Exhibit 99.1
Possis Medical, Inc. Reports Second-Quarter Results
Company Secures Key FDA Approvals
MINNEAPOLIS--(BUSINESS WIRE)--Feb. 21, 2007--Possis Medical, Inc.
(NASDAQ:POSS), a developer, manufacturer and marketer of pioneering
medical devices used in endovascular procedures, today reported
results for its fiscal 2007 second quarter that were within the range
of its previously issued guidance.
For the second quarter ended January 31, 2007, Possis delivered
sales of $15.8 million, a 4.5 percent increase from fiscal 2006
second-quarter sales of $15.1 million. The company reported
second-quarter net income on a generally accepted accounting
principles (GAAP) basis of $174,000, or $0.01 per diluted share,
versus GAAP net income of $342,000, or $0.02 per diluted share, for
the prior-year period. This includes stock-based compensation expense
of $662,000, net of tax, or $0.04 per diluted share, and $730,000, net
of tax, or $0.04 per diluted share, for the fiscal 2007 and 2006
second quarters, respectively.
Non-GAAP (pro forma) net income for the fiscal 2007 second
quarter, adjusted to eliminate the effect of stock-based compensation
expense, was $836,000, or $0.05 per diluted share. This compares with
net income of $1.1 million, or $0.06 per diluted share, in the second
quarter of fiscal 2006.
"We made significant progress during the second quarter," said
Robert G. Dutcher, CEO of Possis Medical. "In addition to meeting our
sales and earning guidance, we achieved four key FDA approvals--two
for catheters, one for our new AngioJet(R) Ultra System, and one for
treatment of venous thrombus. We also made a strategic investment in
Rafael Medical to broaden our endovascular focus, and saw the first
patient treatments using our new GuardDOG(R) Occlusion Catheter and
Ultra System. Additionally, sales force turnover has moderated,
returning to a more normal industry level."
For the six-month period ended January 31, 2007, sales totaled
$31.4 million, versus $30.6 million in the prior year. The company
reported a net loss of $60,000 for the six months on a GAAP basis,
including stock-based compensation expense of $1.3 million, net of
tax, or $0.08 per diluted share. GAAP net income for the prior-year
six months was $607,000, or $0.03 per diluted share, including
stock-based compensation expense of $1.4 million, net of tax, or $0.08
per diluted share. Non-GAAP (pro forma) net income for the first half
of fiscal 2007 was $1.3 million, or $0.07 per diluted share, compared
to $2.0 million, or $0.11 per diluted share, for fiscal 2006.
In the fiscal 2007 second quarter, Possis sold 10 new AngioJet(R)
Ultra Consoles and 19 prior-generation drive units worldwide, all but
one of the units in the United States. Total U.S. drive units in the
field, which contributes to catheter usage and sales, increased
sequentially to 1,719 at the end of the fiscal 2007 second quarter
from 1,699 units at the end of the fiscal 2007 first quarter. Of the
total U.S. drive units in the field, 22 are new AngioJet Ultra
Consoles.
"The initial performance, acceptance and success of our new
AngioJet Ultra Thrombectomy System has been tremendous. Hospitals
involved in the evaluation process are rapidly turning to the Ultra
System for its simple and fast setup, sleeker design, lighter weight
and improved handling that make it significantly easier to use than
the previous generation AngioJet System. We expect that the marked
benefits the Ultra System offers will drive increased catheter
utilization going forward," said Dutcher.
For the second quarter, Possis' gross profit margin was 70
percent, versus 74 percent in the year-ago second quarter. On a
sequential basis, gross profit margin was down slightly from 71.7
percent in the fiscal 2007 first quarter. The quarterly,
year-over-year decrease was primarily due to the impact of higher
start-up costs for new products. Average selling prices remained firm
across the company's product lines.
Selling, general and administrative expenses (SG&A) increased by
$1.8 million from the year-earlier second quarter, to $9.3 million.
Sales force commissions and staff additions, as well as management
incentive compensation, contributed to the rise. The second-quarter
management incentive compensation increase included in SG&A reflected
a $440,000 charge ($215,000 or $0.01 per share net of tax) for the
impact of accelerated vesting of restricted stock awards based on the
market price of the company's common stock.
Fiscal 2007 second-quarter research and development (R&D) spending
decreased by $1.3 million from the prior-year period, to $1.9 million.
The year-over-year decrease is due to the timing of R&D initiatives as
several new products are now moving to market release. R&D spending
represented 12.3 percent of second-quarter revenue.
The company reported that on January 31, 2007, cash, cash
equivalents, and marketable securities totaled $45.4 million. On
December 19, 2006, Possis' board of directors authorized the company
to repurchase up to $15 million of its common stock over the two years
ending December 31, 2008. The company did not repurchase any common
shares during the second quarter, but remains committed to the share
repurchase program. Based on market conditions, Possis plans to
repurchase shares going forward to offset dilution from stock-based
compensation programs.
Product Update
AngioJet(R) Ultra System
In December 2006 Possis received marketing approval from the FDA
for its new AngioJet Ultra System. The Ultra System is the
next-generation, completely re-engineered version of Possis' proven,
industry-leading AngioJet System. Following FDA approval, Mercy
Hospital in Coon Rapids, Minn., was the first hospital to use the
Ultra System--doing so in multiple thrombectomy procedures. The Ultra
System is currently undergoing customer evaluation at select
institutions around the U.S., including: Charleston Area Medical
Center, Charleston, W. Va.; Good Samaritan Hospital, Los Angeles,
Calif.; The University of Tennessee Medical Center, Knoxville, Tenn.;
and Mercy Medical Center, Des Moines, Iowa. Full release in the U.S.
market is expected in Spring 2007.
Spiroflex(R) Catheters
Recently, Possis received FDA approval to market its Spiroflex
rapid exchange catheter to remove thrombus from coronary arteries.
Thrombus in coronary arteries and bypass grafts can cause lack of
oxygen (ischemia) in the heart muscle and may lead to a damaging heart
attack. More than 1 million patients suffer from heart attacks in the
United States every year. The Spiroflex catheter, Possis' most
flexible and maneuverable rapid exchange catheter, is specifically
designed for blood clot removal (thrombectomy) in small vessels such
as coronary arteries. Sharing the same technology, Possis' Spiroflex
VG catheter is currently marketed for use in larger peripheral vessels
and is pending FDA approval for use in coronary arteries.
GuardDOG(R) Occlusion System
Possis' new GuardDOG Distal Occlusion Guidewire system saw its
first patient use in December. Dr. Mitchell J. Silver and Dr. Gary
Ansel, interventional cardiologists with MidOhio Cardiology and
Vascular Consultants, Columbus, Ohio, performed the pioneering
clinical procedure.
Initial experiences were promising in demonstrating that the
GuardDOG System can be used to easily control blood flow in the vessel
while allowing the use of endovascular treatment tools such as the
AngioJet System to treat vascular disease. Initial experiences,
however, also pointed out the need for a more flexible wire. With this
information in hand, Possis will continue further market evaluations
at select medical sites following completion of wire enhancement
activities, in preparation for a full U.S. market release of the
GuardDOG system later this calendar year. In addition, a second
GuardDOG catheter model featuring a smaller-diameter guidewire is
expected to complete development in the next several months.
New Venous Indication
Late in 2006, Possis' Xpeedior(R) catheter, in conjunction with
the AngioJet System, received FDA clearance to be marketed for
removing thrombus from upper- and lower-extremity peripheral veins--to
date, AngioJet is the only device FDA cleared for venous thrombectomy.
Each year in the U.S., approximately 600,000 patients are
diagnosed with deep vein thrombosis (DVT). Complications range from
severe pain and limitation of mobility to limb loss and even death.
Moreover, 200,000 people die from pulmonary embolism (PE) each year,
which occurs when venous thrombus migrates to the lungs and blocks
blood flow. Historically, venous thrombus treatment has been largely
limited to anti-coagulant drugs to prevent further clot progression, a
process that can take days--or even weeks--to show benefit.
Thrombectomy with the AngioJet Xpeedior catheter gives physicians
a powerful tool to restore flow through blocked veins. Patients may
benefit from faster resolution of leg pain and reduced risk of
complications. Additionally, the catheter also is cleared for general
peripheral vascular use with Possis' Power Pulse(TM) Delivery, a
procedure that sprays smaller, targeted doses of clot-dissolving
medicine directly into the thrombus and then quickly removes the
softened clot material.
SafeFlo(R) IVC Filter
During the second quarter Possis made a strategic investment in
Rafael Medical Technologies, an Israeli-based company that is
developing its proprietary SafeFlo(R) inferior vena cava (IVC) filter.
The IVC is the large vein that carries de-oxygenated blood from the
lower body back to the heart for subsequent re-oxygenation in the
lungs. In certain patients DVT can lead to the migration of blood
clots to the lungs, causing pulmonary embolism (PE), an often fatal
condition.
The U.S.-patented SafeFlo IVC filter is a minimally invasive and
retrievable filter designed to prevent thrombus migration to the lungs
and the potentially devastating effects of PE. It is estimated that by
2010, the U.S. market for IVC filters will total nearly $200 million
annually. Rafael Medical is conducting a clinical trial of the SafeFlo
filter at multiple sites in the United States and Europe; a 510(k)
submission to the FDA for market clearance is expected within 12 to 18
months.
Fetch(TM) Aspiration Catheter
During the fiscal 2007 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 to aspirate small,
fresh thrombus and other embolic debris from arteries.
In the second quarter, Possis completed its beta site evaluation
of the Fetch Catheter. Said Dutcher, "We are now gearing up for a full
market launch. Feedback from the vast majority of our beta site
physicians indicates that the Fetch Catheter is superior or equivalent
to other manual aspiration catheters."
Clinical Science Update
Coronary Thrombus
Possis' JETSTENT clinical trial of the AngioJet System in heart
attack patients with large thrombus has enrolled 145 patients to date
at seven active sites, mostly in Europe. The first interim analysis
has been completed and enrollment continues toward the next target of
225 patients, which is expected later this calendar year.
Additionally, Possis continues its collaboration with a leading
clinical researcher and trialist to combine all suitable published
AngioJet clinical experience in treating acute coronary syndrome
patients into a single large clinical dataset for a more sophisticated
meta-analysis of AngioJet safety and benefit in such patients. The
company expects this effort could be presented or published later in
2007.
Finally, Possis continues to promote the important findings from
Dr. George Sianos and the Thoraxcenter in Rotterdam, the Netherlands.
This work shows that in heart attack patients, AngioJet thrombectomy
to remove large thrombus before placement of a drug-eluting stent
(DES) is associated with significantly lower rates of death, repeat
heart attack and late-stent thrombosis. Sianos' work was presented at
four major medical meetings in 2006, most recently the November annual
meeting of the American Heart Association. Additionally, it was also
presented to the Circulatory Systems Advisory Panel meeting convened
by FDA in December.
Said Dutcher, "We believe these key results demonstrate that
unresolved thrombus at the time a drug-eluting stent is placed is a
significant cause of subsequent stent thrombosis; and that AngioJet
thrombectomy has an essential role to play in reducing overall rates
of stent thrombosis."
Peripheral Arterial Thrombus and Venous Thromboembolic (VTE)
Disease
Possis continues to develop several significant new clinical
science initiatives to support its peripheral vascular product
offerings. The company's new PEARL registry (PEripheral use of
AngioJet Rheolytic Thrombectomy with Mid-Length Catheters) is now
actively enrolling patients. PEARL is a Web-based registry of patient
treatments and outcomes using the mid-length DVX(R) and Xpeedior(R)
AngioJet catheters. Eventually, PEARL will involve 20 or more
high-volume peripheral AngioJet customers and become a rich source of
future case studies, scientific presentations, and publications on the
uses and clinical value of AngioJet treatment in a variety of
peripheral vascular disease challenges. The company plans to include
clinical experience with its GuardDOG product in the PEARL registry as
well. In addition, Possis expects that the initial clinical
experiences with the GuardDOG product will be the subject of
scientific presentations and publications.
Several new articles have appeared in recent medical literature
presenting AngioJet thrombectomy and Power Pulse Delivery for the
treatment of DVT. Recent presentations at the January meeting of the
International Society for Endovascular Therapy in Miami, Fla., and the
February meeting of the American Venous Forum in San Diego, Calif.,
have provided valuable new clinical science and favorable exposure for
the value Possis AngioJet thrombectomy brings to treating VTE.
Following the recent approved indication for venous AngioJet
thrombectomy, Possis continues to expand its investment in new
clinical science work to support the growing peripheral market.
Business Outlook
For fiscal 2007, Possis Medical anticipates a strong second half,
but has lowered its full-year sales guidance to the range of $66
million to $69 million, from $70 to $73 million. This revised guidance
represents significant year-over-year revenue growth of 13 to 23
percent in the second half of fiscal 2007. The company expects most of
the double-digit gain to come from its core AngioJet product line. The
reduced range is primarily the result of lower-than-anticipated sales
of new non-AngioJet products, combined with the impact of the Ultra
System approval coming later than anticipated.
The company also is working through start-up production and
inventory issues limiting the near-term supply of Ultra disposable
products. Possis expects this temporary ramp up situation to be
resolved late in the third quarter. Non-AngioJet new product sales
will most significantly be impacted by the company's need to extend
the beta site evaluation phase for the GuardDOG Occlusion Guidewire
into the fourth quarter of fiscal 2007. The extension will allow
Possis to implement certain product enhancements based on customer
input prior to a full market launch.
The company expects fiscal 2007 gross margins in the low 70s, as a
percent of sales. Non-GAAP (pro forma) net income per diluted share
for fiscal 2007 is estimated to range between $0.25 and $0.34 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 $0.09 to $0.18 per share.
Possis anticipates third-quarter net sales of $16.5 million to $18
million and non-GAAP (pro forma) net income, adjusted to eliminate
SFAS 123(R) for stock-compensation expense, in the range between $0.08
and $0.10 per diluted share. Possis expects fiscal 2007 third-quarter
GAAP net income, which includes SFAS 123(R), of $0.04 to $0.06 per
diluted share.
The company will host a conference call today, Wednesday, Feb. 21,
2007, at 9:30 a.m. (CT). Bob Dutcher, Chairman & CEO, and Jules
Fisher, CFO, will discuss second-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 Feb. 23, 2007. To access the replay, dial
1-866-373-4990 (international 1-203-369-0270).
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 veins, 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, performance, development, 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 and launching new products, our ability to
effectively manage new product development and production timelines,
the effectiveness of our initiatives to reduce sales force turnover
and improve productivity, and our ability to generate suitable
clinical data to support growing use of the AngioJet in coronary
applications. 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
FOR THE THREE AND SIX MONTHS ENDED JANUARY 31, 2007 AND 2006
(UNAUDITED)
Three Months Ended Six Months Ended
------------------------- -------------------------
Jan. 31, Jan. 31, Jan. 31, Jan. 31,
2007 2006 2007 2006
------------ ------------ ------------ ------------
Product sales......$15,806,085 $15,129,108 $31,409,966 $30,604,782
Cost of sales and
other expenses:
Cost of medical
products........ 4,737,400 3,902,976 9,145,594 8,133,131
Selling, general
and
administrative.. 9,265,398 7,511,257 19,081,443 15,904,984
Research and
development..... 1,943,999 3,197,804 4,358,673 5,707,097
------------ ------------ ------------ ------------
Cost of sales
and other
expenses.... 15,946,797 14,612,037 32,585,710 29,745,212
------------ ------------ ------------ ------------
Operating (loss)
income............ (140,712) 517,071 (1,175,744) 859,570
Interest income. 536,620 427,633 1,076,112 831,082
Loss on sale of
securities..... (38,208) (19,141) (19,317) (25,487)
------------ ------------ ------------ ------------
Income (loss)
before income
taxes............. 357,700 925,563 (118,949) 1,665,165
(Benefit) provision
for income taxes.. 184,000 584,000 (59,000) 1,058,000
------------ ------------ ------------ ------------
Net (loss) income.. 173,700 341,563 (59,949) 607,165
Other comprehensive
income (loss), net
of tax:
Unrealized gain
(loss) on
securities........ (5,000) 19,000 188,000 (80,000)
------------ ------------ ------------ ------------
Comprehensive
income............ $168,700 $360,563 $128,051 $527,165
============ ============ ============ ============
Weighted average
number of common
shares
outstanding:
Basic........... 17,179,940 17,228,059 17,164,966 17,271,953
Diluted......... 17,734,245 17,683,758 17,748,170 17,768,948
Net income per
common share:
Basic........... $0.01 $0.02 $0.00 $0.04
============ ============ ============ ============
Diluted......... $0.01 $0.02 $0.00 $0.03
============ ============ ============ ============
POSSIS MEDICAL, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS January 31, 2007 July 31, 2006
---------------- -------------
CURRENT ASSETS:
Cash and cash equivalents............. $2,903,620 $3,505,796
Marketable securities................. 42,508,664 44,610,130
Trade receivables (less allowance for
doubtful accounts and returns of
$690,000 and $580,000, respectively). 8,873,758 8,356,776
Inventories........................... 6,846,125 5,915,950
Prepaid expenses and other assets..... 1,959,326 1,663,322
Deferred tax asset.................... 1,331,000 1,331,000
---------------- -------------
Total current assets................ 64,422,493 65,382,974
PROPERTY AND EQUIPMENT, net............. 4,795,885 5,090,198
DEFERRED TAX ASSET...................... 10,834,000 10,756,000
INVESTMENT IN TECHNOLOGY (Cost Method).. 2,608,199 -
OTHER ASSET............................. 1,062,457 723,262
---------------- -------------
TOTAL ASSETS............................ $83,723,034 $81,952,434
================ =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable................ $1,313,480 $2,040,367
Accrued salaries, wages, and
commissions.......................... 3,477,967 3,468,961
Other liabilities..................... 2,467,734 2,715,421
---------------- -------------
Total current liabilities........... 7,259,181 8,224,749
OTHER LIABILITES........................ 1,047,065 823,975
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock-authorized, 100,000,000
shares of $0.40 par value each;
issued and outstanding, 17,220,162
and 17,146,825 shares, respectively.. 6,888,065 6,858,730
Additional paid-in capital............ 79,733,968 77,378,276
Accumulated other comprehensive loss.. (141,000) (329,000)
Retained deficit...................... (11,064,245) (11,004,296)
---------------- -------------
Total shareholders' equity.......... 75,416,788 72,903,710
---------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY................................. $83,723,034 $81,952,434
================ =============
AngioJet System Key Business Indicators
U.S. Market Data Q2-06 Q3-06 Q4-06 Q1-07 Q2-07
- ----------------------------------------------------------------------
AngioJet Revenue - $(000) $14,582 $14,748 $15,258 $15,017 $15,005
- ----------------------------------------------------------------------
AngioJet 3000 Drive Units
Sold 28 46 22 30 18
- ----------------------------------------------------------------------
AngioJet Ultra Consoles
Sold - - - - 10
- ----------------------------------------------------------------------
AngioJet 3000 Drive Units
& Ultra Consoles in the
Field 1,600 1,645 1,672 1,699 1,719
- ----------------------------------------------------------------------
AngioJet Catheters Sold 11,174 10,692 11,866 11,370 11,348
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Gross Margin % 74.2% 71.1% 71.5% 71.7% 70.0%
- ----------------------------------------------------------------------
EPS Diluted $0.02 ($0.02) $0.03 ($0.01) $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.
Q2-06 Q3-06 Q4-06 Q1-07 Q2-07
- ----------------------------------------------------------------------
Cost of medical products $105 $114 $97 $94 $93
- ----------------------------------------------------------------------
Selling, general and administrative 503 665 580 584 587
- ----------------------------------------------------------------------
Research and development 196 197 183 174 175
- ----------------------------------------------------------------------
Income tax provision (74) (156) (150) (186) (193)
- ----------------------------------------------------------------------
Net income (730) (820) (710) (666) (662)
- ----------------------------------------------------------------------
EPS diluted (0.04) (0.05) (0.04) (0.04) (0.04)
- ----------------------------------------------------------------------
CONTACT: Possis Medical, Inc.
Jules L. Fisher, 763-450-8011
Vice President, Finance and Chief Financial Officer
Jules.Fisher@possis.com