IRVINE, Calif., Nov. 13 /PRNewswire-FirstCall/ -- Cardiogenesis
Corporation (Pink Sheets: CGCP), a leading developer of surgical
products used in the treatment of patients suffering from severe
angina, today reported financial results for its third quarter
ended September 30, 2008. Third Quarter Financial Results Sales in
the third quarter of 2008 totaled $2,618,000, a 25% decrease from
the prior year third quarter sales of $3,486,000. The lower revenue
in the current year quarter is primarily attributable to a
$534,000, or 59%, decrease in capital sales, and a $326,000, or
14%, decrease in disposable handpiece revenue as compared with the
prior year quarter. Sales in the first nine months of 2008 totaled
$9,719,000, an increase of approximately $427,000 or 5% from sales
of $9,292,000 in the first nine months of 2007. The year to date
increase as compared with the prior year period is primarily
attributable to a $712,000, or 38%, increase in capital sales
offset by a $255,000, or 4%, decrease in disposable handpiece
revenue. The Company reported a third quarter 2008 operating loss
of $310,000 as compared with an operating income of $679,000 in the
prior year quarter. The Company's net loss for the quarter was
$308,000, or $0.01 per diluted share, as compared with a net income
of $590,000, or $0.01 per diluted share, in the 2007 third quarter.
For the first nine months of 2008, Cardiogenesis reported operating
income of $235,000 as compared with $888,000 for the same period in
the prior year. Net income for the first nine months of 2008 was
$258,000, or $0.01 per diluted share, compared with $662,000, or
$0.01 per diluted share, for the first nine months of 2007. Gross
profit decreased by $603,000 to $2,144,000 in the current year
quarter as compared with $2,747,000 for the 2007 third quarter.
Gross margin was 82% of net revenues for the quarter ended
September 30, 2008 as compared with a 79% gross margin in the third
quarter of 2007. The increase in gross margin for the three month
period is primarily attributable to an increase in the average
selling price of disposable handpieces. Gross profit increased by
$751,000 to $8,130,000 for the nine months ended September 30,
2008, as compared with $7,379,000 for the nine months ended
September 30, 2007. For the nine months ended September 30, 2008,
gross margin was 84% of net revenues as compared to 79% of net
revenues for the nine months ended September 30, 2007. The increase
in gross profit and gross margin for the nine month period is
primarily attributable to higher average selling prices for both
laser and disposable handpiece units. In addition, during the
second quarter of 2008, the company recognized $234,000 of deferred
revenue for which there was no associated cost of goods sold.
Research and development costs ("R&D") were $165,000 in the
third quarter of 2008 as compared with $103,000 in the 2007 third
quarter. Year to date, R&D expenses of $633,000 were $21,000 or
3% higher than the prior year period of $612,000. Sales and
marketing ("S&M") expenses of $1,536,000 in the quarter ended
September 30, 2008 increased $290,000, or 23%, compared with
$1,246,000 for the quarter ended September 30, 2007. For the nine
months ended September 30, 2008, S&M expenditures totaled
$4,858,000, an increase of $1,590,000, or 49%, compared with
$3,268,000 for the nine months ended September 30, 2007. The
increase for both the quarter and year to date periods is primarily
due to higher compensation expenses related to investments made to
strengthen the sales and marketing organization. General and
administrative expenditures ("G&A") for the quarter ended
September 30, 2008 totaled $753,000 as compared to $719,000 during
the quarter ended September 30, 2007. For the nine months ended
September 30, 2008, G&A totaled $2,404,000 as compared to
$2,611,000 for the nine months ended September 30, 2007. This
reduction of $207,000, or 8%, is primarily attributable to lower
insurance expense in the current year. Richard Lanigan,
Cardiogenesis President stated, "To leverage the investments we
have made in our sales organization, we are undertaking a major
marketing initiative to drive greater awareness of the benefits of
TMR within the cardiology community. As we reported in October we
began with a successful kick-off at the recent Transcatheter
Cardiovascular Therapeutics (TCT) meeting." Mr. Lanigan explained,
"Although intraoperative TMR procedures are performed by the
cardiothoracic surgeon, it is the cardiologist that manages the
patients and with that patient determines treatment strategies that
may include medical management, percutaneous intervention or
surgery. Educating cardiologists on the discrete current
indications for TMR, as well as future applications is critical to
garner their support and referrals for TMR. Engaging them directly
will be critical to achieving the clinical and commercial potential
of our technology and we plan on providing more color on the topic
during our earnings call." About Cardiogenesis Corporation
Cardiogenesis is a medical device company specializing in the
treatment of cardiovascular disease and is a leader in devices that
treat severe angina. The Company's market leading holmium:YAG laser
system and single use fiber-optic delivery systems are used to
perform a FDA-cleared surgical procedure known as Transmyocardial
Revascularization (TMR). For more information on Cardiogenesis and
its products, please visit the Company's website at
http://www.cardiogenesis.com/ or the direct to patient website at
http://www.heartofnewlife.com/. Safe Harbor Statement With the
exception of historical information, the statements set forth above
include forward-looking statements. Any forward-looking statements
in this news release related to the possible effectiveness of the
Company's technologies and the effect of such technologies on the
Company's sales, profitability, the adoption of its technology and
products and FDA clearances are based on current expectations and
beliefs and are subject to numerous risks and uncertainties, many
of which are outside the Company's control, that could cause actual
results to differ materially. Factors that could affect the
accuracy of these forward-looking statements include, but are not
limited to: any inability by the Company to sustain profitable
operations or obtain additional financing on favorable terms if and
when needed; any failure to obtain required regulatory approvals;
failure of the medical community to expand its acceptance of TMR
procedures; possible adverse governmental rulings or regulations,
including any FDA regulations or rulings; the Company's ability to
comply with international and domestic regulatory requirements;
possible adverse Medicare or other third-party reimbursement
policies or adverse changes in those policies; any inability by the
Company to ship product on a timely basis; the Company's ability to
manage its growth; the effects of recent disruptions in global
credit and equity markets and other adverse economic developments
that could adversely affect the market for our products or our
ability to raise needed financing; actions by our competitors; and
the Company's ability to protect its intellectual property. Other
factors that could cause Cardiogenesis' actual results to differ
materially are discussed in the "Risk Factors" section of the
Company's Annual Report on Form 10-KSB for the year ended December
31, 2007 and the Company's other recent SEC filings. The Company
disclaims any obligation to update any forward-looking statements
as a result of developments occurring after the date of this press
release. CARDIOGENESIS CORPORATION CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (in thousands, except per share amounts)
(unaudited) Three months ended Nine months ended September 30,
September 30, 2008 2007 2008 2007 Net revenues $2,618 $3,486 $9,719
$9,292 Cost of revenues 474 739 1,589 1,913 Gross profit 2,144
2,747 8,130 7,379 Operating expenses: Research and development 165
103 633 612 Sales and marketing 1,536 1,246 4,858 3,268 General and
administrative 753 719 2,404 2,611 Total operating expenses 2,454
2,068 7,895 6,491 Operating (loss) income (310) 679 235 888 Other
income (expense): Interest expense (1) (10) (22) (59) Interest
income 13 29 55 94 Non-cash interest expense -- (13) -- (89) Change
in fair value of derivatives -- (133) -- (323) Other non-cash
income, net -- 38 -- 151 Total other income (expense), net 12 (89)
33 (226) (Loss) income before income taxes (298) 590 268 662 Tax
provision 10 -- 10 -- Net (loss) income $(308) $590 $258 $662 Net
(loss) earnings per share: Basic $(0.01) $0.01 $0.01 $0.01 Diluted
$(0.01) $0.01 $0.01 $0.01 Weighted average shares outstanding:
Basic 45,292 45,274 45,292 45,274 Diluted 45,292 45,274 45,328
45,274 CARDIOGENESIS CORPORATION CONDENSED CONSOLIDATED BALANCE
SHEETS (in thousands) September December 30, 2008 31, 2007
(unaudited) (audited) ASSETS Current assets: Cash and cash
equivalents $3,439 $2,824 Accounts receivable, net of allowance for
doubtful accounts of $49 and $28, respectively 1,319 1,763
Inventories 1,380 1,602 Prepaids and other current assets 466 486
Total current assets 6,604 6,675 Long-term investments in
marketable securities 75 -- Property and equipment, net 341 457
Other assets, net 27 27 Total assets $7,047 $7,159 LIABILITIES AND
SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $338
$169 Accrued liabilities 1,124 1,458 Deferred revenue 902 1,210
Current portion of capital lease obligation 8 12 Total current
liabilities 2,372 2,849 Capital lease obligation, less current
portion 14 19 Total liabilities 2,386 2,868 Commitments and
Contingencies Shareholders' equity: Preferred stock: no par value;
5,000 shares authorized; none issued and outstanding -- -- Common
stock: no par value; 75,000 shares authorized; 45,314 and 45,274
shares issued and outstanding, respectively 173,938 173,826
Accumulated deficit (169,277) (169,535) Total shareholders' equity
4,661 4,291 Total liabilities and shareholders' equity $7,047
$7,159 DATASOURCE: Cardiogenesis Corporation CONTACT: William R.
Abbott, Senior Vice President and Chief Financial Officer of
Cardiogenesis Corporation, +1-949-420-1800 Web site:
http://www.cardiogenesis.com/ http://www.heartofnewlife.com/
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