubtful accounts of $295,803 and
$256,309, respectively 6,738,414 6,530,598
Inventories 11,315,340 11,307,226
Income tax receivable 831,289 786,654
Deferred income taxes 1,419,949 1,419,949
Prepaid expenses and other current assets 914,874 1,070,903
-------------------- -----------------
Total current assets 23,156,518 21,790,730
Property, plant and equipment, net 6,458,392 6,495,854
Deferred income taxes 1,298,122 1,039,824
Goodwill 4,673,713 4,673,713
Other assets 498,458 512,444
-------------------- -----------------
Total assets $36,085,203 $34,512,565
==================== =================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Revolving credit facilities and note payable $3,492,628 $1,572,042
Accounts payable 4,533,164 4,784,102
Accrued expenses and other current liabilities 3,214,007 2,963,762
Current maturities of long-term debt and capital lease obligations 354,946 -
Foreign income tax payable 61,730 367,823
-------------------- -----------------
Total current liabilities 11,656,475 9,687,729
Long-term debt and capital lease obligations 1,123,972 1,145,279
Deferred income taxes 282,455 282,455
Deferred income 376,575 422,634
Deferred lease liability 373,762 378,031
-------------------- -----------------
Total liabilities 13,813,239 11,916,128
Commitments and contingencies
Minority interest 373,997 341,631
Stockholders' equity:
Capital stock, $0.01 par - shares authorized 10,000,000; 6,978,169
issued and 6,900,369 outstanding 69,782 69,782
Additional paid-in capital 24,598,621 24,548,536
Accumulated deficit (2,700,687) (2,158,271)
Accumulated other comprehensive income 342,675 207,183
Treasury stock, 77,800 shares (412,424) (412,424)
-------------------- -----------------
Total stockholders' equity 21,897,967 22,254,806
-------------------- -----------------
Total liabilities and stockholders' equity $36,085,203 $34,512,565
==================== =================
