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WEDNESDAY JULY 25, 5:01 AM EASTERN TIME
Press Release
INAMED ANNOUNCES SECOND-QUARTER RESULTS
Updates 2001 Outlook
SANTA BARBARA, Calif.--(BUSINESS WIRE)--July 25, 2001--Inamed Corp. (Nasdaq:IMDC
- - news) today announced earnings for the second quarter ended June 30, 2001,
exceeding the range of analysts' expectations.
Sales for the second quarter were $62.6 million, down 7% from $67.6 million for
the 2000 second quarter. Earnings per share (EPS) for the quarter were $0.46,
compared with pro forma EPS of $0.57 in the second quarter of the prior year
(pro forma EPS reflects the elimination of the effect of a $2.8 million tax
refund received in the second-quarter 2000). Cash earnings per share for the
2001 quarter were $0.56, compared with $0.65 in the second quarter of 2000.
The gross margin for the second quarter of 2001 remained strong at 74%, as
compared to 72% for the second quarter of 2000. The improved margins are a
direct result of the company's ongoing cost-reduction programs. EBITDA for the
second quarter of 2001 were $22.0 million, as compared to EBITDA of $25.8
million for the second quarter of 2000.
Commenting on the results, Richard G. Babbitt, Inamed's chairman and chief
executive officer, said: "Inamed had a good quarter despite a difficult economic
environment. Results were impacted by foreign currency exchange rates, a strong
U.S. dollar, weakening economies in Europe and Japan, and the sluggish U.S.
economy.
"We continued to see softer sales both domestically and internationally, because
we believe customers are postponing the purchases of discretionary items such as
breast augmentation devices and collagen facial injections. Internationally,
breast implant and dermal filler sales were off 18% from the second quarter
2000. In June 2000, McGhan sent stocking shipments of shaped breast implants to
our Brazilian distributor, in anticipation of the launch of these products in Q3
2000.
"Excluding this event, international breast implant sales for this quarter were
down 2% and global sales of all products were down 6% from the same period last
year. International dermal filler sales were down 25%, in part due to continued
unfounded concerns relating to bovine spongiform encephalopathy, or BSE. Our
U.S. breast implant and dermal filler sales in the quarter were down 8% from the
prior year.
"On a positive note, our obesity business, primarily Lap-Band(R) Systems,
continued to show exceptionally strong sales, growing by 48% in the quarter,
against the prior year. Despite the top-line decline against a record prior
year, profits beat analysts' expectations, as the company continued to deliver a
strong gross margin and to control SG&A expenses," continued Babbitt.
"We are also looking to support top-line growth during the economic slowdown,
and in the second quarter we initiated new marketing programs to address growth
opportunities in our core product lines of breast implants, tissue expanders and
dermal fillers. Incremental improvements
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these product lines are being enhanced with simplified, value-added marketing
support to physicians both in the U.S. and internationally.
"Our customers can extend our product offerings through our assistance with
local advertising, patient financing, group purchasing, patient seminars and Web
locators," said Babbitt.
The company said that due to the uncertain economic environment, it is revising
its guidance for fiscal 2001 and now expects sales of $232 million to $240
million, pro forma EPS in the range of $1.17 to $1.34 and cash EPS in the range
of $1.57 to $1.74, excluding any non-recurring or extraordinary items.
Commenting on the company's outlook, Babbitt said: "Despite this challenging
environment, this is a truly exciting time for Inamed. We have had several
significant business developments in the last several weeks that further
position Inamed for continued growth. These include the FDA approval and
shipping of the Lap-Band(R) System -- a product with huge market potential --
the approval in Australia for silicone gel implants, where we are the only
approved source for gel implants, and gaining regulatory approval to begin
production at our new, more efficient Los Carneros facility."
Babbitt continued: "Most importantly, we are excited that Nick Teti will be
joining us as president and CEO as of Aug. 1. Nick brings to Inamed exactly the
skills we were looking for, and we believe that with his exceptional management
experience, brand-building skills and superb marketing experience, he is
uniquely qualified to lead Inamed. Nick will build on the company's superb
platform and move the company in an aggressive manner to expand globally and
increase shareholder value."
For the six-month period ended June 30, 2001, sales were $120.4 million,
compared with $127.9 million for the same period last year. Pro forma earnings
per share for the six months of 2001 were $0.78, compared with $0.98 in last
year's first half. Cash earnings per share for the first six months of fiscal
2001 were $0.99, compared with $1.12 for the same period of the prior year.
For the six months of fiscal 2001, the gross margin was 74%, as compared to 73%
for the same period in 2000. For the 2001 six-month period, EBITDA (before
restructuring charges) were $39.6 million, as compared to EBITDA of $46.1
million for the same period in 2000.
Recent Developments
On July 10, Inamed announced that Nicholas Teti will join Inamed on Aug. 1,
2001, as president and chief executive officer and a board member. Teti has more
than 25 years of management, operations and marketing experience in the
pharmaceuticals industry. Most recently, he was president and director of
Yamanouchi America Inc., a division of Yamanouchi Pharmaceuticals Co., where he
was responsible for establishing its U.S. business.
Previously, he was president and chief executive officer of DuPont
Pharmaceuticals Co., a company with $1.6 billion in sales in 1999, topping a
25-year career at DuPont and DuPont Merck, which included a number of senior
management positions, leading global business units. Babbitt will remain
chairman of the board.
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Inamed's subsidiary BioEnterics Corp. received FDA pre-market approval for the
Lap-Band(R) System Adjustable Gastric Banding System, on June 5, 2001, and began
shipping the Lap-Band(R) System to United States hospitals earlier this month.
BioEnterics has subsequently supplied the FDA with the final product labeling as
required by the PMA letter.
Obesity is the second-leading cause of preventable death in the United States,
and an estimated 11 million American adults are severely obese. The company
expects the Lap-Band(R) System, which offers a minimally invasive approach to
obesity surgery, to have a significant impact on 2002 earnings.
McGhan Ltd., a subsidiary of Inamed, and Device Technologies Australia,
distributor of McGhan's breast implants, have received immediate Australian
Therapeutic Goods Administration (TGA) registration approval of McGhan's
silicone gel breast implants. The company is the only approved source in
Australia for silicone breast implants. McGhan's saline breast implants have
already received registration in Australia.
Inamed also recently announced that the FDA has reviewed McGhan Medical's
submission for the Los Carneros plant in California and granted approval to
commence production of breast implants at the new facility. The company expects
production to begin during the third quarter of 2001. The new facility will
allow Inamed to increase its manufacturing capacity while also increasing
manufacturing efficiency.
In addition, Inamed has been working closely with another global player, Genzyme
Biosurgery, to drive growth in the dermal filler market by expanding its
worldwide commitment to Hylaform(R). Hylaform(R), which is a hyaluronan-based
dermal filler that Inamed currently markets in Europe and other markets outside
the United States, provides an alternative to collagen-based dermal fillers, and
is used to treat facial lines, wrinkles and scars. The company expects to
announce the full details of its agreement with Genzyme Biosurgery in the coming
weeks.
Conference Call and Replay
Inamed management will host a conference call today, Wednesday, July 25, at noon
Eastern time to discuss the company's second quarter. Investors can access the
conference call in the United States by dialing 800/865-4460, international
callers, dial 973/628-9554, then in either case, ask to be connected to the
Inamed investor call.
In addition, you may listen to the conference call over the Internet through
Investor Broadcast Network's Vcall Web site, www.vcall.com. To listen, go to the
Web site at least 15 minutes early to register, download and install any
necessary audio software.
For those unable to participate, a rebroadcast will be made available through
Vcall's Web site for 30 days after the call. It will be available shortly after
the call.
About Inamed Corp.
Inamed is a global surgical and medical device company engaged in the
development, manufacturing and marketing of products for the plastic and
reconstructive surgery, aesthetic
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medicine and obesity markets. Inamed sells a variety of lifestyle products used
to make people look younger and more attractive, including breast implants for
cosmetic augmentation and collagen-based facial implants to correct facial
wrinkles and to improve lip definition.
Inamed also sells products that address women's health issues, including breast
implants for reconstructive surgery following a mastectomy, and devices that
treat severe obesity and urinary incontinence.
Forward-Looking Statements
This release contains, in addition to historical information, forward-looking
statements. Such statements are based on management's current estimates and
expectations and are subject to a number of uncertainties and risks that could
cause actual results to differ or differ materially from those described in the
forward-looking statements. For a full discussion of the risks and
uncertainties, refer to recent Securities and Exchange Commission filings made
by the company including, without limitation, the company's annual report on SEC
Form 10-K for fiscal 2000.
Inamed Corp.
Earnings Recap
(in millions, except per share data)
UNAUDITED
For the second quarter ended
June 30,
2001 2000
------ ------
Net Sales $ 62.6 $ 67.6
Cost of sales 16.5 19.1
Gross Margin 46.1 48.5
Gross Margin % 73.6% 71.7%
Selling, general and administrative 24.8 23.4
Research and development 2.9 2.1
Other Income (Expense) 2.3 1.8
Amortization and other non-cash charges 2.6 2.5
Restructuring charge -- --
INCOME BEFORE INTEREST AND TAXES 18.1 22.3
Net interest 2.8 1.6
INCOME BEFORE TAXES 15.3 20.7
Taxes 5.4 4.5
NET INCOME $ 9.9 $ 16.2
Basic EPS $ 0.49 $ 0.79
Diluted EPS $ 0.46 $ 0.69
Pro forma EPS $ 0.46 $ 0.57
Cash EPS $ 0.56 $ 0.65
Basic Shares 20.2 20.5
Diluted Shares 21.7 23.3
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Depreciation 1.3 1.4
Amortization and other non-cash charges 2.6 2.1
EBITDA 22.0 25.8
For the six months ended
June 30,
2001 2000
------- -------
Net Sales $ 120.4 $ 127.9
Cost of sales 31.7 34.8
Gross Margin 88.7 93.1
Gross Margin % 73.7% 72.8%
Selling, general and administrative 48.8 48.5
Research and development 5.8 4.3
Other Income (Expense) 3.1 3.9
Amortization and other non-cash charges 5.2 4.8
Restructuring charge 8.4 --
INCOME BEFORE INTEREST AND TAXES 23.6 39.4
Net interest 5.5 6.1
INCOME BEFORE TAXES 18.1 33.3
Taxes 6.8 9.1
NET INCOME $ 11.3 $ 24.2
Basic EPS $ 0.56 $ 1.19
Diluted EPS $ 0.52 $ 1.04
Pro forma EPS $ 0.78 $ 0.98
Cash EPS $ 0.99 $ 1.12
Basic Shares 20.3 20.4
Diluted Shares 21.8 23.3
Depreciation 2.4 2.8
Amortization and other non-cash charges 5.2 3.9
EBITDA 39.6 46.1
Inamed Corp.
Earnings per share calculations
UNAUDITED
For the second quarter ended
June 30,
2001 2000
----- -----
Diluted EPS $0.46 $0.69
Impact of $2.8 million tax refund $0.00 ($0.12)
Pro forma EPS $0.46 $0.57
Goodwill amortization $0.06 $0.06
Amortization of other intangibles $0.04 $0.02
Cash EPS $0.56 $0.65
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For the six months ended
June 30,
2001 2000
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Diluted EPS $0.52 $1.04
Restructure charge $0.26
Impact of bridge loan fees $0.06
Impact of $2.8 million tax refund ($0.12)
Pro forma EPS $0.78 $0.98
Goodwill amortization $0.12 $0.11
Amortization of other intangibles $0.09 $0.04
Cash EPS $0.99 $1.12
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Contact:
Inamed Corp., New York
Michael Doty, SVP & CFO, 212/273-3430 (investors)
or
Citigate Sard Verbinnen, New York
Denise DesChenes/Anna Cordasco, 212/687-8080