EDAP TMS (NASDAQ:EDAP)
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EDAP TMS S.A. Reports 2005 Second Quarter Results
Continued Growth in Mobile Demand Increased Marketing in Preparation for Future
Reimbursement
LYON, France, July 27 /PRNewswire-FirstCall/ -- EDAP TMS S.A. (NASDAQ:EDAP),
today reported financial results for the 2005 second quarter ended June 30,
2005. For the second quarter of 2005, the company reported total revenues of
EUR 5.0 million compared to EUR 5.2 million in the same quarter of 2004. Year
to date revenue includes the sale of 16 lithotripsy and four Ablatherm-HIFU
units. Revenues for the first six months of 2005 were EUR 10.1 million compared
to EUR 11.0 million in 2004.
Year to date, the company's gross margin as a percentage of total revenue
increased from 37 percent in 2004 to 40 percent presently due to continued
focus on cost reductions. The company's operating expenses increased by 5
percent year to date compared to 2004, primarily in relation to the company's
continued focus on marketing in the Ablatherm-HIFU division. Progress toward
reimbursement is ongoing, and the company is advancing its marketing and
pipeline development activities in anticipation of future approvals.
The company's net loss for the second quarter 2005 was EUR 398,000 compared to
EUR 507,000 in the second quarter 2004. Net loss for the first six months was
EUR 538,000 compared to EUR 519,000 in 2004. The net loss is largely
attributable to the company's investment in sales and marketing expenses ahead
of revenues, as previously planned and announced.
As of June 30, 2005, the company had EUR 8.2 million in cash, level with the
first quarter of 2005. The company continues to invest operating cash flows
into marketing, product enhancement and market expansion to grow the total
eligible user base for its Ablatherm-HIFU product line. The company plans to
continue using cash in the third quarter to advance the Ablatherm-HIFU
business.
Hugues de Bantel, CEO of EDAP TMS, commented, "The second quarter results
reflect the company's current strategic initiatives -- to continue a steady
increase in our shift to mobile per-procedure treatment sales. This model
benefits the growth of Ablatherm-HIFU availability in European markets while
steadily investing in sales, marketing and education initiatives in countries
where we believe reimbursement will open the market opportunity for both mobile
and equipment sales."
EDAP: GROWTH IN ABLATHERM-HIFU MOBILE BUSINESS, POSITIONED FOR REIMBURSEMENT
APPROVALS
For the first half of 2005, the HIFU division continued to experience steady
unit sales while the majority of growth was in the mobile per-procedure and
service business. Revenues were up slightly for the first six months of 2005 to
EUR 3.6 million, and gross margins improved to 48 percent of sales as compared
to 43 percent in the prior year six months. Maintenance and service contract
sales increased as older Ablatherm-HIFU machines exited their warranty period,
fueling a 44 percent increase year to date. Year-to-date margin improvement was
driven by efficiencies within the manufacturing and production process.
Sales and marketing expenses increased in the EDAP division according to the
company's planned expansion of education programs for doctors and patients and
to grow the pipeline in anticipation of future reimbursement approvals.
Additionally, research and development expenses were up associated with the
launch of the company's integrated imaging system allowing physicians to image
while treating and reduce total treatment time. During the quarter, the company
added one additional sales position to support growth in the mobile business
across Europe.
EDAP - HIFU Division: Euros 000's
Year Revenues Gross Margin Operating Income
(Loss)
Q2 2004 1,708 47% 91
Q2 2005 1,841 47% (192)
YTD 2004 3,548 43% 163
YTD 2005 3,601 48% (187)
Ablatherm-HIFU continued to build on its strong clinical foundation with now up
to 8 years of patient data and total treatments of more than 7,800 worldwide.
Additionally, the company now reports 75 sites using Ablatherm-HIFU on a fixed
or mobile basis, as compared to 67 sites at the end of the first quarter of
2005 and 53 sites at the end of the second quarter 2004, a 42% increase over
the twelve months.
In Germany, where Ablatherm-HIFU is partially reimbursed, the mobile
per-procedure business increased 71 percent compared to the same period last
year. The company ended the quarter with 12 sites in Germany, nine of which are
served with the mobile model. In June the company added an additional mobile
Ablatherm-HIFU unit to meet continuing growth in treatment demand and inquiries
from additional sites. The company is continuing to train new physicians
regularly at its Centers of Excellence.
The Italian mobile market continues to grow, benefiting from strong enthusiasm
from doctors, patients and key opinion leaders selecting the procedure as an
alternative for patients not able to cope with the rigors or restrictions of
current treatments. Additionally, the reduced side effects and long-term
success rate of Ablatherm-HIFU treatment are increasing interest among the
broader urological community.
The United Kingdom market continues to develop following the introduction of
Ablatherm-HIFU in June 2004. The company is currently working to secure private
reimbursement approvals following positive reviews and acceptance by the
National Institute for Clinical Excellence announced in April 2005. The company
has strong leads and expects to place additional Ablatherm units by year end in
response to demand from local doctors to gain access to the Ablatherm-HIFU
technology.
"Total Ablatherm-HIFU treatments are now more than 7,800 to date, which is the
most extensive body of experience on HIFU for localized prostate cancer in the
world," said de Bantel. "In addition to our strong existing clinical evidence,
we continue to work with the urological community to refine and improve this
procedure to further lower patient side effects beyond the success we have
already enjoyed. We introduced our new imaging head allowing doctors to better
visualize the prostate while treatment is occurring. This accelerates treatment
efficiencies and allows for even finer application of the HIFU technology.
"The HIFU business continues its strong growth in the mobile model giving
clinics easier access by lowering their initial expenses to begin treating
patients with Ablatherm-HIFU," continued de Bantel. "Doctors are very pleased
with the successful patient outcomes while offering their patients a better
quality of life and shorter recovery period following treatment of localized
prostate cancer. We continue to receive new inquiries daily about
Ablatherm-HIFU, and our experienced clinical practitioners are an excellent
resource in demonstrating the benefits of Ablatherm-HIFU to new contacts as
well as conducting training to grow our population of practicing physicians."
TMS: CONTINUED DEMAND FOR OUR LITHOTRIPTERS
The UDS Division continued steady sales with 16 lithotripters sold in the first
half of 2005, stable with the prior year same period. The company's mix of new
unit sales year to date 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. Cost of sales continued to decline as a result of
manufacturing efficiencies while gross margins held steady at 30 percent for the
division. Operating profit for the quarter declined 15 percent from the change
in unit sales mix and corresponding change in service contract mix.
TMS - UDS Division: Euros 000's
Year Revenues Gross Margin Operating Income
(Loss)
Q2 2004 4,058 30% 12
Q2 2005 3,802 30% 54
YTD 2004 8,614 30% 104
YTD 2005 7,722 30% 86
The company continued to maintain strict controls on internal expenses, which
decreased by 8% within the UDS division year to date. TMS ended the second
quarter with a strong backlog of 5 lithotripters.
CONFERENCE ACTIVITY
During the second quarter the company actively participated in three worldwide
conferences: the American Urological Association Conference held in San
Antonio, Texas, the 6th International Consultation on New Developments in
Prostate Cancer and Prostate Diseases, co-sponsored by the International Union
Against Cancer, in Paris and the British Association of Urology Surgeons
meeting held in Glasgow, Scotland.
On Sept 21-24, 2005, EDAP will participate in the Deutsche Gesellschaft fur
Urologie (Congress of the German Society for Urology), in Dusseldorf, with
events for urologists to meet practitioners using Ablatherm-HIFU, as well as
present a number of abstracts on successful Ablatherm studies and outcomes.
CORPORATE OUTLOOK
"EDAP management continues to see our move toward the mobile model as the
larger and growing portion of the Ablatherm-HIFU business," said de Bantel. "We
continue to gain strength in key markets such as Italy and Germany where we are
seeing strong growth through the spread of enthusiastic support from many key
opinion leaders in the urological community of both countries. Our commitment
to making the Ablatherm unit available without a substantial initial expense
allows these doctors to offer care to their patients while working toward
future approvals in the clinical budgets to purchase a unit or develop a robust
per procedure business, whichever is most suitable to their needs. This
commitment to supporting their needs has helped to forge strong cooperative
relationships benefiting EDAP, the urologist and the patient. Additionally, our
launch in the U.K. continues to offer a significant market with ever increasing
interest among physicians following the positive recommendation from N.I.C.E.
and expanding interest among the private insurance community toward the
possibility of using Ablatherm-HIFU as a means to treat patients at moderate
cost and without the expense and difficulty of side effects.
"We continue to focus on building the base of Ablatherm-HIFU users through a
blend of fixed and mobile installations in multiple markets," de Bantel
continued. "In the short term, our revenue mix can vary between unit sales and
procedure sales, but the overall model continues to build our corporate
strength by working closely with members of the urological community to
strengthen our reputation as the leading provider of HIFU for localized
prostate cancer. We are executing our plan to invest in sales and marketing
efforts in proportion to the growing opportunity we see ahead. We are placing
resources into the market to manage the increasing interest we are seeing as
well as in anticipation of reimbursement approvals and opportunities to
continue expanding the markets we are serving in Europe and around the world."
Conference Call and Webcast
The company will host a conference call to discuss the results and answer
questions from investors on Thursday, July 28, 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 888-343-7144 within the United States or +1-415-537-1933
from international locations and requesting the EDAP TMS 2005 Second 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 800-633-8284 or +1-402-977-9140 and using
access code 21253116 beginning two hours after the end of the call until August
7, 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 Euro's and U.S. Dollars, except per share data)
Three Months Ended : Three Months Ended :
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
Euros Euros $US $US
Net sales of medical
equipment 2,236 2,439 2,786 2,957
Net sales of spare
parts, supplies and
Services 2,712 2,701 3,377 3,275
NET SALES 4,948 5,140 6,193 6,232
Other revenues 4 80 5 97
TOTAL REVENUES 4,952 5,220 6,168 6,329
Cost of sales (2,946) (3,183) (3,670) (3,859)
GROSS PROFIT 2,006 2,037 2,498 2,470
Research & development
expenses (479) (386) (597) (468)
S, G & A expenses (2,079) (1,889) (2,589) (2,290)
Non recurring operating
expenses --- (207) --- (252)
Total operating expenses (2,558) (2,482) (3,186) (3,010)
OPERATING PROFIT (LOSS) (552) (445) (688) (540)
Interest (expense)
income, net 21 (3) 26 (4)
Currency exchange gains
(loss), net 139 (81) 174 (98)
Other income (loss), net (7) 7 (9) 9
INCOME (LOSS) BEFORE TAXES
AND MINORITY INTEREST (399) (522) (497) (633)
Income tax (expense) credit 1 15 2 19
NET INCOME (LOSS) (398) (507) (495) (614)
Earning per share - Basic (0.05) (0.07) (0.06) (0.08)
Average number of shares
used incomputation
of EPS 7,781,731 7,781,731 7,781,731 7,781,731
Earning per share -
Diluted (0.05) (0.07) (0.06) (0.08)
Average number of shares
used in computation
of EPS 8,344,368 8,102,979 8,344,368 8,102,979
NOTE: Translated for convenience of the reader to U.S. dollars at the
2005 average three months noon buying rate of 1 Euro = 1.2455 USD,
and 2004 average three months noon buying rate of
1 Euro = 1.2124 USD.
EDAP TMS S.A.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Amounts in thousands of Euro's and U.S. Dollars, except per share data)
Six Months Ended : Six Months Ended :
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
Euros Euros $US $US
Net sales of medical
equipment 4,935 5,629 6,301 6,900
Net sales of spare
parts, supplies and
Services 5,089 5,132 6,497 6,292
NET SALES 10,024 10,761 12,798 13,192
Other revenues 54 232 68 284
TOTAL REVENUES 10,078 10,993 12,866 13,476
Cost of sales (6,008) (6,902) (7,670) (8,461)
GROSS PROFIT 4,070 4,091 5,196 5,015
Research & development
expenses (930) (777) (1,187) (953)
S, G & A expenses (4,015) (3,743) (5,127) (4,588)
Non recurring operating
expenses --- (207) --- (255)
Total operating expenses (4,945) (4,727) (6,314) (5,796)
OPERATING PROFIT (LOSS) (875) (636) (1,118) (781)
Interest (expense)
income, net 28 (31) 36 (37)
Currency exchange gains
(loss), net 307 192 392 235
Other income (loss), net 2 4 3 5
INCOME (LOSS) BEFORE TAXES
AND MINORITY INTEREST (538) (471) (687) (578)
Income tax (expense) credit --- (48) --- (58)
NET INCOME (LOSS) (538) (519) (687) (636)
Earning per share - Basic (0.07) (0.07) (0.09) (0.08)
Average number of shares
used incomputation
of EPS 7,781,731 7,781,731 7,781,731 7,781,731
Earning per share -
Diluted (0.07) (0.07) (0.09) (0.08)
Average number of shares
used in computation
of EPS 8,344,368 8,051,689 8,344,368 8,051,689
NOTE: Translated for convenience of the reader to U.S. dollars at the
2005 average six months noon buying rate of 1 Euro = 1.2767 USD,
and 2004 average six months noon buying rate of
1 Euro = 1.2259 USD.
EDAP TMS S.A.
CONSOLIDATED BALANCE SHEETS HIGHLIGHTS (UNAUDITED)
(Amounts in thousands of Euro's and U.S. Dollars)
June 30, March 31, June 30, March 31,
2005 2005 2005 2005
Euros Euros $US $US
Cash, cash equivalents and
short term investments 8,222 8,183 9,947 10,567
Total current assets 23,254 22,954 28,133 29,641
Total current liabilities 10,089 9,553 12,205 12,335
Shareholders' Equity 17,543 17,872 21,224 23,079
NOTE: Translated for convenience of the reader to U.S. dollars at the
noon buying rate of 1 Euro = 1.2098 USD, on June 30, 2005 and at
the noon buying rate of 1 Euro = 1.2913 USD, on March 31, 2005.
EDAP TMS S.A.
CONDENSED STATEMENTS OF OPERATIONS BY DIVISION
SIX MONTHS ENDED JUNE 30, 2005
(Amounts in thousands of Euro's )
EDAP S.A TMS S.A. Consolid Total
HIFU UDS EDAP TMS -ation After
Division Division HQ Impact Consolidation
Net sales of medical
devices 1,883 3,837 --- (785) 4,935
Net sales of spare
parts, supplies &
services 1,665 3,838 --- (414) 5,089
Other revenues 53 47 --- (47) 53
TOTAL REVENUES 3,601 7,722 --- (1,246) 10,077
GROSS PROFIT 1,740 48% 2,330 30% --- --- 4,070 40%
Research & Development (556) (374) --- --- (930)
Total SG&A plus
depreciation (1,371) (1,870) (774) --- (4,015)
Non recurring op.
expenses --- --- --- --- ---
OPERATING PROFIT
(LOSS) (187) 86 (774) --- (875)
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/