EXHIBIT 99.1
Contact:
Christopher J. Geberth Carney Duntsch
Vice President Finance Investor Relations
Diomed Holdings, Inc. Burns McClellan
(877) 434-6633 or (978) 824-1816 (212) 213-0006 cduntsch@burnsmc.com
investor-relations@diomedinc.com
DIOMED ANNOUNCES FIRST QUARTER RESULTS
Company Delivers 11% Growth in Total Revenues and 13% Increase in North American
EVLT(R) Sales
ANDOVER, MA, April 27, 2006 --- Diomed Holdings, Inc. (AMEX: DIO), a leading
developer and marketer of minimally invasive medical technologies, including its
patented EVLT(R) laser treatment for varicose veins, today announced results for
the first quarter ended March 31, 2006.
Diomed posted sales revenues of $4.6 million, an increase of 11% over the first
quarter of 2005, while global EVLT(R) revenue increased 13%. "Although first
quarter revenues fell short of our record fourth quarter 2005 revenues, we
believe we are on track for the next quarter," commented James Wylie, CEO and
President of Diomed Holdings, Inc. "After a sluggish January, we gained
significant momentum in February and finished the quarter with a solid
performance in March. Sales data for the current quarter is obviously incomplete
and may not be indicative of full second quarter performance, however, we
believe that April global revenues demonstrate that we have regained momentum,"
continued Wylie.
Gross profit for the first quarter of 2006 was $2.1 million, representing an
increase of $214,000, or 12% over the first quarter of 2005. Gross profit as a
percentage of sales for the first quarter of 2006 of 45% was in line with the
first quarter of 2005 and, in the month of March 2006, reached 52%. The Company
has targeted continued improvement in gross profit levels to the 60% level and
higher, consistent with other proprietary medical device companies, as the
EVLT(R) product line grows.
Selling and marketing expenses of $2.8 million for the first quarter of 2006
increased $486,000, or 21%, over the first quarter of 2005. The increase was
driven by higher sales commissions resulting from the increased sales volume,
expansion of the sales force, and increased marketing expenditures in support of
our sales initiatives focused on the growing commercialization of EVLT(R).
Selling and marketing expenses included $49,000 in SFAS 123R stock based
compensation charges in the first quarter of 2006.
General and administrative expenses of $2.1 million for the first quarter of
2006 increased $487,000, or 31%, over the first quarter of 2005, but decreased
$286,000, or 12%, from the fourth quarter of 2005. Total first quarter legal
costs were $807,000, down from $1.1 million in the fourth quarter of 2005.
General and administrative expenses included $113,000 in SFAS 123R stock based
compensation charges in the first quarter of 2006.
Loss from operations for the first quarter of 2006 of approximately $3.2 million
increased $723,000 compared with the loss from operations for the first quarter
of 2005, as the expansion of our sales and marketing efforts during the quarter
drove incremental revenue, which was offset by the increased legal costs in
asserting our intellectual property rights and the growth of our North American
sales force.
Net loss for the first quarter of 2006 of approximately $4.0 million increased
by $200,000 compared to $3.8 million in the first quarter of 2005. Net loss
includes a $770,000 non-cash, non-operating charge for the increase in the fair
value of the warrant obligation entered into on September 30, 2005, as the price
of the Company's stock increased from $2.03 at year-end to $2.52 at March 31,
2006. Going forward, the Company will recognize charges when the market value of
the stock appreciates and income from the change in the fair value of the
warrant obligation when the market value of the Company's stock declines.
Net loss for the first quarter of 2006 also includes $171,000 in non-cash
charges for the implementation of FASB Statement of Financial Accounting
Standards Number 123R for the fair value of stock options issued to employees
and directors. This expense has been allocated between Selling, General and
Administrative and Cost of Sales departmental expenses.
Net loss applicable to common stockholders for the first quarter of 2006 was
$4.3 million, or $0.22 per share, compared to $3.8 million, or $0.21 per share,
in the first quarter of 2005. Net loss applicable to common stockholders for the
first quarter of 2006 includes $155,000 of non-cash preferred stock dividends
accreted for future increasing rate dividends and $149,000 of preferred stock
cash dividends earned during the first quarter.
The Company ended the first quarter with a cash and short term investment
balance of $9.0 million, after giving effect to the final EVLT(R) acquisition
payment made in January 2006 and legal fees relative to asserting the EVLT(R)
patent. During the first quarter of 2006, the Company made cash payments of
$777,000 for patent litigation expenses accrued in the fourth quarter of 2005.
"In response to our results this quarter, Diomed has implemented a series of
strategic initiatives to drive a rebound in the second quarter." Wylie
continued, "We have made adjustments to our tactical plans to deal with
short-term competitive pressure and remain confident in our ability to capture
significant market share in this growing market."
Conference Call Information
Diomed will hold a conference call to review its first quarter 2006 results on
Thursday, April 27, 2006 at 10:00 a.m. EST. The call will be hosted by James A.
Wylie, Jr., President and Chief Executive Officer, and David B. Swank, Chief
Financial Officer.
Interested parties may access the conference call by dialing 800-260-8140
(domestic) or 617-614-3672 (international), participant pass code 75880272. The
call will also be available via web cast at www.diomedinc.com. If you are unable
to participate, an audio digital replay of the call will be available from
Thursday, April 27, 2006, 12:00 p.m. ET, until Thursday, May 5, 2006, 12:00 p.m.
ET. The digital replay can be accessed by dialing 888-286-8010, (domestic) or
617-801-6888, (international), using pass code 62603041. A web archive will also
be available during this time period at www.diomedinc.com.
About Diomed
Diomed develops and commercializes minimal and micro-invasive medical procedures
that use its proprietary laser technologies and disposable products. Diomed's
EVLT(R) laser vein ablation procedure is used in varicose vein treatments.
Diomed also provides photodynamic therapy (PDT) for use in cancer treatments,
and dental and general surgical applications. The EVLT(R) procedure and the
Company's related products were cleared by the United States FDA in January of
2002. Along with lasers and single-use procedure kits for its EVLT(R) laser vein
treatment, the Company provides its customers with state of the art physician
training and practice development support. Additional information is available
on the Company's website: www.evlt.com.
EVLT(R) is a registered trademark of Diomed Inc., Andover, MA.
Safe Harbor
Safe Harbor statements under the Private Securities Litigation Reform Act of
1995: Statements in this news release looking forward in time involve risks and
uncertainties, including the risks associated with trends in the products
markets, reliance on third party distributors in various countries outside the
United States, reoccurring orders under OEM contracts, market acceptance risks,
technical development risks and other risk factors. These statements relate to
our future plans, objectives, expectations and intentions. These statements may
be identified by the use of words such as "may," "will," "should," "potential,"
"expects," "anticipates," "intends," "plans," "believes" and similar
expressions. These statements are based on our current beliefs, expectations and
assumptions and are subject to a number of risks and uncertainties. Our actual
results could differ materially from those discussed in these statements. Our
Annual Report on Form SEC 10-KSB/A (the "Annual Report") contains a discussion
of certain of the risks and uncertainties that affect our business. We refer you
to the "Risk Factors" on pages 23 through 38 of the Annual Report for a
discussion of certain risks, including those relating to our business as a
medical device company without a significant operating record and with operating
losses, our risks relating to our commercialization of our current and future
products and applications and risks relating to our common stock and its market
value. Diomed disclaims any obligation or duty to update or correct any of its
forward-looking statements.
Diomed Holdings, Inc.
(Unaudited) Condensed Consolidated Statements of Operation
Three Months Ended March 31, 2006 and 2005
March 31, 2006 March 31, 2005
-------------- --------------
Revenues $4,576,152 $4,132,250
Cost of revenues 2,522,631 2,292,961
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Gross profit 2,053,521 1,839,289
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Operating expenses:
Research and development 354,547 390,738
Selling and marketing 2,793,067 2,307,308
General and administrative 2,058,222 1,570,845
------------------------------------------------------------
Total operating expenses 5,205,836 4,268,891
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Loss from operations (3,152,315) (2,429,602)
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Other (income) expense, net
Loss from fair value adjustment on warrant
liability 770,421 -
Interest expense, net, non-cash 96,076 1,304,952
Interest expense, cash based 16,915 101,306
------------------------------------------------------------
Total other (income) expense, net 883,412 1,406,258
Net loss $ (4,035,727) $ (3,835,860)
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Less preferred stock dividends (149,188) -
Less preferred stock non-cash dividends (154,991) -
------------------------------------------------------------
Net loss applicable to common stockholders $(4,339,906) $(3,835,860)
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Basic and diluted net loss per share $ (0.22) $ (0.21)
applicable to common stockholders
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Basic and diluted weighted average common 19,445,950 18,573,024
shares outstanding
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Diomed Holdings, Inc.
Consolidated Condensed Balance Sheets
As of March 31, 2006 (unaudited) and December 31,
2005
ASSETS
March 31, 2006 December 31, 2005
--------------------------------------------------
Current assets:
Cash and cash equivalents $ 6,894,644 $ 9,562,087
Short term investments 2,089,969 3,566,454
Accounts receivable, net 2,705,897 2,824,717
Inventories 3,371,519 3,059,886
Prepaid expenses and other current assets 631,171 444,453
--------------------------------------------------
Total current assets 15,693,200 19,457,597
Property, plant and equipment, net 1,286,769 1,171,703
Intangible assets, net 4,201,724 4,302,915
Investment 500,000 500,000
Other assets 270,567 294,810
--------------------------------------------------
Total assets $ 21,952,260 $ 25,727,025
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LIABILITIES, PREFERRED STOCK, AND STOCKHOLDERS'
EQUITY
Current Liabilities:
Accounts payable $ 3,005,843 $ 3,561,786
Accrued expenses 2,433,717 2,298,823
Current portion of deferred revenue 265,341 257,889
Bank loan 44,638 53,924
Current maturities of capital lease obligations 1,828 2,047
EVLT technology payable (zero face value at March 31, 2006 and $250,000 face
value, net of
$4,902 debt discount at December 31, 2005) - 245,098
Warrant liability 2,668,634 1,898,213
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Total current liabilities 8,420,001 8,317,780
Deferred revenue, net of current portion 130,156 144,428
Capital lease obligation, net of current maturities 3,656 4,094
Convertible notes payable ($3,712,000 face value,
net of $985,650 debt discount at March 31, 2006 and
$3,712,000 face value, net of $1,081,727 debt
discount at December 31, 2005) 2,726,350 2,630,273
--------------------------------------------------
Total liabilities 11,280,163 11,096,575
Preferred stock 7,920,399 7,819,658
Stockholders' equity 2,751,698 6,810,792
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Total liabilities, preferred stock, and
stockholders' equity $21,952,260 $25,727,025
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