EXHIBIT 99.1
[Logo] LASERSCOPE FOR IMMEDIATE RELEASE
At Laserscope: At Financial Relations Board:
Eric Reuter, President & CEO Tricia Ross Analyst/Investor Contact
Derek Bertocci, CFO (617) 520-7064
(408) 943-0636 Laurie Berman, General Information
(310) 854-8315
LASERSCOPE REPORTS 2005 FOURTH QUARTER AND
YEAR-END OPERATING RESULTS
Fourth Quarter Results Driven by Record Worldwide GreenLight(TM) Product
Revenues, Strong Aesthetic Sales and Significant Increases in R&D Spending
SAN JOSE, Calif. (February 23, 2006) - Laserscope (Nasdaq: LSCP), a pioneer in
the development and commercialization of minimally-invasive medical devices,
including medical lasers and advanced fiber-optic delivery devices, today
reported record revenues of $35.0 million for its fourth quarter ended December
31, 2005, a 19% increase from $29.4 million in the fourth quarter of 2004 and a
15% increase from $30.4 million in the third quarter of 2005. The fourth quarter
increase in revenues was primarily attributable to 35% growth in worldwide
urology revenues, led by record shipments of GreenLight PV(R) single-use fiber
optic delivery devices both domestically and internationally. Domestic
GreenLight PV delivery device sales totaled 15,221 units in the fourth quarter
of 2005 compared with 10,211 units in the fourth quarter of 2004. International
GreenLight PV delivery device sales totaled 5,461 in the fourth quarter of 2005
compared to 2,269 in the fourth quarter of 2004. The sequential increase in
revenues was primarily attributable to strong growth in GreenLight PV delivery
device sales and a 19% increase in aesthetic system sales. The worldwide
installed base of GreenLight PV laser systems now stands at more than 775 units,
with over 425 units in the United States and over 350 units outside the United
States.
Fourth quarter 2005 operating income was $5.4 million, down slightly from $5.6
million in the fourth quarter of 2004. Fourth quarter 2005 net income increased
to $5.9 million, or $0.26 per fully diluted share, compared to net income of
$5.2 million, or $0.23 per fully diluted share, in the same quarter last year.
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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 2005 Fourth Quarter and Year-End Operating Results
February 23, 2006
Page 2 of 10
Gross margins of 59% in the fourth quarter of 2005 remained consistent with the
fourth quarter of 2004 as well as the third quarter of 2005. Historically, gross
profit margin has varied as sales mix has changed. For example, increases in
sales of GreenLight PV delivery devices will generally raise overall gross
profit margin, whereas increases in sales of products through distributors in
international markets will tend to decrease overall gross profit margin. Fourth
quarter 2005 gross profit was reduced by approximately $400,000 due to inventory
adjustments taken as a result of a full physical inventory count. Field service
activity related to the upgrade of GreenLight laser systems during the fourth
quarter contributed significantly to these inventory adjustments. Additionally,
as part of a new pricing program for the GreenLight PV delivery device, in the
fourth quarter of 2005 the Company reduced the retail sales price of GreenLight
PV delivery devices in the U.S. from $875 to $795. The new pricing program for
the GreenLight PV delivery device resulted in a reduction in fourth quarter
gross profit of approximately $400,000. Through engineering and manufacturing
programs the cost of the Company's fiber optic delivery devices were reduced for
2006. The impact of the new pricing program and the benefit of these cost
savings are reflected in Laserscope's forward looking guidance.
Fourth quarter 2005 research and development ("R&D") expenses grew 62% on an
absolute basis to $2.4 million, or 7% of revenues, compared to $1.5 million, or
5% of revenues, in the fourth quarter of 2004. Research and development expenses
were $2.1 million, or 7% of revenues, in the third quarter of 2005. The increase
in R&D expenses resulted primarily from new product development and clinical
activities focused on the development of future products and new clinical
applications.
Selling, general and administrative ("SG&A") expenses grew approximately 27% to
$12.9 million, or 37% of revenues, in the fourth quarter of 2005, compared to
$10.2 million, or approximately 35% of revenues, in the fourth quarter of 2004.
The increase in SG&A expenses resulted primarily from higher sales and marketing
expenses to support the Company's current and future growth initiatives and
increased sales in the United States and international markets.
Income tax expense was negative in the fourth quarter of 2005 and relatively low
for the full year due principally to tax loss and tax credit carry forwards that
benefited income tax expenses in 2005. The benefits from these tax loss and tax
credit carry forwards have been fully recognized in
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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 2005 Fourth Quarter and Year-End Operating Results
February 23, 2006
Page 3 of 10
the 2005 results and the Company expects its effective income tax rate for 2006
to be approximately 40%.
Laserscope's balance sheet remains strong. At December 31, 2005, the Company had
no bank borrowings and a cash position of $30.7 million, up significantly from
$16.0 million at December 31, 2004. Inventories increased slightly compared to
the third quarter of 2005 due to the increase in sales of GreenLight and
aesthetic products. Accounts receivable increased approximately $2.7 million
compared to the third quarter of 2005 as a result of increased sales. Days sales
outstanding in receivables declined from 68 to 66 days.
Full-Year 2005 Results
For the full year ended December 31, 2005, Laserscope reported record revenues
of $127.1 million, compared to $93.8 million for the full year ended December
31, 2004, a 36% increase. Operating income in 2005 was $23.8 million, compared
to $15.4 million in 2004, a 55% increase. Net income rose 53% in 2005 to $22.6
million, or $0.98 per fully diluted share, compared to $14.7 million, or $0.65
per fully diluted share, in 2004.
Surgical Business Update
"Our surgical business posted strong gains in 2005, driven by our worldwide
sales of GreenLight PV delivery devices which increased 97% in 2005 from 2004.
In the fourth quarter of 2005 GreenLight PV delivery device sales increased 17%
from the third quarter. As we expected, U.S. utilization recovered nicely from
the adverse factors that impacted the domestic surgical market in the September
quarter, and we were especially pleased to see a strong rebound in sales of
GreenLight PV delivery devices in the United States," said Eric Reuter,
President and Chief Executive Officer of Laserscope. "International demand for
the Photo-Selective Vaporization of the Prostate (PVP) procedure using the
GreenLight PV laser system also continued its upward trend during the fourth
quarter, as GreenLight PV laser system sales and sales of associated delivery
devices grew once again when compared both to the same quarter last year and to
the immediately prior quarter. We are pleased with this trend and the high level
of enthusiasm for the future market opportunity for the GreenLight product line
and PVP procedure from both our direct international operations personnel as
well as our international distribution partners."
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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 2005 Fourth Quarter and Year-End Operating Results
February 23, 2006
Page 4 of 10
About GreenLight(TM) and PVP
The primary market opportunity for the PVP procedure, which is used to treat
enlarged prostate disease called benign prostatic hyperplasia ("BPH"), is to
replace the Trans-Urethral Resection of the Prostate procedure, or TURP.
Industry sources and available data indicate that the number of TURPs performed
worldwide likely exceeds one million procedures each year.
Additionally, sources indicate that the number of men using medical therapy
(drugs) to treat their BPH symptoms is over 2.5 million annually in the United
States and several times this number internationally.
The PVP procedure using the GreenLight PV laser system and GreenLight PV
single-use fiber optic delivery device has been demonstrated to offer a
relatively safe, durable, and clinically efficacious procedure to treat BPH with
minimal side effects that can give patients quick and substantial relief from
their BPH symptoms. PVP uses focused high power light energy at the 532 nm
wavelength applied through a small, flexible sterile fiber optic delivery device
which the urologist uses to safely, efficiently and virtually bloodlessly
vaporize and immediately remove thin layers of the unwanted prostatic tissue
until the patient's prostatic channel is restored. A PVP treatment often results
in nearly immediate symptom relief for the patient. PVP is often done on an
outpatient basis and patients often can go home without an in-dwelling catheter
the same day following their surgery. Long term clinical data demonstrates that
PVP offers clinical outcomes equivalent to TURP, the current "gold-standard",
but with a more patient-friendly and substantially better safety and side-effect
profile. Laserscope estimates that over 100,000 PVP procedures have been
performed worldwide since the GreenLight laser system and PVP procedure were
made commercially available in 2002. In 2005, the Company believes approximately
54,000 PVP procedures were performed in the U.S. and over 19,000 performed
internationally.
"Our goal has been and continues to be for the PVP procedure to replace TURP as
the standard of care worldwide. We are now also focused on establishing the PVP
procedure using the GreenLight PV laser system as a preferable alternative in
many cases to other less efficacious surgical solutions as well as medical
therapies, and to begin to take market share from these other therapies
currently in use. Our results in 2005 show that we've achieved marked progress
toward replacing the TURP," said Reuter. "In the United States, there were about
54,000 PVP
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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 2005 Fourth Quarter and Year-End Operating Results
February 23, 2006
Page 5 of 10
procedures performed in 2005, which we believe is somewhere between 20 and 25%
of the current TURP market and between 15 and 18% of the overall non-drug
surgical treatment market in the U.S. Although international growth has been
strong, we believe penetration of the TURP market remains under 5% in many of
the largest markets outside the United States. We have not yet received market
approval in Japan which we believe is the second largest TURP market outside the
United States. We believe this opportunity represents one of several large
untapped market opportunities. Given the significant advantages that the PVP
procedure offers the patient, the physician, and healthcare systems, we believe
that PVP will continue to be adopted as a replacement for TURP for the
foreseeable future.
"We have also recently heard anecdotal accounts from some physicians
domestically and internationally of patients who have chosen to stop medical
therapy (drugs) and instead to seek treatment of their BPH symptoms with the PVP
procedure using the GreenLight PV laser system," continued Mr. Reuter. "Although
it is not clear whether these anecdotal accounts represent a significant trend,
they are consistent with our understanding of the relative merits in many cases
of PVP versus medical therapy. Drugs usually require daily compliance for the
rest of the patient's life. Drug therapy is expensive, can have side effects,
and typically offers nowhere near the clinical efficacy of the PVP procedure.
Consequently, we believe that when presented with the facts regarding their
treatment options - especially after long-term treatment with medical therapy -
many men would prefer to have a single, durable, and substantially more
clinically efficacious procedure to treat their symptoms rather than be
dependent on a lifetime of medical therapy. We believe the relative merits of
the PVP procedure using the GreenLight PV laser system over TURP, other
available surgical solutions and medical therapy for a wide spectrum of patients
enhance the potential long term prospects for the PVP procedure using our
GreenLight products both domestically and internationally."
Aesthetics Business Update
"The fourth quarter represented a strong effort for our aesthetics business,"
said Mr. Reuter. "Revenues grew nicely compared to the third quarter, allowing
us to generate our second highest ever quarterly aesthetics sales. We have made
continued good progress with our U.S. distribution partner, Henry Schein, Inc.,
as we continue to introduce the Henry Schein sales and marketing organization to
our aesthetic product line. This is an ongoing process that is expected
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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 2005 Fourth Quarter and Year-End Operating Results
February 23, 2006
Page 6 of 10
to take several quarters for full implementation. In the fourth quarter of 2005,
we hired a global vice president of sales and marketing dedicated to our
aesthetic products to focus our energies and drive our growth initiatives in a
large and growing worldwide market for aesthetics products and procedures. We
are determined to return the aesthetic business to market growth rates by the
fourth quarter of 2006. We believe that this past quarter was a good indication
that we have made incremental progress toward achieving this goal."
Full Year 2006 Guidance
Full year 2006 revenues and fully taxed earnings are expected to rise between
20% and 25% assuming a full income tax rate of 40% is applied to pre-tax income
for both 2006 and 2005. Revenue growth is expected to increase year-over-year
with some slight sequential reduction expected in the third quarter due to
seasonality.
This forecast specifically does not include the impact on the Company of
stock-based compensation expense required under FAS 123R which will decrease
earnings reported in 2006 and beyond.
2006 earnings guidance includes accommodation for absolute increases of between
50-60% in R&D spending over 2005 levels to continue funding of key new product
development programs, clinical, and regulatory activities in both urology and
aesthetics. R&D spending during 2006 is expected to be in the range of 7% to 9%
of total revenues. Fully taxed earnings growth is expected to be weighted toward
the second half of the year.
SG&A expenses are expected to rise on an absolute basis during 2006 as domestic
and international initiatives in sales and marketing are executed. SG&A expenses
are expected to range between 33% to 35% of sales during 2006.
Management will continue to report both domestic and international GreenLight
delivery device sales and system installed base for the foreseeable future.
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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 2005 Fourth Quarter and Year-End Operating Results
February 23, 2006
Page 7 of 10
Special Investor Relations Forum Announced
Laserscope will be holding a special Investor Relations Forum coinciding with
the 2006 American Urological Association Meeting in May, 2006. At this meeting,
Laserscope will be discussing current and future key strategic research and
development initiatives and additionally will be unveiling the latest new
additions to the Laserscope urology product line. Investors are invited to
attend in-person or via a web-cast which will be announced prior to the event.
Those planning to attend in person should contact Laserscope's IR
representatives as attendance will be limited.
Management Conference Call
Management of Laserscope will hold a conference call today, Thursday, February
23, 2006 at 8:00 am PT / 11:00am ET to discuss results for the 2005 fourth
quarter and full year. To participate in the call, please dial 800-257-1836
(303-262-2051 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.
Investors should go to the 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 Thursday, March 2, 2006 by dialing
800-405-2236 (303-590-3000 for international callers), and entering passcode
11054215.
About Laserscope
Laserscope designs, manufactures, sells and services on a worldwide basis an
advanced line of minimally-invasive medical products including 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
its web site at www.laserscope.com.
Safe Harbor Statement
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, manufacturing and engineering improvements in our existing products
designed to reduce the cost of goods sold, expected continued momentum of
Laserscope's business and growth including new product offerings, worldwide
adoption rates of the PVP procedure using the GreenLight PV(R) laser system, our
ability to compete with similar product offerings and other therapies for the
treatment of BPH, market penetration
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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 2005 Fourth Quarter and Year-End Operating Results
February 23, 2006
Page 8 of 10
opportunities in international markets such as in Europe and the Asia Pacific
region, including Japan, and the relationship with our distribution partner for
aesthetic products, Henry Schein, Inc. These statements are subject to a number
of risks and uncertainties, including: uncertainties regarding introduction of
new technologies competitive to Laserscope's products and the degree to which
our current and new products are accepted by customers, which could affect the
level of demand for our products; uncertainties regarding the impact that
competitive products and therapies as well as private and public payer
reimbursement levels for the PVP procedure could have on the competitiveness of
our current pricing programs, which could adversely impact our financial
results; our dependence on sole source providers for key components and
products; risk of reductions in government and private insurance reimbursement
of hospitals and physicians for health care costs, which may negatively impact
hospitals and physicians decisions to purchase our products reducing adoption
rates and sales growth; risks that we may be unable to protect adequately the
integrity, safety and proper use of our disposable fiber optic delivery device
with the GreenLight PV(R) laser system, which could result in negative patient
outcomes and reduce our disposable delivery device recurring revenue stream;
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; uncertainties regarding our ability to compete with companies that
have significantly greater financial, technical, research and development,
manufacturing and marketing resources than we have; 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 and at the SEC's website: www.sec.gov. 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 2005 Fourth Quarter and Year-End Operating Results
February 23, 2006
Page 9 of 10
GreenLight(TM) Delivery Device Sales
(UNITS)
2005 Q1 Q2 Q3 Q4 Year
- ---- -- -- -- -- ----
United States 11,792 14,379 12,654 15,221 54,046
International 4,463 4,712 4,985 5,461 19,621
------ ------ ------ ------ ------
Total 16,255 19,091 17,639 20,682 73,667
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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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3070 Orchard Drive Telephone: (408) 943-0636
San Jose, California Fax: (408) 943-9630
95134-2011 www.laserscope.com
Laserscope Reports 2005 Fourth Quarter and Year-End Operating Results
February 23, 2006
Page 10 of 10
LASERSCOPE FINANCIAL SUMMARY
(Unaudited)
Condensed Consolidated Statements of Income
Three months ended Twelve months ended
December 31, December 31,
(thousands except per share amounts) 2005 2004 2005 2004
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Net revenues .......................................... $35,001 $29,430 $127,124 $93,770
Cost of sales ......................................... 14,290 12,180 50,421 39,115
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Gross margin .......................................... 20,711 17,250 76,703 54,655
Operating expenses:
Research and development ......................... 2,412 1,490 7,858 5,217
Selling, general and administrative .............. 12,913 10,189 45,014 34,023
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15,325 11,679 52,872 39,240
Operating income ...................................... 5,386 5,571 23,831 15,415
Interest income (expense) and other, net .............. 126 (57) 545 264
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Net income before income taxes ........................ 5,512 5,514 24,376 15,679
Provision (benefit) for income taxes .................. (395) 330 1,826 940
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Net income ............................................ $ 5,907 $ 5,184 $ 22,550 $14,739
======= ======= ======== =======
Basic net income per share ............................ $ 0.27 $ 0.24 $ 1.02 $ 0.70
======= ======= ======== =======
Diluted net income per share .......................... $ 0.26 $ 0.23 $ 0.98 $ 0.65
======= ======= ======== =======
Shares used in basic per share calculations ........... 22,265 21,672 22,142 21,075
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Shares used in diluted per share calculations ......... 22,874 22,905 22,917 22,808
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Condensed Consolidated Balance Sheets
December 31, December 31,
($ in thousands) 2005 2004
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Assets
Current assets:
Cash & cash equivalents..................................................... $ 30,653 $15,954
Accounts receivable, net.................................................... 25,138 20,342
Inventories................................................................. 27,058 19,446
Prepayments and other current assets........................................ 19,171 1,471
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Total current assets............................................... 102,020 57,213
Property and equipment, net...................................................... 8,663 3,457
Other assets ................................................................... 1,087 919
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Total assets....................................................... $111,770 $61,589
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Liabilities and Shareholders' Equity
Current liabilities.............................................................. $ 26,973 $18,647
Capital leases................................................................... 9 31
Shareholders' equity............................................................. 84,788 42,911
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Total liabilities and shareholders' equity....................................... $111,770 $61,589
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3070 Orchard Drive Telephone: (408) 943-0636
San Jose, California Fax: (408) 943-9630
95134-2011 www.laserscope.com