Enpath (NASDAQ:NPTH)
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Enpath Medical Reports Second Quarter Results
Sales Meet Company Guidance
MINNEAPOLIS, July 21 /PRNewswire-FirstCall/ -- Enpath Medical, Inc.
(NASDAQ:NPTH) today reported second quarter sales of $7.2 million compared with
$7.3 million in the second quarter of 2004. For the six months ended June 30,
2005, the Company reported sales of $13.8 million, compared with $14.6 million
in the same period of 2004. For the second quarter of 2005, the Company
reported a net loss of $225,000, or $.04 per diluted share, compared with a net
loss of $1.8 million, or $.31 per diluted share, in the second quarter of 2004.
Second quarter 2004 results included a one-time, non-cash impairment adjustment
of $2.8 million ($1.9 million after tax) related to the Company's safety needle
investment. For the six months ended June 30, 2005, the Company reported a net
loss of $575,000, or $.10 per diluted share, compared with a loss of $1.5
million, or $.27 per diluted share for the first half of 2004, including the
$1.9 million after tax safety needle impairment adjustment.
"Our second quarter sales results were in line with our previously provided
guidance and we achieved gross margins of 38.7%, which was slightly better than
the 37.6% reported in the second quarter of last year," said James D. Hartman,
chairman and CEO. "Sales of our core introducer product line were consistent
with the second quarter of 2004," Hartman continued. "However, sales of
advanced delivery products, safety needles and contract manufacturing all
declined modestly, resulting in a decline in delivery system sales of
approximately $250,000 compared with the same period of 2004. Within our lead
technologies product line, we are beginning to see the positive impact of our
involvement with a variety of neuro-stimulation lead projects that we have
undertaken on behalf of our partner companies. As a result, year over year
sales in this product line increased 6%.
"As we stated in our July 14, 2005 news release, we are obviously very
disappointed with the conclusion by the FDA that it will require human clinical
trials in order to grant marketing clearance for the Myopore Rx," Hartman
continued. "Notwithstanding the original determination agreement with the FDA
that human trials were not necessary to grant clearance for our device, it is
not feasible for us, due to cost and time considerations, to conduct human
clinical trials at this late date in the development cycle, unless those trials
are very modest in nature. We are meeting with our marketing partners to
determine other potential courses of action as well as evaluating options
related to a further appeal of this most recent FDA decision to the next level
within the FDA. Despite this latest decision regarding Myopore Rx, we continue
to feel encouraged by our opportunities in Europe. We are shipping the Myopore
Rx steroid lead to one partner in Europe and this partner has indicated to us
that both sales and positive customer feedback have exceeded its expectations.
"Our profitability was again affected by higher than anticipated research and
development expenditures related to our FDA appeal," Hartman stated. "It has
been an intense, costly and highly sophisticated process that has involved a
number of expert consultants. In addition, our profitability was also affected
by development expenditures directed towards our steerable sheath catheter
projects, primarily to meet the requirements necessary to complete certain
milestone work and to finalize our license and supply agreement with Bard EP, a
division of C. R. Bard, Inc., which we announced today in a separate news
release. These products are far more complex than anything we have developed
in the past, and we have incurred more significant costs than anticipated
related to the testing and manufacturing process development activities that
are associated with these projects. Research and development expenses for the
second quarter were $1.6 million or 22% of sales, an increase of 40% over the
same quarter in 2004.
"Selling, general and administrative expenses were $1.47 million for the second
quarter, or 20.4% of sales, compared to $1.42 million, or 19.5% in the second
quarter of 2004. We continue to monitor our general and administrative
expenses and were pleased that those costs actually declined slightly from the
second quarter of 2004. Selling expenses increased about 10% from 2004's
second quarter primarily related to additional physician-based show activity.
"Our product development pipeline is full at the present time with seven very
active advanced delivery introducer projects, including five with companies
that are now, or soon to be, in human clinical trials," continued Hartman. "In
addition, we are involved with four neuro-stimulation development projects, a
next generation epicardial lead and delivery system as well as a number of
enhancements to our core introducer product line. We continue to stay actively
involved in the entities developing the new IS-4 connector configuration, the
pacing lead connector technology, and believe the new specifications will be
finalized by the European Union in 2005," Hartman concluded.
2005 Outlook and Guidance
The Company stated that it expects sales for the upcoming two quarters of 2005
to approximate sales achieved in the second quarter, while it achieves modest
profitability in those same quarters assuming no significant additional
expenditures are made in an effort to gain FDA marketing clearance for the
Myopore Rx lead.
Conference Call Today
The management team of Enpath Medical will host a conference call to discuss
the results beginning at 1:30 P.M. Central Time, today, July 21, 2005. To
participate, domestic participants should dial 800-257-1927 and international
participants should dial 303-262-2138. A recording of the conference call will
be available approximately one hour after the conclusion of the call and can be
accessed for seven days. To access the replay, please dial 1-800-405-2236 for
domestic callers and 303-590-3000 for international callers; please reference
the pass code 11035104#.
The conference call will also be webcast live on the company's web site,
http://www.enpathmed.com/ , and may be accessed by clicking on the 2nd Quarter
2005 Earnings Call icon. An audio replay will be archived on the Enpath
website for one year.
About Enpath Medical
Enpath Medical, Inc., headquartered in Plymouth, Minnesota, is a leader in the
design, development, manufacture and marketing of percutaneous delivery systems
and stimulation leads technologies. Its products include venous vessel
introducers, epicardial and endocardial stimulation leads, safety needles and
other products for use in pacemaker, defibrillator, catheter and infusion port
procedures as well as neuromodulation and hearing restoration markets. Its
products are sold worldwide through partnering relationships with other medical
device companies.
Safe Harbor
This news release contains forward-looking statements as defined by the Private
Securities Litigation Reform Act of 1995. Certain important factors could cause
results to differ materially from those anticipated by some statements made
herein. All forward-looking statements involve risks and uncertainties. A
number of factors that could cause results to differ materially are discussed
in our Annual Report on Form 10-K for the year ended December 31, 2004, as well
as in our quarterly reports on Form 10-Q and Current Reports on Form 8-K. Among
the factors that could cause results to differ materially are the following:
Enpath's ability to complete development of its Myopore Rx steroid epicardial
lead and FasTac Flex delivery tool and obtain regulatory approval to market
these devices in a number of countries without significant delay or expenditure
of resources; the ability of Enpath and its distribution partners to
successfully introduce the Myopore Rx and FasTac Flex; Enpath's dependence
upon a limited number of key customers for its revenue; the ability of Enpath's
customers to successfully develop and market therapies that utilize the
Company's advanced delivery systems; Enpath's dependence upon licensing
agreements with third parties for the technology underlying some of its
products; Enpath's ability to effectively manufacture its products, including
the new Myopore Rx steroid lead and the FasTac Flex delivery device, in
anticipated required quantities; Enpath's ability to develop or acquire new
products to increase its revenues; Enpath's ability to attract and retain key
personnel; introduction of competitive products; Enpath's ability to
successfully protect its intellectual property against misappropriation or
claims of infringement by third parties; government regulatory matters;
economic conditions; and Enpath's ability to raise capital. All
forward-looking statements of Enpath, whether written or oral, and whether made
by or on behalf of Enpath, are expressly qualified by these cautionary
statements. In addition, Enpath disclaims any obligation to update
forward-looking statements to reflect events or circumstances after the date
hereof.
Condensed Balance Sheets
Unaudited Audited
Assets 06/30/05 12/31/04
Cash and cash equivalents $- $362,625
Inventory, receivables and prepaids 8,466,430 8,514,675
Other current assets 796,200 504,683
Property, plant and equipment, net 5,066,521 5,176,086
Goodwill 9,607,975 9,593,662
Intangible assets with finite
lives, other 6,736,557 7,016,009
Total Assets $30,673,683 $31,167,740
Liabilities & Shareholders' Equity
Current liabilities $4,708,547 $4,162,001
Long-term liabilities 2,333,320 3,230,882
Shareholders' equity 23,631,816 23,774,857
Total Liabilities & Shareholders'
Equity $30,673,683 $31,167,740
Income Statements (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
Sales $7,193,659 $7,295,113 $13,810,411 $14,592,167
Cost of sales 4,413,522 4,549,519 8,663,749 9,078,339
Gross profit 2,780,137 2,745,594 5,146,662 5,513,828
Operating expenses:
Research and
development 1,592,166 1,135,608 2,970,139 2,182,311
Selling, general
and
administrative 1,466,142 1,420,817 2,922,711 2,696,897
Safety needle
asset impairment 0 2,809,199 0 2,809,199
Total operating
expenses 3,058,308 5,365,624 5,892,850 7,688,407
Operating loss (278,171) (2,620,030) (746,188) (2,174,579)
Other income (expense):
Interest expense (61,151) (46,486) (124,153) (94,151)
Interest income 0 213 0 1,608
Other (6,392) (4,315) (13,953) (1,032)
Total other income
(expense) (67,543) (50,588) (138,106) (93,575)
Loss before income taxes (345,714) (2,670,618) (884,294) (2,268,154)
Income tax benefit 121,000 854,644 309,503 725,313
Net Loss $(224,714) $(1,815,974) $(574,791) $(1,542,841)
Loss per share
Basic $(0.04) $(0.31) $(0.10) $(0.27)
Diluted $(0.04) $(0.31) $(0.10) $(0.27)
Weighted average shares
Basic 5,948,430 5,880,308 5,924,135 5,799,922
Diluted 5,948,430 5,880,308 5,924,135 5,799,922
DATASOURCE: Enpath Medical, Inc.
CONTACT: Jim Hartman of Enpath Medical, Inc., +1-763-577-2212; or
investors, Doug Sherk, +1-415-896-6820, or Jennifer Beugelmans,
+1-415-896-6817, both of EVC Group, Inc.
Web site: http://www.enpathmed.com/