Exhibit 99.1
Possis Medical, Inc. Reports First-Quarter Results
Performance Meets Guidance; New Products and Clinical Science
Advances Expected to Fuel Growth
MINNEAPOLIS--(BUSINESS WIRE)--Nov. 22, 2006--Possis Medical, Inc.
(NASDAQ:POSS), a developer, manufacturer and marketer of pioneering
medical devices for the cardiovascular and vascular treatment markets,
today reported results for its fiscal 2007 first quarter that were
within the range of its previously issued expectations.
For the first quarter ended Oct. 31, 2006, Possis delivered sales
of $15.6 million, a one percent increase from fiscal 2006
first-quarter sales of $15.5 million. The company reported a
first-quarter net loss on a generally accepted accounting principles
(GAAP) basis of $234,000, or $0.01 per diluted share, versus GAAP net
income of $266,000, or $0.01 per diluted share, for the prior-year
period. The fiscal 2007 first-quarter net loss includes stock-based
compensation expense of $666,000, net of tax, or $0.04 per diluted
share, due to the implementation of SFAS 123(R).
Non-GAAP (pro forma) net income, adjusted to eliminate the effect
of stock-based compensation expense, for the fiscal 2007 first quarter
was $432,000, or $0.02 per diluted share. This compares with net
income of $968,000, or $0.05 per diluted share, in the first quarter
of fiscal 2006.
"We met both our top and bottom-line first-quarter guidance while
continuing to invest in new product introductions, maintaining a
strong balance sheet and delivering profitability on a pro forma basis
for the 23rd consecutive quarter," said Robert G. Dutcher, CEO of
Possis Medical. "Our primary goal for the current fiscal year is to
expand our leadership position in thrombus management and leverage our
strengths and proven technology to provide customers with a broader
portfolio of endovascular treatment options."
In the fiscal 2007 first quarter, Possis sold 35 AngioJet(R) Drive
Units worldwide, 30 of which were in the U.S. Total U.S. drive units
in the field, which contributes to catheter usage and sales, increased
to 1,699 at the end of the fiscal 2007 first quarter from 1,672 units
at the end of the fiscal 2006 fourth quarter. The average catheter
utilization rate per installed drive unit, a measure of recurring
usage, was 6.7 in the first quarter, versus 7.5 in the fiscal 2006
first quarter.
"We believe our next-generation AngioJet Ultra System, including a
new console and thrombectomy sets, will streamline the setup process
and greatly improve ease-of-use, thereby helping to increase
utilization of our various catheter models, and provide a far more
versatile platform to support the development of new, more specialized
and sophisticated catheter models," said Dutcher.
For the first quarter, Possis' gross profit margin was 71.7
percent, versus 72.7 percent in the year-ago first quarter. On a
sequential basis, the company's gross profit margin was up slightly
from 71.5 in the fiscal 2006 fourth quarter. The quarterly,
year-over-year decrease was primarily due to an unfavorable sales mix
combined with flat unit sales volume. Average selling prices remained
firm across the company's product lines.
Selling, general and administrative expenses (SG&A) rose by $1.4
million from the year-earlier first quarter, to $9.8 million. Sales
force commissions and staff additions, as well as clinical science and
industry event expenses, contributed to the increase.
Fiscal 2007 first-quarter research and development (R&D) spending
decreased by $100,000 from the prior-year period, to $2.4 million. The
slight year-over-year decrease is due to project timing. R&D spending
represented 15.5 percent of first-quarter revenue, reflecting Possis'
continuing commitment to new product development.
The company reported that on Oct. 31, 2006, cash, cash equivalents
and marketable securities were $47.4 million. In fiscal 2006, Possis
repurchased approximately $3.2 million of its common shares. While the
company did not repurchase any shares during the fiscal 2007 first
quarter, it remains committed to buying back stock to offset dilution
from stock-based compensation programs. Possis' board of directors has
authorized up to $10 million in additional share repurchases.
Said Dutcher, "Fiscal 2007 is shaping up to be an exciting time
for Possis. We recently introduced several new products and we have
more in the pipeline. In addition, we are conducting important new
clinical science that further demonstrates the clinical value of
AngioJet thrombectomy. With our strengthened sales force, pipeline of
new products, clinical science advances and other promising
opportunities, we are confident in our ability to return to
double-digit growth."
Product Introduction and Development Update
AngioJet Ultra System
The next generation AngioJet Thrombectomy System, the Ultra,
remains under active review at the FDA. With approval anticipated by
calendar year end, the company is confident that the improved
ease-of-use and increased capabilities of the new Ultra Console and
Thrombectomy sets will be a key platform for long-term AngioJet System
business growth.
"We're very excited about the Ultra Console's potential. At the
recent Transcatheter Cardiovascular Therapeutics (TCT) conference in
Washington, D.C., and in private screenings with leading
interventionalists, the response has been exceptionally positive,"
said Dutcher.
GuardDOG(R) Occlusion System
In August 2006, Possis received FDA clearance to market its
GuardDOG Occlusion System for use during treatment of peripheral
vascular disease. The GuardDOG System enables physicians to quickly
and effectively manage local blood flow while employing interventional
techniques and devices, such as the AngioJet System, to treat vascular
disease.
According to the company, the first-ever clinical use of GuardDOG
is planned for December 2006, followed by a broader market evaluation
and a full-market launch as early as Possis' fiscal 2007 third
quarter. In addition, a second GuardDog model featuring a
smaller-diameter guidewire is expected to complete development in the
next several months.
Fetch(TM) Aspiration Catheter
During the first quarter, Possis received FDA clearance for its
new Fetch Aspiration Catheter. Utilizing advanced catheter technology
from the AngioJet System, the Fetch Aspiration Catheter offers
physicians another alternative for the aspiration of small, fresh
thrombus and other embolic debris from arteries.
"Our goal is to offer physicians a complete solution for thrombus
removal. The addition of the Fetch Aspiration Catheter to our product
line further enhances our position as an increasingly valuable partner
to customers dealing with thrombus," said Dutcher.
"We recently showcased many of our new products at TCT, the
premier annual meeting for interventional physicians. The conference
was the ideal venue to highlight our increasing range of endovascular
therapies, including a comprehensive portfolio of device solutions for
thrombus management," said Dutcher.
Clinical Science Update
Dr. Georgios Sianos Presents Compelling Results Demonstrating
AngioJet System Effectiveness
According to Dutcher, TCT was also a valuable showcase for
important new science supporting AngioJet thrombectomy. Dr. Georgios
Sianos of the Thoraxcentre in Rotterdam, the Netherlands, presented
compelling results showing the clinical value of AngioJet thrombectomy
in treating heart attack patients. Dr. Sianos' research demonstrated
that AngioJet thrombectomy in heart attack patients with large
thrombus prior to treatment with drug-eluting stents markedly reduces
the incidence of stent thrombosis in follow-up out to two years.
Said Dutcher, "The favorable results reported at the TCT by Dr.
Sianos and his colleagues reinforce other research that identifies
thrombus as a significant risk factor for subsequent major
complications such as stent thrombosis. The results also confirm that
for heart attack patients with large thrombus, AngioJet thrombectomy
before treatment with drug-eluting stents provides safer long-term
outcomes."
JETSTENT and Other Coronary Clinical Science
Possis continues to be active in its coronary market segment. The
company's JETSTENT clinical trial has enrolled 128 patients to date. A
meeting of investigators was held at TCT and the scheduled 100 patient
interim analysis continues.
"In addition to JETSTENT, we are also collaborating with a leading
clinical researcher and trialist to combine all available AngioJet
clinical experience in treating acute coronary syndrome patients. The
research will form a single large clinical dataset suitable for a more
sophisticated meta-analysis of AngioJet safety and benefit in such
patients. If successful, this effort could be presented or published
later in fiscal 2007," said Dutcher.
Peripheral Arterial Clinical Science
Possis is developing several significant new clinical science
initiatives in support of its peripheral vascular product offerings.
Its new PEARL registry (PEripheral use of AngioJet Rheolytic
Thrombectomy with Mid-Length Catheters) is expected to become active
in the next few months.
"PEARL will be a Web-based registry of patient treatments and
outcomes using our mid-length DVX(R) and Xpeedior(R) catheters, which
are indicated for the treatment of peripheral arterial thrombus.
Eventually PEARL will involve 20 or more high-volume peripheral
AngioJet customers, and become a rich source of future case studies,
presentations and publications on the uses and clinical value of
AngioJet treatment in a variety of peripheral vascular disease
challenges," Dutcher explained.
In addition, the company expects that the first clinical
experience with the GuardDOG system will be the basis for important
and positive scientific presentations and publications.
Deep Vein Thrombosis (DVT) and Pulmonary Embolism (PE)
Beyond the coronary, peripheral arterial and A-V access markets,
Possis is expanding its clinical science work into DVT and PE. DVT is
caused by thrombus formation in the deep veins of the leg.
Said Dutcher, "More than 600,000 people suffer from DVT annually
in the United States. The most feared complication of DVT is PE, which
is caused by thrombus in a leg vein that migrates to the lungs,
blocking blood flow between the heart and the lungs. Since the
underlying cause of both of these diseases is thrombus, many
physicians are interested in treating them with AngioJet thrombectomy
combined with our Power Pulse(TM) technique, particularly in patients
with acute symptoms and large blood clots. We estimate the initial
market opportunity for use of AngioJet to treat these diseases exceeds
$130 million and will grow significantly over the next decade."
To capitalize on growing interest in DVT, Possis recently filed a
new 510(k) for use of the AngioJet System to remove venous thrombus
using its current Xpeedior(R) Catheter. This submission continues
under active review at the FDA. If approved, it will allow Possis to
market the AngioJet System under the new venous indication, and enable
the company to sponsor additional clinical science studying AngioJet
thrombectomy in venous applications such as DVT. Possis hopes to
receive a favorable ruling from the FDA in the next two to three
months.
In the area of PE, Possis is working with a leading physician in
Italy who has deep experience with AngioJet thrombectomy in treating
PE.
According to Dutcher, "We expect that our collaboration with this
physician will result in a new prospective study of AngioJet
thrombectomy in PE, which we expect to submit to the Italian Ministry
of Health for approval later this year. It's our hope that the study
could be the basis of a European approval for AngioJet in PE, and for
a subsequent U.S. study that would eventually support PE clearance."
Business Outlook
Looking ahead to fiscal 2007, Possis Medical narrowed its
full-year sales guidance to the range of $70 million to $73 million,
with gross margins in the low-to-mid 70's, as a percent of sales.
Non-GAAP (pro forma) net income per diluted share for fiscal 2007 is
estimated to range between $0.34 and $0.43 per share. GAAP net income
per diluted share, which includes the impact of SFAS 123(R)
stock-based compensation expense, is expected to be in the range of
$0.17 to $0.26 per share.
The company anticipates second-quarter net sales of $15.7 million
to $16 million and non-GAAP (pro forma) net income, adjusted to
eliminate SFAS 123(R) for stock-compensation expense, in the range
between $.05 and $.08 per diluted share. Possis expects GAAP net
income, which includes SFAS 123(R), of between $.01 and $.04 per
diluted share in the first quarter of fiscal 2007.
"Looking forward, we are excited by the momentum that we bring
into fiscal 2007 and are confident in our ability to reestablish
Possis as a growth company," concluded Dutcher.
The company will host a conference call today, Wednesday, Nov. 22,
2006, at 9:30 am (CT). Bob Dutcher, Chairman & CEO, and Jules Fisher,
CFO, will discuss the first-quarter operating results.
To join the conference call, dial 1-888-889-7567 (international
1-517-645-6377) and give the password "conference." A replay of the
conference call will be available one hour after the call ends through
11:59 P.M. (CT) on November 30, 2006. To access the replay, dial
1-800-216-3090 (international 1-402-220-3857).
For individual investors, a Webcast of the conference call will be
available at www.possis.com under the "Investors" tab, or at
www.fulldisclosure.com. Institutional investors can access the Webcast
through a password-protected site at www.streetevents.com. An archived
Webcast of Possis' conference call will be available for 30 days.
About Possis Medical, Inc.
Possis Medical, Inc., develops, manufactures and markets
pioneering medical devices for the large and growing cardiovascular
and vascular treatment markets. The Company's AngioJet System is the
world's leading mechanical thrombectomy system with FDA approval to
remove large and small thrombus from coronary arteries, coronary
bypass grafts, peripheral arteries and A-V grafts and native fistulas.
Certain statements in this press release constitute
"forward-looking statements" within the meaning of Federal Securities
Laws. Some of these statements relate to estimated future revenue,
gross margins, expenses and earnings per share, regulatory approvals,
new product introductions and indications, and clinical initiatives.
These statements are based on our current expectations and
assumptions, and entail various risks and uncertainties that could
cause actual results to differ materially from those expressed in such
forward-looking statements, such as, the effectiveness of our sales
and marketing efforts in re-establishing coronary product usage, our
ability to effectively manage new product development timelines and
our ability to generate suitable clinical data to support growing use
of the AngioJet. A discussion of these and other factors that could
impact the Company's future results are set forth in the cautionary
statements included in the Company's Form 10-K for the year ended July
31, 2006, filed with the Securities and Exchange Commission.
This release includes non-GAAP (pro forma) net income, non-GAAP
(pro forma) net income per share data, and non-GAAP (pro forma) key
business indicators, and other non-GAAP line items from the
Consolidated Statements of Income and Comprehensive Income, including
cost of medical products, operating expenses (including selling,
general and administrative, and research and development), and
provision for income taxes. These measures are not in accordance with,
or an alternative for, generally accepted accounting principles and
may be different from non-GAAP (pro forma) measures used by other
companies. Possis believes that the presentation of non-GAAP (pro
forma) net income, non-GAAP (pro forma) net income per share data,
non-GAAP (pro forma) key business indicators and other non-GAAP line
items from the Consolidated Statements of Income and Comprehensive
Income, when shown in conjunction with the corresponding GAAP
measures, provides useful information to management and investors
regarding financial and business trends relating to its financial
condition and results of operations. Possis further believes that
where the adjustments used in calculating non-GAAP (pro forma) net
income and non-GAAP (pro forma) net income per share are based on
specific identified charges that impact different line items in the
statements of income (including cost of medical products, selling,
general and administrative and research and development expense), that
it is useful to investors to know how these specific line items in the
statements of income are affected by these adjustments.
POSSIS MEDICAL, INC.
CONSOLIDATED STATEMENTS
OF INCOME AND COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Ended
---------------------------------
October 31, 2006 October 31, 2005
---------------- ----------------
Product sales........................ $15,603,881 $15,475,674
Cost of sales and other expenses:
Cost of medical products....... 4,408,194 4,230,155
Selling, general and
administrative................ 9,816,040 8,393,727
Research and development....... 2,414,679 2,509,293
---------------- ----------------
Total cost of sales and
other Expenses............ 16,638,913 15,133,175
---------------- ----------------
Operating income..................... (1,035,032) 342,499
Interest income.................. 539,492 403,449
Gain (loss) on sale of securities 18,891 (6,346)
---------------- ----------------
Income before income taxes........... (476,649) 739,602
Income tax provision................. (243,000) 474,000
---------------- ----------------
Net (loss) income.................... (233,649) 265,602
Other comprehensive loss, net of tax:
Unrealized gain (loss) on securities. 193,000 (99,000)
---------------- ----------------
Comprehensive (loss) income.......... (40,649) $166,602
================ ================
Weighted average number of common
shares outstanding:
Basic....................... 17,203,047 17,315,847
Diluted..................... 17,569,136 17,951,037
Net income per common share:
Basic...................... $(0.01) $0.02
================ ================
Diluted.................... $(0.01) $0.01
================ ================
POSSIS MEDICAL, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS October 31, 2006 July 31, 2006
---------------- ---------------
CURRENT ASSETS:
Cash and cash equivalents........... $2,365,461 $3,505,796
Marketable securities............... 44,985,998 44,610,130
Trade receivables (less allowance
for doubtful accounts and returns
of $570,000 and $580,000,
respectively)...................... 8,121,299 8,356,776
Inventories......................... 6,194,666 5,915,950
Prepaid expenses and other assets... 2,524,244 1,663,322
Deferred tax asset.................. 1,331,000 1,331,000
---------------- ---------------
Total current assets.............. 65,522,668 65,382,974
PROPERTY AND EQUIPMENT, net........... 4,939,148 5,090,198
DEFERRED TAX ASSET.................... 11,009,000 10,756,000
OTHER ASSET........................... 825,054 723,262
---------------- ---------------
TOTAL ASSETS.......................... $82,295,870 $81,952,434
================ ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable.............. $2,326,758 $2,040,367
Accrued salaries, wages, and
commissions........................ 2,611,350 3,468,961
Other liabilities................... 2,773,858 2,715,421
---------------- ---------------
Total current liabilities........ 7,711,966 8,224,749
OTHER LIABILITIES..................... 943,468 823,975
COMMITMENTS AND CONTINGENCIES.........
SHAREHOLDERS' EQUITY:
Common stock-authorized, 100,000,000
shares of $0.40 par value each;
issued and outstanding, 17,219,616
and 17,146,825 shares, respectively 6,887,846 6,858,730
Additional paid-in capital.......... 78,126,535 77,378,276
Accumulated other comprehensive loss (136,000) (329,000)
Retained deficit.................... (11,237,945) (11,004,296)
---------------- ---------------
Total shareholders' equity..... 73,640,436 72,903,710
---------------- ---------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY............................... $82,295,870 $81,952,434
================ ===============
AngioJet System Key Business Indicators
- ----------------------------------------------------------------------
Q1-06 Q2-06 Q3-06 Q4-06 Q1-07
- ----------------------------------------------------------------------
U.S. AngioJet Revenue -
$(000) $15,029 $14,582 $14,748 $15,258 $15,181
- ----------------------------------------------------------------------
U.S. Drive Units Sold 42 28 46 22 30
- ----------------------------------------------------------------------
U.S. Drive Units in the Field 1,560 1,600 1,645 1,672 1,699
- ----------------------------------------------------------------------
U.S. Catheter Utilization 7.5 7.0 6.6 7.1 6.7
- ----------------------------------------------------------------------
Gross Margin % 72.7% 74.2% 71.1% 71.5% 71.7%
- ----------------------------------------------------------------------
EPS Diluted $0.01 $0.02 ($0.02) $0.03 ($0.01)
- ----------------------------------------------------------------------
Below is the quarterly effect of Stock-Based Compensation Expense
under SFAS 123(R) on the operations of the Company. All amounts are in
thousands except for EPS diluted.
Q1-06 Q2-06 Q3-06 Q4-06 Q1-07
- ----------------------------------------------------------------------
Cost of medical products $102 $105 $114 $97 $94
- ----------------------------------------------------------------------
Selling, general and administrative 531 503 665 580 584
- ----------------------------------------------------------------------
Research and development 189 196 197 183 174
- ----------------------------------------------------------------------
Income tax provision (120) (74) (156) (150) (186)
- ----------------------------------------------------------------------
Net income (702) (730) (820) (710) (666)
- ----------------------------------------------------------------------
EPS diluted (0.04) (0.04) (0.05) (0.04) (0.04)
- ----------------------------------------------------------------------
CONTACT: Possis Medical, Inc.
Jules L. Fisher, Vice President, Finance and Chief
Financial Officer, 763-450-8011
Jules.Fisher@possis.com