Exhibit 99.1
Possis Medical, Inc. Reports
Fourth-Quarter Results
AngioJet(R) Ultra System Performance Drives Sales Gains; Company
Raises Fiscal 2008 Outlook
MINNEAPOLIS--(BUSINESS WIRE)--Sept. 19, 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 fourth quarter and full year.
For the fourth quarter ended July 31, 2007, Possis delivered net
sales of $19.0 million, an 18 percent increase from fiscal 2006
fourth-quarter sales of $16.0 million. The Company reported
fourth-quarter net income of $72,000, or $0.00 per diluted share,
versus net income of $479,000, or $0.03 per diluted share, for the
prior-year period. This includes stock-based compensation expense of
$531,000, net of tax, or $0.03 per diluted share, and $710,000, net of
tax, or $0.04 per diluted share, for the fiscal 2007 and 2006 fourth
quarters, respectively.
"From a top-line perspective, Possis' fourth quarter exceeded our
expectations," said Robert G. Dutcher, CEO of Possis Medical. "Our
success in placing AngioJet(R) Ultra Consoles and securing complete
market access for additional Ultra Thrombectomy Set models drove sales
and helped us return to double-digit growth. Turning to the breakeven
bottom line, it's important to note that profitability was constrained
by the initial costs of launching and placing Ultra Consoles, as well
as our allowances for sales returns, which will moderate over time."
As reported in the third quarter, Possis has increased its
allowance for sales returns due to the AngioJet Ultra Thrombectomy
System launch. The Company's fiscal fourth-quarter sales return
allowance was 3.6 percent of gross revenue. This is up from
approximately 1 percent for the fiscal 2006 fourth quarter, and up
slightly sequentially from 3.3 percent of gross revenue in the fiscal
2007 third quarter. The year-over-year increase is due to the expected
rise in returns of customers' disposable product inventory usable only
with the previous-generation AngioJet System. The slight sequential
increase in the sales return allowance is attributable to AngioJet
Ultra Console placements increasing to 135 units in the fiscal 2007
fourth quarter from 87 units in the fiscal 2007 third quarter. Gross
revenue in the fourth quarter increased 21 percent versus the same
period one year ago; gross revenue was up 17 percent sequentially from
the fiscal 2007 third quarter. Please refer to the table on page 7 for
additional details on revenue and sales returns.
According to Dutcher, "As noted in our preliminary fourth-quarter
results announcement, our coronary product line delivered double-digit
sequential growth and increased over the prior-year's fourth quarter
by 2 percent--representing the first year-over-year increase in 12
quarters. Further, Possis' fourth-quarter peripheral product sales
returned to historical growth levels and delivered double-digit
sequential and year-over-year growth."
Further, in the fourth quarter, the Company's AV Access product
line also showed double-digit sequential growth. Additionally, sales
of new non-AngioJet products, such as the SafeSeal(TM) Hemostasis
Patch and the Fetch(R) Aspiration Catheter, were up both sequentially
and year-over-year.
Possis sold 67 new AngioJet Ultra Consoles and 13 prior-generation
drive units worldwide in the fiscal 2007 fourth quarter. Total U.S.
drive units in the field, which contributes to catheter usage and
sales, increased sequentially to 1,906 at the end of fiscal 2007 from
1,777 units at the end of the fiscal 2007 third quarter, and up from
1,672 units at the end of fiscal 2006. Of total U.S. drive units in
the field, 244 are the new AngioJet Ultra Consoles.
Possis said that in August it expanded its sales force to 87
members, up from 80 at the end of July. Noted Dutcher, "This increase
in our sales force is a strategic investment to capitalize on the
significant current opportunity we have with the Ultra System,
positive coronary clinical science, and heightened interest in the
endovascular treatment of peripheral vascular disease. By aggressively
expanding our sales team, we believe that we can place more Ultra
Consoles and further drive disposable sales."
For the fourth quarter, Possis' gross profit margin was 68.4
percent, versus 71.5 percent in the year-ago fourth quarter. The
decrease was primarily due to a shift in overall sales mix to
lower-margin Ultra System Consoles from disposables, combined with
slightly higher product costs on the new Ultra System line. As more
Ultra Consoles are placed, Ultra Thrombectomy Set usage is expected to
build, leading to a higher-margin product mix and lower manufacturing
costs. Average selling prices remained firm across the Company's
product lines.
Selling, general and administrative expenses (SG&A) increased by
$1.2 million from the year-earlier fourth quarter, to $9.9 million.
Sales force additions, commissions, and a new sales compensation plan
contributed to the rise.
Fiscal 2007 fourth-quarter research and development (R&D) spending
increased by $197,000 from the prior-year period, to $2.5 million. R&D
spending represented 13.3 percent of fourth-quarter revenue. Possis
remains committed to aggressively developing new products and clinical
applications.
On July 31, 2007, cash, cash equivalents and marketable securities
totaled $42.9 million. Possis generated $2.6 million in positive
operating cash flow in the fiscal 2007 fourth quarter. 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 fourth quarter, Possis repurchased $2.5
million, or 227,000 shares, of common stock at an average price of
$11.18 per share. Based on market conditions, Possis plans to buy back
additional shares going forward to offset dilution from stock-based
compensation programs.
For the fiscal 2007 year ended July 31, 2007, net sales increased
approximately 8 percent and totaled $66.7 million, versus $61.9
million in the prior year. The Company reported net income of $56,000,
or $0.00 per diluted share, for the 2007 fiscal year, including
stock-based compensation expense of $2.5 million, net of tax, or $0.14
per diluted share. For the prior fiscal year the Company reported net
income of $809,000, or $0.05 per diluted share, including stock-based
compensation expense of $3.0 million, net of tax, or $0.17 per diluted
share. As adjusted to eliminate the effect of stock-based compensation
expense, net income (non-GAAP) for fiscal 2007 was $2.6 million, or
$0.15 per diluted share, compared to $3.8 million, or $0.21 per
diluted share, for fiscal 2006.
Said Dutcher, "Fiscal 2007 was an exciting year for us on many
fronts. Our next-generation AngioJet Ultra System gained FDA clearance
and we fully released it to the market. We also attained key catheter
set, new clinical application and endovascular product approvals.
Additionally, we strengthened our portfolio of supporting clinical
science, especially in our coronary franchise. We grew and revitalized
our sales force, so today we are bigger, stronger and more experienced
than we were one year ago. Also, we made a strategic investment in an
Israeli-based company that enhances our future potential product
offering. Most important, we ended the year with a fourth-quarter
return to double-digit revenue growth and strong operating cashflows."
Product Update
AngioJet Ultra System
During the fourth quarter, Possis continued full market release of
its new AngioJet Ultra Thrombectomy System. Physician reception to the
new system continues to be overwhelmingly positive.
Said Dutcher, "Perhaps the marquee highlight of fiscal 2007 was
the launch of our new AngioJet Ultra Thrombectomy System. Garnering
FDA approval in December 2006 and seeing full-market release during
the fiscal third quarter, the Ultra System features much faster and
more reliable set-up than the previous generation AngioJet
System--while retaining the same proven therapeutic effectiveness."
Dutcher continued, "We're encouraged by the fact that Ultra
Console placements and sales exceeded our expectations for the year,
and early indications are that Ultra System catheter set usage will
significantly surpass historic usage rates. An important focus going
forward is to place Ultra Consoles and secure complete market access
for new and improved Ultra Thrombectomy Set designs, which will
capitalize on the increased capabilities of the Ultra Console."
Dutcher noted that the last of the current AngioJet Catheter
models to be released in an Ultra-compatible version will be the
Spiroflex(R) VG, slated for release before the end of the calendar
year.
Non-AngioJet Products
As noted, sales of the new non-AngioJet products, including the
SafeSeal Hemostasis Patch and the Fetch Aspiration Catheter, rose
sequentially and year-over-year.
"Over the past year, the Possis sales and marketing team has
proven that they are able to effectively represent and distribute new
non-AngioJet products, even in highly competitive markets such as
access site management and manual aspiration. This is particularly
encouraging as we continue to expand our focus to explore other
non-AngioJet thrombectomy markets," added Dutcher.
Also in the fourth quarter, Possis restarted the limited market
evaluation of its 0.035" GuardDOG(R) Occlusion Guidewire System.
Earlier in fiscal 2007, initial results from the limited market
evaluation of the GuardDOG System had demonstrated the device's
utility in temporarily occluding blood flow during vascular
interventions, offering physicians greater control when employing
endovascular catheter treatments such as AngioJet thrombectomy. The
early feedback, however, also prompted the Company to temporarily halt
the evaluation to allow the Company to implement additional product
improvements desired for full-market release. Possis now expects to
complete the limited market evaluation involving up to 20 U.S. centers
in its 2008 first quarter. U.S. market release of the GuardDOG System
is expected in the fiscal 2008 second quarter. A second GuardDOG
model, featuring a thinner 0.014" guidewire, is slated for
introduction later in fiscal 2008.
Clinical Science Update
Coronary Thrombectomy
In August 2007, the Journal of the American College of Cardiology
(JACC) formally published a clinical study showing dramatically
favorable results for AngioJet treatment of heart attack patients with
large thrombus. The study by Dr. George Sianos and colleagues at the
ThoraxCenter in Rotterdam, the Netherlands, indicated that stent
thrombosis is nine times more likely to occur when a drug-eluting
stent (DES) is placed in the presence of large thrombus; but that when
the thrombus is first removed with AngioJet, this heightened risk is
eliminated. A similar effect is seen in reducing the rates of other
major cardiac adverse events (i.e., death, repeat heart attack and
repeat revascularization).
The study analyzed 812 consecutive heart attack patients receiving
a DES. Patients with large thrombus had a much higher incidence of
serious adverse events up to two years after treatment, compared with
those who did not. The important exceptions were patients whose large
thrombus was removed with AngioJet before stenting: these patients had
a low incidence of serious adverse outcomes, similar to patients with
little or no thrombus to begin with. AngioJet thrombectomy was the
single most powerful statistical predictor of a good clinical outcome
in these patients.
At the annual Transcatheter Cardiovascular Therapeutics (TCT)
meeting in October, Possis will sponsor a breakfast seminar at which
Dr. Sianos will discuss his findings. Also at that meeting, Dr. Cindy
Grines of William Beaumont Hospital in Royal Oak, Michigan, will
present results of a meta-analysis of published outcomes in heart
attack patients treated with AngioJet, and Dr. Fadi Matar of Tampa
General Hospital in Florida will present the most recent AngioJet
findings from the multicenter Cardioquest interventional cardiology
database.
Possis' JETSTENT clinical trial of AngioJet thrombectomy in heart
attack patients with large thrombus has enrolled 200 patients to date
at seven active sites, mostly in Europe, continuing toward the next
interim milestone of 225 patients expected later this calendar year.
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 prospective, Web-based PEARL registry
(PEripheral use of AngioJet Rheolytic Thrombectomy with Mid-Length
Catheters) continues active patient enrollment, with more than 100
enrolled to date, treated with either the AngioJet DVX or Xpeedior
catheter. Eventually, the PEARL registry will involve 20 or more
high-volume peripheral AngioJet thrombectomy centers, a source of 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 will be the subject of scientific presentations and
publications. Recent FDA clearance to treat venous thrombus with the
AngioJet System has also enhanced the value of PEARL.
Business Outlook
Looking ahead, Possis Medical anticipates fiscal 2008
first-quarter net sales of $17.7 million to $18.2 million. This
compares with year-earlier sales of $15.6 million. Net income is
expected to range between $0.00 per diluted share to a net loss of
$0.01 per diluted share, versus a loss of $0.01 per diluted share in
the first quarter of fiscal 2007.
For the fiscal year ending July 31, 2008, Possis expects net sales
of $75 million or higher, with a gross margin of approximately 70
percent. Net income per diluted share is expected to be in the range
of $0.17 to $0.22 per share. Prior 2008 guidance was for revenue in
the low to mid $70 million range.
Concluded Dutcher, "We are excited by the momentum we bring into
this fiscal year. As we move ahead, we plan to leverage our proven
technology, drive forward into new markets, expand our presence in
existing markets, and continue to grow our top line by double digits
while improving our profitability. Possis is stronger today than ever
before and we are confident in our ability to execute and optimistic
about the future."
The Company will host a conference call today, Wednesday,
September 19, 2007, at 9:30 a.m. (CT). Bob Dutcher, Chairman & CEO,
and Jules Fisher, CFO, will discuss fourth-quarter and full-year
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 September 21, 2007. To access the replay, dial
1-800-388-1293 (international 1-203-369-3116).
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, selling products
for new indications, 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.
POSSIS MEDICAL, INC. CONSOLIDATED STATEMENTS
OF INCOME AND COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Ended Twelve Months Ended
------------------------- -------------------------
July 31, July 31, July 31, July 31,
2007 2006 2007 2006
------------ ------------ ------------ ------------
Product sales..... $19,004,937 $16,049,769 $66,654,592 $61,879,378
Cost of sales and
other expenses:
Cost of medical
products....... 6,000,856 4,581,390 20,339,796 17,114,312
Selling, general
and
administrative. 9,887,774 8,675,864 38,248,241 32,990,441
Research and
development.... 2,526,902 2,330,225 9,257,731 10,907,289
------------ ------------ ------------ ------------
Total cost of
sales and
other expenses
............... 18,415,532 15,587,479 67,845,768 61,012,042
------------ ------------ ------------ ------------
Operating income.. 589,405 462,290 (1,191,176) 867,336
Interest income. 515,074 516,852 2,113,296 1,812,900
Gain (loss) on
sale of
securities..... 16,701 (12,150) (12,860) (148,476)
------------ ------------ ------------ ------------
Income before
income taxes..... 1,121,180 966,992 909,260 2,531,760
Income tax
provision........ 1,049,500 487,948 853,460 1,723,159
------------ ------------ ------------ ------------
Net income........ 71,680 479,044 55,800 808,601
Other
comprehensive
loss, net of tax:
Unrealized (loss)
gain on
securities....... (14,000) 9,000 269,000 (89,000)
------------ ------------ ------------ ------------
Comprehensive
income........... $ 57,680 $ 488,044 $ 324,800 $ 719,601
============ ============ ============ ============
Weighted average
number of common
shares
outstanding:
Basic.......... 17,003,277 17,181,540 17,122,391 17,223,562
Diluted........ 17,549,792 17,490,821 17,707,745 17,824,739
Net income per
common share:
Basic.......... $ 0.00 $ 0.03 $ 0.00 $ 0.05
============ ============ ============ ============
Diluted........ $ 0.00 $ 0.03 $ 0.00 $ 0.05
============ ============ ============ ============
POSSIS MEDICAL, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS July 31, 2007 July 31, 2006
------------- -------------
CURRENT ASSETS:
Cash and cash equivalents................ $ 2,664,607 $ 3,505,796
Marketable securities.................... 40,207,324 44,610,130
Trade receivables (less allowance for
doubtful accounts and returns of
$1,131,000 and $580,000, respectively).. 8,647,569 8,356,776
Inventories.............................. 9,351,888 5,915,950
Prepaid expenses and other assets........ 2,955,583 1,663,322
Deferred tax assets...................... 2,010,000 1,331,000
------------- -------------
Total current assets.................... 65,836,971 65,382,974
PROPERTY AND EQUIPMENT, net............... 4,872,574 5,090,198
DEFERRED TAX ASSET, net................... 9,518,000 10,756,000
INVESTMENT IN RAFAEL MEDICAL 2,612,887 --
OTHER ASSETS.............................. 1,080,889 723,262
------------- -------------
TOTAL ASSETS.............................. $ 83,921,321 $ 81,952,434
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable................... $ 2,558,413 $ 2,040,367
Accrued salaries, wages, and commissions. 4,503,546 3,468,961
Other liabilities........................ 2,369,801 2,715,421
------------- -------------
Total current liabilities............... 9,431,760 8,224,749
OTHER LIABILITIES......................... 1,201,743 823,975
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock-authorized, 100,000,000
shares of $0.40 par value each; issued
and outstanding, 16,894,416 and
17,146,825 shares, respectively 6,757,766 6,858,730
Additional paid-in capital............... 77,538,548 77,378,276
Accumulated other comprehensive loss..... (60,000) (329,000)
Retained deficit......................... (10,948,496) (11,004,296)
------------- -------------
Total shareholders' equity.............. 73,287,818 72,903,710
------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 83,921,321 $ 81,952,434
============= =============
AngioJet System Key Business Indicators
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U.S. Market Data Q4-06 Q1-07 Q2-07 Q3-07 Q4-07
- ----------------------------------------------------------------------
AngioJet Revenue - $(000) $15,258 $15,017 $15,005 $15,150 $17,540
- ----------------------------------------------------------------------
AngioJet 3000 Drive Units Sold 22 30 18 8 3
- ----------------------------------------------------------------------
AngioJet Ultra Consoles Sold - - 10 36 67
- ----------------------------------------------------------------------
AngioJet 3000 Drive Units &
Ultra Consoles in the Field 1,672 1,699 1,719 1,777 1,906
- ----------------------------------------------------------------------
AngioJet Catheters Sold 11,866 11,370 11,348 10,824 12,023
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Gross Margin % 71.5% 71.7% 70.0% 68.0% 68.4%
- ----------------------------------------------------------------------
EPS Diluted $0.03 ($0.01) $0.01 $0.00 $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.
Q4-06 Q1-07 Q2-07 Q3-07 Q4-07
- ----------------------------------------------------------------------
Cost of medical products $97 $94 $93 $89 $75
- ----------------------------------------------------------------------
Selling, general and administrative 580 584 587 613 492
- ----------------------------------------------------------------------
Research and development 183 174 175 174 139
- ----------------------------------------------------------------------
Income tax provision (150) (186) (193) (207) (175)
- ----------------------------------------------------------------------
Net income (710) (666) (662) (669) (531)
- ----------------------------------------------------------------------
EPS diluted (0.04) (0.04) (0.04) (0.04) (0.03)
- ----------------------------------------------------------------------
---------------------------------------
Q4-06 Q1-07 Q2-07 Q3-07 Q4-07
---------------------------------------
Gross Product Sales $16,260 $15,784 $16,066 $16,800 $19,720
---------------------------------------
Less: Sales Returns &
Allowances (210) (180) (260) (560) (715)
---------------------------------------
Net Product Sales 16,050 15,604 15,806 16,240 19,005
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CONTACT: Possis Medical, Inc.
Jules L. Fisher, 763-450-8011
Vice President, Finance and
Chief Financial Officer
Jules.Fisher@possis.com