ABAXIS REPORTS FINANCIAL PERFORMANCE FOR
THE THIRD QUARTER OF FISCAL 2009
Union City, California – January 29, 2009 – Abaxis, Inc. (NasdaqGS: ABAX), a medical products company manufacturing point-of-care blood analysis systems, today reported financial results for the fiscal quarter ended December 31, 2008.
Highlights for the third quarter of fiscal 2009 include:
| · | Revenues of $27.0 million, up 5% over last year’s comparable quarter. |
| · | Medical market sales of $7.2 million, up 19% over last year’s comparable quarter. |
| · | Medical reagent disc sales of 467,000 units, up 48% over last year’s comparable quarter. |
| · | Record sales of Piccolo chemistry analyzers of 242 units, up 2% over last year’s comparable quarter. |
| · | Sales of VetScan chemistry analyzers of 403 units, up 18% over last year’s comparable quarter. |
| · | Total medical and veterinary reagent disc sales of $15.6 million compared to $14.3 million in the same period last year, up 9% over last year’s comparable quarter. |
| · | Operating income of $4.8 million, up 9% over last year’s comparable quarter. |
| · | Net income of $3.4 million, up 5% over last year’s comparable quarter. |
| · | Diluted EPS: $0.15 versus $0.14 in the same period last year. |
| · | Cash, cash equivalents and short-term investments as of December 31, 2008 of $74.6 million, compared to $55.8 million as of December 31, 2007. |
Quarterly Results: For the fiscal quarter ended December 31, 2008, Abaxis reported revenues of $27.0 million, as compared with revenues of $25.7 million for the comparable period last year, an increase of 5 percent. Instrument, reagent disc and hematology reagent revenues increased by an aggregate of $1.0 million, or 4 percent, for the quarter ended December 31, 2008, over the same period last year. The company reported net income of $3.4 million, compared to $3.2 million for the same period last year. The company’s effective tax rate in the quarter ended December 31, 2008 was 34 percent, compared to 35 percent for the same period last year. The company reported diluted net income per share of $0.15 (calculated based on 22,264,000 shares) for the third quarter of fiscal 2009, compared to $0.14 per share (calculated based on 22,359,000 shares) for the same period last year.
Nine Month Results: For the nine-month period ended December 31, 2008, Abaxis reported revenues of $79.2 million, as compared with revenues of $73.8 million for the comparable period last year, an increase of 7 percent. Instrument, reagent disc and hematology reagent revenues increased by an aggregate of $5.5 million, or 8 percent, for the nine-month period ended December 31, 2008, over the same period last year. The company reported net income of $9.4 million, compared to $9.2 million for the same period last year. The company’s effective tax rate in the nine months ended December 31, 2008 was 36 percent, compared to 37 percent for the same period last year. The company reported diluted net income per share of $0.42 (calculated based on 22,325,000 shares) for the nine months ended December 31, 2008, compared to $0.41 per share (calculated based on 22,208,000 shares) for the same period last year.
Other Reported Financial Information: Reagent disc and hematology reagent revenues for the third quarter of fiscal 2009 were $16.8 million, up 9 percent over the $15.3 million reported in the same period last year. During the quarter, the company sold a total of 1,300,000 units of medical and veterinary reagent discs, an increase of 7 percent compared to a total of 1,212,000 units of medical and veterinary reagent discs sold during the same period last year. Medical sales in North America, excluding sales to the U.S. government, during the third quarter of fiscal 2009 were $4.7 million, an increase of 10 percent over last year’s comparable quarter. Total sales in the medical market for the third quarter of fiscal 2009 were $7.2 million, an increase of 19 percent over last year’s comparable quarter. Total sales in the veterinary market for the third quarter of fiscal 2009 were $17.9 million, a decrease of 1 percent over last year’s comparable quarter. Additionally, the company sold $11.3 million of veterinary reagent discs during each of the third quarters of fiscal 2009 and fiscal 2008.
The company ended the quarter with $74.6 million in cash, cash equivalents and short-term investments. As of December 31, 2008, the company had a total of $14.5 million in short-term investments, consisting entirely of certificates of deposits. During the third quarter of fiscal 2009, $28.4 million of the company’s auction rate securities were redeemed at 100 percent of par value.
Clint Severson, chairman and chief executive officer of Abaxis, commented, “Given the current economic conditions, we are pleased with the continued growth in overall revenues and net income for the quarter. We remain focused on improving operating efficiencies and aggressively managing operating expenses. Gross margins improved to 56% for the quarter, an increase of 300 basis points, compared to last year’s third quarter. Additionally, reagent disc margins improved to 66%, an increase of 290 basis points, compared to last year’s third quarter. The company has a very strong balance sheet with a total of $74.6 million in cash, cash equivalents and short-term investments and no debt; and a solid recurring revenue stream, comprised of reagent discs and hematology reagents, which represents 62% of sales for the third quarter. Abaxis believes that it is well positioned for future growth.”
Mr. Severson continued, “The quarter was highlighted by the continued strength in our consumable business. Medical reagent disc unit sales increased 48% compared to the third quarter of fiscal 2008. Medical sales continued to grow during the quarter and accounted for 27% of total sales. Also during the quarter we achieved another significant milestone, as we received CLIA waived status from the United States Food and Drug Administration on two additional medical panels - the Renal Function and MetLyte 8 – bringing the total number of CLIA waived reagent disc panels in our portfolio to 11.”
Conference Call
Abaxis has scheduled a conference call to discuss its results at 4:15 p.m. Eastern Time on January 29, 2009. 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 is available in the Investor Relations section of the company’s website at http://www.abaxis.com. A replay of the call is available by visiting http://www.abaxis.com for the next 30 days or by calling (800) 642-1687 or (706) 645-9291, access code 82004441, through February 2, 2009. This press release is also available prior to and after the call via Abaxis’ website or the Securities and Exchange Commission’s website at http://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 its financial statements presented in accordance with United States generally accepted accounting principles (GAAP), Abaxis uses operating income per share. This non-GAAP financial presentation is not a measurement of performance under GAAP 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 includes, 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”), including but not limited to statements related to Abaxis’ financial resources and potential for future growth. 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 Abaxis’ 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 related to condition of the United States economy, risks involved in carrying of inventory and other risks detailed under “Risk Factors” in Abaxis’ Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2008 and Abaxis’ other periodic reports filed from time to time with the United States Securities and Exchange Commission. Forward-looking statements speak only as of the date the statements were made. Abaxis does not undertake and specifically disclaims any obligation to update any forward-looking statements.
Financial Tables on Following Pages
| ABAXIS, INC. | | | | | | | | | | | | |
| Condensed Consolidated Statements of Operations | | | | | | | | | | | | |
| (In thousands, except per share data) | | | | | | | | | | | | |
| (Unaudited) | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Three Months Ended | | | Nine Months Ended | |
| | | December 31, | | | December 31, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| | | | | | | | | | | | | |
| Revenues | | $ | 26,964 | | | $ | 25,690 | | | $ | 79,224 | | | $ | 73,813 | |
| Cost of revenues | | | 11,859 | | | | 12,081 | | | | 35,274 | | | | 33,331 | |
| Gross profit | | | 15,105 | | | | 13,609 | | | | 43,950 | | | | 40,482 | |
| | | | | | | | | | | | | | | | | |
| Operating expenses: | | | | | | | | | | | | | | | | |
| Research and development | | | 2,037 | | | | 1,629 | | | | 6,116 | | | | 5,104 | |
| Sales and marketing | | | 6,061 | | | | 6,056 | | | | 18,382 | | | | 17,666 | |
| General and administrative | | | 2,241 | | | | 1,571 | | | | 5,855 | | | | 4,760 | |
| Total operating expenses | | | 10,339 | | | | 9,256 | | | | 30,353 | | | | 27,530 | |
| | | | | | | | | | | | | | | | | |
| Income from operations | | | 4,766 | | | | 4,353 | | | | 13,597 | | | | 12,952 | |
| Interest and other income (expense), net | | | 352 | | | | 552 | | | | 1,140 | | | | 1,580 | |
| Income before income taxes | | | 5,118 | | | | 4,905 | | | | 14,737 | | | | 14,532 | |
| Income tax provision | | | 1,762 | | | | 1,700 | | | | 5,308 | | | | 5,341 | |
| Net income | | $ | 3,356 | | | $ | 3,205 | | | $ | 9,429 | | | $ | 9,191 | |
| | | | | | | | | | | | | | | | | |
| Net income per share: | | | | | | | | | | | | | | | | |
| Basic net income per share | | $ | 0.15 | | | $ | 0.15 | | | $ | 0.43 | | | $ | 0.43 | |
| Diluted net income per share | | $ | 0.15 | | | $ | 0.14 | | | $ | 0.42 | | | $ | 0.41 | |
| | | | | | | | | | | | | | | | | |
| Shares used in the calculation of net income per share: | | | | | | | | | | | | | | | | |
| Weighted average common shares outstanding - basic | | | 21,879 | | | | 21,561 | | | | 21,798 | | | | 21,441 | |
| Weighted average common shares outstanding - diluted | | | 22,264 | | | | 22,359 | | | | 22,325 | | | | 22,208 | |
| ABAXIS, INC. | | | | | | |
| Condensed Consolidated Balance Sheets | | | | | | |
| (Unaudited and in thousands) | | | | | | |
| | | | | | | |
| | | December 31, | | | March 31, | |
| | | 2008 | | | 2008 | |
| Current assets: | | | | | | |
| Cash and cash equivalents | | $ | 60,158 | | | $ | 17,219 | |
| Short-term investments | | | 14,489 | | | | 6,991 | |
| Trade receivables, net | | | 21,557 | | | | 20,873 | |
| Inventories, net | | | 17,104 | | | | 18,657 | |
| Prepaid expenses | | | 1,241 | | | | 427 | |
| Net deferred tax asset - current | | | 3,481 | | | | 2,426 | |
| Total current assets | | | 118,030 | | | | 66,593 | |
| Long-term investments | | | - | | | | 35,463 | |
| Property and equipment, net | | | 15,130 | | | | 14,599 | |
| Intangible assets, net | | | 319 | | | | 375 | |
| Other assets | | | 29 | | | | 5 | |
| Net deferred tax asset - non-current | | | 3,874 | | | | 3,868 | |
| Total assets | | $ | 137,382 | | | $ | 120,903 | |
| | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Accounts payable | | $ | 5,920 | | | $ | 6,421 | |
| Accrued payroll and related expenses | | | 2,822 | | | | 4,277 | |
| Other accrued liabilities | | | 1,472 | | | | 1,369 | |
| Deferred revenue | | | 922 | | | | 807 | |
| Warranty reserve | | | 1,637 | | | | 1,219 | |
| Total current liabilities | | | 12,773 | | | | 14,093 | |
| | | | | | | | | |
| Non-current liabilities: | | | | | | | | |
| Deferred rent | | | 183 | | | | 286 | |
| Deferred revenue | | | 1,516 | | | | 1,146 | |
| Warranty reserve | | | 748 | | | | 729 | |
| Total non-current liabilities | | | 2,447 | | | | 2,161 | |
| | | | | | | | | |
| Shareholders' equity: | | | | | | | | |
| Common stock | | | 115,700 | | | | 109,031 | |
| Retained earnings (accumulated deficit) | | | 6,462 | | | | (2,967 | ) |
| Accumulated other comprehensive loss | | | - | | | | (1,415 | ) |
| Total shareholders' equity | | | 122,162 | | | | 104,649 | |
| Total liabilities and shareholders' equity | | $ | 137,382 | | | $ | 120,903 | |
| Non-GAAP Operating Income Per Share | | | | | | | | | | | | |
| (In thousands, except per share data) | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Three Months Ended | | | Nine Months Ended | |
| | | December 31, | | | December 31, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| Shares used in the calculation of operating income per share (non-GAAP): | | | | | | | | | | |
| Weighted average common shares outstanding - basic | | | 21,879 | | | | 21,561 | | | | 21,798 | | | | 21,441 | |
| Weighted average common shares outstanding - diluted | | | 22,264 | | | | 22,359 | | | | 22,325 | | | | 22,208 | |
| | | | | | | | | | | | | | | | | |
| Non-GAAP operating income per share - basic | | $ | 0.22 | | | $ | 0.20 | | | $ | 0.62 | | | $ | 0.60 | |
| Non-GAAP operating income per share - diluted | | $ | 0.21 | | | $ | 0.19 | | | $ | 0.61 | | | $ | 0.58 | |
| Revenues by Geographic Region | | | | | | | | | | | | |
| (In thousands) | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Three Months Ended | | | Nine Months Ended | |
| | | December 31, | | | December 31, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| North America | | $ | 22,852 | | | $ | 21,628 | | | $ | 65,629 | | | $ | 61,868 | |
| International | | | 4,112 | | | | 4,062 | | | | 13,595 | | | | 11,945 | |
| Total revenues | | $ | 26,964 | | | $ | 25,690 | | | $ | 79,224 | | | $ | 73,813 | |
| Revenues by Customer Group | | | | | | | | | | | | |
| (In thousands) | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Three Months Ended | | | Nine Months Ended | |
| | | December 31, | | | December 31, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| Medical Market | | $ | 7,175 | | | $ | 6,005 | | | $ | 19,719 | | | $ | 16,455 | |
| Veterinary Market | | | 17,907 | | | | 18,073 | | | | 54,465 | | | | 52,498 | |
| Other | | | 1,882 | | | | 1,612 | | | | 5,040 | | | | 4,860 | |
| Total revenues | | $ | 26,964 | | | $ | 25,690 | | | $ | 79,224 | | | $ | 73,813 | |
