laserscope [logo] FOR IMMEDIATE RELEASE
At Laserscope: At Financial Relations Board:
Eric Reuter, President & CEO Tricia Ross Analyst/Investor Contact
Dennis LaLumandiere, CFO (617) 520-7064
(408) 943-0636 Laurie Berman, General Information
(310) 854-8315
LASERSCOPE REPORTS RECORD REVENUES AND EARNINGS
FOR 2004 FOURTH QUARTER AND FULL YEAR
Urology Business Drives Significant Top and Bottom Line Growth
2004 Fourth Quarter and Full Year Highlights (compared to the prior-year quarter
and the prior year, respectively):
o GreenLightTM PVP fiber volumes increased almost 133% in the fourth
quarter of 2004 and almost 182% for the full year.
o Total revenues grew approximately 65% in the fourth quarter of 2004
and approximately 63% for the full year.
o Net income grew approximately 245% in the fourth quarter of 2004 and
approximately 486% for the full year.
SAN JOSE, Calif. (March 3, 2005) - Laserscope (Nasdaq: LSCP), a pioneer in the
development and commercialization of medical lasers and advanced fiber-optic
devices, today reported record revenues of $29.4 million for its fourth quarter
ended December 31, 2004, a 65.2% increase from $17.8 million in the fourth
quarter of 2003. Revenues also increased 21.8% sequentially, from $24.2 million
for the quarter ended September 30, 2004. The increase in revenues was
attributable to continued growth in sales of the Company's line of GreenLightTM
products for Photo-Selective Vaporization of the Prostate (PVP), in addition to
strong aesthetic product sales. Fourth quarter 2004 net income was a record $5.2
million, or $0.23 per diluted share, a significant increase from net income of
$1.5 million, or $0.07 per diluted share, in the same quarter last year, and net
income of $4.4 million, or $0.19 per diluted share, for the third quarter of
2004.
"The fourth quarter capped another very exciting year for Laserscope," said Eric
Reuter, President and Chief Executive Officer of Laserscope. "Since launching
our urology business in 2002, global adoption of the PVP procedure using the
GreenLightTM laser system for treatment for Benign Prostatic Hyperplasia, or
BPH, has been outstanding. As more patients and physicians continue to recognize
the safety and efficacy of the PVP procedure using our GreenLightTM laser
system, we've been able to
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Laserscope Reports Record Revenues and Earnings for 2004
Fourth Quarter and Full Year
March 3, 2005
Page 2 of 8
grow procedure volume. We are regularly hearing now that men, both in the U.S.
and internationally, are choosing PVP over all other major therapy types,
including many men who are choosing to forego or stop their medical therapy to
have a PVP procedure done. Our strong and consistent financial performance over
the last year is the result of this success coupled with continued solid
performance in our aesthetics business."
Gross margin in the fourth quarter of 2004 was approximately 58%, compared with
approximately 54% in the fourth quarter of 2003, and approximately 59% for the
third quarter of 2004. The increase in 2004 fourth quarter gross margin resulted
from product mix changes and manufacturing efficiencies, partially offset by an
approximate $400,000 year-end write-down of inventory.
Selling, general and administrative expenses were $10.1 million, or 34% of
revenues, in the fourth quarter of 2004, compared with $6.8 million, or 38% of
revenues in the fourth quarter of 2003, and $8.7 million, or 36% of revenues, in
the third quarter of 2004. Increased SG&A spending resulted primarily from
higher commissions paid commensurate with the increase in revenues, higher
marketing and education expenses related to expanding the presence of the
Company's products in both domestic and international markets, as well as
increased costs related to Sarbanes-Oxley compliance.
The Company's financial position remains strong. At December 31, 2004,
Laserscope had no bank borrowings and a cash position of $15.7 million, up from
$7.2 million at December 31, 2003 and $12.7 million at September 30, 2004.
Shareholders' equity increased from $23.2 million at December 31, 2003 and $35.5
million at September 30, 2004 to $42.9 million at December 31, 2004.
2004 Full Year Results
Laserscope reported 2004 revenues of $93.8 million, a 63% increase when compared
to $57.4 million in 2003. Net income in 2004 was $14.7 million, or $0.65 per
diluted share, a 486% increase when compared to $2.5 million, or $0.13 per
diluted share, in 2003.
Urology Business Update
"Our urology business continued its impressive track
record in the fourth quarter, as we sold 77 GreenLight laser systems and almost
12,500 disposable fibers worldwide," said Mr. Reuter. "At the end of December
2004, our worldwide installed base of GreenLight laser systems exceeded 400
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3070 Orchard Drive Telephone: (408) 943-0636
San Jose, California Fax: (408) 943-9630
95134-2011 www.laserscope.com
Laserscope Reports Record Revenues and Earnings for 2004
Fourth Quarter and Full Year
March 3, 2005
Page 3 of 8
systems, and fiber sales since we introduced the PVP procedure in 2002 have been
over 54,000. While our international fiber revenue was lower in the fourth
quarter when compared to the third quarter of 2004, due primarily to the
previously discussed buying patterns of some of our international customers, we
expect strong growth in PVP procedure volume internationally over the full year
in 2005, although this growth will vary on a sequential basis.
"The world's leading academic medical centers and urologists continue to prove
the effectiveness and safety profile of the PVP procedure using Laserscope's
GreenLightTM laser system. As more and more men are choosing PVP for treatment
of their BPH symptoms, the PVP procedure using the GreenLight laser system is
gaining momentum and displacing other forms of surgical treatment, as well as
drug therapies. Around the globe, we're getting closer to our number one
priority in the urology segment, which is to ensure that Laserscope's GreenLight
laser system for PVP is recognized as the new worldwide standard for treating
BPH.
"We are especially proud of the progress we're making overseas, where we believe
the ultimate market for the PVP procedure is approximately four to five times
that of the United States. Recently, Kings College Hospital in the United
Kingdom won an award for clinical excellence based on their use of our BPH
treatment technology. We continue to believe that the visibility we're receiving
from recognition like this, along with current and up-and-coming academic papers
that will continue to demonstrate not only the effectiveness and safety of the
procedure using our product, but the reduction in costs to the healthcare
system, will help us penetrate other two-tiered medical systems around the
world.
"We recently announced a new, exclusive distribution agreement for the sale of
our GreenLight laser system into Latin American and Caribbean markets,
previously untapped for Laserscope. We are also currently in the process of
preparing a submission to the Ministry of Health in Japan for our GreenLight
laser system. The market for BPH treatments in Japan is among the largest in the
developed world outside the United States, and although we do not expect to be
able to market and sell GreenLight products in Japan until late 2006 at the
earliest, we remain very optimistic that this market represents a very exciting
future untapped opportunity for Laserscope."
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3070 Orchard Drive Telephone: (408) 943-0636
San Jose, California Fax: (408) 943-9630
95134-2011 www.laserscope.com
Laserscope Reports Record Revenues and Earnings for 2004
Fourth Quarter and Full Year
March 3, 2005
Page 4 of 8
Aesthetics Business Update
"Our Aesthetics business continues to produce good results, as we're taking
advantage of the growing demand around the world for cosmetic treatments,"
continued Mr. Reuter. "Last month, we enhanced our aesthetic product offering
with the introduction of our new SolisTM treatment system at the American
Academy of Dermatology Annual Meeting. The Solis is targeted to address the
increasing trend toward very fast light-based cosmetic procedures in the U.S.
and abroad. We believe the Solis, which is ideal for treating large areas of the
body, offers some of the fastest treatment speeds among all similar devices,
making it a great choice for physicians who are considering adding cosmetic
procedures to their suite of services. We believe the Solis will appeal to
physicians who want to replace older, less effective systems that are no longer
competitive in the current environment with one of the fastest treatments
systems available. We expect to begin shipping the Solis in the late summer.
"We think we've built a great franchise in both the urology and aesthetic
markets. Growth in the PVP procedure using our GreenLightTM laser system
continues to surpass expectations, while we're strengthening our aesthetics
portfolio to capture growing market opportunities," said Mr. Reuter. "We look
forward to 2005 with enthusiasm and excitement, as the entire Laserscope team
continues to execute on our business plan."
Full Year 2005 Guidance
The management of Laserscope has updated full year 2005 guidance as follows:
o 2005 full year revenues are expected to be in the range of $125 million to
$130 million.
o Reported pre-tax earnings are expected to be in the range of $28 million
to $31 million.
o During 2004, the Company did not release the reserve for its deferred tax
asset. Should it not release the reserve during 2005, the Company's
effective tax rate is expected to be in the range of 14% to 17%, and net
income would be expected to be in the range of $1.00 to $1.10 per fully
diluted share. Should the reserve be released during 2005, we would expect
net income to be between $0.75 and $0.80 per fully diluted share, on a
fully taxed basis of approximately 38%, without consideration given to the
benefit of the release of the reserve.
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3070 Orchard Drive Telephone: (408) 943-0636
San Jose, California Fax: (408) 943-9630
95134-2011 www.laserscope.com
Laserscope Reports Record Revenues and Earnings for 2004
Fourth Quarter and Full Year
March 3, 2005
Page 5 of 8
o As was the case in 2003 and 2004, we expect the sequential growth in
revenue and earnings in 2005 to be more heavily weighted to the second
half of the year.
Management Conference Call
Management of Laserscope will hold a conference call on Thursday, March 3, 2005
at 8:00 am PT / 11:00am ET to discuss results for the quarter and full year. To
participate in the call, please dial 800-218-8862 (303-262-2142 for
international callers) at least five minutes prior to the start time.
Investors will also have the opportunity to listen to the conference call live
on the Internet through Laserscope's website at www.laserscope.com or at
www.fulldisclosure.com. Investors should go to either website a few minutes
early, as it may be necessary to download audio software to access the
conference call.
A replay of the conference call will be available through March 10, 2005 by
dialing 800-405-2236 (303-590-3000 for international callers), passcode
11024579. A replay of the webcast will also be available at Laserscope's
website.
About Laserscope
Laserscope designs, manufactures, sells and services on a worldwide basis an
advanced line of medical laser systems and related energy delivery devices for
the office, outpatient surgical center, and hospital markets. More information
about Laserscope can be found on the Company's web site at www.laserscope.com.
This press release contains forward-looking information within the meaning of
Section 21E of the Securities Exchange Act of 1934, and is subject to the safe
harbor created by this section. These forward-looking statements include:
statements about Laserscope's future profitability and operating results,
competition, expected continued momentum of Laserscope's business and growth
including new product offerings, worldwide adoption rates of the PVP procedure
using our GreenLightTM laser system and market penetration opportunities in
international markets such as Japan and Latin America among others. These
statements are subject to a number of risks and uncertainties, including:
uncertainties regarding introduction of new technologies competitive to our
products, the degree to which our current and new products are accepted by
customers, which could affect the level of demand for our products; our
dependence on sole source providers for key components and products; reductions
in government and private insurance reimbursement of hospitals and physicians
for health
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3070 Orchard Drive Telephone: (408) 943-0636
San Jose, California Fax: (408) 943-9630
95134-2011 www.laserscope.com
Laserscope Reports Record Revenues and Earnings for 2004
Fourth Quarter and Full Year
March 3, 2005
Page 6 of 8
care costs which may negatively impact hospitals and physicians
decisions to purchase our products reducing adoption rates and sales growth;
risks that patents and licenses that we hold may be challenged, invalidated or
circumvented or that we may become the subject of intellectual property
litigation; and uncertainties that new products will receive regulatory approval
in applicable jurisdictions. Actual results may differ materially due to these
and other factors. The matters discussed in this press release also involve
risks and uncertainties described from time to time in Laserscope's filings with
the Securities and Exchange Commission. In particular, see the Risk Factors
described in Laserscope's most recent Quarterly Report on Form 10-Q and Annual
Report on Form 10-K. Copies of Laserscope's public disclosure filings with the
SEC, including the most recent Annual Report on Form 10-K and the most recent
forms 10-Q are available upon request from its Investor Relations Department at
its website at www.laserscope.com. Laserscope assumes no obligation to update
the forward-looking information contained in this press release.
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3070 Orchard Drive Telephone: (408) 943-0636
San Jose, California Fax: (408) 943-9630
95134-2011 www.laserscope.com
Laserscope Reports Record Revenues and Earnings for 2004
Fourth Quarter and Full Year
March 3, 2005
Page 7 of 8
Laserscope
GreenLight PVTM Fiber Sales
(Units)
2004 Q1 Q2 Q3 Q4 Year
- ---- ------ ------ ------ ------ ------
United States 5,018 6,908 7,024 10,211 29,161
International 1,385 1,582 2,967 2,269 8,203
------ ------ ------ ------ ------
Total 6,403 8,490 9,991 12,480 37,364
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2003 Q1 Q2 Q3 Q4 Year
- ---- ------ ------ ------ ------ ------
United States 1,241 2,260 2,585 3,848 9,934
International 165 815 829 1,516 3,325
------ ------ ------ ------ ------
Total 1,406 3,075 3,414 5,364 13,259
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3070 Orchard Drive Telephone: (408) 943-0636
San Jose, California Fax: (408) 943-9630
95134-2011 www.laserscope.com
Laserscope Reports Record Revenues and Earnings for 2004
Fourth Quarter and Full Year
March 3, 2005
Page 8 of 8
LASERSCOPE FINANCIAL SUMMARY
(Unaudited)
Condensed Consolidated Statements of Income
Three months ended Twelve months ended
December 31, December 31,
(thousands except per share amounts) 2004 2003 2004 2003
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Net revenues ................................. $ 29,430 $ 17,816 $ 93,770 $ 57,427
Cost of sales ................................ 12,296 8,251 39,483 27,639
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Gross margin ................................. 17,134 9,565 54,287 29,788
Operating expenses:
Research and development ................ 1,490 1,143 5,217 4,443
Selling, general and administrative ..... 10,073 6,802 33,655 22,638
-------- -------- -------- --------
............................................. 11,563 7,945 38,872 27,081
Operating income ............................. 5,571 1,620 15,415 2,707
Interest income (expense) and other, net ..... (57) 35 264 12
-------- -------- -------- --------
Net income before income taxes ............... 5,514 1,655 15,679 2,719
Provision for income taxes ................... 330 154 940 202
-------- -------- -------- --------
Net income ................................... $ 5,184 $ 1,501 $ 14,739 $ 2,517
======== ======== ======== ========
Basic net income per share ................... $ 0.24 $ 0.08 $ 0.70 $ 0.13
======== ======== ======== ========
Diluted net income per share ................. $ 0.23 $ 0.07 $ 0.65 $ 0.13
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Shares used in basic per share calculations .. 21,672 17,946 21,075 17,452
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Shares used in diluted per share calculations 22,905 22.412 22,808 21.838
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Condensed Consolidated Balance Sheets
December 31, December 31,
(thousands) 2004 2003
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Assets
Current assets:
Cash & cash equivalents................... $15,724 $ 7,158
Accounts receivable, net.................. 20,572 12,711
Inventories............................... 19,446 13,368
Prepayments and other current assets...... 1,471 1,315
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Total current assets............. 57,213 34,552
Property and equipment, net.................... 3,457 1,645
Other assets ................................. 919 831
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Total assets..................... $61,589 $37,028
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Liabilities and Shareholders' Equity
Current liabilities............................ $18,647 $13,830
Capital leases................................. 31 --
Shareholders' equity........................... 42,911 23,198
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Total liabilities and shareholders' equity $61,589 $37,028
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