Exhibit 99.1
Possis Medical, Inc. Reports Third-Quarter Results
Ultra System Sales Exceed Expectations; Net Sales Up 7 Percent
Over Year Ago Quarter and 3 percent Sequentially
MINNEAPOLIS--(BUSINESS WIRE)--May 23, 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 third quarter.
For the third quarter ended April 30, 2007, Possis delivered net sales of
$16.2 million, a 7 percent increase from fiscal 2006 third-quarter sales of
$15.2 million. The Company reported third-quarter net income on a generally
accepted accounting principles (GAAP) basis of $44,000, or $0.00 per diluted
share, improved from a GAAP net loss of $278,000, or $0.02 per diluted share,
for the prior-year period. This includes stock-based compensation expense of
$669,000, net of tax, or $0.04 per diluted share, and $820,000, net of tax, or
$0.05 per diluted share, for the fiscal 2007 and 2006 third quarters,
respectively. As adjusted to eliminate the effect of stock-based compensation
expense, net income (non-GAAP) was $713,000, or $0.05 per diluted share in the
third fiscal quarter of 2007 compared to net income of $542,000, or $0.03 per
diluted share, in the third quarter of fiscal 2006.
Due to the recent AngioJet(R) Ultra Thrombectomy System launch, Possis'
expense for sales returns has increased from approximately 1 percent of gross
revenue to 3.3 percent of gross revenue in the fiscal 2007 third quarter. This
increase is due to the expected rise in returns of customers' disposable product
inventory usable only with the previous generation AngioJet System. At the
customer's request, these returns are often delayed 30 to 60 days until the
customer is fully trained and converted to the new Ultra System. Gross revenue
in the third quarter increased 9 percent to $16.8 million, versus the same
period one year ago; gross revenue was up 5 percent sequentially from the fiscal
2007 second quarter. Possis anticipates that sales returns will moderate as the
Ultra System becomes the preferred thrombectomy system. Please refer to the
table on page 7 for additional details on revenue and sales returns.
"Year over year, we delivered revenue growth in spite of higher sales
returns. We did, however, come up somewhat short of our guidance," said Robert
G. Dutcher, CEO of Possis Medical. "Possis is in the midst of a growth recovery
phase and at a pivotal transition in our business. As we convert from the legacy
AngioJet Systems to the new Ultra Consoles, we're going to market with a whole
new product line--working to turn over an installed base of over 1,800 drive
units and prior-generation catheters and pumps. This transition is expected to
result in increased sales returns, higher manufacturing start-up costs, and a
higher ratio of capital equipment versus disposable product sales that will
impact gross margins and product sales mix while we focus on the Ultra System
near-term."
"Our focus as a Company is long term and strategic, and an important part
is to place Ultra Consoles and secure complete market access for additional
Ultra Catheter Set designs. These are future revenue generators and keys to
growth. It's encouraging that Ultra Console placements and sales exceeded our
expectations for the third quarter and early indications are that Ultra System
disposable usage will significantly exceed historic usage rates."
Continued Dutcher, "Moreover, the FDA just recently cleared our AngioJet
Ultra Spiroflex(R) catheter set for blood clot removal in coronary conduits.
This approval means our flagship Ultra Spiroflex catheter set is now approved
for both coronary and peripheral thrombus removal, an important forward step in
establishing the Ultra System. Additionally, the FDA cleared our FETCH(TM)
Aspiration Catheter specifically for coronary vasculature use, on top of its
original clearance for generic arteries. These two newest indications further
broaden the on-label scope of our product family and offer physicians a more
complete solution for treating coronary thrombus."
In the fiscal 2007 third quarter, Possis sold 36 new AngioJet Ultra
Consoles and 15 prior-generation drive units worldwide. Total U.S. drive units
in the field, which contributes to catheter usage and sales, increased
sequentially to 1,777 at the end of the fiscal 2007 third quarter from 1,719
units at the end of the fiscal 2007 second quarter. Of total U.S. drive units in
the field, 109 are the new AngioJet Ultra consoles.
For the third quarter, Possis' gross profit margin was 68 percent, versus
71 percent in the year-ago third quarter. The quarterly, year-over-year decrease
was primarily due to the impact of higher start-up costs for new products and
customer conversion to the Ultra System. Average selling prices remained firm
across the company's product lines.
Selling, general and administrative expenses (SG&A) increased by $869,000
from the year-earlier third quarter, to $9.2 million. Sales force commissions
and a sales force operating at full staff contributed to the rise.
Fiscal 2007 third-quarter research and development (R&D) spending decreased
by $498,000 from the prior-year period to $2.4 million. The year-over-year
decrease is due to the timing of specific expenses for R&D initiatives as
several new products are now moving to market release. R&D spending represented
14.6 percent of third-quarter revenue.
On April 30, 2007, cash, cash equivalents, and marketable securities
totaled $43.3 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. During the third quarter, Possis
repurchased $1.88 million, or 149,738 shares, of common stock at an average
price of $12.54 per share. Based on market conditions, Possis plans to
repurchase additional shares going forward to offset dilution from stock-based
compensation programs.
For the nine-month period ended April 30, 2007, net sales increased 4
percent and totaled $47.6 million, versus $45.8 million in the prior year. The
company reported a net loss of $16,000 for the nine months on a GAAP basis,
including stock-based compensation expense of $2 million, net of tax, or $0.12
per diluted share. GAAP net income for the prior-year nine months was $330,000,
or $0.02 per diluted share, including stock-based compensation expense of $2.3
million, net of tax, or $0.13 per diluted share. As adjusted to eliminate the
effect of stock-based compensation expense, net income (non-GAAP) for the fiscal
2007 nine months was $2.0 million, or $0.11 per diluted share, compared to $2.6
million, or $0.14 per diluted share, for fiscal 2006.
AngioJet Product Update
Said Dutcher, "Possis continues to be the established leader in the
thrombus management space. Through ongoing new product introductions and
additional clinical science, we have returned to growth and our goal remains to
leverage our proven technology and market strength to provide physicians and
hospitals with a broader portfolio of endovascular treatment options."
AngioJet Ultra System
During the third quarter, Possis initiated the full market release of its
new AngioJet Ultra Thrombectomy System. Leading up to full-market release, the
Ultra System was broadly evaluated by experienced AngioJet operators in several
hospitals across the country. According to Possis, cathlab staff found the Ultra
System to be much faster to set up and significantly easier to use than the
previous generation AngioJet System, while retaining the same therapeutic
effectiveness--and physician response has been overwhelmingly positive.
Ultra Spiroflex Thrombectomy Set
Possis' new Ultra Thrombectomy System combines catheters and pump sets into
a single disposable device called a Thrombectomy Set. The Spiroflex catheter was
approved for coronary use with the previous generation AngioJet System in
January 2007. Recently, the FDA approved the Ultra Spiroflex thrombectomy set
for coronary use with the Ultra System. The Ultra Spiroflex thrombectomy set is
now cleared for both coronary and peripheral use.
Said Dutcher, "Approval of the Ultra Spiroflex thrombectomy set
demonstrates the continued forward progress we're making with our new Ultra
System."
Spiroflex Catheters
In April 2007, the FDA approved Possis' AngioJet Spiroflex VG rapid
exchange catheter for thrombus removal in coronary conduits. First introduced in
July 2006 for removing thrombus in larger peripheral arteries, the recent FDA
approval allows the Spiroflex VG catheter to be marketed for use in saphenous
vein bypass grafts in the heart and larger native coronary arteries.
Sharing the same platform technology, Possis' Spiroflex and Spiroflex VG
catheters are the company's most flexible and maneuverable rapid exchange
catheters. The Spiroflex and Spiroflex VG catheters are now approved for
thrombus removal in both coronary and peripheral arteries. The Spiroflex
catheter is uniquely suited for thrombus removal in smaller native coronary
arteries, while the Spiroflex VG catheter provides more power and is
specifically designed for thrombus removal in bypass grafts in the heart and
larger peripheral and coronary arteries. According to Possis, interventions in
saphenous vein bypass grafts represent approximately 15 percent of all coronary
interventions. These bypass grafts are generally larger in diameter than native
coronary arteries and often contain larger, more difficult to remove thrombus.
Non-AngioJet Products
Possis continues to make progress with its strategy to leverage the
Company's enterprise strengths by bringing new endovascular products to market.
So far in fiscal 2007, Possis has introduced two new non-AngioJet products; the
Fetch Aspiration Catheter and the SafeSeal(TM) Hemostasis Patch. Both products
have been well received by customers and their combined sales represented 4
percent of total revenue in the fiscal third quarter. In May 2007, the FDA
approved the company's application to specifically label the Fetch Aspiration
Catheter for use in coronary arteries, in addition to peripheral arterial use.
Said Dutcher, "We're very pleased with this new, more specific indication
from the FDA. The Fetch aspiration catheter can now be marketed more directly
for the removal of fresh, soft, emboli and thrombus from arteries in the
coronary and peripheral vasculature. While the AngioJet System remains the gold
standard in thrombectomy, the Fetch catheter provides physicians with a quick
and simple means to aspirate small amounts of fresh coronary thrombus."
"Our early success with the Fetch catheter has allowed us to further
position Possis as the complete solution for thrombus treatment. Combined, our
comprehensive product offering provides safe and effective devices to remove
thrombus throughout the body's vascular system--and positions Possis well for
future growth."
As noted in Possis' second-quarter earnings release, the initial market
evaluation of the GuardDOG Occlusion Guidewire System demonstrated its utility
in temporarily occluding blood flow through a vascular treatment field, offering
physicians greater control when employing endovascular catheter treatments such
as AngioJet thrombectomy. This initial clinical experience also highlighted the
market's desire for an even more flexible guidewire shaft. Further development
work towards this goal is proceeding, and Possis expects to continue the initial
clinical evaluation starting in the fiscal 2007 fourth quarter. Full U.S. market
release of the GuardDOG System, comprising a 0.035" diameter guidewire and later
a 0.014" guidewire, is expected later this calendar year.
Clinical Science Update
Coronary Thrombectomy
Possis' JETSTENT clinical trial of AngioJet thrombectomy in heart attack
patients with large thrombus has enrolled 155 patients to date at seven active
sites, mostly in Europe, continuing toward the next interim milestone of 225
patients expected later this calendar year.
Additionally, Possis continues its collaboration with a leading clinical
researcher and trialist to combine all suitable published clinical experience
with the AngioJet System in treating acute coronary syndrome patients into a
single large clinical dataset for a more sophisticated meta-analysis of the
safety and benefit of AngioJet thrombectomy in such patients. The company
expects this effort will 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 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, and has been accepted by a major U.S. medical journal for publication
later this year.
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 nationwide."
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, with 52 enrolled to
date. 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 thrombectomy centers, and
become a 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 the initial clinical experiences with GuardDOG System will be the
subject of scientific presentations and publications.
Several new articles have appeared in recent medical literature presenting
AngioJet thrombectomy and Power Pulse(TM) Spray for the treatment of deep vein
thrombosis (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
Looking ahead, Possis Medical anticipates fourth-quarter net sales of $17
million to $18 million and GAAP net income, which includes stock-based
compensation expense, of $0.00 to $0.02 per diluted share. After adjustment to
eliminate stock-compensation expense, net income (non-GAAP) is expected to be in
the range of $0.04 to $0.06 per diluted share.
For the current fiscal year ending July 31, 2007, Possis expects net sales
of $65 million to $66 million, with a gross margin of approximately 70 percent.
Net income per diluted share, which includes the impact of stock-based
compensation expense, is expected to be in the range of $0.00 to $0.02 per
share. After adjustment to eliminate stock-compensation expense, net income
(non-GAAP) per diluted share for the year is estimated to range between $0.16
and $0.18 per share.
For the 2008 fiscal year, Possis' preliminary guidance anticipates sales in
the low to mid $70 million range.
The Company will host a conference call today, Wednesday, May 23, 2007, at
9:30 a.m. (CT). Bob Dutcher, Chairman & CEO, and Jules Fisher, CFO, will discuss
third-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
May 25, 2007. To access the replay, dial 1-800-839-2348 (international
1-203-369-3033).
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 timelines, our success in selling products for new
indications, and our ability to generate suitable clinical data to support
growing AngioJet System use. 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.
POSSIS MEDICAL, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS April 30, 2007 July 31, 2006
-------------- -------------
CURRENT ASSETS:
Cash and cash equivalents.............. $2,084,560 $3,505,796
Marketable securities.................. 41,247,100 44,610,130
Trade receivables (less allowance for
doubtful accounts and returns of
$899,000 and $580,000, respectively).. 8,440,953 8,356,776
Inventories............................ 8,051,592 5,915,950
Prepaid expenses and other assets...... 3,121,837 1,663,322
Deferred tax asset..................... 1,331,000 1,331,000
-------------- -------------
Total current assets................. 64,277,042 65,382,974
PROPERTY AND EQUIPMENT, net.............. 4,752,370 5,090,198
DEFERRED TAX ASSET....................... 11,152,648 10,756,000
INVESTMENT IN RAFAEL MEDICAL............. 2,612,317 -
OTHER ASSET.............................. 1,066,463 723,262
-------------- -------------
TOTAL ASSETS............................. $83,860,840 $81,952,434
============== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable................. $2,163,808 $2,040,367
Accrued salaries, wages, and
commissions........................... 3,242,770 3,468,961
Other liabilities...................... 2,492,438 2,715,421
-------------- -------------
Total current liabilities........... 7,899,016 8,224,749
OTHER LIABILITIES........................ 1,118,317 823,975
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock-authorized, 100,000,000
shares of $0.40 par value each; issued
and outstanding, 17,105,187 and
17,146,825 shares, respectively....... 6,842,075 6,858,730
Additional paid-in capital............. 79,067,608 77,378,276
Accumulated other comprehensive loss... (46,000) (329,000)
Retained deficit....................... (11,020,176) (11,004,296)
-------------- -------------
Total shareholders' equity........ 74,843,507 72,903,710
-------------- -------------
- -----------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY.................................. $83,860,840 $81,952,434
============== =============
POSSIS MEDICAL, INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE THREE AND NINE MONTHS ENDED APRIL 30, 2007 AND 2006
(UNAUDITED)
Three Months Ended Nine Months Ended
------------------------- -------------------------
April 30, April 30, April 30, April 30,
2007 2006 2007 2006
------------ ------------ ------------ ------------
Product sales......$16,239,689 $15,224,827 $47,649,655 $45,829,609
Cost of sales and
other expenses:
Cost of medical
products........ 5,193,346 4,399,791 14,338,940 12,532,922
Selling, general
and
administrative.. 9,279,024 8,409,593 28,360,467 24,314,577
Research and
development..... 2,372,156 2,869,967 6,730,829 8,577,064
------------ ------------ ------------ ------------
Cost of sales
and other
expenses..... 16,844,526 15,679,351 49,430,236 45,424,563
------------ ------------ ------------ ------------
Operating (loss)
income............ (604,837) (454,524) (1,780,581) 405,046
Interest income. 522,110 464,966 1,598,222 1,296,048
Loss on sale of
securities..... (10,244) (110,839) (29,561) (136,326)
------------ ------------ ------------ ------------
Income (loss)
before income
taxes............. (92,971) (100,397) (211,920) 1,564,768
(Benefit) provision
for income taxes.. (137,040) 177,211 (196,040) 1,235,211
------------ ------------ ------------ ------------
Net income (loss).. 44,069 (277,608) (15,880) 329,557
Other comprehensive
income (loss), net
of tax:
Unrealized gain
(loss) on
securities........ 95,000 (18,000) 283,000 (98,000)
------------ ------------ ------------ ------------
Comprehensive
income............ 139,069 $(295,608) $267,120 $231,557
============ ============ ============ ============
Weighted average
number of common
shares
outstanding:
Basic........... 17,157,499 17,166,955 17,162,532 17,237,723
Diluted......... 17,791,654 17,166,955 17,162,532 17,700,222
Net income per
common share:
Basic........... $0.00 $(0.02) $0.00 $0.02
============ ============ ============ ============
Diluted......... $0.00 $(0.02) $0.00 $0.02
============ ============ ============ ============
AngioJet System Key Business Indicators
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U.S. Market Data Q3-06 Q4-06 Q1-07 Q2-07 Q3-07
- ----------------------------------------------------------------------
AngioJet Revenue - $(000) $14,748 $15,258 $15,017 $15,005 $15,150
- ----------------------------------------------------------------------
AngioJet 3000 Drive Units
Sold 46 22 30 18 8
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AngioJet Ultra Consoles
Sold - - - 10 36
- ----------------------------------------------------------------------
AngioJet 3000 Drive Units
& Ultra Consoles in the
Field 1,645 1,672 1,699 1,719 1,777
- ----------------------------------------------------------------------
AngioJet Catheters Sold 10,692 11,866 11,370 11,348 10,824
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Gross Margin % 71.1% 71.5% 71.7% 70.0% 68.0%
- ----------------------------------------------------------------------
EPS Diluted ($0.02) $0.03 ($0.01) $0.01 $0.00
- ----------------------------------------------------------------------
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.
Q3-06 Q4-06 Q1-07 Q2-07 Q3-07
- ----------------------------------------------------------------------
Cost of medical products $114 $97 $94 $93 $89
- ----------------------------------------------------------------------
Selling, general and administrative 665 580 584 587 613
- ----------------------------------------------------------------------
Research and development 197 183 174 175 174
- ----------------------------------------------------------------------
Income tax provision (156) (150) (186) (193) (207)
- ----------------------------------------------------------------------
Net income (820) (710) (666) (662) (669)
- ----------------------------------------------------------------------
EPS diluted (0.05) (0.04) (0.04) (0.04) (0.04)
- ----------------------------------------------------------------------
Below is a schedule detailing product sales.
--------------------------------------------
Q3-06 Q4-06 Q1-07 Q2-07 Q3-07
--------------------------------------------
Gross Product Sales $15,365 $16,260 $15,784 $16,066 $16,800
--------------------------------------------
Less: Sales Returns &
Allowances (140) (210) (180) (260) (560)
--------------------------------------------
Net Product Sales 15,225 16,050 15,604 15,806 16,240
--------------------------------------------
CONTACT: Possis Medical, Inc.
Jules L. Fisher, 763-450-8011
Vice President, Finance and
Chief Financial Officer
Jules.Fisher@possis.com