EDAP TMS (NASDAQ:EDAP)
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EDAP TMS S.A. Reports 2005 First Quarter Performance
Opening of Canadian and U.K. Markets for Ablatherm(R)-HIFU; Strong Revenue
Growth in Reimbursed Countries; Strengthening of EDAP TMS Gross Margin
LYON, France, May 11 /PRNewswire-FirstCall/ -- EDAP TMS S.A. (NASDAQ:EDAP),
today reported financial results for the 2005 first quarter ended March 31,
2005. For the first quarter of 2005, the Company reported total revenues of
EUR 5.1 million compared to EUR 5.8 million in the same quarter of 2004. First
quarter revenue included the sale of nine lithotripsy and two Ablatherm-HIFU
units compared to nine lithotripsy and three Ablatherm(R)-HIFU units in 2004.
The Company's gross margin as a percentage of total revenue increased from 36
percent to 40 percent due to an increase in average product selling price for
both lithotripsy and Ablatherm-HIFU units, and therefore remained stable in
absolute value at EUR 2.1 million, level with same quarter of 2004.
The Company's operating expenses increased by 6 percent from the prior year, in
line with the Company's strategy to further increase education and awareness
for Ablatherm-HIFU, to further enhance technological leadership in HIFU and to
accelerate the reimbursement process in key countries, while continuing to
control UDS division expenses.
Both EDAP TMS operating divisions reported a profitable quarter, confirming the
repositioning of the Company executed in 2004. The Company's net loss was EUR
140,000 in Q1 2005 versus EUR 13,000 in Q1 2004.
As of March 31, 2005, the Company had EUR 8.2 million in cash and recorded a
net book value of EUR 17.9 million, level with December 2004 shareholders'
equity.
Hugues de Bantel, CEO of EDAP TMS, commented: "This quarter is in line with our
corporate plan, particularly with regard to a sensible shift from equipment
purchase to procedure purchase in countries where we are reimbursed for
Ablatherm-HIFU, as well as continued and sustainable growth patterns in our
total number of treatments performed. As awareness of Ablatherm-HIFU continues
to grow, we will be addressing a broader geography of patients providing access
to the procedure to our doctors and clinics though our mobile services. Once
the treatment is established in the doctor and patient community, a permanent
installation will become more attractive, leading to the equipment sale in many
of the large locations. In the interim, both our machine sale and mobile
procedure models remain healthy and are making meaningful contributions to
operating income."
EDAP: ABLATHERM-HIFU EXPANDS ITS RECOGNITION WORLDWIDE
For the first quarter of 2005, the HIFU division recorded continued Ablatherm
growth through the sale of two treatment units as well as continued growth in
the mobile treatment business. Net sales amounted to EUR 1.7 million compared
to EUR 1.8 million for the same quarter of 2004. While the Company sold one
fewer unit compared to the prior year quarter, continued market penetration and
growth in the mobile and permanent treatment rates made significant
contributions to the division's total revenues. Expenses increased from EUR
658,000 in Q1 2004 to EUR 871,000 in Q1 2005, in line with the Company's
strategy to strengthen its marketing, sales and R&D and to further penetrate
the market. Operating income remained positive at EUR 4,000 versus EUR 72,000
the prior year. Gross margin as a percentage of revenue strengthened from 40
percent up to 50 percent on a quarterly comparison, thanks to the
implementation of major cost reduction programs on the device and an increase
in the Company's average selling price for these two units.
EDAP - HIFU Division: Euros 000's
Year Revenues Gross Margin % Operating Income (Loss)
Q1 2004 1,840 40 % 72
Q1 2005 1,761 50 % 4
Performance achieved in countries where Ablatherm-HIFU has already secured
reimbursement demonstrates continued development in the Company's operating
model for both fixed and mobile treatment centers. In Germany and Italy, where
the Company has received approval for reimbursement of approximately half the
total treatment cost, mobile HIFU-related revenues increased three- fold. This
is in line with the Company's mobile strategy to provide access to HIFU
treatment without initial investment from the hospital or clinic. The Company
is continuing to seek additional reimbursement approvals as well as increases
to obtain appropriate levels in countries with partial reimbursement.
Additionally, the EDAP HIFU division launched its initial presence in the North
American market and strengthened its distribution channel with the placement of
EDAP's first Ablatherm-HIFU unit in Toronto. The Company's Canadian partner
Maple Leaf HIFU Company, now fully operational, treated its first patients in
late April.
"We are pleased to report that patient treatments at the Toronto clinic have
started following the official launch this spring," said de Bantel. "To date,
our partner Maple Leaf HIFU has successfully treated a number of patients from
North America and plans to continue doing so at an aggressive pace in the
months to come. We see significant interest in and demand for an alternative
prostate cancer treatment for men in North America who are not good candidates
for more traditional, but potentially difficult, treatments such as surgery or
radiation. HIFU offers these patients a proven, safe and effective treatment
with lower side effects and faster recovery -- all critical elements in a
successful treatment program."
The Company also made significant progress in Great Britain. After reviewing
all available data on HIFU, the U.K. National Institute of Clinical Excellence
(NICE) issued guidance mentioning that "current evidence on the safety and
efficacy of HIFU, as measured by reduction in PSA levels and biopsy findings,
appears adequate to support the use of HIFU for the treatment of prostate
cancer, provided that normal arrangements are in place ..." Following that
review and its recommendations, the largest U.K. private insurance company is
now reviewing the Company's application for reimbursement.
"Our first U.K. center, Stepping Hill Hospital in Stockport, has now performed
approximately 30 treatments and, based on this guidance, is now planning to
increase the pace of its Ablatherm treatments in the future. Furthermore, over
the last few months, we strengthened our presence in the U.K. with the
selection of a local distributor with very strong credibility and network
connections in Great Britain. We plan to rapidly increase the number of
operating sites over the months to come," added de Bantel.
The Company continues to work with its U.S. partner, HealthTronics, in pursuit
of clinical trials for the Ablatherm device in the United States. American
clinical trials are expected to begin in the second half of 2005.
On the clinical side, a recent review article published in the April edition of
Nature Clinical Practice highlighted comparable results in four different
Ablatherm-HIFU centers in Europe and outlined excellent outcome reports for
patients with prostate cancer who chose Ablatherm-HIFU treatment. These results
confirm that Ablatherm-HIFU, with its sustained outcomes at five years combined
with a good preservation of quality of life, is now considered as a routine
treatment for the management of prostate cancer.
TMS: CONTINUED DEMAND FOR OUR LITHOTRIPTERS
The UDS division continued its predictable revenue and net income delivery with
another quarter of operating income profit. The UDS division delivered another
strong quarter with 9 lithotripsy units sold. Over the quarter, the Company's
mix of new unit sales was weighted toward the mid-range Sonolith Praktis,
rather than the more advanced and higher priced Sonolith Vision, which accounts
for the difference in revenue. Nevertheless, the division succeeded in
increasing its gross margin through stronger pricing per unit in both equipment
lines.
TMS - UDS Division: Euros 000's
Year Revenues Gross Margin % Operating Income
(Loss)
Q1 2004 4,556 29 % 92
Q1 2005 3,920 30 % 34
The Company continued to maintain strict controls on internal expenses, which
decreased by 6% within the UDS division.
The Company also participated significantly in the 93rd Annual Meeting of the
Japanese Urological Association (JUA) in April. More than 6,000 doctors
attended the proceedings in Tokyo, including Dr. Osamu Muraki of Fujita General
Hospital and Dr. Kenichi Tajima of Tokyo Teishin Hospital, both of whom
presented clinical results unique to the EDAP lithotripsy platforms.
TMS entered the second quarter with a strong backlog of five lithotripters.
CORPORATE OUTLOOK
Hugues de Bantel concluded: "This 2005 first quarter further demonstrates the
importance for the HIFU division of accelerating the reimbursement process in
key countries and securing a satisfactory level of reimbursement, as this is
tied to significant increases in procedure utilization and acceptance by
patients. Many of the patients rely on reimbursement to afford the total cost
of their care. Results obtained in Q1 also confirm the stability of our
lithotripsy business.
"With the turnaround executed throughout 2004, we envisioned having enough
resources to implement our strategy despite potential quarter-to-quarter
changes in the total number and mix of treatment units sold. Our continued
forward progress on total treatments and penetration of key markets remains
steady on multiple fronts utilizing both the mobile pay-per-procedure and fixed
installation models as the local population dictates. We continue to be well
capitalized for growth, are investing in additional marketing and education
initiatives to grow market demand, and gain strength as more urologists and
patients are turning to Ablatherm-HIFU as a desirable alternative to the risks
and uncertainties that can make more traditional treatments difficult for
patients."
The Company will participate in the upcoming American Urological Association
Annual Meeting to be held in San Antonio, Texas, May 21-26, 2005.
CONFERENCE CALL AND WEBCAST
The Company will host a conference call to discuss the results and answer
questions from investors on Thursday, May 12, 2005, at 12:00 noon Eastern Time,
6:00 p.m. Paris Time. Representing the Company on the call will be Philippe
Chauveau, Chairman of the Board; Hugues de Bantel, Chief Executive Officer; and
Thierry Turbant, Chief Financial Officer. Investors may join the call live by
dialing 877-707-9628 within the United States or +1-785-832-0301 from
international locations and requesting the EDAP TMS 2005 First Quarter
Conference Call. Investors may also listen to the live call online at
http://www.edap-tms.com/ .
Investors unable to join the call can access a playback of the conference call.
To access the replay, please dial 800-839-5490 or +1-402-220-2550 beginning
two hours after the end of the call until Saturday, May 21, 2005, or visit the
Company's Web site at http://www.edap-tms.com/ .
ABOUT EDAP TMS S.A.
EDAP TMS S.A. develops and markets the Ablatherm, the most advanced and
clinically proven choice for High Intensity Focused Ultrasound (HIFU) treatment
of localized prostate cancer. HIFU treatment is shown to be a minimally
invasive and effective treatment option with a low occurrence of side effects.
The Company is also developing this technology for the treatment of certain
other types of tumors. EDAP TMS S.A. also produces and commercializes medical
equipment for treatment of urinary tract stones using Extra-corporeal Shockwave
Lithotripsy (ESWL).
For more information on the Company, contact the Investor Relations Dept by
phone at +33 (0)4 78 26 40 46 or see the Company's Web site at:
http://www.edap-tms.com/ .
This press release contains, in addition to historical information,
forward-looking statements that involve risks and uncertainties. These include
statements regarding the Company's growth and expansion plans. Such statements
are based on management's current expectations and are subject to a number of
uncertainties and risks that could cause actual results to differ materially
from those described in the forward-looking statements. Factors that may cause
such a difference include, but are not limited to, those described in the
Company's filings with the Securities and Exchange Commission.
(Tables follow)
EDAP TMS S.A.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Amounts in thousands of Euros and U.S. Dollars, except per share data)
Three Months Ended: Three Months Ended:
March 31, March 31, March 31, March 31,
2005 2004 2005 2004
Euros Euros $US $US
Net sales of medical
equipment 2,699 3,190 3,530 3,954
Net sales of spare
parts, supplies and
Services 2,377 2,431 3,109 3,014
TOTAL NET SALES 5,076 5,621 6,639 6,968
Other revenues 50 152 65 188
TOTAL REVENUES 5,126 5,773 6,704 7,156
Cost of sales (3,062) (3,719) (4,004) (4,610)
GROSS PROFIT 2,064 2,054 2,700 2,546
Research &
development expenses (450) (391) (589) (484)
S, G & A expenses (1,936) (1,854) (2,533) (2,299)
Total operating expenses (2,386) (2,245) (3,122) (2,783)
OPERATING PROFIT (LOSS) (323) (191) (422) (237)
Interest (expense)
income, net 7 (28) 9 (34)
Currency exchange
gains (loss), net 168 272 220 337
Other income (loss), net 9 (3) 12 (4)
INCOME (LOSS) BEFORE
TAXES AND MINORITY
INTEREST (139) 50 (181) 62
Income tax (expense) credit (1) (63) (1) (78)
NET INCOME (LOSS) (140) (13) (182) (16)
Earning per share -
Basic (0.02) (0.00) (0.02) (0.00)
Average number of
shares used in
computation of EPS 7,781,731 7,781,731 7,781,731 7,781,731
Earning per share -
Diluted (0.02) (0.00) (0.02) (0.00)
Average number of
shares used in
computation of EPS 8,344,368 7,822,842 3,344,368 7,822,368
NOTE: Translated for convenience of the reader to U.S. dollars at the 2005
average three months noon buying rate of 1 Euro = 1.3079 USD, and 2004 average
three months noon buying rate of 1 Euro = 1.2395 USD.
EDAP TMS S.A.
CONSOLIDATED BALANCE SHEETS HIGHLIGHTS (UNAUDITED)
(Amounts in thousands of Euros and U.S. Dollars)
March 31, December 31, March 31, December 31,
2005 2004 2005 2004
Euros Euros $US $US
Cash, cash equivalents
and short term
investments 8,183 9,398 10,567 12,723
Total current assets 22,954 22,025 29,641 29,818
Total current
liabilities 9,553 8,038 12,335 10,881
Shareholders' Equity 17,872 17,964 23,079 24,320
NOTE: Translated for convenience of the reader to U.S. dollars at the noon
buying rate of 1 Euro = 1.2913 USD, on March 31, 2005 and at the noon buying
rate of 1 Euro = 1.3538 USD, on December 31, 2004.
EDAP TMS S.A.
CONDENSED STATEMENTS OF OPERATIONS BY DIVISION
THREE MONTHS ENDED MARCH 31, 2005
(Amounts in thousands of Euros)
EDAP S.A. TMS S.A. EDAP Consolidation Total
HIFU UDS TMS HQ Impact After
Division Division Consolidation
Net sales of
medical devices 1,010 2,002 (313) 2,699
Net sales of
spare parts,
supplies &
services 703 1,871 (197) 2,377
TOTAL NET SALES 1,713 3,873 --- (510) 5,076
Other revenues 48 47 --- (45) 50
TOTAL REVENUES 1,761 3,920 --- (555) 5,126
GROSS PROFIT 875 50% 1,189 30% --- 2,064 40%
Research &
Development (276) (175) --- (451)
Total SG&A plus
depreciation (595) (980) (361) (1,936)
OPERATING PROFIT
(LOSS) 4 34 (361) (323)
CONTACT: EDAP TMS S.A.
Hugues de Bantel - Philippe Chauveau
Blandine Confort
+33 4 78 26 40 46
Halliburton Investor Relations
Matt Kreps - Geralyn DeBusk
972 458 8000
DATASOURCE: EDAP TMS S.A.
CONTACT: Hugues de Bantel, Philippe Chauveau, or Blandine Confort, all
of EDAP TMS S.A., +33-4-78-26-40-46; or Matt Kreps or Geralyn DeBusk, both of
Halliburton Investor Relations, +1-972-458-8000, for EDAP TMS S.A.
Web site: http://www.edap-tms.com/