Solid preparations position MDS Inc. well for restart of
reactor-based medical isotope production
Highlights:
- Signed a molybdenum-99 (Mo-99) supply agreement with a major
customer to provide medical isotopes to the global nuclear medicine
community
- On track to substantially complete transition and
restructuring activities by the end of fiscal 2010
- Maintained a solid cash position to support ongoing operations
and obligations
OTTAWA, Sept. 14
/PRNewswire-FirstCall/ - MDS Inc. (TSX: MDS; NYSE: MDZ), a leading
provider of products and services to the global health sciences
market, announced today third quarter revenues from continuing
operations of $53 million, up 8% from
$49 million in the third quarter of
fiscal 2009. Loss from continuing operations was $18 million ($0.27
loss per share), compared with income from continuing operations of
$9 million ($0.08 earnings per share) in the third quarter of
fiscal 2009.
"Our priorities this year have centered on transition and
repositioning activities, fostering customer relationships, and
protecting our core markets," said Mr. Steve West, Chief Executive Officer, MDS Inc.
"Moving forward we plan to concentrate on performance, cost
management and product investment that can drive improved
profitability and cash flow and cultivate sustainable growth."
Key Q3 Events:
- Canadian Nuclear Safety Commission approved the restart of the Chalk
River National Research Universal (NRU) reactor
- MDS signed a Mo-99 supply agreement with its primary customer,
Lantheus Medical Imaging Inc., to provide medical isotopes to the
global nuclear medicine community
- MDS announced its intent to restructure the Glucotrace and
Radiochemical facility at its Belgian operations
- Dr. Oye Olukotun was appointed to the Board of Directors; Directors
James MacDonald and Gregory Spivy retired from the Board of Directors
Subsequent to the quarter:
- On August 13, MDS announced it had extended its existing agreement
with Ontario Power Generation Inc., securing supply of cobalt-60 (Co-
60) for the Company until 2020
- On August 17, the NRU reactor returned to operation and MDS assumed
its role in the medical isotope supply chain
- On September 3, MDS announced that Kenneth Newport was appointed to
the Board of Directors
Third Quarter Results
Three months ended Nine months ended
July 31 July 31
-------------------------------------------------------------------------
2010 2009 2010 2009
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Consolidated Results
(millions of U.S. dollars,
except where noted)
-------------------------------------------------------------------------
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Revenues from continuing
operations $ 53 $ 49 $ 155 $ 180
(Loss) income from continuing
operations $ (18) $ 9 $ (113) $ 6
- Basic (loss) earnings per
share from continuing
operations $ (0.27) $ 0.08 $ (1.17) $ 0.05
Net loss $ (15) $ (62) $ (248) $ (77)
Cash and cash equivalents $ 121 $ 298 $ 121 $ 298
Share buyback
- millions of shares - - 53 -
Weighted average number of
Common shares outstanding
(millions of shares) 67 120 97 120
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- Revenue in the third quarter of fiscal 2010 was $53 million, up $4
million (8%) compared with the third quarter of fiscal 2009;
- Sterilization revenue was up 23% on a year-over-year basis mainly due
to the sale of a production irradiator during the third quarter;
- Radiotherapeutics revenue was up 56% on a year-over-year basis driven
primarily by CardioGen and the global performance of TheraSphere; and
- Revenue from cyclotron-based isotopes increased on a year-over-year
basis, driven primarily by increased demand for thallium-201 (Tl-
201), as a result of shortages of Mo-99 due to reactor shut-downs.
The NRU reactor returned to service in the fourth quarter of fiscal 2010
and therefore no revenue was recorded in the third quarter related to
NRU-supplied product. Reactor-based isotopes from the NRU were shipped,
however, during the first month of the third quarter of fiscal 2009.
The following key costs and expenses were recorded in the third quarter of
fiscal 2010:
- $9 million restructuring charge in Corporate related to our strategic
repositioning;
- $7 million non-cash impairment charge related to MDS Nordion's
Belgium operations;
- $4 million of expense in relation to our preparation for the MAPLE
arbitration proceedings; and
- $5 million of other income associated with the transition services
provided to the divested businesses.
MDS's cash and cash equivalents balance of $121 million as of the third quarter of fiscal
2010 decreased $13 million from the
second quarter of fiscal 2010, primarily due to cash payments of
$23 million for restructuring costs
associated with the strategic repositioning of the Company and
$4 million for transaction costs
related to the divestitures, partially offset by $7 million in cash received from the dissolution
of the Company's joint venture partnership with Applied Biosystems
as part of the sale of MDS Analytical Technologies, and cash flows
provided by operating activities from continuing operations.
Continuing Operations by Segment
Continuing operations consist of the MDS Nordion business and
Corporate and Other functions, which include finance, information
technology, human resources, and certain assets and liabilities
expected to be retained by MDS.
MDS Nordion
Three months ended Nine months ended
July 31 July 31
-------------------------------------------------------------------------
2010 2009 2010 2009
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(millions of U.S. dollars,
except where noted)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Revenues $ 53 $ 49 $ 155 $ 180
Operating (loss) income $ (8) $ 17 $ 4 $ 52
Gross Margin 42% 43% 41% 48%
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MDS Nordion had an operating loss of $8
million in the third quarter of fiscal 2010 compared with
operating income of $17 million in
the same quarter last year. This decrease was primarily due to an
unfavourable change of $13 million in
the fair value of embedded derivatives, an impairment charge of
$7 million related to MDS Nordion's
Belgium operations, a $6 million increase in selling, general and
administrative (SG&A) expense (SG&A included $4 million of expense associated with the
preparation of the MAPLE arbitration proceedings), a $1 million increase in depreciation and
amortization (D&A) expense, and lower medical imaging revenues
driven by the shut down of the NRU reactor. These decreases were
partially offset by the growth in revenues for sterilization and
certain radiotherapeutic products.
Corporate and Other
Corporate and Other recorded an operating loss of $19 million in the third quarter of fiscal 2010,
up $3 million compared with a loss of
$16 million in the third quarter of
fiscal 2009. The increase in the operating loss was primarily due
to restructuring charges of $9
million, and increases in SG&A expense of $3 million and in D&A expense of $1 million, partially offset by $5 million of other income associated with the
transition services provided to the divested businesses.
Discontinued Operations
MDS recorded an operating loss of $4
million from discontinued operations in the third quarter of
fiscal 2010 compared with an operating loss of $56 million in the third quarter of fiscal 2009.
The loss was primarily a result of the operating performance in the
remaining MDS Pharma Services Early Stage business.
Conference Call
MDS will hold a conference call on Wednesday, September 15 at 9:30 a.m. EST to discuss its third quarter fiscal
2010 results. This call will be webcast live at www.mdsnordion.com,
and will be available after the call in archived format at
www.mdsnordion.com/news_events/webcasts_presentations.asp.
The full text of MDS Inc.'s third quarter release, including
Management's Discussion and Analysis (MD&A) and financial
statements can be accessed on MDS's website at
http://www.mdsnordion.com/investors/financial_results.asp.
About MDS Inc.
MDS Inc. (TSX: MDS; NYSE: MDZ) is a global health science
company that provides market-leading products and services used for
the prevention, diagnosis and treatment of disease. We are a
leading provider of innovative technologies for use in medical
imaging and radiotherapeutics, and sterilization technologies
benefiting the lives of millions of people in more than 65
countries around the world. Our products and services are used
daily by pharmaceutical and biotechnology companies, medical-device
manufacturers, hospitals, clinics and research laboratories. MDS
has nearly 700 highly skilled people in five locations. Find out
more at www.mdsnordion.com.
Caution Regarding Forward-Looking Statements
From time to time, we make written or oral forward-looking
statements within the meaning of certain securities laws, including
under applicable Canadian securities laws and the "safe harbor"
provisions of the United States Private Securities Litigation
Reform Act of 1995. This document contains forward-looking
statements including, the strategy of the continuing businesses,
the completion of activities associated with the sale of MDS
Analytical Technologies and MDS Pharma Services Early Stage (Early
Stage), as well as statements with respect to our beliefs, plans,
objectives, expectations, anticipations, estimates and intentions.
The words "may", "could", "should", "would", "outlook", "believe",
"plan", "anticipate", "estimate", "project", "expect", "intend",
"indicate", "forecast", "objective", "optimistic", and words and
expressions of similar import, are intended to identify
forward-looking statements.
By their very nature, forward-looking statements involve
inherent risks and uncertainties, both general and specific, which
give rise to the possibility that predictions, forecasts,
projections and other forward-looking statements will not be
achieved. We caution readers not to place undue reliance on these
statements as a number of important factors could cause our actual
results to differ materially from the beliefs, plans, objectives,
expectations, anticipations, estimates and intentions expressed in
such forward-looking statements. These factors include, but are not
limited to: management of operational risks; the strength of the
global economy, in particular the economies of Canada, the U.S., the European Union,
Asia, and the other countries in
which we conduct business; our ability to secure a reliable supply
of raw materials, particularly cobalt and critical medical
isotopes; the stability of global equity markets; the fact that our
operations have been substantially reduced as a result of the sale
of MDS Analytical Technologies and Early Stage; assets and
liabilities that we retained from the businesses sold; obligations
retained and projected adjustments thereto; successful
implementation of structural changes, including restructuring
plans; our ability to complete other strategic transactions and to
execute them successfully; our ability to negotiate future credit
agreements, which may or may not be on terms favourable to us; the
impact of the movement of the U.S. dollar relative to other
currencies, particularly the Canadian dollar and the Euro; changes
in interest rates in Canada, the
U.S., and elsewhere; the effects of competition in the markets in
which we operate; the timing and technological advancement of new
products introduced by us or by our competitors; our ability to
manage our research and development; the impact of changes in laws,
trade policies and regulations, and enforcement thereof; regulatory
actions; judicial judgments and legal proceedings, including legal
proceedings described in this document; our ability to maintain
adequate insurance; our ability to successfully realign our
organization, resources and processes; our ability to retain key
personnel; our ability to have continued and uninterrupted
performance of our information technology and financial systems;
our ability to compete effectively; the risk of environmental
liabilities; new accounting standards that impact the policies we
use to report our financial condition and results of operations;
uncertainties associated with critical accounting assumptions and
estimates; the possible impact on our businesses from third-party
special interest groups; our ability to negotiate and maintain
collective-bargaining agreements for certain of our employees;
natural disasters; public-health emergencies and pandemics;
international conflicts and other developments including those
relating to terrorism; other risk factors described in section 3.10
of our Annual Information Form (AIF); and our success in
anticipating and managing these risks.
The foregoing list of factors that may affect future results is
not exhaustive. When relying on our forward-looking statements to
make decisions with respect to the Company, investors and others
should carefully consider the foregoing factors and other
uncertainties and potential events. We do not undertake to update
any forward-looking statement, whether written or oral, that may be
made from time to time by us or on our behalf, except as required
by law.
SOURCE MDS Inc.
Copyright . 14 PR Newswire