| Contact: | Clint Severson | Lytham Partners, LLC |
| | Chief Executive Officer | Joe Dorame, Robert Blum and Joe Diaz |
| | Abaxis, Inc. | 602-889-9700 |
| | 510-675-6500 | |
ABAXIS REPORTS RECORD FINANCIAL PERFORMANCE FOR THE FIRST QUARTER OF FISCAL 2008
Union City, California - July 26, 2007 - ABAXIS, Inc. (NasdaqGS: ABAX), a medical products company manufacturing point-of-care blood analysis systems, today reported financial results for the first fiscal quarter ended June 30, 2007.
Quarterly highlights include:
| · | Record revenues of $22.9 million, up 13% over last year’s comparable quarter. |
| · | Medical market sales of $4.8 million, up 29% over last year’s comparable quarter. |
| · | Medical instrument sales of 177 units, up 43% over last year’s comparable quarter. |
| · | Medical reagent disc sales of 274,000 units, up 25% over last year’s comparable quarter. |
| · | Total medical and veterinary reagent disc sales of 1,138,000 units, compared to 957,000 units in the same period last year, up 19% over last year’s comparable quarter. |
| · | Record reagent disc margin of 65%, up 540 basis points over last year’s comparable quarter. |
| · | Gross profit of 56.8%, up 60 basis points over last year’s comparable quarter. |
| · | Record operating income of $4.5 million, up 22% over last year’s comparable quarter. |
| · | Record net income of $3.1 million, up 29% over last year’s comparable quarter. |
| · | Diluted EPS: $0.14 versus $0.11 in the same period last year. |
| · | Cash, cash equivalents and short-term investments as of June 30, 2007 of $49.5 million, up 38% compared to June 30, 2006. |
Quarterly Results: For the fiscal quarter ended June 30, 2007, Abaxis reported revenues of $22.9 million, as compared with revenues of $20.4 million for the comparable period last year, an increase of 13 percent. Instrument, reagent disc and hematology reagent revenues increased by $1.9 million, or 10 percent over the same period last year. The company reported net income of $3.1 million, compared to $2.4 million for the same period last year. The company’s effective tax rate in the quarter ended June 30, 2007 was 38 percent, compared to 40 percent for the same period last year. The company reported diluted net income per share of $0.14 (calculated based on 22,102,000 shares) in the first quarter of fiscal 2008, compared to $0.11 per share (calculated based on 21,758,000 shares) for the same period last year.
Other Reported Information: Reagent disc and hematology reagent revenues for the first quarter of fiscal 2008 were $14.3 million, up 18 percent over the $12.1 million reported in the same period last year. During the quarter, the company sold a total of 1,138,000 medical and veterinary reagent discs, an increase of 19 percent, compared to 957,000 medical and veterinary reagent discs sold during the same period last year. Total medical sales for the first quarter of fiscal 2008 were $4.8 million, an increase of 29 percent over last year’s comparable quarter. Medical sales in North America, excluding sales to the U.S. government, during the first quarter of fiscal 2008 were $3.7 million, an increase of 36 percent over last year’s comparable quarter. Total veterinary sales for the first quarter of fiscal 2008 were $16.4 million, up 6 percent over last year’s comparable quarter. Additionally, veterinary reagent disc sales for the first quarter of fiscal 2008 were $11.0 million, an increase of 19 percent, compared to the same period last year. The company ended the quarter with $49.5 million in cash, cash equivalents and short-term investments.
“The first quarter of fiscal 2008 was a quarter of changes and transitions,” commented Clint Severson, President and Chief Executive Officer of Abaxis. “Despite the challenges that come with change, we were able to achieve record financial results for the quarter. We continue to achieve strong year-over-year sales results in most of our product segments and believe that fiscal 2008 has the potential to continue the strong growth trends of the previous few years. From a strategic standpoint, we are commencing a number of initiatives that we believe will help us take the company to the next level of its development.”
“In our veterinary business,” Mr. Severson continued, “we have adjusted the compensation model of our direct sales team to now include sales of reagent discs to customers on an on-going basis. Previously, our sales representatives were tasked with selling our VetScan and VS2 blood analysis instruments only. We have now added reagent disc sales to their compensation package with the goal of improving reagent disc sales going forward, which in turn should expand customer loyalty to our leading-edge systems.”
“We have also retained a national search firm to bring on a new manufacturing operations executive to succeed Bob Milder, who recently retired. We thank Bob for the significant contributions he made to help bring Abaxis to its current level. We will now look to bring on a seasoned industry professional that can help to drive our next level of growth with the most efficient and effective manufacturing operation possible. We believe that this also represents an exciting opportunity for the next generation of blood analysis products to benefit from the creativity and the fresh perspective of a new operations executive with a unique set of skills and industry expertise.”
“All in all,” concluded Mr. Severson, “we are pleased with the progress that we continue to make and we believe that there are a great many market opportunities for our products in the years to come.”
Conference Call
Abaxis has scheduled a conference call to discuss its results at 4:15 p.m. ET on July 26, 2007. Participants can dial (877) 356-5706 or (706) 643-0580 to access the conference call, or can listen via a live Internet web cast, which can be found at www.abaxis.com. A replay of the call is available by visiting www.abaxis.com for the next 30 days or by calling (800) 642-1687 or (706) 645-9291, access code 7195890, through July 29, 2007. This press release is also available prior to and after the call via Abaxis’ website or the Securities and Exchange Commission’s website at www.sec.gov.
About Abaxis
Abaxis develops, manufactures and markets portable blood analysis systems for use in any veterinary or human patient-care setting to provide clinicians with rapid blood constituent measurements. The system consists of a compact, 5.1 kilogram (11.2 pounds), portable analyzer and a series of single-use plastic discs, called reagent discs that contain all the chemicals required to perform a panel of up to 13 tests on veterinary patients and 14 tests on human patients. The system can be operated with minimal training and performs multiple routine tests on whole blood, serum or plasma samples. The system provides test results in less than 12 minutes with the precision and accuracy equivalent to a clinical laboratory analyzer.
Use of Non-GAAP Financial Measures
To supplement the financial statements presented in accordance with United States generally accepted accounting principles (GAAP), Abaxis uses operating income per share on a pro forma basis. This non-GAAP financial presentation is not a measurement of performance under generally accepted accounting principles in the United States of America. Management uses this measure in comparing Abaxis’ operating results with historical performance and believes it provides meaningful and comparable information to management and investors to assist in their review of Abaxis’ performance relative to prior periods and its competitors.
This press release and our conference call will include statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Abaxis claims the protection of the safe-harbor for forward-looking statements contained in the Reform Act. These forward-looking statements are often characterized by the terms “may,” “believes,” “projects,” “expects,” “anticipates,” or words of similar import, and do not reflect historical facts. Specific forward-looking statements contained in this press release or in our conference call may be affected by risks and uncertainties, including, but not limited to, those related to the market acceptance of the company’s products and the continuing development of its products, required United States Food and Drug Administration clearance and other government approvals, risks associated with manufacturing and distributing its products on a commercial scale free of defects, risks related to the introduction of new instruments manufactured by third parties, risks associated with entering the human diagnostic market on a larger scale, risks related to the protection of the company’s intellectual property or claims of infringement of intellectual property asserted by third parties, risks involved in carrying of inventory, risks associated with the ability to attract, train and retain competent sales personnel, general market conditions, competition and other risks detailed from time to time in Abaxis’ periodic reports filed with the United States Securities and Exchange Commission. Forward-looking statements speak only as of the date the statement was made. Abaxis does not undertake and specifically disclaims any obligation to update any forward-looking statements.
Financial Tables on Following Pages
ABAXIS, INC. | | |
Condensed Statements of Operations | | |
(In thousands, except per share data) | | |
(Unaudited) | | |
| | | Three Months Ended | |
| | | June 30, | |
| | | 2007 | | 2006 | |
| | | | | | |
| Revenues | | $ | 22,931 | | $ | 20,358 | |
| Cost of revenues | | | 9,915 | | | 8,921 | |
| Gross profit | | | 13,016 | | | 11,437 | |
| | | | | | | | |
| Operating expenses: | | | | | | | |
| Research and development | | | 1,653 | | | 1,717 | |
| Sales and marketing | | | 5,229 | | | 4,471 | |
| General and administrative | | | 1,651 | | | 1,584 | |
| Total operating expenses | | | 8,533 | | | 7,772 | |
| | | | | | | | |
| Income from operations | | | 4,483 | | | 3,665 | |
| Interest and other income (expense), net | | | 499 | | | 336 | |
| Income before income taxes | | | 4,982 | | | 4,001 | |
| Income tax provision | | | 1,884 | | | 1,600 | |
| Net income | | $ | 3,098 | | $ | 2,401 | |
| | | | | | | | |
| Net income per share: | | | | | | | |
| Basic net income per share | | $ | 0.15 | | $ | 0.12 | |
| Diluted net income per share | | $ | 0.14 | | $ | 0.11 | |
| | | | | | | | |
| Shares used in the calculation of net income per share: | | | | | | | |
| Weighted average common shares outstanding - basic | | | 21,311 | | | 20,268 | |
| Weighted average common shares outstanding - diluted | | | 22,102 | | | 21,758 | |
ABAXIS, INC. | | |
Condensed Balance Sheets | | |
(Unaudited and in thousands) | | |
| | | June 30, | | March 31, | |
| | | 2007 | | 2007 | |
| Current assets: | | | | | | | |
| Cash and cash equivalents | | $ | 9,159 | | $ | 10,183 | |
| Short-term investments | | | 40,315 | | | 35,028 | |
| Trade receivables, net | | | 15,348 | | | 16,929 | |
| Inventories, net | | | 16,682 | | | 14,813 | |
| Prepaid expenses | | | 935 | | | 1,321 | |
| Net deferred tax asset - current | | | 7,416 | | | 8,979 | |
| Total current assets | | | 89,855 | | | 87,253 | |
| Property and equipment, net | | | 12,870 | | | 12,662 | |
| Intangible assets, net | | | 431 | | | 450 | |
| Other assets | | | 29 | | | 38 | |
| Net deferred tax asset - non-current | | | 2,312 | | | 2,312 | |
| Total assets | | $ | 105,497 | | $ | 102,715 | |
| | | | | | | | |
| Current liabilities: | | | | | | | |
| Accounts payable | | $ | 5,553 | | $ | 6,505 | |
| Accrued payroll and related expenses | | | 3,052 | | | 3,830 | |
| Other accrued liabilities | | | 1,091 | | | 1,169 | |
| Deferred revenue | | | 819 | | | 917 | |
| Warranty reserve | | | 615 | | | 315 | |
| Total current liabilities | | | 11,130 | | | 12,736 | |
| | | | | | | | |
| Non-current liabilities: | | | | | | | |
| Deferred rent | | | 367 | | | 391 | |
| Deferred revenue | | | 1,095 | | | 1,244 | |
| Warranty reserve | | | 295 | | | 532 | |
| Total non-current liabilities | | | 1,757 | | | 2,167 | |
| | | | | | | | |
| Shareholders' equity: | | | | | | | |
| Common stock | | | 104,982 | | | 103,282 | |
| Accumulated deficit | | | (12,372 | ) | | (15,470 | ) |
| Total shareholders' equity | | | 92,610 | | | 87,812 | |
| Total liabilities and shareholders' equity | | $ | 105,497 | | $ | 102,715 | |
Non-GAAP Operating Income Per Share | | | |
(In thousands, except per share data) | | | |
| | | Three Months Ended | |
| | | June 30, | |
| | | 2007 | | 2006 | |
| Shares used in the calculation of operating income per share (non-GAAP): | | | | | | | |
| Weighted average common shares outstanding - basic | | | 21,311 | | | 20,268 | |
| Weighted average common shares outstanding - diluted | | | 22,102 | | | 21,758 | |
| | | | | | | | |
| Non-GAAP operating income per share - basic | | $ | 0.21 | | $ | 0.18 | |
| Non-GAAP operating income per share - diluted | | $ | 0.20 | | $ | 0.17 | |
Revenues by Geographic Region | | | | | |
(In thousands) | | | | | |
| | | Three Months Ended | |
| | | June 30, | |
| | | 2007 | | 2006 | |
| North America | | $ | 19,169 | | $ | 16,763 | |
| International | | | 3,762 | | | 3,595 | |
| Total revenues | | $ | 22,931 | | $ | 20,358 | |
Revenues by Customer Group | | | | | |
(In thousands) | | | | | |
| | | Three Months Ended | |
| | | June 30, | |
| | | 2007 | | 2006 | |
| Medical Market | | $ | 4,807 | | $ | 3,730 | |
| Veterinary Market | | | 16,436 | | | 15,541 | |
| Other | | | 1,688 | | | 1,087 | |
| Total revenues | | $ | 22,931 | | $ | 20,358 | |
