EP Medsystems (MM) (NASDAQ:EPMD)
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EP MedSystems, Inc. (NASDAQ: EPMD), today reported its financial
results for the fourth quarter and full fiscal year ending December 31,
2007. The Company reported record quarterly revenue of $5.6 million,
representing a 29% increase over the $4.4 million achieved during the
fourth quarter of 2006. Total revenue for the twelve months ended
December 31, 2007 was $18.9 million, a 21% increase over the twelve
months ended December 31, 2006.
Ultrasound revenue grew by 92% as compared to the fourth quarter of
2006, and by 59% to $2.0 million compared to fiscal 2006. Cash on hand
at December 31, 2007 was $5.6 million, as compared to $5.6 million at
September 30, 2007 and $7.7 million at December 31, 2006.
David Bruce, President and Chief Executive Officer, commented, “We
achieved another quarterly revenue record and a new annual revenue
record thanks to the continued growth of our EP-WorkMate®
platform combined with our ViewMate® II
ultrasound system and ViewFlex® catheter
products. In addition, during the fourth quarter, we took further steps
to align our assets and operations with our focus on these higher growth
business lines going forward.”
In the fourth quarter, the Company discontinued low growth product lines
and distribution operations, and wrote down inventory related to
discontinued products resulting in realignment charges of approximately
$1.3 million, or $.04 per share, of which approximately $940,000 were
non-cash items.
Gross margin was 50% in the fourth quarter and 61% for the full year of
2007. Excluding business realignment charges, adjusted gross margin was
65% in each of the fourth quarter and the twelve months ended December
31, 2007, compared to 60% in the fourth quarter and 61% for fiscal 2006.
The Company’s net loss was $2.1 million, or
$.07 per share, for the fourth quarter of 2007, and $5.5 million, or
$.18 per share, for fiscal 2007. After excluding business realignment
charges, adjusted net loss in the fourth quarter was $787,000, or $0.03
per share, and $4.2 million, or $0.14 per share, for the full year ended
December 31, 2007. See the attached reconciliation of the Company’s
non-GAAP adjusted diluted earnings per share to the Company’s
GAAP diluted earnings per share.
David Bruce commented, “In 2007 we made
significant progress growing revenue to record levels, penetrating the
ultrasound catheter market, substantially increasing customer
satisfaction with our products and services, and developing new products
for 2008. Beginning this month we have started shipping our WorkMate®
4.0 products with ClearWave™ technology
delivering a significant improvement in clarity of signals, a top factor
considered when customers select an EP Recording System.”
Non-GAAP Financial Measures
The Company provides adjusted net earnings and adjusted earnings per
share because we believe that in order to properly understand the Company’s
short-term and long-term financial results, investors may wish to
consider the impact of certain adjustments (such as asset impairment
charges, write-offs of assets related to discontinued products and
headcount reductions). These adjustments result from facts and
circumstances that vary in frequency and impact on the Company’s
results of operations. EP MedSystems’
management uses adjusted net earnings and adjusted earnings per share to
evaluate the operational performance of the Company as well as to
compare results of current periods to prior periods.
Non-GAAP financial measures used by the Company may be calculated
differently from, and therefore may not be comparable to, similarly
titled measures used by other companies. Investors should consider
non-GAAP measures in addition to, and not as a substitute for, or
superior to, financial performance measures prepared in accordance with
GAAP.
Conference Call:
We have scheduled a conference call for 4:30 pm EST today, March 13,
2008, to discuss the financial results for the fourth quarter and full
year of 2007. The call is open to all listeners and will be followed by
a question and answer session. To access the live conference call, dial
(800) 366-8058 and give the company name “EP
MedSystems.” An audio replay of the
conference call will be accessible starting two hours following the live
event. Access to the replay is available through March 27, 2008 by
dialing (800) 405-2236 (access code 11110436#)
About EP MedSystems:
EP MedSystems develops, manufactures and markets a line of products for
use in the cardiac rhythm management or electrophysiology (“EP”)
market which are used for visualization, diagnosis and treatment of
cardiac rhythm disorders. The Company's EP product line includes the
EP-WorkMate® computerized electrophysiology
workstation and the EP-4™ Computerized
Cardiac Stimulator, with options to incorporate the MapMate®
Navigation Interface, the NurseMate™ Remote
Review Charting Station, and products linking our systems to hospital IT
networks. In addition, our intracardiac echo (ICE) ultrasound catheter
system, including our ViewFlex® intracardiac
imaging catheters and ViewMate® II ultrasound
imaging system, is used for live visualization of devices and anatomy
during catheter based procedures in EP and interventional cardiology.
For more information, visit our website at www.epmedsystems.com.
Forward-Looking Statements:
This news release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995 that involve
risks and uncertainties. Such forward-looking statements include the
expectations, plans and prospects for the Company, including the future
market success of our ICE products, anticipated regulatory approvals and
future product launches. The statements made by the Company are based
upon management’s current expectations and
are subject to certain risks and uncertainties that could cause actual
results to differ materially from those described in the forward-looking
statements. These risks and uncertainties include market conditions and
other factors beyond the Company’s control
and the risk factors and other cautionary statements described in the
Company’s filings with the SEC, including
those described in the Company’s Form 10-K
and Quarterly Reports on Form 10-Q. The Company does not intend to
update these statements and undertakes no duty to any person to provide
any such update under any circumstance.
EP MEDSYSTEMS, INC.
INCOME STATEMENT
(Unaudited)
Three Months
Twelve Months
December 31,
December 31,
December 31,
December 31,
2007
2006
2007
2006
Net sales
$
5,619,788
$
4,368,758
$
18,852,372
$
15,558,085
Cost of products sold
2,790,772
1,739,910
7,421,568
6,125,088
Gross profit
2,829,016
2,628,848
11,430,804
9,432,997
Operating costs and expenses:
Sales and marketing expenses
2,933,082
2,335,557
10,179,219
9,683,576
Research and development expenses
956,756
689,850
3,130,652
2,737,914
General and administrative expenses
1,022,541
801,790
3,652,416
3,736,871
Total operating expenses
4,912,379
3,827,197
16,962,287
16,158,361
Loss from operations
(2,083,363
)
(1,198,349
)
(5,531,483
)
(6,725,364
)
Interest and other income
75,640
101,059
292,055
419,514
Interest expense
(61,475
)
(66,926
)
(255,417
)
(258,308
)
Loss before income tax benefit
(2,069,198
)
(1,164,216
)
(5,494,845
)
(6,564,158
)
Income Tax benefit
86,873
86,873
Net Loss
$
(2,069,198
)
$
(1,077,343
)
$
(5,494,845
)
$
(6,477,285
)
Non Gaap Adjusted Net Loss (1)
$
(787,407
)
$
(1,077,343
)
$
(4,213,054
)
$
(6,477,285
)
Basic and diluted loss per share
$
(0.07
)
$
(0.04
)
$
(0.18
)
$
(0.22
)
Adjusted Basic and diluted loss per share (1)
$
(0.03
)
$
(0.04
)
$
(0.14
)
$
(0.22
)
Weighted average shares outstanding used
to compute basic and diluted loss per share
30,405,236
30,365,236
30,390,332
29,330,452
(1)
Fourth quarter 2007 adjusted net loss and adjusted basic and
diluted net loss per share exclude after-tax charges of:
a.
$609,806 or $0.02 per share related to write down of inventory
related to discontinued products.
b.
$218,700 or $0.01 per share related to inventory impairments for
products deemed slow moving due to new product launches.
c.
$339,178 or $0.01 per share related to staff adjustments and closing
down of certain international offices and activities.
d.
$114,107 or $0.00 per share related to completion of clinical study
and including write-off of clinical study supplies and equipment.
EP MEDSYSTEMS, INC.
BALANCE SHEET
(Unaudited)
December 31,
December 31,
2007
2006
ASSETS
Current assets:
Cash and cash equivalents
$
5,553,637
$
7,743,239
Accounts receivable, net
4,368,992
4,808,225
Inventories, net of reserves
2,331,567
2,859,677
Prepaid expenses and other current assets
327,166
419,411
Total current assets
12,581,362
15,830,552
Property, plant and equipment, net
1,581,835
1,937,131
Goodwill
341,730
341,730
Other intangible assets, net
102,293
187,081
Other assets
20,105
14,851
Total assets
$
14,627,325
$
18,311,345
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Secured convertible note, current
1,998,595
-
Accounts payable
1,684,733
1,531,799
Accrued expenses
2,026,010
1,722,944
Deferred revenue
814,979
542,351
Total current liabilities
6,524,317
3,797,094
Deferred warranty revenue– non-current
547,034
335,658
Secured convertible note, non-current
-
1,989,760
Total liabilities
$
7,071,351
$
6,122,512
Commitments and contingencies
Shareholders’ equity:
Preferred stock
-
-
Common stock
30,406
30,366
Additional paid-in capital
68,391,581
67,423,769
Accumulated other comprehensive loss
(458,494
)
(352,628
)
Treasury stock, 50,000 shares at cost
(100,000
)
(100,000
)
Accumulated deficit
(60,307,519
)
(54,812,674
)
Total shareholders’ equity
7,555,974
12,188,833
Total liabilities and shareholders’
equity
$
14,627,325
$
18,311,345