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Exhibit 99.1
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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 FOURTH QUARTER AND FULL YEAR RESULTS
- Quarterly sales growth of 77% to $22.2 million with EPS of 8 cents -
- Annual sales growth of 60% in 2004 to $65 million, with EPS of 10 cents -
Yoqneam, Israel-February 8, 2005-Given Imaging Ltd. (NASDAQ: GIVN) today
announced results for the fourth quarter and year ended December 31, 2004.
Worldwide sales of the Given(R) System and PillCam(TM) video capsules reached a
record $22.2 million in the fourth quarter of 2004, a 52% increase over sales of
$14.6 million in the third quarter of 2004 and a 77% increase over sales of
$12.5 million in the fourth quarter of 2003. This increase in sales was due to
increased reorders of PillCam(TM) SB, increased system sales and sales of the
new PillCam(TM) ESO. Gross margin in the quarter was 70.4% of revenues compared
to 69.8% of revenues in the fourth quarter of 2003 and 75.1% in the third
quarter of 2004. Gross margin in the fourth quarter was lower than the previous
quarter mainly due to (1) the launch of a promotional campaign in the United
States to accelerate adoption of the new PillCam(TM) ESO and DataRecorder(R) 2.0
by offering a significant reduction on the combined purchase price of both
products and (2) payment of a 3% royalty to the Chief Scientist of the Israeli
Government on sales of PillCam ESO and the Given System with the new Rapid 3
review software and DataRecorder 2.0. Net profit for the fourth quarter was $2.4
million, or $0.08 per share on a fully diluted basis, compared to a net profit
of
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$114,000 in the third quarter of 2004 and a net loss of $579,000 in the fourth
quarter of 2003. Net profit in the quarter was positively impacted by $690,000
resulting from the recognition of tax benefits in our U.S. subsidiary which is
expected to continue profitable operations.
Cash generated in the fourth quarter was $14.0 million, including $10.0 million
representing the first milestone payment received from InScope, a division of
Ethicon Endo-Surgery, Inc. Cash balance at the end of 2004 was $80.9 million.
For the twelve month period ended December 31, 2004, sales were $65.0 million, a
60.4% increase over sales in 2003. Gross margin increased to 72.7% of revenues
from 66.6% in 2003. Operating expenses in the twelve-month period ended 2004
were $46.8 million, compared to $37.9 million in the same period in 2003. Net
profit for 2004 was $2.9 million or $0.10 per share on a diluted basis, compared
to a net loss of $9.6 million or $(0.38) per share in 2003.
"2004 was another record year of achievements for Given Imaging," said Gavriel
D. Meron, President and CEO of Given Imaging. "Our achievements this year
included launching new products; forming a strategic collaboration with InScope,
a division of Ethicon Endo-Surgery; expanding reimbursement coverage;
accelerating revenue growth; increasing recurring revenue; solidifying our
financial position through a successful follow-on offering; and becoming a
profitable company."
Fourth Quarter 2004 Revenue Analysis
The geographic breakdown of fourth quarter 2004 sales is as follows:
(Millions of U.S. dollars)
United States $16.8
Europe and ROW $ 5.4
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In the fourth quarter of 2004, worldwide reorders of the PillCam SB capsule
endoscope grew to 24,200, 75% higher than the fourth quarter of 2003. The total
number of PillCam SB capsules sold in the quarter was 26,500, 69% higher than in
the fourth quarter of 2003. To date, cumulative unit sales of PillCam SB have
reached 171,800. Following FDA clearance to market the PillCam ESO in late
November, more than 3,400 PillCam ESO capsules were sold. Sales of Given Systems
totaled 233 for the fourth quarter of 2004, with 189 systems sold in the United
States, compared to 185 systems sold in the fourth quarter of 2003, 114 of which
were in the United States.
Fourth Quarter Highlights
- -------------------------
o Together with InScope, the company launched the new PillCam ESO for
visualizing the esophagus, following marketing clearance from the U.S.
Food and Drug Administration (FDA).
o Upon receipt of FDA clearance to market PillCam ESO, the company
received payment from Ethicon Endo-Surgery, a Johnson & Johnson
company, amounting to $10 million. In February 2005, the company
completed upgrading 900 systems in the United States to the new Rapid
3 software, entitling the company to an additional milestone payment
of $5 million. Additional payments to the company of up to $35 million
may be made by February 2007, contingent upon performance criteria
achievable by both parties. These milestone payments are recorded on a
straight-line basis over the 15-year life of the agreement as a
reduction in marketing expenses.
o The company launched a new platform for the Given System, consisting
of the new Rapid 3 software that includes numerous features and
enhancements for increased user efficiency, and the new DataRecorder
2.0, with higher reliability, easier handling and various performance
improving features.
o An economic analysis of using PillCam SB as a first-line tool for
diagnosing patients with suspected Crohn's disease was published in
the Winter 2004 issue of the peer-reviewed journal Disease Management.
The study, conducted by researchers at
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Thomas Jefferson University, concluded that PillCam SB video capsule
endoscopy is less costly from a third-party payer perspective as a
first line procedure for detecting small bowel Crohn's disease than
traditional diagnostic procedures. This publication supports the
company's efforts to convince payers to revise policies to cover
PillCam SB when performed as a first line procedure in patients with
suspected Crohn's disease.
o More than 35 studies on capsule endoscopy were presented at the 69th
Annual Scientific meeting of the American College of Gastroenterology,
in Orlando, Florida. Meeting highlights included:
o Presentation of complete data from the pivotal, 106-patient study
of PillCam ESO for the detection of abnormalities of the
esophagus in patients with GERD symptoms. Results of the study
showed that PillCam ESO was as accurate as conventional
endoscopy. All patients reported greater satisfaction with the
PillCam ESO procedure than with conventional endoscopy.
o Presentation of results from a study of patients with small bowel
tumors. This study confirmed PillCam SB's ability to diagnosis
small bowel tumors that go undetected by other imaging
approaches. The data also showed that the majority (65%) of small
bowel tumors discovered were malignant.
o Presentation of numerous studies reporting results of evaluating
patients with known or suspected Crohn's disease, the impact of
PillCam SB on patients' management and outcomes and clinical
performance in pediatric patients.
o The company was awarded the Wall Street Journal Technology Innovation
award for its PillCam video capsule. The company was awarded first
place in the medical category and a Silver medal overall.
Reimbursement Expansion in 2004
2004 was a year of significant increase in the number of lives with reimbursable
access to capsule endoscopy for the small intestine, in particular for expanded
indications, such as the
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initial diagnosis of patients with suspected Crohn's disease. The worldwide
population with reimbursable access to capsule endoscopy grew from 206 million
at the end of 2003 to 327 million at the end of 2004, and the number of lives
with reimbursement for expanded indications grew from 48 million at the end of
2003 to 253 million at the end of 2004.
In the United States, the total number of lives covered grew from 148 million at
the end of 2003 to 206 million at the end of 2004, and the number of individuals
with coverage for expanded indications grew from 24 million at the end of 2003
to 167 million at the end of 2004.
In Europe, the population with reimbursable access to capsule endoscopy grew
from 40 million at the end of 2003 to 102 million at the end of 2004, and the
number of lives with reimbursement for expanded indications grew from 24 million
at the end of 2003 to 87 million at the end of 2004. This increase was mainly
the result of guidance issued in December 2004 by the National Institute of
Clinical Excellence (NICE) of the United Kingdom National Health Service (NHS),
allowing 58 million U.K. residents access to capsule endoscopy under the NHS'
public health system.
Recent Event
- ------------
The company recently discovered that a former employee of its U.S. subsidiary
misappropriated funds. The company has substantially completed an investigation
of this matter with the assistance of external advisers. In the fourth quarter
the company recorded a provision of $600,000, which the company believes is
adequate to cover both the loss and investigation cost.
2005 Full Year and First Quarter Guidance
- -----------------------------------------
Given Imaging announced that in 2005 the company expects annual revenues of $95
- -$105 million, representing a 46% - 62% growth over 2004 revenues.
Gross margin for 2005 is expected to be in the range of 72% to 75% of revenue.
This reflects an increase over 2004 due to higher capsule production volumes,
that will be somewhat offset by the 3% royalty paid to the Israeli Government's
Office of the Chief Scientist on sales of
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Given Systems and PillCam ESO and the significant reduction offered on the
combined purchase price of the PillCam ESO and DataRecorder 2.0 as part of the
launch of a campaign in the U.S. for accelerating adoption of these products
following receipt of FDA marketing clearance for the PillCam ESO.
Research and development spending is forecast to be in the range of $9 million
to $11 million, reflecting continued investment in new products, including
PillCam video capsules for the colon and the stomach, as well as clinical trials
to drive continued expansion of reimbursement for PillCam SB worldwide.
Selling and marketing expenses are expected to grow. Under the strategic
marketing alliance agreement with Ethicon Endo-Surgery, the Company will pay
Ethicon Endo-Surgery's InScope division commissions on revenue from sales in the
U.S. of PillCam ESO at the rate of 50% and on system sales at the rate of 10%.
These commissions will be recorded as marketing expenses. In addition, the
Company will be increasing its investment in market development, including
further expansion of the sales force in the United States, increasing
infrastructure to support InScope selling activities and building a robust
operation in Japan in anticipation of the approval of PillCam SB this year.
Net income in 2005 is expected to be in the range of $13 million to $16 million.
Fully diluted earnings per share based on 32 million outstanding shares are
expected to be in the range of $0.40 to $0.50.
For the first quarter of 2005 the company expects sales between $22 and $24
million and earnings between $0.02 and $0.05 per share. These expected earnings
reflect the planned increases in expenses in 2005 as described above and an
increase of InScope sales of PillCam ESO. In addition, the company expects to
complete in the first quarter the promotional campaign to launch PillCam ESO and
DataRecorder 2.0 as well as the upgrade of its U.S. installed base to the new
Rapid 3 software.
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This projected increase in diluted earnings per share does not give effect to
the non-cash impact from the implementation in the third quarter 2005 of
accounting for share-based payments (Statement of Financial Accounting Standards
No.123R) which is expected to have a material impact on our projected earnings.
"We enter 2005 positioned for continued high growth, with an installed base of
more than 1,300 workstations in the United States and approximately 2,300
worldwide" said Gavriel D. Meron, president and CEO. "In anticipation of the
opportunities we see in the market, we already increased our sales force in the
U.S. and are strengthening our organization in Japan in preparation for
marketing approval".
Fourth Quarter Webcast Information
- ----------------------------------
Given Imaging will host a conference call tomorrow, Wednesday, February 9,
2005, at 9:00 am Eastern Time to discuss fourth quarter and 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 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 170,000 patients worldwide. The
PillCam(TM) ESO video capsule, which provides visual examination of the
esophagus, has been cleared for marketing by the FDA. 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 and our future revenues, expenses and
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,"
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"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 in operating results, the impact of the newly adopted SFAS 123R for
expensing option-based payments, the possibility of armed conflict or civil or
military unrest in Israel and other risks disclosed in our filings with the U.S.
Securities and Exchange Commission.
(Financial tables follow)
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Given Imaging Ltd. and its Consolidated Subsidiaries
Consolidated Balance Sheets
(In thousands except per share data)
December 31, December 31,
2003 2004
---------------- ----------------
Assets
Current assets
Cash and cash equivalents $ 25,367 $ 80,861
Accounts receivable:
Trade 6,945 12,261
Other 467 1,271
Inventories 8,485 13,794
Advances to suppliers 47 555
Deferred taxes - 737
Prepaid expenses 1,314 954
---------- ----------
Total current assets 42,625 110,433
Deposits 361 425
Assets held for severance benefits 1,008 1,339
Fixed assets, at cost, less accumulated depreciation 9,595 9,862
Other assets, at cost, less accumulated amortization 1,980 2,165
---------- ----------
Total Assets $ 55,569 $ 124,224
========== ==========
Liabilities and shareholders' equity
Current liabilities
Current installments of obligation under capital lease $ 27 $ 11
Accounts payable:
Trade 2,216 5,147
Other 4,462 8,678
Deferred income 950 3,610
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7,655 17,446
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Total current liabilities
Long-term liabilities
Deferred income - 9,340
Obligation under capital lease, net 4 48
Liability for employee severance benefits 1,188 1,596
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Total long-term liabilities 1,192 10,984
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Total liabilities 8,847 28,430
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Minority interest 1,924 1,177
Shareholders' equity 44,798 94,617
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Total liabilities and shareholders' equity $ 55,569 $ 124,224
========== ==========
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Given Imaging Ltd. and its Consolidated Subsidiaries
Consolidated Statements of Operations
(In thousands except per share data)
Year ended December 31, Three month period
ended December 31,
---------------------------- -----------------------------
2003 2004 2003 2004
----------- ----------- ------------ -----------
Revenues $ 40,539 $ 65,020 $ 12,534 $ 22,213
Cost of revenues 13,551 17,734 3,780 6,580
----------- ----------- ------------ -----------
Gross profit 26,988 47,286 8,754 15,633
----------- ----------- ------------ -----------
Operating expenses
Research and development, gross (7,037) (7,363) (1,773) (1,907)
Royalty bearing participation 1,303 1,140 298 438
----------- ----------- ------------ -----------
Research and development, net (5,734) (6,223) (1,475) (1,469)
Sales and marketing expenses (26,804) (33,652) (7,066) (11,064)
General and administrative expenses (5,312) (6,916) (1,288) (2,272)
----------- ----------- ------------ -----------
Total operating expenses (37,850) (46,791) (9,829) (14,805)
----------- ----------- ------------ -----------
Operating profit (loss) (10,862) 495 (1,075) 828
Financing income, net 995 956 368 854
----------- ----------- ------------ -----------
Profit (loss) before taxes on income (9,867) 1,451 (707) 1,682
Taxes on income - 690 - 690
----------- ----------- ------------ -----------
Profit (loss) before minority share (9,867) 2,141 (707) 2,372
Minority share in losses of subsidiary 258 747 128 66
----------- ----------- ------------ -----------
Net profit (loss) $ (9,609) $ 2,888 $ (579) $ 2,438
=========== =========== ============ ===========
Profit (loss) per share
Basic profit (loss) per ordinary share $ (0.38) $ 0.11 $ (0.02) $ 0.09
=========== =========== ============ ===========
Diluted profit (loss) per ordinary share $ (0.38) $ 0.10 $ (0.02) $ 0.08
=========== =========== ============ ===========
Weighted average number of ordinary
shares used to compute basic profit
(loss) per ordinary share 25,493,073 26,633,964 25,596,911 27,536,995
=========== =========== ============ ===========
Weighted average number of ordinary
shares used to compute diluted profit
(loss) per ordinary share 25,493,073 29,353,448 25,596,911 30,129,113
=========== =========== ============ ===========
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