GIVEN IMAGING [GRAPHIC OMITTED]
For Immediate Release
For further information contact:
Yoram Ashery or Fern Lazar/David Carey
Given Imaging Ltd. Lazar Partners Ltd.
1-(866) GIVEN-IR
flazar@lazarpartners.com/
dcarey@lazarpartners.com
GIVEN IMAGING REPORTS THIRD QUARTER RESULTS AND RAISES ANNUAL GUIDANCE
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o Sales increase by 51% over third quarter of 2003
o Company raises 2004 annual revenue guidance to $60-62 million
o 2004 Annual earnings per share guidance set at 5 to 7 cents
o PillCam ESO cleared to market and launch plans announced
Yoqneam, Israel, October 28, 2004 - Given Imaging Ltd. (NASDAQ:GIVN) today
announced third quarter and nine month results for the period ended September
30, 2004.
Worldwide sales of the Given(R) Diagnostic System and PillCamTM SB reached $14.6
million in the third quarter of 2004, 51% higher than in the third quarter of
2003. Gross profit was 75.1% of revenues compared to 63.0% in the third quarter
of 2003. Operating expenses increased to $11.2M, $0.3 million higher than the
second quarter of 2004, mainly due to R&D and regulatory efforts related to the
launch of new products, and marketing expenses related to major medical
meetings, rebranding and strengthening of the global marketing organization.
This resulted in a net profit for the third quarter of $0.1 million or 0.4 cents
per share on a fully diluted basis, compared to a net loss of
$2.1 million or (8.1) cents per share in the third quarter of 2003. Cash balance
at the end of the quarter was $66.9 million.
For the nine month period ended September 30, 2004, sales were $42.8 million
reflecting a 53% increase over the same period in 2003. Gross profit increased
to 73.9% of revenues from 65.1% in the first nine months of 2003. Operating
expenses in the nine months of 2004 were $32 million, compared to $28 million in
the same period in 2003. Net profit for the first nine months of 2004 was $0.4
million or 1.5 cents per share on a diluted basis, compared to a net loss of
$9.0 million or (35.5) cents per share for the same period in 2003.
"Our third quarter sales were down sequentially, as anticipated, due to summer
seasonality. Nonetheless, sales were 51% higher than in the third quarter of
2003", said Gavriel D. Meron, president and CEO of Given Imaging. "Consequently,
we are increasing our full year sales guidance to reflect an annual growth rate
of approximately 50%."
Third Quarter 2004 Revenue Analysis
- -----------------------------------
The geographic breakdown of third quarter 2004 sales is as follows:
(Millions of U.S. dollars)
United States $10.2
Europe and ROW $ 4.4
In the quarter, worldwide sales for reorders of the PillCam SB capsule endoscope
were 21,100, 73% higher than the third quarter of 2003. The total number of
capsules sold in the quarter was 22,400, 67% higher than in the third quarter of
2003. To date, cumulative unit sales of PillCam SB have reached 145,200. Sales
of Given(R) Diagnostic Systems totaled 129 for the third quarter of 2004, with
85 systems sold in the United States. In the third quarter of 2003, the company
sold 122 systems with 78 systems sold in the United States.
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Third Quarter and Recent Highlights
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New Products Update
o On October 25, 2004 the U.S. Food and Drug Administration granted clearance
to market Given Imaging's PillCamTM ESO for visualization of the esophagus.
The cleared version takes four frames per second using two cameras, one at
each end of the capsule, which has the same dimensions as the existing
PillCam SB. The company, however, intends to commercialize an even more
advanced version of PillCam ESO, which will take 14 frames per second. A
"special" 510(k) has been submitted for this advanced version, and the
Company expects clearance before year end. Pending U.S. marketing
clearance, Given Imaging is ready to distribute the 14 frame PillCam ESO.
o The 14 frames per second version of PillCam ESO will be commercialized
through Given Imaging's partner, InScope, a division of Ethicon
Endo-Surgery. The product will be launched at the annual meeting of the
American College of Gastroenterology, taking place October 30 to November 3
in Orlando, FL. At this meeting, investigators will present final data from
the 106-patient, pivotal multi-center, multi-national trial which was the
basis for the clearance of PillCam ESO. The study demonstrated that PillCam
ESO is comparable to traditional endoscopy in visualizing pathologies of
the esophagus in patients with GERD symptoms and Barrett's esophagus, and
that it is convenient, safe and preferred by all patients.
o Given Imaging will upgrade its existing U.S. installed base to the new
Rapid 3.0 review software required for performing PillCam ESO procedures.
The upgrade program is expected to take 2-3 months following clearance of
the PillCam ESO 14 frames per second version.
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o Given Imaging and InScope intend to promote the new Data Recorder 2 to
existing customers. The Data Recorder 2 is also required for performing
PillCam ESO procedures.
o Following clearance of the PillCam ESO with 14 frames per second, all new
systems sold will include Rapid 3 and Data Recorder 2 and will be fully
compatible with both PillCam SB and PillCam ESO.
Marketing Update
o More than 30 poster and oral presentations were delivered at the United
European Gastroenterology Week (UEGW) in September in Prague, Czech
Republic.
o The company appointed Mark Colby as corporate vice president and general
manager Japan and rest of world.
o The company's capsule endoscopy product line was rebranded from M2A to
PillCam(TM). Different models of the PillCam will now be named according to
their intended use, such as PillCam SB for the small bowel and the new
PillCam ESO for the esophagus.
o The new platform, comprised of Rapid 3 and DataRecorder 2, was launched at
the United European Gastroenterology Week in Prague, Czech Republic.
o The European Capsule Endoscopy Group was formed under the auspices of the
European Society of Gastrointestinal Endoscopy, for promoting research,
clinical practice and education on capsule endoscopy.
o 24 new publications in peer review journals on capsule endoscopy, brought
total published articles, editorials and case reports to 224.
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Reimbursement Expansion
Additional payers who now recognize capsule endoscopy for expanded indications,
such as initial diagnosis of suspected Crohn's disease, include:
Private Payer:
o Oxford (1.55 million members in NY, NJ, CT)
Medicare:
o Trailblazer Health Enterprises (3.62 members in TX, MD, DE, DC, VA)
o National Heritage Insurance Company NE (1.8 million members in MA, NH,
VT, ME)
The number of individuals in the U.S. with coverage for Capsule Endoscopy
remained the same at 176 million, while the number of individuals in the U.S.
with coverage for expanded indications, such as initial diagnosis of Crohn's
disease, increased by approximately 7 million to 120 million.
In September, the government of Italy's Piemonte region approved reimbursement
for PillCam SB capsule endoscopy for the region's 4.3 million individuals, for
broad indications, including Crohn's disease, celiac disease, lymphoma,
polyposis and occult bleeding. More than 44 million Europeans now have access to
reimbursement for PillCam endoscopy.
Updated 2004 guidance
- ---------------------
Given Imaging anticipates that sales in the fourth quarter of 2004 will be
between $17 and $19 million, and full year 2004 sales will be between $60 and
$62 million. The company expects that full year EPS will be between 5 to 7
cents. Achieving the high end of the range of sales and EPS would depend, among
other things, on the timing of receipt of FDA clearance for the 14 frames per
second version of the PillCam ESO.
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Now that the Company has transitioned to profitability, the Company will provide
EPS guidance along with its revenue guidance. Going forward, the company will
discontinue its practice of early announcement of quarterly sales prior to the
release of the full financial results.
Third Quarter Webcast Information
- ---------------------------------
Given Imaging will host a conference call tomorrow, Friday, October 29, 2004, at
9:00 am Eastern Time to discuss third quarter 2004 results. The conference call
will be webcast through the Company's website www.givenimaging.com.
About Given Imaging
- -------------------
Given Imaging is redefining gastrointestinal diagnosis by developing, producing
and marketing innovative, patient-friendly products for detecting
gastrointestinal disorders. The company is developing a complete line of PillCam
video capsules for detecting disorders throughout the gastrointestinal tract.
The company's technology platform is the Given(R) Diagnostic System, featuring
the PillCam(TM) video capsule, a disposable, miniature video camera contained in
a capsule, which is ingested by the patient. The PillCam(TM)SB video capsule is
the only naturally ingested method for direct visualization of the entire small
intestine. It is currently marketed in the United States and in more than 60
other countries and has benefited more than 145,000 patients worldwide. The
PillCam(TM) ESO video capsule, which provides visual examination of the
esophagus, has been cleared for marketing by the FDA and a higher frame rate
version will be commercialized pending FDA clearance. Additional capsules for
visualization of the stomach and colon are under development. Given Imaging's
headquarters, manufacturing and R&D facilities are located in Yoqneam, Israel;
it has direct sales and marketing operations in the United States, Germany and
France, and local offices in Tokyo, Madrid and Sydney. For more information,
visit http://www.givenimaging.com.
This press release contains forward-looking statements about Given Imaging,
including projections about our business, our future revenues and our future
profitability, within the meaning of Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934. For example, statements
in the future tense, words such as "anticipates," "estimates," "expects,"
"intends," "plans," "believes," and words and terms of similar substance used in
connection with any discussion of future operating or financial performance
identify such forward-looking statements. Those forward-looking statements are
not guarantees of future performance and actual results could differ materially
from our current expectations as a result of numerous factors, including but not
limited to the following: changes in regulatory environment, our success in
implementing our sales, marketing and manufacturing plan, protection and
validity of patents and other intellectual property rights, the impact of
currency exchange rates, the effect of competition by other companies, the
outcome of future litigation, the reimbursement policies for our product from
healthcare payors, quarterly variations
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in operating results, the possibility of armed conflict or civil or military
unrest in Israel and other risks disclosed in our filings with the U.S.
Securities Exchange Commission.
(Financial tables follow)
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Given Imaging Ltd. and its Consolidated Subsidiaries
Consolidated Balance Sheets
U.S. $ in thousands except per share data
September 30, December 31,
--------------- ---------------
2004 2003
--------------- ---------------
(Unaudited) (Audited)
Assets
Current assets
Cash and cash equivalents $ 66,885 $ 25,367
Accounts receivable:
Trade 8,040 6,945
Other 1,216 467
Inventories 13,386 8,485
Prepaid expenses 1,395 1,361
Advances to suppliers 446 -
--------------- ---------------
Total current assets 91,368 42,625
--------------- ---------------
Deposits 361 361
Assets held for severance benefits 1,181 1,008
Fixed assets, at cost, less accumulated depreciation 9,833 9,595
Other assets, at cost, less accumulated amortization 2,206 1,980
--------------- ---------------
Total assets $ 104,949 $ 55,569
=============== ===============
Liabilities and shareholders' equity
Current liabilities
Current installments of obligation under capital lease $ 9 $ 27
Accounts payable:
Trade 5,305 2,216
Other 4,871 4,462
Deferred revenue 1,158 950
--------------- ---------------
Total current liabilities 11,343 7,655
--------------- ---------------
Long-term liabilities
Obligation under capital lease, net 47 4
Liability for employee severance benefits 1,422 1,188
--------------- ---------------
Total long-term liabilities 1,469 1,192
--------------- ---------------
Total liabilities 12,812 8,847
--------------- ---------------
Minority interest 1,243 1,924
Shareholders' equity 90,894 44,798
--------------- ---------------
Total liabilities and shareholders' equity $ 104,949 $ 55,569
=============== ===============
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Given Imaging Ltd. and its Consolidated Subsidiaries
Consolidated Statements of Operations
U.S. $ in thousands except per share data
Nine month period ended Three month period ended Year ended
September 30, September 30, December 31,
----------------------- -----------------------
2004 2003 2004 2003 2003
----------- ----------- ----------- ----------- ---------
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
Revenues $ 42,807 $ 28,005 $ 14,594 $ 9,682 $ 40,539
Cost of revenues (11,154) (9,771) (3,636) (3,581) (13,551)
----------- ----------- ----------- ---------- ---------
Gross profit 31,653 18,234 10,958 6,101 26,988
----------- ----------- ----------- ---------- ---------
Operating expenses
Research and development, gross (5,456) (5,264) (2,119) (1,526) (7,037)
Royalty bearing participation 702 1,005 288 314 1,303
----------- ----------- ----------- ---------- ---------
Research and development, net (4,754) (4,259) (1,831) (1,212) (5,734)
Sales and marketing expenses (22,588) (19,738) (7,705) (6,219) (26,804)
General and administrative expenses (4,644) (4,024) (1,678) (1,233) (5,312)
----------- ----------- ----------- ---------- ---------
Total operating expenses (31,986) (28,021) (11,214) (8,664) (37,850)
----------- ----------- ----------- ---------- ---------
Operating loss (333) (9,787) (256) (2,563) (10,862)
Financing income, net 102 627 165 573 995
----------- ----------- ----------- ---------- ---------
Loss before taxes on income (231) (9,160) (91) (1,990) (9,867)
Taxes on income - - - - -
----------- ----------- ----------- ---------- ---------
Loss before minority share (231) (9,160) (91) (1,990) (9,867)
Minority share in losses (profits) of subsidiary 681 130 205 (67) 258
----------- ----------- ----------- ---------- ---------
Net profit (loss) $ 450 $ (9,030) $ 114 $ (2,057) $ (9,609)
=========== =========== =========== =========== =========
Basic profit (loss) per Ordinary Share $ 0.017 $ (0.355) $ 0.004 $ (0.081) $ (0.377)
=========== =========== =========== =========== =========
Diluted profit (loss) per Ordinary Share $ 0.015 $ (0.355) $ 0.004 $ (0.081) $ (0.377)
========== ========== ========== ========== ==========
Weighted average number of Ordinary Shares
outstanding used in basic profit (loss) per
Ordinary Share calculation 26,332,954 25,456,461 27,404,098 25,532,223 25,493,073
========== ========== ========== ========== ==========
Weighted average number of ordinary shares
used to compute diluted profit (loss) per
Ordinary Shares 29,091,795 25,456,461 30,139,467 25,532,223 25,493,073
========== ========== ========== ========== ==========
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