Diomed (AMEX:DIO)
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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 second
quarter ended June 30, 2007.
Significant accomplishments during the second quarter 2007 included:
Record second quarter total revenue of $6.5 million, increased 10%
from the first quarter of 2007;
EVLT® revenue, increased 14% over the first
quarter of 2007;
EVLT® laser sales increased 29% over the
first quarter of 2007;
On May 22, the judge in the ‘777 patent
infringement trial
-- denied the defendants' AngioDynamics' and Vascular
Solutions' motion for a new trial;
-- denied the defendants' motion for judgment as a
matter of law to overturn the jury verdict;
-- denied a request to reduce the amount of damages
awarded by the jury.
Total damages awarded by the jury and post trial agreement between the
parties were increased to $14.7 million; and
On July 2, the judge in the '777 patent infringement trial granted
Diomed a permanent injunction against both infringing products and any
other products that are no more than “mere
colorable variations” of the infringing
products.
Diomed delivered revenues for the second quarter ended June 30, 2007 of
$6.5 million, an increase of $431,000, or 7%, compared to the second
quarter of 2006. During the second quarter consolidated EVLT®
revenues increased 13% over 2006. For the six months ended June 30,
2007, total revenue of $12.4 million increased $1.8 million, or 17%,
over the same period of 2006, and consolidated EVLT®
revenues increased 17%, led by a 31% increase in EVLT®
disposable sales.
“Our ability to deliver a record sales
performance during this quarter is remarkable in the face of aggressive,
head-to-head competition in our primary market,”
said James A. Wylie, President and CEO of Diomed Holdings, Inc. “This
success was followed closely by two court rulings including a permanent
injunction against both AngioDynamics and Vascular Solutions, resulting
in significant victories for Diomed.”
“EVLT® installed
base now exceeds 1,200 laser systems, up 27% from the prior year. Our
EVLT® procedures performed utilizing Diomed
disposables now exceeds 110,000, up 63% from June 30, 2006. Additionally
sales of closed EVLT® laser systems continued
to increase for the third straight year. During the second quarter, more
than 94% of the lasers sold were closed platforms which can only use
Diomed single-use disposable procedure kits. This brings the total
number of closed systems in the United States to more than 50% of the
installed base. This accomplishment is a critical element of our growth
strategy and is delivering strong disposable sales growth,”
concluded Wylie.
Driven by total revenues of $6.5 million, gross profit for the second
quarter of 2007 was $3.0 million, representing an increase of $96,000,
or 3%, over the second quarter of 2006. The Company has targeted
continued improvement in gross profit 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 second quarter of 2007 were $3.3
million, an increase of $284,000, or 9%, over the second quarter of
2006. The increase resulted from higher sales commissions from the
increased sales volume and expansion into new markets, including Latin
America. For the six months ended June 30, 2007, selling and marketing
expenses were $6.4 million, an increase of $628,000, or 11%, over the
same period of 2006.
General and administrative expenses for the second quarter of 2007 of
$3.0 million increased $1.1 million, or 57%, compared to the second
quarter of 2006 primarily as a result of increased legal costs. Total
second quarter legal costs were $1.4 million, a decrease of $317,000
from the first quarter of 2007, with a reduction in the continuing cost
of litigation against our primary laser competitors offset by the
increased cost of litigation in the VNUS patent infringement suit. For
the six months ended June 30, 2007, general and administrative expenses
were $6.0 million, an increase of $2.1 million, or 53%, over the same
period in 2006, primarily as a result of legal costs.
Loss from operations for the second quarter of 2007 were approximately
$3.7 million, an increase of $1.3 million from the second quarter of
2006. Losses from operations for the six months ended June 30, 2007 were
$7.6 million, an increase of $2.1 million from the same period in 2006.
During both the second quarter and the six months ended June 30, 2007,
gains from incremental revenue were offset by increased selling and
legal costs.
Net loss for the second quarter of 2007 was $3.6 million, an increase of
$3.0 million from the second quarter of 2006, as a result of both the
increased loss from operations in 2007 offset by non-cash interest
income recorded to reflect the effective interest rate method of
amortizing the debt discount, and a $1.8 million non-operating,
non-recurring gain recorded in the second quarter of 2006 for the
decrease in the fair value of the warrant obligation entered into on
September 30, 2005.
Net loss applicable to common stockholders for the second quarter of
2007 was $3.6 million, or $0.12 per share compared to $921,000 or $0.05
per share for the second quarter of 2006. The second quarter of 2006
included the $1.8 million non-operating, non-recurring gain in the fair
value of the warrant obligation.
The Company ended the second quarter of 2007 with a cash and short term
investment balance of $3.8 million, a decrease of $3.5 million from a
cash and short term investment balance of $7.3 million at the end of the
first quarter of 2007. The increase in cash utilization is a result of
both increased production of inventory in anticipation of the permanent
injunction awarded in July 2007, and legal expenditures. The Company is
in the process of investigating several options for monetizing the
recent $14.7 million trial award in order to significantly minimize any
dilution that would occur from other potential financing vehicles.
Conference Call Information
Diomed will hold a conference call to review its second quarter 2007
financial results today at 10:00 a.m. (Eastern Time) 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
800.901.5217 (domestic) or 617.786.2964 (international), participant
pass code 78617684. 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, July 26, 2007 12:00 p.m. Eastern Time,
until Thursday, August 2, 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 55922592. 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.
Diomed Holdings, Inc.
(Unaudited) Condensed Consolidated Statements of Operation
Three Months and Six Months Ended June 30, 2007 and 2006
Three Months
Three Months
Six Months
Six Months
Ended
Ended
Ended
Ended
June 30,
June 30,
June 30,
June 30,
2007
2006
2007
2006
Revenues
$
6,506,017
$
6,075,244
$
12,411,288
$
10,651,396
Cost of revenues
3,555,919
3,221,633
6,781,349
5,744,264
Gross profit
2,950,098
2,853,611
5,629,939
4,907,132
Operating expenses:
Research and development
362,171
363,027
777,517
717,574
Selling and marketing
3,294,563
3,010,196
6,430,895
5,803,263
General and administrative
2,975,982
1,900,331
6,048,572
3,958,553
Total operating expenses
6,632,716
5,273,554
13,256,984
10,479,390
Loss from operations
(3,682,618)
(2,419,943)
(7,627,045)
(5,572,258)
Other (income) expense
Gain on fair value adjustment on warrant liability
-
(1,810,858)
-
(1,040,437)
Interest expense (income), non-cash
(163,643)
96,075
214,414
192,151
Interest expense, net and other (income)
76,812
(94,353)
106,135
(77,438)
Total other (income) expense, net
(86,831)
(1,809,136)
320,549
(925,724)
Net loss
(3,595,787)
(610,807)
(7,947,594)
(4,646,534)
Less preferred stock cash dividends
-
(149,102)
-
(298,290)
Less preferred stock non-cash dividends
-
(161,116)
-
(316,107)
Net loss applicable to common stockholders
$
(3,595,787)
$
(921,025)
$
(7,947,594)
$
(5,260,931)
Basic and diluted net loss per share applicable to common
stockholders
$
(0.12)
$
(0.05)
$
(0.31)
$
(0.27)
Basic and diluted weighted average common shares outstanding
29,517,045
19,448,728
25,486,276
19,447,347
Diomed Holdings, Inc.
Condensed Consolidated Balance Sheets
As of June 30, 2007 (unaudited) and December 31, 2006
ASSETS
June 30, 2007
December 31, 2006
Current assets:
Cash and cash equivalents
$
3,405,061
$
7,306,578
Short term investments
435,046
2,626,880
Accounts receivable, net
3,207,501
3,144,056
Inventories
5,009,749
4,021,217
Prepaid expenses and other current assets
735,946
268,343
Total current assets
12,793,303
17,367,074
Property, plant and equipment, net
1,281,940
1,260,507
Intangible assets, net
3,770,193
4,006,927
Investment
1,000,000
1,000,000
Other assets
158,311
204,770
Total assets
$
19,003,747
$
23,839,278
LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
5,095,862
$
2,970,443
Accrued expenses
2,356,317
2,158,157
Current portion of deferred revenue
334,642
278,284
Bank loan
433,263
223,491
Total current liabilities
8,220,084
5,630,375
Deferred revenue, net of current portion
167,619
110,044
Convertible notes payable ($3,712,000 face value, net of $2,456,872
debt discount at June 30, 2007 and $3,712,000 face value, net of
$2,671,285 debt discount at December 31, 2006)
1,255,128
1,040,715
Total liabilities
9,642,831
6,781,134
Stockholders’ equity
9,360,916
17,058,144
Total liabilities, preferred stock and stockholders’
equity
$
19,003,747
$
23,839,278