Micro Therapeutics (NASDAQ:MTIX)
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- Company Significantly Narrows Net Loss With Growth in Net Sales, Higher Gross Margins and Improved Cost Control -
IRVINE, Calif., Oct. 27 /PRNewswire-FirstCall/ -- Micro Therapeutics, Inc. (MTI) (NASDAQ:MTIX), an endovascular medical device company focused on neurovascular disease and disorders, today reported financial results for its fiscal third quarter and nine months ended October 2, 2005.
As reported on October 5, 2005, net sales in the 2005 third quarter increased 72% to $14.1 million versus net sales of $8.2 million in the third quarter of 2004, and increased 8% compared with net sales of $13.1 million in the second quarter of 2005. Contributing to net sales growth in the most recent quarter were the company's neuro embolic products, net sales of which increased by 112% to $6.2 million, and neuro access and delivery products, net sales of which increased 53% to $7.1 million. Geographically, third quarter net sales increased by 98% to $6.1 million in the United States, and international net sales increased by 57% to $8.0 million. ev3 Inc. (NASDAQ:EVVV), MTI's majority stockholder, distributes MTI's products internationally. For the nine months ended October 2, 2005, net sales totaled $38.5 million, an increase of 55% compared with net sales during the first nine months of 2004.
Net loss for the 2005 third quarter was $1.7 million, or $0.04 per share, compared with a net loss of $15.5 million, or $0.34 per share, in the third quarter of 2004. Net loss for the first nine months of 2005 was $4.0 million, or $0.08 per share, compared with a net loss of $31.9 million, or $0.76 per share, in the first nine months of 2004. Weighted average shares outstanding for the 2005 and 2004 third quarters were 48.5 million and 45.0 million, respectively.
"The significant increase in net sales reflects broad-based growth from both a product line and geographic perspective," said Tom Wilder, MTI President and Chief Executive Officer. "We are particularly pleased with the progress that we have made with the introduction of Onyx for the treatment of brain arteriovenous malformations in the United States, which commenced in late July. Importantly, the growth in net sales combined with higher gross margins and operating expense control, resulted in a much improved bottom line for the quarter."
Gross margin in the 2005 third quarter grew to 71%, up from 62% in the year-ago third quarter. For the first nine months of 2005, gross margin increased to 68% compared with 59% in the first nine months of 2004.
Operating expenses for the 2005 third quarter were $11.8 million, an increase of 5% from operating expenses of $11.3 million incurred in the third quarter of 2004. For the first nine months of 2005, operating expenses were $34.4 million compared with operating expenses of $32.9 million for the corresponding period in 2004, an increase of 4%. Expenses for the most recent quarter benefited from net reversals of previously established reserves totaling $836 thousand related to facility consolidation and distributor termination.
For the third quarter of 2005, operating loss narrowed significantly to $1.8 million, representing a 71% reduction from the operating loss in the year-ago third quarter. For the first nine months of 2005, operating loss was $8.1 million versus $18.2 million in the first nine months of 2004.
The financial results for the first nine months of 2005 include a first quarter gain from the receipt of $3.7 million as a result of the sale of certain assets of Genyx Medical, a company in which MTI held an equity interest, to C.R. Bard, and a second quarter gain of $878 thousand from the release to MTI of previously escrowed funds related to the sale of Enteric Medical Technologies, also a company in which MTI held an equity interest. The financial results for the first nine months of 2004 include non-cash charges of $6.2 million and $9.1 million in the first and third quarters, respectively, related to the value ascribed to the conversion features of an aggregate $38.0 million of notes exchanged for shares of MTI's common stock in such 2004 fiscal quarters, and a 2004 second quarter gain of $1.7 million related to the receipt of previously escrowed funds from the sale of Enteric Medical Technologies.
As of October 2, 2005, MTI's cash and cash equivalents totaled $3.1 million.
Outlook
MTI tightened its financial guidance regarding net sales, forecasting total year 2005 net sales in the range of $53.0 to $54.0 million, compared to its previously communicated range of $51.0 to $54.0 million. The Company also indicated that it expects to narrow its operating loss in the fourth quarter of 2005 compared with its operating loss in the fourth quarter of 2004.
About Micro Therapeutics, Inc.
Micro Therapeutics develops, manufactures and markets minimally invasive medical devices for the diagnosis and treatment of vascular disease. The company is focused on catheter-based, or endovascular, technologies for the minimally invasive treatment of neurovascular disorders of the brain associated with stroke. MTI's products include: the NXT and Nexus lines of embolic coils; the Onyx(R) liquid embolic; and a range of access and delivery products that include micro delivery catheters, balloon catheters, and guidewires.
Conference Call Information and Forward-Looking Statements
The company will host a conference call tomorrow with its majority stockholder ev3 Inc. for interested parties beginning at 9:00 a.m. ET (6:00 a.m. PT) to review the results of operations for the third quarter of 2005 and other recent events. Discussions during the conference call may include forward-looking statements regarding such topics as, but not limited to, the company's net sales, margins, operating expenses, distribution arrangements, clinical studies, regulatory status, and financial position, and comments the company may make about its future in response to questions from participants on the conference call. Any interested party may listen to the conference call through a live audio Internet broadcast at http://www.1mti.com/. For those unable to listen to the live broadcast, a playback of the webcast will be available at http://www.1mti.com/ for approximately one year.
Statements contained in this press release that are not historical information are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected or implied. Such potential risks and uncertainties relate, but are not limited, to, in no particular order: product demand and market acceptance, the impact of competitive products and pricing, and success of clinical testing. More detailed information on these and additional factors which could affect Micro Therapeutics, Inc.'s operating and financial results are described in the company's Forms 10-Q, 10-KSB, and other reports, filed or to be filed with the Securities and Exchange Commission. Micro Therapeutics, Inc. urges all interested parties to read these reports to gain a better understanding of the many business and other risks that the company faces. Additionally, Micro Therapeutics, Inc. undertakes no obligation to publicly release the results of any revisions to these forward-looking statements, which may be made to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events.
MICRO THERAPEUTICS, INC.
Consolidated Statements of Operations
For The Three and Nine Months Ended October 2, 2005 and October 3, 2004
(unaudited)
For The Three Months Ended For The Nine Months Ended
October 2, October 3, October 2, October 3,
2005 2004 2005 2004
Net sales $14,090,000 $8,171,000 $38,549,000 $24,847,000
Cost of Sales 4,067,000 3,144,000 12,284,000 10,125,000
Gross profit 10,023,000 5,027,000 26,265,000 14,722,000
Operating expenses
Research and
development,
clinical and
regulatory 4,170,000 3,607,000 11,465,000 10,962,000
Sales, general
and admini-
strative 8,481,000 7,117,000 23,400,000 21,125,000
Distributor
termination (400,000) 554,000 (400,000) 823,000
Facility
consolidation (425,000) -- (85,000) --
Total
operating
expenses 11,826,000 11,278,000 34,380,000 32,910,000
Loss from
operations (1,803,000) (6,251,000) (8,115,000) (18,188,000)
Other income
(expense)
Amortization of
conversion
feature of notes -- (9,148,000) -- (15,338,000)
Gain on sale of
investment -- -- 4,611,000 1,728,000
Other, net 82,000 (54,000) (464,000) (120,000)
Total other
income (expense) 82,000 (9,202,000) 4,147,000 (13,730,000)
Loss before
income
taxes (1,721,000) (15,453,000) (3,968,000) (31,918,000)
Income tax
expense -- -- 2,000 2,000
Net loss $(1,721,000) $(15,453,000) $(3,970,000) $(31,920,000)
Per share
information
Net loss
available
to common
stockholders $(1,721,000) $(15,453,000) $(3,970,000) $(31,920,000)
Net loss per
share (basic
and diluted) $(0.04) $(0.34) $(0.08) $(0.76)
Weighted average
common shares
outstanding 48,507,000 45,045,000 48,455,000 41,958,000
MICRO THERAPEUTICS, INC.
Consolidated Balance Sheets
October 2, 2005 and December 31, 2004
(unaudited)
October 2, December 31,
2005 2004
ASSETS
Current assets
Cash and cash equivalents $3,144,000 $11,647,000
Accounts receivable, net of allowance 9,200,000 7,712,000
Receivable from ev3 Inc. 2,610,000 2,419,000
Inventories, net 6,880,000 6,365,000
Prepaid expenses and other assets 1,377,000 633,000
Total current assets 23,211,000 28,776,000
Property and equipment, net 2,820,000 2,139,000
Intangible assets, net 6,162,000 7,893,000
Goodwill 20,982,000 20,982,000
Other assets 405,000 1,245,000
Total assets $53,580,000 $61,035,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $1,676,000 $924,000
Accrued salaries and benefits 2,881,000 1,972,000
Accrued liabilities 1,755,000 3,105,000
Accrued facility consolidation costs 143,000 1,296,000
Payable to sellers of Dendron GmbH -- 3,750,000
Deferred revenue and other
liabilities 2,480,000 1,993,000
Total current liabilities 8,935,000 13,040,000
Stockholders' equity:
Preferred stock, $0.001 par value;
5,000,000 shares authorized; no
shares issued or outstanding -- --
Common stock, $0.001 par value;
70,000,000 shares authorized;
48,425,000 issued
and outstanding at December 31,
2004 and 48,524,000 shares issued
and outstanding at October 2, 2005 49,000 48,000
Additional paid in capital 194,871,000 194,551,000
Accumulated deficit (150,184,000) (146,214,000)
Accumulated other comprehensive loss (91,000) (390,000)
Total stockholders' equity 44,645,000 47,995,000
Total liabilities and stockholders'
equity $53,580,000 $61,035,000
MICRO THERAPEUTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Nine Months Ended October 2, 2005 and October 3, 2004
(unaudited)
For The Nine Months Ended
October 2, October 3,
2005 2004
Cash flows from operating activities:
Net loss $(3,970,000) $(31,920,000)
Adjustments to reconcile net loss to
net cash used in operating
activities
Amortization of exchange feature
of notes payable -- 15,338,000
Non-cash interest expense -- 320,000
Abandonment of patents 179,000 --
Depreciation and amortization 2,415,000 2,487,000
Gain on sale of investment (4,611,000) (1,728,000)
Loss on sale of fixed assets 13,000 2,000
Non-cash compensation 26,000 243,000
Provision for doubtful accounts 197,000 708,000
Provision for inventory
obsolescence 536,000 633,000
Change in operating assets and
liabilities:
Accounts receivable (1,637,000) (935,000)
Receivable from ev3, Inc. (191,000) (284,000)
Inventories (1,051,000) (3,118,000)
Prepaid expenses and other current
assets (791,000) (226,000)
Accounts payable 752,000 (788,000)
Accrued salaries and benefits 909,000 (440,000)
Accrued liabilities (2,503,000) 670,000
Deferred revenue and other
liabilities 487,000 1,277,000
Net cash used in operating activities (9,240,000) (17,761,000)
Cash flows from investing activities:
Proceeds from sale of investment 4,611,000 1,728,000
Proceeds from sale of fixed assets 7,000 --
Acquisition of Dendron, GmbH (3,750,000) (3,750,000)
Additions to property and equipment (1,430,000) (957,000)
Additions to patents and licenses (134,000) (345,000)
Change in other assets 841,000 (2,000)
Net cash provided by (used in)
investing activities 145,000 (3,326,000)
Cash flows from financing activities:
Proceeds from issuance of common
stock under employee stock purchase
plan 213,000 178,000
Proceeds from exercise of stock
options 81,000 39,000
Proceeds from issuance of notes
payable -- 21,008,000
Costs from issuance of notes payable
and exchange of notes for common
stock -- (1,164,000)
Net cash provided by financing
activities 294,000 20,061,000
Effect of exchange rate changes on
cash 298,000 (5,000)
Net decrease in cash and cash
equivalents (8,503,000) (1,031,000)
Cash and cash equivalents, beginning
of period 11,647,000 16,551,000
Cash and cash equivalents, end of
period $3,144,000 $15,520,000
Cash paid for income taxes $2,000 $2,000
Supplemental disclosure of non-cash
items:
Exchange of notes payable, net of
discount, for issuance of common
stock -- $22,859,000
MICRO THERAPEUTICS, INC.
Net Sales By Product Line and Geographic Market
(unaudited)
For The Three Months Ended For The Nine Months Ended
October 2, October 3, October 2, October 3,
2005 2004 2005 2004
Product Line
Embolic products $6,173,000 $2,905,000 $14,267,000 $8,422,000
Neuro access and
delivery products 7,130,000 4,651,000 21,953,000 14,269,000
Peripheral blood
clot therapy and
other products 787,000 615,000 2,329,000 2,156,000
Total net sales $14,090,000 $8,171,000 $38,549,000 $24,847,000
Geographic Market
United States $6,080,000 $3,076,000 $14,527,000 $8,772,000
International 8,010,000 5,095,000 24,022,000 16,075,000
Total net sales $14,090,000 $8,171,000 $38,549,000 $24,847,000
DATASOURCE: Micro Therapeutics, Inc.
CONTACT: Thomas C. Wilder of Micro Therapeutics, Inc., +1-949-837-3700;
or Rob Whetstone or Robert Jaffe, both of PondelWilkinson Inc.,
+1-310-279-5963, for Micro Therapeutics, Inc.
Web site: http://www.1mti.com/