Exhibit 99.1
LASERSCOPE REPORTS 2005 THIRD QUARTER OPERATING RESULTS, UPDATES GUIDANCE FOR
2005 AND SETS INITIAL GUIDANCE FOR 2006
SOLID YEAR-OVER-YEAR REVENUE GROWTH DRIVEN BY DOMESTIC AND INTERNATIONAL PVP
PROCEDURE VOLUME GROWTH
2005 THIRD QUARTER HIGHLIGHTS (COMPARED TO THE PRIOR-YEAR QUARTER):
- GreenLight PV(R) fiber optic delivery devices shipped for PVP
increased 77% to 17,639 units from 9,991 units.
- Total revenues grew 26% to $30.4 million.
- Operating income rose 19% to $5.4 million.
SAN JOSE, Calif., Nov. 3 /PRNewswire-FirstCall/ -- Laserscope (Nasdaq:
LSCP), a pioneer in the development and commercialization of minimally-invasive
medical devices, including medical lasers and advanced fiber-optic delivery
devices, today reported revenues of $30.4 million for its third quarter ended
September 30, 2005, a 26% increase from $24.2 million in the third quarter of
2004. The increase in revenues was primarily attributable to continued strong
year-over-year growth in sales of the Company's line of GreenLight(TM) products
used for the Photoselective Vaporization of the Prostate ("PVP") procedure,
offset by a slight decline in the Company's aesthetics business. Third quarter
2005 operating income grew 19% to $5.4 million, from $4.5 million in the third
quarter of 2004. Third quarter 2005 net income was $6.3 million, or $0.28 per
fully-diluted share, an increase from net income of $4.4 million, or $0.19 per
fully-diluted share, in the same quarter last year.
Gross margins in the third quarter of 2005 were down slightly to 59%
compared to approximately 60% in the third quarter of 2004 and 61% in the second
quarter of 2005. Year-over-year gross margin fluctuations were the result of the
higher mix of lower margin international sales of both our GreenLight and
aesthetic products as a percentage of overall revenues offset by a higher
percentage of overall sales being from higher margin GreenLight products
worldwide.
Selling, general and administrative ("SG&A") expenses declined as a
percentage of revenues compared to the third quarter of 2004. SG&A expenses were
$10.5 million, or 35% of revenues, in the third quarter of 2005, compared to
$8.8 million, or 36% of revenues, in the third quarter of 2004. The absolute
increase in SG&A expenses resulted primarily from increases in marketing and
sales costs to support higher sales.
As a result of analysis of business prospects for 2006, the Company
determined that it is more likely than not that future profitability will be
sufficient to realize deferred income tax assets. In accordance with FAS 109 and
related literature the Company released valuation allowances against its
deferred income tax assets. The effective income tax rate was approximately
negative 16% in the third quarter of 2005 and is expected to be positive 12% in
the fourth quarter of 2005. The effective income tax rate for 2006 is currently
anticipated to be in the range of 39% to 40%.
The Company strengthened its balance sheet during the third quarter of
2005. At September 30, 2005, Laserscope had no bank borrowings and a cash
position of $29.1 million, up significantly from $16.0 million at December 31,
2004. Inventories increased predominantly to support our GreenLight product
line. Day Sales Outstanding ("DSOs") were relatively constant in the U.S. and
increased somewhat for international sales.
Nine-Month Results
For the nine months ended September 30, 2005, the Company reported revenues
of $92.1 million compared to $64.3 million for the nine months ended September
30, 2004, a 43% year-over-year increase. Operating income in the first nine
months of 2005 was $18.4 million, compared to $9.8 million in the prior-year
period, an 87% year-over-year increase. For the nine months ended September 30,
2005, Laserscope reported net income rose 74% to $16.6 million, or $0.73 per
fully-diluted share, compared to $9.6 million, or $0.42 per fully-diluted share,
in the same period last year.
Urology Business Update
"In the last quarter, we continued our trend of strong year-over-year
growth, increased our penetration of international markets and advanced our goal
of making the PVP procedure using our GreenLight products as the worldwide
standard for treating BPH, while absorbing the impact of a confluence of adverse
factors in the U.S. urology market. International demand for the PVP procedure
using the GreenLight laser system continued to grow in the third quarter of
2005, as we posted another quarterly increase in shipments of GreenLight
delivery devices overseas on a sequential quarter-over-quarter and
year-over-year basis," said Eric Reuter, Laserscope President and CEO. "U.S.
revenues from GreenLight delivery devices grew strongly year-over-year, although
we did experience an unexpected slowdown in U.S. PVP utilization during the
third quarter, resulting in a sequential decrease in U.S. sales of GreenLight
delivery devices on a quarter-over-quarter basis. We believe several factors
contributed to this decline including a seasonal slowdown in elective procedures
during the summer months, a temporary disruption in large areas of the southern
United States due to the hurricanes and subsequent relief efforts, the potential
that reimbursement for the PVP procedure may be reduced substantially from the
current temporary rate which caused some customers to delay or cancel purchases
and competitive product offerings."
Reimbursement Update
"Yesterday, the Centers for Medicare and Medicaid Services ("CMS")
announced the final rule for the Outpatient Prospective Payment System ("OPPS")
for 2006," Mr. Reuter commented. "Although we disagree with the decision by CMS,
we had anticipated the possibility of this ruling and, accordingly, our current
2006 guidance contemplates the new OPPS reimbursement rate applicable to PVP in
2006 of approximately $2,500 per procedure, on a national average basis. CMS is
expected to announce the final rule for the Fee Schedule (physician payment) for
2006 in the near future, and we will reserve public comment on that final rule
until after its release."
Aesthetics Business Update
"This was a disappointing quarter for our aesthetics business," said Mr.
Reuter. "Aesthetics revenues fell slightly on a sequential and year-over-year
basis due in large part to a precipitous decline in revenues generated through
our distribution relationship with McKesson during the transition to our new
U.S. distribution partner, Henry Schein. Given the large opportunity in the
market for aesthetic products and procedures, we plan to utilize our new
distribution relationship with Henry Schein and augment our internal resources
in order to re-dedicate and re-focus the organization on growth. We believe our
aesthetic product portfolio remains attractive and that our recently released
Solis(TM) product will help our aesthetic business rebound in the fourth quarter
and in 2006."
Full Year 2005 Guidance
Based on the nine-month results in 2005, the management of Laserscope has
revised its full-year 2005 guidance as follows:
- 2005 revenues are expected to be in the range of $125 million to $130
million, up 33% to 38% over 2004.
- Reported pre-tax earnings are expected to be in the range of $25.5 to
$26.5 million, up 63% to 69% over 2004.
- Net income is expected to be in the range of $0.97 to $1.02 per
fully-diluted share, at our effective tax rate of approximately 12%
for 2005. For 2006, Laserscope expects our effective tax rate will be
39-40%.
Full Year 2006 Guidance
The management of Laserscope has additionally outlined preliminary 2006
guidance as follows:
- 2006 Revenues and Earnings are expected to grow between 20% and 25%
assuming a full income tax rate of 39-40% is applied to pre-tax income
for both 2006 and 2005. This earnings outlook specifically does not
include the impact on the Company of stock-based compensation expenses
required under FAS 123R.
Management Conference Call
Management of Laserscope will hold a conference call on Thursday, November
3, 2005 at 8:00 am PT / 11:00 am ET to discuss results for the third quarter of
2005. To participate in the call, please dial 800-257-6566 (303-205-0055 for
international callers) at least five minutes prior to the start time.
Investors will also have the opportunity to listen to the conference call
live on the Internet through Laserscope's website at www.laserscope.com.
Investors should go to the website a few minutes early, as it may be necessary
to download audio software to access the conference call.
A replay of the conference call will be available through November 10, 2005
by dialing 800-405-2236 (303-590-3000 for international callers), and entering
passcode 11041041
About Laserscope
Laserscope designs, manufactures, sells and services on a worldwide basis
an advanced line of minimally-invasive medical products including medical laser
systems and related energy delivery devices for the office, outpatient surgical
center, and hospital markets. More information about Laserscope can be found on
its web site at www.laserscope.com.
Safe Harbor Statement
This press release contains forward-looking information within the meaning
of Section 21E of the Securities Exchange Act of 1934, and is subject to the
safe harbor created by this section. These forward-looking statements include:
statements about Laserscope's future profitability and operating results,
competition, proposed changes to the rates of reimbursement applicable to the
PVP procedure recently proposed by the Centers for Medicare and Medicaid
Services and the possible effects, expected continued momentum of Laserscope's
business and growth including new product offerings, worldwide adoption rates of
the PVP procedure using the Company's GreenLight(TM) laser system, our ability
to compete with similar product offerings, market penetration opportunities in
international markets such as in Europe and the Asia Pacific region, including
Japan. These statements are subject to a number of risks and uncertainties,
including: uncertainties regarding introduction of new technologies competitive
to Laserscope's products and the degree to which the Company's current and new
products are accepted by customers, which could affect the level of demand for
our products; our dependence on sole source providers for key components and
products; risk of reductions in government and private insurance reimbursement
of hospitals and physicians for health care costs, which may negatively impact
hospitals and physicians decisions to purchase our products reducing adoption
rates and sales growth; risks that we may be unable to protect adequately the
integrity, safety and proper use of our disposable fiber optic delivery device
with the GreenLight laser system, which could result in negative patient
outcomes and reduce our disposable fiber recurring revenue stream; risks that
patents and licenses that we hold may be challenged, invalidated or circumvented
or that we may become the subject of intellectual property litigation;
uncertainties regarding our ability to compete with companies that have
significantly greater financial, technical, research and development,
manufacturing and marketing resources than we have; and uncertainties that new
products will receive regulatory approval in applicable jurisdictions. Actual
results may differ materially due to these and other factors. The matters
discussed in this press release also involve risks and uncertainties described
from time to time in Laserscope's filings with the Securities and Exchange
Commission. In particular, see the Risk Factors described in Laserscope's most
recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K. Copies of
Laserscope's public disclosure filings with the SEC, including the most recent
Annual Report on Form 10-K and the most recent forms 10-Q are available upon
request from its Investor Relations Department at its website at
www.laserscope.com and at the SEC's website: www.sec.gov. Laserscope assumes no
obligation to update the forward-looking information contained in this press
release.
At Laserscope: At Financial Relations Board:
Eric Reuter, President & CEO Tricia Ross Analyst/Investor Contact
Derek Bertocci, CFO (617) 520-7064
(408) 943-0636 Laurie Berman, General Information
(310) 854-8315
GreenLight(TM) Fiber Sales*
(Units)
2005 Q1 Q2 Q3
-------------- ------ ------ ------
United States 11,792 14,379 12,654
International 4,463 4,712 4,985
Total 16,255 19,091 17,639
2004 Q1 Q2 Q3 Q4 Year
-------------- ------ ------ ------ ------ ------
United States 5,018 6,908 7,024 10,211 29,161
International 1,385 1,582 2,967 2,269 8,203
Total 6,403 8,490 9,991 12,480 37,364
* The Company now plans to report consolidated worldwide fiber unit sales
beginning with its 2006 first quarter earnings press release.
LASERSCOPE FINANCIAL SUMMARY
(Unaudited)
Condensed Consolidated Statements of Income
Three months ended Nine months ended
September 30, September 30,
---------------------------------- ---------------------------------
(thousands except per share amounts) 2005 2004 2005 2004
- ------------------------------------ --------------- --------------- --------------- ---------------
Net revenues $ 30,428 $ 24,156 $ 92,123 $ 64,340
Cost of sales 12,403 9,749 36,131 26,935
Gross margin 18,025 14,407 55,992 37,405
Operating expenses:
Research and
development 2,123 1,143 5,446 3,727
Selling, general
and administrative 10,533 8,763 32,100 23,834
12,656 9,906 37,546 27,561
Operating income 5,369 4,501 18,446 9,844
Interest income
(expense) and
other, net 92 (52) 419 321
Net income before
income taxes 5,461 4,449 18,865 10,165
Provision (benefit)
for income taxes (862) 96 2,221 610
Net income $ 6,323 $ 4,353 $ 16,644 $ 9,555
Basic net income
per share $ 0.28 $ 0.20 $ 0.75 $ 0.46
Diluted net income
per share $ 0.28 $ 0.19 $ 0.73 $ 0.42
Shares used in basic
per share
calculations 22,196 21,364 22,101 20,875
Shares used in
diluted per
share calculations 22,955 22,778 22,937 22,780
Condensed Consolidated Balance Sheets
September 30, December 31,
($ in thousands) 2005 2004
- --------------------------------------------- -------------- --------------
Assets
Current assets:
Cash & cash equivalents $ 29,083 $ 15,954
Accounts receivable, net 22,403 20,342
Inventories 26,731 19,446
Deferred tax assets,
prepayments and other current assets 16,908 1,471
Total current assets 95,125 57,213
Property and equipment, net 6,321 3,457
Other assets 1,317 919
Total assets $ 102,763 $ 61,589
Liabilities and Shareholders' Equity
Current liabilities $ 24,824 $ 18,647
Capital leases 14 31
Shareholders' equity 77,925 42,911
Total liabilities and shareholders' equity $ 102,763 $ 61,589
SOURCE Laserscope
-0- 11/03/2005
/CONTACT: Eric Reuter, President & CEO, or Derek Bertocci, CFO,
both of Laserscope, +1-408-943-0636; or Analyst/Investor, Tricia Ross,
+1-617-520-7064, or Laurie Berman, General Information, +1-310-854-8315, both of
Financial Relations Board, for Laserscope/
/Web site: http://www.laserscope.com /
(LSCP)