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EXHIBIT 99.1
[CARDIOGENESIS LETTERHEAD]
NEWS RELEASE for July 23, 2003 at 7:30 AM EDT
Contact: Allen & Caron Inc CardioGenesis
Mike Mason (investors) Len Hall (media) Darrell Eckstein
212-691-8087 949-474-4300 714-649-5000
michaelm@allencaron.com len@allencaron.com
CARDIOGENESIS CORPORATION REPORTS 2003 SECOND QUARTER,
SIX-MONTH RESULTS
FOOTHILL RANCH, CA (July 23, 2003) ... CardioGenesis Corporation
(OTCBB:CGCP.OB), the worldwide leader in angina-relieving Transmyocardial
Revascularization (TMR) and Percutaneous Myocardial Revascularization (PMR),
today announced results for its second quarter and first six months ended June
30, 2003. Chairman and CEO Michael J. Quinn said that revenues for this year's
second quarter and first six months increased modestly compared to revenues in
the same periods last year and gross margins in the 2003 second quarter and
first six months rose sharply from the prior year periods. The loss from
operations in this year's second quarter and first six months declined from
prior year periods despite a sharp increase in R&D in the second quarter and
first six months of 2003 to support the Company's efforts to gain clearance from
the U.S. Food and Drug Administration (FDA) to market the PMR system.
Revenues in this year's second quarter were $3.1 million with a loss from
operations of $879,000, compared to revenues of $3.0 million with a loss from
operations of $1.2 million in the second quarter of 2002. The Company reported a
net loss for the 2003 second quarter of $878,000, or a $0.02 loss per basic and
fully diluted share, compared to net income of $1.1 million, or $0.03 per basic
and fully diluted share for the second quarter of 2002. Results for the second
quarter of 2002 included non operating income of $2.3 million from the Company's
gain on the sale of its minority interest in a privately held medical products
company.
"The modest increase in revenues in this year's second quarter, when
compared to last year's second quarter," Quinn said, "was driven by the effects
of higher average selling prices, which were partially offset by fewer
disposable hand piece sales in the quarter. Even though we lost money in this
year's second quarter, we believe our TMR business in the quarter remained on
track to develop into a consistently profitable business.
"Interest in the procedure among cardiothoracic surgeons and potential
patients continues to grow," Quinn added. "This continues to be evidenced by the
increasing number of trained TMR surgeons and greater awareness of TMR among
potential new users of the system and patients with advanced cardiovascular
disease who are in need of relief from severe angina pain."
For the first six months of 2003 revenues were $6.5 million, with a loss
from operations of $760,000, compared to revenues for the first six months of
the prior year of $6.2 million, with
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CARDIOGENESIS CORPORATION REPORTS
Page 2-2-2
a loss from operations of $2.4 million. The net loss for the first six months of
2003 was $757,000, or a $0.02 loss per basic and fully diluted share, compared
to a net loss for the first six months of last year of $102,000, or a $0.00 loss
per basic and fully diluted share. Results for the first six months of 2002
included the $2.3 million of non-operating income recorded in the 2002 second
quarter.
Gross profit margins as a percentage of sales rose to 84 percent and 83
percent, respectively, in the second quarter and first six months of 2003, up
significantly from 78 percent and 76 percent, in the prior year's respective
periods and in line with the upward trend in gross margins seen in prior
quarters. The increase in gross margins is due to higher average selling prices
of the Company's products and ongoing improvements in manufacturing by our
contract manufacturer.
Total operating expenses for the 2003 second quarter and first six months
were $3.5 million and $6.1 million, respectively, which included $448,000 and
$659,000, respectively, of R&D expenses associated with PMR.
Quinn said that the Company remains committed to PMR, its less invasive,
catheter-based version of TMR. He said the Company continues to work even more
closely with the FDA, and that the FDA and the Company have agreed to work
interactively to attempt to settle the scientific dispute in connection with the
Company's pending Premarket Approval (PMA) supplement for its PMR system.
On July 18, the Company announced that the August 20, 2003 meeting with
the FDA Medical Device Dispute Resolution Panel (MDDRP) has been cancelled based
upon a decision by CardioGenesis and the FDA that the FDA will review additional
data to be submitted by the Company in support of its PMA for the PMR system.
This decision does not preclude the Company and the FDA from scheduling a MDDRP
hearing in the future. The FDA has agreed to reschedule the hearing before the
MDDRP if the dispute cannot be resolved.
Quinn said, "Based upon our agreement with the FDA, we expect the review
of the additional information to occur rapidly and are hopeful that we will
receive a timely decision on the status of our PMR supplement. Even though it
will take a few weeks to complete and submit the requested information, we
believe this can be our fastest pathway to achieving approval of PMR. We are
confident and optimistic that the strength of our clinical data coupled with the
submission of the additional information to the FDA can effectively address
their concerns and support an approval decision by the FDA without the need for
a hearing."
The Company's June 30, 2003 balance sheet showed cash and cash equivalents
of $1.1 million, total assets of $6.9 million, shareholders' equity of $3.0
million, and no long term debt. The Company has a Convertible Note agreement
with a private equity fund that provides for borrowings up to $2 million based
upon eligible accounts receivable. The Company has no outstanding borrowings on
the Note.
During the year's second quarter, the Company shipped five lasers and had
worldwide disposable sales of 730 units, compared to the shipment of two lasers
and worldwide disposable
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Page 3-3-3
sales of 859 units in the second quarter of 2002. At the end of the 2003 second
quarter, there were 428 sites with CardioGenesis lasers for myocardial
revascularization, compared to 418 sites at the end of the second quarter of
2002.
Conference Call
CardioGenesis will host a conference call today, July 23, 2003, to discuss
the Company's results for its second quarter and first six months ended June 30,
2003. The call will take place at 11:30 a.m. EDT (Eastern) and will be broadcast
live over the Internet. Those interested in listening to the live webcast of the
conference call may do so by going to the Company's website at
www.cardiogenesis.com.
Web participants are encouraged to go to the selected website at least 15
minutes prior to the start of the call to register and, if necessary, download
and install any needed audio software. An online webcast replay of the call will
be accessible at www.cardiogenesis.com for seven days starting shortly after the
live webcast.
About CardioGenesis Corporation
CardioGenesis is a medical device company specializing in the treatment of
cardiovascular disease and is a leader in devices that stimulate cardiac
angiogenesis. The Company's market leading Holmium: YAG laser system and
disposable fiber-optic accessories are used to perform a FDA-cleared surgical
procedure known as transmyocardial revascularization (TMR) to treat patients
suffering from angina. The CardioGenesis TMR procedure, which is marketed in the
U.S. and around the world, has been shown to reduce angina and improve the
quality of life in patients with coronary artery disease. The Company's
minimally invasive percutaneous myocardial revascularization (PMR) procedure is
currently being marketed in Europe and other international markets.
For more information on the Company and its products, please visit the
CardioGenesis web site at www.cardiogenesis.com. For investor relations
information, visit the CardioGenesis pages in the "Client" section of the Allen
& Caron Inc web site at www.allencaron.com.
Any forward-looking statements in this news release related to the Company's
sales, profitability, the adoption of its technology and products and FDA
clearances are based on current expectations and beliefs and are subject to
numerous risks and uncertainties that could cause actual results to differ
materially. Other factors that could cause CardioGenesis' actual results to
differ materially are discussed in the "Risk Factors" section of the Company's
Annual Report on Form 10-K for the year ended December 31, 2002, its Quarterly
Report on Form 10-Q for the first quarter ended March 31, 2003, and the
Company's other recent SEC filings. The Company disclaims any obligation to
update any forward-looking statements as a result of developments occurring
after the date of this press release.
TABLES FOLLOW
CARDIOGENESIS CORPORATION REPORTS
Page 4-4-4
CARDIOGENESIS CORPORATION
CONDENSED AND CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
2003 2002 2003 2002
---- ---- ---- ----
Net revenues $ 3,090 $ 3,010 $ 6,512 $ 6,168
Cost of revenues 502 672 1,124 1,498
-------- -------- -------- --------
Gross profit 2,588 2,338 5,388 4,670
-------- -------- -------- --------
Operating expenses:
Research and development 723 437 1,106 643
Sales, general and
administrative 2,744 3,061 5,042 6,433
-------- -------- -------- --------
Total operating expenses 3,467 3,498 6,148 7,076
-------- -------- -------- --------
Loss from operations (879) (1,160) (760) (2,406)
Non-operating income, net 1 2,297 3 2,304
-------- -------- -------- --------
Net (loss) income $ (878) $ 1,137 $ (757) $ (102)
======== ======== ======== ========
Net (loss) income per share -
basic and diluted $ (0.02) $ 0.03 $ (0.02) $ (0.00)
======== ======== ======== ========
Shares used in per share
computations
Basic 37,136 36,979 37,128 36,744
======== ======== ======== ========
Diluted 37,136 37,098 37,128 36,744
======== ======== ======== ========
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CARDIOGENESIS CORPORATION
CONDENSED AND CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
JUNE 30, DECEMBER 31,
2003 2002
-------- ------------
ASSETS
Cash and cash equivalents $1,139 $1,490
Accounts receivable, net 1,419 1,961
Inventories, net 1,531 1,632
Property and equipment, net 470 589
Other assets 2,331 2,083
------ ------
Total assets $6,890 $7,755
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued
liabilities $3,243 $3,423
Deferred revenue 601 621
Shareholders' equity 3,046 3,711
------ ------
Total liabilities and
shareholders' equity $6,890 $7,755
====== ======
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