Diomed Announces First Quarter Results

  
    
  
  
    
      Diomed Holdings, Inc. (AMEX: DIO), a leading developer and 
      marketer of minimally invasive medical technologies, including its 
      patented EVLT® laser 
      treatment for varicose veins, today announced results for the first 
      quarter ended March 31, 2007.
    
    
      Significant accomplishments during the first quarter included:
    
    
      
        First quarter total revenue of $5.9 million, up 29% over the first 
        quarter of 2006;
      
      
        First quarter EVLT® 
        revenue, up 23% over the first quarter of 2006;
      
      
        First quarter EVLT® disposable 
        revenue, up 40% over the first quarter of 2006;
      
      
        EVLT® installed 
        base exceeds 1,100 laser systems;
      
      
        More than 100,000 EVLT® procedures 
        successfully performed; and
      
      
        Diomed wins litigation defending its pioneering ‘777 
        patent and is awarded $12.5 million in damages.
      
    
    
      "We are very pleased with our first quarter accomplishments in the face 
      of aggressive competition in our marketplace," commented James A. Wylie, 
      CEO and President of Diomed Holdings, Inc. "Diomed delivered strong 
      year-over-year revenue growth for the first quarter, a quarter typically 
      affected by seasonality, by posting an increase of 29% in total revenues 
      and an increase of 23% in EVLT® revenue. Most 
      importantly, after more than three years of legal preparation, a trial 
      jury has ruled in favor of Diomed and against two defendants for 
      infringement of our ‘777 patent.”
    
    
      Driven by total revenues of $5.9 million, gross profit for the first 
      quarter of 2007 was $2.7 million, representing an increase of $626,000, 
      or 30%, over the first quarter of 2006. Gross profit as a percentage of 
      sales improved 50 basis points from the first quarter of 2006, and 
      exceeded our internal plan by 110 basis points. The Company has targeted 
      continued improvement in gross profit levels to the 60% level and 
      higher, consistent with other proprietary medical device companies, as 
      the EVLT® product 
      line grows.
    
    
      Selling and marketing expenses for the first quarter of 2007 were $3.1 
      million, an increase of $343,000, or 12%, over the first quarter of 
      2006. The increase resulted from an expansion of our sales force, higher 
      sales commissions from the increased sales volume and increased 
      marketing expenditures in support of our sales initiatives to drive the 
      growing commercialization of EVLT®.
    
    
      General and administrative expenses for the first quarter of 2007 of 
      $3.1 million increased $1.0 million or 49%, compared to the first 
      quarter of 2006 primarily as a result of increased legal costs during 
      the trial phase of the ‘777 litigation. Total 
      first quarter legal and patent related costs of $1.7 million included 
      $1.5 million of trial related costs, and increased by $1.0 million on a 
      sequential basis, compared to the fourth quarter of 2006, and $900,000 
      compared to the first quarter of 2006.
    
    
      Loss from operations for the first quarter of 2007 of approximately $3.9 
      million increased $792,000 from the first quarter of 2006, as gains from 
      incremental revenue were offset by increased selling, marketing and 
      legal costs.
    
    
      Net loss for the first quarter of 2007 of $4.4 million increased by 
      $316,000, or 8%, from the first quarter of 2006. Net loss for the first 
      quarter of 2007 includes $378,000 of non-cash interest expense, compared 
      to $96,000 in the first quarter of 2006. The first quarter of 2006 also 
      included a $770,000 non-operating loss for the increase in the fair 
      value of the warrant obligation entered into on September 30, 2005.
    
    
      Net loss applicable to common stockholders for the first quarter of 2007 
      was $4.4 million, or $0.20 per share compared to $4.3 million or $0.22 
      per share for the first quarter of 2006. Net loss applicable to common 
      stockholders for the first quarter of 2006 included $155,000 of non-cash 
      preferred stock dividends accreted for future increasing rate dividends 
      and $149,000 of preferred stock cash dividends earned during the first 
      quarter of 2006. As a result of the private placement entered into in 
      September 2006 and the concurrent exchange of the preferred stock issued 
      in 2005 for the new 2006 series of preferred stock on which dividends do 
      not accrue, there are currently no dividends accreted on preferred stock.
    
    
      The Company ended the first quarter of 2007 with a cash and short term 
      investment balance of $7.3 million, compared to a cash and short term 
      investment balance of $9.9 million at the end of 2006. Despite the 
      increase in operating losses, which primarily resulted from the 
      increased legal costs, Diomed’s net cash used 
      from operations decreased $950,000 to $2.7 million as compared to the 
      first quarter of 2006.
    
    
      Conference Call Information
    
    
      Diomed will hold a conference call to review its first quarter 2007 
      financial results today at 10:00 a.m. (Eastern Time) and will be hosted 
      by James A. Wylie, Jr., President and Chief Executive Officer, and David 
      B. Swank, Chief Financial Officer. Interested parties may access the 
      conference call by dialing 866.700.7477 (domestic) or 617.213.8840 
      (international), participant pass code 96686975. The call will also be 
      available via web cast at www.diomedinc.com.
    
    
      If you are unable to participate, an audio digital replay of the call 
      will be available from Thursday, April 26, 2007 12:00 p.m. Eastern Time, 
      until Thursday, May 3, 2007, 11:59 p.m. Eastern Time. The digital replay 
      can be accessed by dialing 888-286-8010 (domestic) or 617-801-6888 
      (international), using pass code 63822800. A web archive will also be 
      available during this time period at www.diomedinc.com.
    
    
      About Diomed
    
    
      Diomed develops and commercializes minimal and micro-invasive medical 
      procedures that use its proprietary laser technologies and disposable 
      products. Diomed’s EVLT® 
      laser vein ablation procedure is used in varicose vein treatments. 
      Diomed also provides photodynamic therapy (PDT) for use in cancer 
      treatments, and dental and general surgical applications. The EVLT® 
      procedure and the Company’s related products 
      were cleared by the United States FDA in January of 2002. Along with 
      lasers and single-use procedure kits for its EVLT® 
      laser vein treatment, the Company provides its customers with state of 
      the art physician training and practice development support. Additional 
      information is available on the Company’s 
      website: www.evlt.com.
    
    
      EVLT® is a registered trademark of Diomed 
      Inc., Andover, MA.
    
    
      Safe Harbor
    
    
      Safe Harbor statements under the Private Securities Litigation Reform 
      Act of 1995: Statements in this news release looking forward in time 
      involve risks and uncertainties, including the risks associated with 
      trends in the products markets, reliance on third party distributors in 
      various countries outside the United States, reoccurring orders under 
      OEM contracts, market acceptance risks, technical development risks and 
      other risk factors. These statements relate to our future plans, 
      objectives, expectations and intentions. These statements may be 
      identified by the use of words such as "may," "will," "should," 
      "potential," "expects," "anticipates," "intends," "plans," "believes" 
      and similar expressions. These statements are based on our current 
      beliefs, expectations and assumptions and are subject to a number of 
      risks and uncertainties. Our actual results could differ materially from 
      those discussed in these statements. Our 2006 Annual Report on Form SEC 
      10-KSB (the "Annual Report") contains a discussion of certain of the 
      risks and uncertainties that affect our business. We refer you to the 
      "Risk Factors" on pages 19 through 34 of the Annual Report for a 
      discussion of certain risks, including those relating to our business as 
      a medical device company without a significant operating record and with 
      operating losses, our risks relating to our commercialization of our 
      current and future products and applications and risks relating to our 
      common stock and its market value. Diomed disclaims any obligation or 
      duty to update or correct any of its forward-looking statements.
    
    
      
        
        
        
          March 31, 2007
        
        
        
        
          March 31, 2006
        
      
      
        
          Revenues
        
        
          $5,905,271 
        
        
        
        
          $4,576,152 
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Cost of revenues
        
        
          3,225,430 
        
        
        
        
          2,522,631 
        
      
      
        
          
            Diomed Holdings, Inc.
          
        
      
      
        
          
            (Unaudited) Condensed Consolidated Statements of Operation
          
        
      
      
        
          
            Three Months Ended March 31, 2007 and 2006
          
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Gross profit
        
        
          2,679,841 
        
        
        
        
          2,053,521 
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Operating expenses:
        
        
        
        
        
        
        
      
      
        
          Research and development
        
        
          415,346 
        
        
        
        
          354,547 
        
      
      
        
          Selling and marketing
        
        
          3,136,332 
        
        
        
        
          2,793,067 
        
      
      
        
          General and administrative
        
        
          3,072,590 
        
        
        
        
          2,058,222 
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Total operating expenses
        
        
          6,624,268 
        
        
        
        
          5,205,836 
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Loss from operations
        
        
          (3,944,427)
        
        
        
        
          (3,152,315)
        
      
      
        
          Other expense, net
        
        
        
        
        
        
        
      
      
        
          Loss from fair value adjustment on warrant liability
        
        
          
            - 
          
        
        
        
        
          
            770,421 
          
        
      
      
        
          Interest expense, net, non-cash
        
        
          378,057 
        
        
        
        
          96,076 
        
      
      
        
          Interest expense, cash based
        
        
          29,323 
        
        
        
        
          16,915 
        
      
      
        
          Total other expense, net
        
        
          407,380 
        
        
        
        
          883,412 
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Net loss
        
        
          $ (4,351,807)
        
        
        
        
          $ (4,035,727)
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Less preferred stock dividends
        
        
          - 
        
        
        
        
          (149,188)
        
      
      
        
          Less preferred stock non-cash dividends
        
        
          - 
        
        
        
        
          (154,991)
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Net loss applicable to common stockholders
        
        
          $ (4,351,807)
        
        
        
        
          $(4,339,906)
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Basic and diluted net loss per share applicable to common 
          stockholders
        
        
          $ (0.20)
        
        
        
        
          $ (0.22)
        
      
      
        
          Basic and diluted weighted average common shares outstanding
        
        
          21,410,721 
        
        
        
        
          19,445,950 
        
      
    
    
      
        
          Diomed Holdings, Inc.
        
        
        
        
        
        
        
        
        
      
      
        
          Condensed Consolidated Balance Sheets
        
        
        
        
        
        
        
        
        
      
      
        
          As of March 31, 2007 (unaudited) and December 31, 2006
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          ASSETS
        
        
        
        
          March 31, 2007
        
        
        
        
          December 31, 2006
        
      
      
        
          Current assets:
        
        
        
        
        
        
        
        
        
      
      
        
          Cash and cash equivalents
        
        
        
        
          $ 6,813,219 
        
        
        
        
          $ 7,306,578 
        
      
      
        
          Short term investments
        
        
        
        
          499,670 
        
        
        
        
          2,626,880 
        
      
      
        
          Accounts receivable, net
        
        
        
        
          2,926,972 
        
        
        
        
          3,144,056 
        
      
      
        
          Inventories
        
        
        
        
          4,650,959 
        
        
        
        
          4,021,217 
        
      
      
        
          Prepaid expenses and other current assets
        
        
        
        
          578,527 
        
        
        
        
          268,343 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total current assets
        
        
        
        
          15,469,347 
        
        
        
        
          17,367,074 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Property, plant and equipment, net
        
        
        
        
          1,183,806 
        
        
        
        
          1,260,507 
        
      
      
        
          Intangible assets, net
        
        
        
        
          3,888,561 
        
        
        
        
          4,006,927 
        
      
      
        
          Investment
        
        
        
        
          1,000,000 
        
        
        
        
          1,000,000 
        
      
      
        
          Other assets
        
        
        
        
          182,054 
        
        
        
        
          204,770 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total assets
        
        
        
        
          $ 21,723,768 
        
        
        
        
          $ 23,839,278 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          LIABILITIES AND STOCKHOLDERS’ EQUITY
        
        
        
        
        
        
        
        
        
      
      
        
          Current liabilities:
        
        
        
        
        
        
        
        
        
      
      
        
          Accounts payable
        
        
        
        
          $ 4,048,789 
        
        
        
        
          $ 2,970,443 
        
      
      
        
          Accrued expenses
        
        
        
        
          2,835,998 
        
        
        
        
          2,158,157 
        
      
      
        
          Current portion of deferred revenue
        
        
        
        
          294,284 
        
        
        
        
          278,284 
        
      
      
        
          Bank loan
        
        
        
        
          331,026 
        
        
        
        
          223,491 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total current liabilities
        
        
        
        
          7,510,097 
        
        
        
        
          5,630,375 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Deferred revenue, net of current portion
        
        
        
        
          120,903 
        
        
        
        
          110,044 
        
      
      
        
          Convertible notes payable ($3,712,000 face value, net of debt 
          discount of $2,293,228 at March 31, 2007 and $3,712,000 face value, 
          net of $2,671,285 debt discount at December 31, 2006)
        
        
        
        
          1,418,772 
        
        
        
        
          1,040,715 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total liabilities
        
        
        
        
          9,049,772 
        
        
        
        
          6,781,134 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Stockholders’ equity
        
        
        
        
          12,673,996 
        
        
        
        
          17,058,144 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total liabilities and stockholders’ equity
        
        
        
        
          $ 21,723,768 
        
        
        
        
          $ 23,839,278