EXHIBIT 99.2
LASERSCOPE REPORTS FIRST QUARTER 2006 RESULTS
FIRST QUARTER RESULTS DRIVEN BY RECORD WORLDWIDE GREENLIGHT(TM) DELIVERY
DEVICES AND LASER SYSTEM SHIPMENTS AND SOLID AESTHETIC SALES
SAN JOSE, Calif., May 1 /PRNewswire-FirstCall/ -- Laserscope (Nasdaq: LSCP),
a leader in the development and commercialization of minimally-invasive medical
devices, including medical lasers and advanced fiber-optic delivery devices,
today reported its financial results for the first quarter ended March 31, 2006.
2006 First Quarter Highlights (compared to the prior-year quarter):
- GreenLight PV(R) fiber optic delivery devices shipped worldwide for PVP
increased 29% to 21,006 units from 16,255 units
- GreenLight PV worldwide laser system installed base grew 71% to 868
units
- Total revenues grew 14% to $32.0 million
- R&D spending increased 86% to $2.9M
- Aesthetic sales increased 23% to $7.6 million
- Pre-tax income $4.9 million (includes $0.6 million of stock based
compensation expense), down from $6.2 million in Q1 2005
- Income tax rate of 43%, up from 20% in Q1 2005
- Diluted EPS of $0.12 (includes expense of $0.6 million pre-tax or $0.02
per share for stock based compensation expense)
First Quarter 2006 Operating Results
U.S. sales of GreenLight PV delivery devices were 14,782 units in the first
quarter of 2006 compared with 15,221 units in the fourth quarter of 2005 and
11,792 units in the first quarter of 2005. International sales of GreenLight PV
delivery devices were 6,224 units compared with 5,461 units in the fourth
quarter of 2005 and 4,463 units during the first quarter of the prior year.
Sales of aesthetic products totaled $7.6 million in the first quarter of 2006
compared with $6.2 million in the first quarter of 2005.
Gross margin was 61% in the first quarter of 2006, compared with 62% for the
first quarter of 2005 and 59% for the fourth quarter of 2005. Higher average
unit prices for aesthetics relative to Q1 of 2005 were offset by higher
international urology fiber and system sales as a percentage of total revenues.
International sales typically have lower margins than US sales.
Research and development ("R&D") expenses increased 86% in the first quarter
to $2.9 million, or 9% of revenues, from $1.6 million, or 6% of revenues, in the
first quarter of 2005. The increase in R&D expense resulted from accelerated new
product development and clinical activities focused on the near- and medium-term
development of multiple new products and clinical applications in urology and
aesthetics. As previously announced, the Company anticipates that full year 2006
R&D spending will increase 50% to 60% over 2005 levels. On May 22nd, 2006,
Laserscope will hold a special Investor Forum to discuss these R&D and clinical
programs and new product announcements at the American Urological Association
Meeting in Atlanta, Georgia.
Selling, general and administrative ("SG&A") expenses grew approximately 20%
to $11.8 million, or 37% of revenues in the first quarter of 2006, compared to
$9.9 million, or 35% of revenues in the first quarter of 2005. The increase in
SG&A expenses resulted primarily from higher sales, marketing, business
development and administrative expenses to support the Company's current and
future growth initiatives domestically and internationally.
First quarter operating income was $4.7 million, compared with $6.1 million
in the first quarter of 2005. First quarter 2006 net income was $2.8 million, or
$0.12 per diluted share, compared with net income of $5.0 million, or $0.22 per
diluted share, in the same quarter last year, and $5.9 million or $0.26 per
fully diluted share for the fourth quarter of 2005. As a result of net operating
loss and tax credit carryforwards, the Company's effective tax rate for 2005 was
7.5%. Valuation allowances for these deferred tax assets were released in 2005.
Accordingly, the Company anticipates an income tax rate of approximately 43% in
2006. Net income for the first quarter of 2006 includes the impact from the
adoption of SFAS No. 123 (revised 2004), "Share- Based Payment" ("SFAS 123(R)")
by which the Company recognized pre-tax equity- based compensation expense of
$596,000 or $0.02 per diluted share. The Company's effective income tax rate was
43% in the first quarter of 2006.
Commenting on the first quarter results, Eric Reuter, CEO and President of
Laserscope said, "Our international progress exceeded expectations as we
continued to make strides in all major international markets, a strong
indication that we are indeed making important progress in replacing the Trans
Urethral Resection of the Prostate (TURP) procedure with Photoselective
Vaporization of the Prostate (PVP) as the worldwide standard of care for Benign
Prostaic Hyperplasia (BPH). International market penetration remains an
important part of our long-term strategic growth plan. We are on track to begin
our clinical studies in Japan, the second largest TURP market outside the US,
beginning in the third quarter of 2006 and we continue to expect strong urology
revenue growth in the major international markets in 2006 and beyond. Although
our domestic urology revenue was more modest than we had expected this quarter,
direct accounts showed a strong increase in delivery device usage sequentially
with large mobilizing partnerships showing flat to slightly down sequentially.
Additionally, some capital equipment purchase processes were delayed as these
customers chose to wait for the upcoming American Urological Association meeting
before making purchase decisions. As indicated previously, we expect
year-over-year revenue and earnings growth to be heavily weighted toward the
second half of the year as revenues from our new products pipeline, expanded
sales network, recent acquisition, and product cost reduction initiatives take
effect."
"We are continuing to make significant investments in R&D and sales and
marketing as part of our commitment to remaining at the forefront of the new
technology and product development curve. We are also aggressively pursuing
selective strategic acquisitions to augment our existing product and technology
portfolio, increase our manufacturing efficiencies, and drive continued revenue
and earnings growth. To that end, we are very excited about our acquisition of
Innovaquartz Inc., which we announced today and we will discuss in more detail
today at our first quarter earnings conference call."
"We have also continued our efforts to revitalize our aesthetics product
line. Although very competitive, this is still a growth market. We continue to
work closely with our U.S. distribution partner, Henry Schein, to drive sales in
this large and growing market in the US as well as internationally. Our goal is
to return this business to market growth rates by the fourth quarter of 2006 by
increasing our distribution network of direct sales representatives both
domestically and internationally and releasing a series of new products and
marketing programs during the balance of 2006 and in 2007. We look forward to
giving an overview of our aesthetics product development pipeline at our
Investor Forum in May."
Balance Sheet Summary
Laserscope's balance sheet remains strong. At March 31, 2006, the Company
had no bank borrowings and a cash position of $33.2 million, up from $30.7
million at December 31, 2005. At quarter-end, net accounts receivable was $24.0
million. Days sales outstanding (DSOs) were 67, up slightly from 66 in the
fourth quarter of 2005.
Outlook
The company continues to expect full year 2006 revenue and fully taxed
earnings to increase by 20% to 25% over 2005 levels to $0.72 - $0.75 per share,
assuming a 43% tax rate is applied to both 2006 and 2005 pre-tax earnings, and
excluding the impact of FAS 123(R) stock compensation expenses in 2006. The
Company anticipates that revenue and fully taxed earnings will be larger in the
second half of 2006 (approximately 55% to 60% of the full year's total) due to
new products we will bring to market as a result of internal R&D and strategic
activities.
Adoption of SFAS 123R
The results for the first quarter of 2006 include the impact from adoption
in 2006 of SFAS 123R that requires expensing of stock options and other share-
based payments. The company included in its cost of revenues and operating
expenses total share-based compensation expenses of approximately $596,000
($472,000 net of income tax or $0.02 per diluted share).
Special Investor Relations Forum Announced
Laserscope will be holding a special Investor Relations Forum coinciding
with the 2006 American Urological Association Meeting on May 22, 2006. At this
meeting, Laserscope will be discussing current and future R&D and business
development initiatives for our urology and aesthetic product lines as well as
unveiling the latest new additions to the Laserscope urology product line.
Investors are invited to attend in-person or via a web-cast which will be
announced prior to the event. Those planning to attend in person should contact
Laserscope's IR representatives as attendance will be limited.
Management Conference Call
Management of Laserscope will hold a conference call today, Monday, May 1,
2006 at 8:00am PT / 11:00am ET to discuss results for the 2006 first quarter. To
participate in the call, please dial 800-218-0204 (303-262-2050 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 http://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 Monday, May 8, 2006, by dialing 800- 405-2236
(303-590-3000 for international callers), and entering passcode 11059316. An
archive will also be available at Laserscope's website.
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 http://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, manufacturing and engineering improvements in our existing products
designed to reduce the cost of goods sold, expected benefits resulting from the
acquisition of Innovaquartz, Inc., expected continued momentum of Laserscope's
business and growth including new product offerings, worldwide adoption rates of
the PVP procedure using the GreenLight PV(R) laser system, our ability to
compete with similar product offerings and other therapies for the treatment of
BPH, market penetration opportunities in international markets such as in Europe
and the Asia Pacific region, including Japan, and the relationship with our
distribution partner for aesthetic products, Henry Schein, Inc. 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 our current and new products are accepted by customers,
which could affect the level of demand for our products; any acquisitions we
make, including the
acquisition of InnovaQuartz, Inc., may not provide us the expected benefits and
could disrupt our business and harm our financial condition, results of
operations and cash flows, uncertainties regarding the impact that competitive
products and therapies as well as private and public payer reimbursement levels
for the PVP procedure could have on the competitiveness of our current pricing
programs, which could adversely impact our financial results; 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
PV(R) laser system, which could result in negative patient outcomes and reduce
our disposable delivery device 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 http://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.
GreenLight(TM) Delivery Device Sales
(Units)
2006 Q1
------------- -------
United States 14,782
International 6,224
Total 21,006
2005 Q1 Q2 Q3 Q4 Year
-------------------- --------- --------- --------- --------- ---------
United States 11,792 14,379 12,654 15,221 54,046
International 4,463 4,712 4,985 5,461 19,621
Total 16,255 19,091 17,639 20,682 73,667
LASERSCOPE FINANCIAL SUMMARY
(Unaudited)
Condensed Consolidated Statements of Income
Three months ended
March 31,
---------------------
(thousands except per share amounts) 2006 2005
--------------------------------------------- --------- ---------
Net revenues $ 32,009 $ 28,177
Cost of sales (1) 12,499 10,577
Gross margin 19,510 17,600
Operating expenses:
R&D, clinical and regulatory (1) 2,949 1,585
Selling, general and administrative (1) 11,835 9,878
14,784 11,463
Operating income 4,726 6,137
Interest income (expense) and other, net 144 79
Net income before income taxes 4,870 6,216
Provision for income taxes (1) 2,079 1,253
Net income (1) $ 2,791 $ 4,963
Basic net income per share (1) $ 0.13 $ 0.23
Diluted net income per share (1) $ 0.12 $ 0.22
Shares used in basic per share calculations 22,327 22,009
Shares used in diluted per share calculations 22,823 22,986
(1)Includes the following amounts for stock based compensation.
Cost of sales $ 100 $ --
R&D, clinical and regulatory 110 --
Selling, general and administrative 386 --
Total 596 --
Provision for income taxes (124) --
Net income $ 472 $ --
Basic net income per share $ 0.02 $ --
Diluted net earnings per share $ 0.02 $ --
LASERSCOPE FINANCIAL SUMMARY
(Unaudited)
Condensed Consolidated Balance Sheets
March 31, December 31,
($ in thousands) 2006 2005
--------------------------------------------- --------- ------------
Assets
Current assets:
Cash & cash equivalents $ 33,234 $ 30,653
Accounts receivable, net 23,972 25,138
Inventories 27,595 27,058
Prepayments and other current assets 18,461 19,171
Total current assets 103,262 102,020
Property and equipment, net 10,919 8,663
Other assets 1,060 1,087
Total assets $ 115,241 $ 111,770
Liabilities and Shareholders' Equity
Current liabilities $ 26,203 $ 26,973
Capital leases 4 9
Shareholders' equity 89,034 84,788
Total liabilities and shareholders' equity $ 115,241 $ 111,770
At Laserscope: At Financial Relations Board:
Eric Reuter, President & CEO Tricia Ross Analyst/Investor Contact
Derek Bertocci, CFO (617) 520-7064
(408) 943-0636
SOURCE Laserscope
-0- 05/01/2006
/CONTACT: Eric Reuter, President & CEO, or Derek Bertocci, CFO,
+1-408-943-0636 both of Laserscope; or At Financial Relations Board:
Analyst/Investor Contact, Tricia Ross, +1-617-520-7064 /
/Web site: http://www.laserscope.com /
(LSCP)