Advanced Neuromodulation (NASDAQ:ANSI)
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Advanced Neuromodulation Systems Reports Record Quarterly Revenue
of $38.7 Million and EPS of $0.25
Neuro Revenue Increased 26.1% Versus Second Quarter of 2004 and 21.4%
Sequentially
DALLAS, July 28 /PRNewswire-FirstCall/ -- Advanced Neuromodulation Systems,
Inc. (ANS) (NASDAQ:ANSI) today announced record revenue for the second quarter
of 2005, as sales of neuromodulation products increased 26.1% compared to the
second quarter of 2004 and 21.4% sequentially. The Company also reported
earnings per fully diluted share of $0.25.
Second Quarter Results
For the three months ended June 30, 2005, revenue increased 26.9% to a record
$38,693,000 from $30,488,000 for the second quarter of 2004. Sales of neuro
products increased 26.1% to $34,855,000 for this year's second quarter compared
to $27,633,000 for last year's second quarter, and increased 21.4% compared to
the first quarter of 2005. This growth was driven by strong sales of ANS'
Genesis(R) and GenesisXP(TM) implantable spinal cord stimulation (SCS) systems
for the treatment of chronic pain, as well as expanded market availability
beginning late in the quarter of the Company's new flagship rechargeable
implantable pulse generator (IPG) system, the Eon(TM) Neurostimulation System.
Gross margin was 72.9% for this year's second quarter compared to 72.5% for the
second quarter of 2004. Research and development spending increased 55.6% to
$4,465,000 from $2,870,000 to support ANS' new product and new indication
development initiatives. Marketing expense was about unchanged as a percentage
of revenue for this year's second quarter versus last year, while G&A expense
increased to 10.4% of revenue from 8.9% last year, reflecting higher legal and
recruiting and relocation expenses.
Net income for the second quarter of 2005 increased 17.6% to $5,086,000, or
$0.25 per diluted share, from $4,323,000, or $0.21 per diluted share, for the
second quarter of 2004.
At June 30, 2005, ANS had total cash and marketable securities of approximately
$154.5 million. ANS has no debt. To date, the Company has repurchased 923,674
shares of its common stock under a 2,000,000-share repurchase authorization.
First Half Results
For the six months ended June 30, 2005, revenue increased 24.3% to a record
$71,029,000 from $57,121,000 for the first half of 2004. Neuro sales increased
22.6% to $63,572,000 compared to $51,861,000 last year. Net income for the
first six months of 2005 was $63,655,000, or $3.06 per diluted share. This
compares to net income for the first six months of 2004 of $8,292,000, or $0.39
per diluted share. Net income for this year's first half included a pre-tax
gain of $85,244,000 from the previously announced sale of Cyberonics, Inc.
common stock acquired in August 2004.
Expanded Market Launch Of Eon Neurostimulation System
On June 21, 2005, ANS announced an expanded U.S. market launch of its newest
rechargeable IPG system, the Eon Neurostimulation System, after successfully
completing a market test and increasing inventories.
"Sales significantly exceeded our expectations, and we sold out our inventory
of Eon systems within four weeks," said President and CEO Chris Chavez. "We
will increase production of Eon as quickly as possible, but until our capacity
increases over the next few months to meet demand, we will have to carefully
manage allocation of this exciting new rechargeable IPG system."
"ANS enjoys the broadest, most advanced product offering in the industry to
address the needs of interventional pain physicians and their pain patients.
With our impressive line of generators and an equally impressive list of leads
and programmers, we believe we are uniquely positioned to address the diverse
needs of the market at many different price points. We expect our expanded
product range, combined with our excellent sales representation in the field
and our dedication to providing excellent customer service, to sustain ANS'
highly competitive position in interventional neuromodulation."
Expanded Clinical Indications For Neuromodulation
"The interventional neuromodulation market now exceeds one billion dollars, and
promises to become a multi-billion dollar, multi-indication modality in the
years ahead. The clinical indications that neuromodulation can address are
large, under-served and under-penetrated. Neuromodulation holds the promise to
improve the quality of life for millions of people who suffer from chronic pain
and other chronic diseases. As more and more people become aware of the
benefits of neuromodulation, we are increasingly excited about our mission to
develop ever-improving neuromodulation technologies to address an expanding set
of clinical indications."
Chavez noted that ANS decided in the first quarter to accelerate clinical
studies, regulatory approval efforts and product development. "We are
leveraging our platform technologies into emerging clinical applications that
we believe will fuel strong organic growth for years to come. In addition to
the planned pivotal studies to treat migraine headaches, essential tremor and
Parkinson's disease and the pilot study to treat chronic treatment-resistant
depression, we are systematically incubating such promising new indications as
pelvic pain, obesity, tinnitus, angina, ischemic pain associated with
peripheral vascular disease, obsessive compulsive disorder, and traumatic brain
injury."
The CEO continued, "ANS is making good progress on an extensive pipeline of
clinical trials and emerging therapies. Multiple sites have been initiated in
the Essential Tremor pivotal trial, patients are being recruited, and we
anticipate that the initial implants will occur in third quarter. In
mid-April, ANS received FDA approval for a 136-patient pivotal trial at 12
sites for Parkinson's disease, and we have been aggressively working through
the Institutional Review Boards (IRBs) as well as clinical study agreements at
the investigational sites. We currently anticipate that the first implant will
also occur in third quarter. ANS also received conditional approval from the
FDA for a 20-patient, 3-center, Interstitial Cystitis study which is expected
to get underway in the fourth quarter."
Regarding the migraine pivotal trial, Chavez said, "The goal of a pivotal trial
is to prove safety and efficacy for the indicated population. Our physician
advisors recommended a modification to our approved FDA pivotal trial protocol
for migraine that will broaden the indicated population and perhaps ultimately
speed up patient enrollment. We are preparing to submit these changes to the
FDA, and now expect implants for this indication to begin in the fourth quarter
of 2005.
"The prospect of using neurostimulation to treat various psychiatric diseases
is gaining momentum and generating excitement in the neurosurgical community.
We recently received an approval in Canada to begin our pilot study for
treatment-resistant depression and will soon begin recruiting patients.
Additionally, we recently acquired exclusive intellectual property to stimulate
a specific target in the brain to treat Obsessive Compulsive Disorder."
Management Reaffirms Revenue Guidance for 2005 and Increases EPS Guidance
Chavez said that management continues to expect revenue for 2005 of
approximately $145 million. We continue to expect to significantly increase
our investment in clinical studies, regulatory and R&D in 2005 compared to
2004. Including the impact of these increases, and taking into account the
decreased number of issued and outstanding shares as a result of our stock
repurchases, we are increasing our forecast for net income for 2005 to a range
of $3.54 to $3.57 per diluted share," Chavez said. Previously, management had
expected net income in the range of $3.49 to $3.52 per diluted share.
Conference Call
ANS has scheduled a conference call today at 11:00 a.m. EDT. The simultaneous
webcast is available at http://www.ans-medical.com/investors . A replay will
be available at this same Internet address, or at (800) 633-8284, reservation
#21252499, after 1:00 p.m. EDT.
About Advanced Neuromodulation Systems
Advanced Neuromodulation Systems designs, develops, manufactures and markets
implantable systems used to manage chronic intractable pain and other disorders
of the central nervous system. Fortune magazine recently ranked ANS as the 36th
fastest growing small company in its annual list of the Top 200 Fastest Growing
Small Companies in the United States. Forbes magazine recently recognized ANS
as one of America's 200 Best Small Companies. Frost & Sullivan, an
international strategic market research firm, also recently presented ANS with
its Product Innovation Award, recognizing ANS as the technology innovation
leader in the neurostimulation market and ANS' Genesis(R) Implantable Pulse
Generator system as the most advanced fully implantable spinal cord stimulator
on the market. Additional information is available at
http://www.ans-medical.com/ .
"Safe harbor" statement under the Private Securities Litigation Reform Act of
1995:
Statements contained in this document that are not based on historical facts
are "forward-looking statements." Terms such as "plan," "should," "would,"
"anticipate," "believe," "intend," "estimate," "expect," "predict,"
"scheduled," "new market," "potential market applications" and similar
expressions are intended to identify forward-looking statements. Such
statements are by nature subject to uncertainties and risks, including but not
limited to market acceptance of our new rechargeable IPGs, as well as continued
market acceptance of our conventional IPGs and radio-frequency powered SCS
systems; competition from and the launch of new competitive products by
Medtronic, Advanced Bionics/Boston Scientific or others, as well as other
market factors that could impede growth in or reduce sales of the Company's IPG
and RF systems, which could adversely affect revenues and profitability; patient
or physician selection of less invasive or less expensive alternatives; adverse
changes in coverage or reimbursement amounts by Medicare, Medicaid, private
insurers, managed care organizations or workers' comp programs; intellectual
property protection and potential infringement issues; the cost, uncertainty
and other risks inherent in litigation generally, including without limitation
the intellectual property and patent litigation against Advanced Bionics and
the securities class action litigation filed in the first quarter of 2005;
obtaining necessary government approvals for other new products or applications
and maintaining compliance with FDA product and manufacturing requirements;
product liability; reliance on single suppliers for certain components;
completion of research and development projects in an efficient and timely
manner; successful patient enrollment in and timely implementation of the IDE
clinical studies for migraine headache, Essential Tremor and Parkinson's
disease; physician and patient acceptance of the Libra DBS system for the
Essential Tremor and Parkinson's disease studies, for which already-approved
products are already available on the market; the uncertainty of clinical
results that may ensue from these and other clinical studies; the risk that the
FDA may not approve our PMA applications for these applications following the
completion of the clinical trials; the satisfactory completion of feasibility,
pilot and pivotal studies and/or market tests prior to the introduction of new
products generally; successful integration of acquired businesses, products and
technologies; international trade risks; and other risks detailed from time to
time in the Company's SEC filings. Consequently, if such management
assumptions prove to be incorrect or such risks or uncertainties materialize,
anticipated results could differ materially from those forecast in
forward-looking statements Such forward-looking statements speak only as of the
date on which they are made, and the Company does not undertake any obligation
to update any forward-looking statement to reflect events or circumstances
after the date of this release.
(tables attached)
ADVANCED NEUROMODULATION SYSTEMS, INC. and SUBSIDIARIES
Condensed Consolidated Statements of Income (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
Net revenue $38,693,227 $30,487,851 $71,028,690 $57,120,714
Cost of revenue 10,475,418 8,371,311 18,922,252 15,336,843
Gross profit 28,217,809 22,116,540 52,106,438 41,783,871
Operating expenses:
Sales and marketing 12,051,776 9,454,727 22,142,095 18,018,773
Research and
development 4,464,991 2,869,660 7,789,698 5,184,610
General and
administrative 4,007,926 2,706,956 7,351,380 5,023,696
Amortization of other
intangibles 657,547 623,773 1,297,527 1,198,647
21,182,240 15,655,116 38,580,700 29,425,726
Income from
operations 7,035,569 6,461,424 13,525,738 12,358,145
Other income (expense):
Gain on sale of investment
in common stock of
Cyberonics, Inc. --- --- 85,244,301 ---
Foreign currency
transaction loss (117,190) (25,506) (164,815) (54,853)
Investment income 1,091,257 229,842 1,638,118 481,171
974,067 204,336 86,717,604 426,318
Income before income
taxes 8,009,636 6,665,760 100,243,342 12,784,463
Income taxes 2,923,517 2,342,348 36,588,820 4,492,460
Net income $5,086,119 $4,323,412 $63,654,522 $8,292,003
Basic income per share:
Net income $0.26 $0.22 $3.18 $0.41
Number of basic shares 19,678,020 20,107,481 20,022,505 20,018,213
Diluted income per share:
Net income $0.25 $0.21 $3.06 $0.39
Number of diluted
shares 20,442,848 21,047,875 20,817,647 21,158,756
ADVANCED NEUROMODULATION SYSTEMS, INC. and SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
June 30, December 31,
2005 2004
Assets
Current assets:
Cash and marketable securities $154,479,782 $124,016,064
Receivable, trade net 29,860,358 25,322,813
Receivable, investment income and other 1,699,372 638,987
Inventories 23,811,609 23,923,851
Deferred income taxes 1,997,418 2,029,091
Prepaid expenses and other current assets 1,725,235 1,888,957
Total current assets 213,573,774 177,819,763
Net property, equipment and fixtures 34,213,645 33,175,329
Minority equity investments in
preferred stock 1,104,000 1,104,000
Goodwill, patents, tradenames purchased
technology & other assets, net 35,003,340 35,388,049
Total assets $283,894,759 $247,487,141
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $2,913,064 $3,206,516
Accrued salary and employee benefit costs 3,549,714 2,390,721
Accrued commissions 2,641,180 2,656,112
Income taxes payable 16,626,851 708,412
Deferred revenue 107,028 165,861
Other accrued expenses 750,497 342,075
Total current liabilities 26,588,334 9,469,697
Deferred income taxes 6,126,604 14,734,487
Non-current deferred revenue 643,605 718,820
Total stockholders' equity 250,536,216 222,564,137
Total liabilities and stockholders'
equity $283,894,759 $247,487,141
DATASOURCE: Advanced Neuromodulation Systems, Inc.
CONTACT: investors, Neil Berkman Associates, +1-310-277-5162, or
, for Advanced Neuromodulation Systems, Inc.; or
Chris Chavez, President & CEO of Advanced Neuromodulation Systems, Inc.,
+1-972-309-8000
Web site: http://www.ans-medical.com/
http://www.ans-medical.com/investors