The Spectranetics Corporation (NASDAQ:SPNC) today reported
financial results for the three months ended March 31,
2016. Highlights of the quarter, all compared with the three
months ended March 31, 2015, include:
- Revenue of $62.9 million increased 10% (both as reported and
constant currency1)
- Vascular Intervention revenue of $41.9 million increased 15%
(both as reported and constant currency)
- Lead Management revenue of $17.1 million increased 4% (5%
constant currency)
“Results reflect solid commercial execution across business
segments and global regions,” said Scott Drake, President and CEO.
“We also displayed traction in our innovation pipeline. In
particular, the interim 12-month Stellarex data supports our
top-tier First-in-Human results, and compare favorably to similar
studies conducted in the marketplace. Our competitive position
continues to strengthen as our pipeline matures.”
Net loss for the three months ended March 31, 2016 was
$17.3 million, or $0.40 per share, compared with net loss of $27.3
million, or $0.65 per share, for the three months ended
March 31, 2015.
__________________________1Constant currency is a non-GAAP
financial measure. See “Reconciliation of Non-GAAP Financial
Measures” later in this release.
2016 Financial OutlookSpectranetics’ management
reaffirms its previously given full year 2016 outlook, as disclosed
on February 25, 2016, and as detailed below:
- 2016 full year revenue is projected to be within a range of
$254 million to $266 million, an increase of 3% to 8% over
2015
- Net loss for 2016 is projected to be within a range of $59
million to $64 million, or $1.34 to $1.45 per share. Non-GAAP
net loss for 2016 is projected to be within a range of $45 million
to $50 million, or $1.03 to $1.14 per share. See
“Reconciliation of non-GAAP Financial Measures” later in this
release
- Gross margin is projected to be within a range of 74.4% to
75.0%
- Research, development and other technology expenses are
expected to be in the range of 25% to 26% of revenue
- Selling, general and administrative expenses are expected to be
in the range of 61% to 63% of revenue
Conference CallManagement will host an
investment community conference call today beginning at 2:30 p.m.
MT / 4:30 p.m. ET. Individuals interested in listening to the
conference call may dial (877) 561-2747 for domestic callers, or
(973) 409-9689 for international callers, conference ID 81186531,
or access the webcast on the investor relations section of the
Company’s website at: www.spectranetics.com. The webcast will be
available on the Company’s website for 14 days following the
completion of the call.
About SpectraneticsThe Spectranetics
Corporation develops, manufactures, markets and distributes medical
devices used in minimally invasive procedures within the
cardiovascular system. The Company's products are available in over
65 countries and are used to treat arterial blockages in the heart
and legs and in the removal of pacemaker and defibrillator
leads.
The Company's Vascular Intervention (VI) products include a
range of laser catheters for ablation of blockages in arteries
above and below the knee, the AngioSculpt scoring balloon used in
both peripheral and coronary procedures, and the Stellarex
drug-coated balloon peripheral angioplasty platform, which received
European CE mark approval in December 2014. The Company also
markets support catheters to facilitate crossing of peripheral and
coronary arterial blockages, and retrograde access and guidewire
retrieval devices used in the treatment of peripheral arterial
blockages, including chronic total occlusions. The Company markets
aspiration and cardiac laser catheters to treat blockages in the
heart.
The Lead Management (LM) product line includes excimer laser
sheaths, dilator sheaths, mechanical sheaths and accessories for
the removal of pacemaker and defibrillator cardiac leads.
For more information, visit www.spectranetics.com.
Safe Harbor StatementThis news
release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, Section 21E of the
Securities Exchange Act of 1934 and the Private Securities
Litigation Reform Act of 1995. You can identify these statements
because they do not relate strictly to historical or current facts.
Such statements may include words such as “anticipate,” “will,”
“estimate,” “expect,” “look forward,” “strive,” “project,”
“intend,” “should,” “plan,” “believe,” “hope,” “enable,”
“potential,” and other words and terms of similar meaning in
connection with any discussion of, among other things, future
operating or financial performance, strategic initiatives and
business strategies, clinical trials and regulatory approvals,
regulatory or competitive environments, outcome of litigation, our
intellectual property and product development. These
forward-looking statements include, but are not limited to,
statements regarding our competitive position, product development
and commercialization schedule, expectation of continued growth and
the reasons for that growth, growth rates, strength, integration
and product launches, and 2016 outlook and projected results
including projected revenue and expenses, net loss and gross
margin. Such statements are based on current assumptions that
involve risks and uncertainties that could cause actual outcomes
and results to differ materially. You are cautioned not to place
undue reliance on these forward-looking statements and to note they
speak only as of the date of this news release. These risks and
uncertainties may include financial results differing from
guidance, increasing competition and consolidation in our industry,
the impact of rapid technological change, slower revenue growth and
losses, inability to successfully integrate AngioScore and
Stellarex into our business and the inaccuracy of our assumptions
regarding AngioScore and Stellarex, market acceptance of our
technology and products, our inability to manage
growth, increased pressure on expense levels resulting from
expanded sales, marketing, product development and clinical
activities, uncertain success of our strategic direction,
dependence on new product development and successful
commercialization of new products, loss of key personnel, uncertain
success of or delays in our clinical trials, costs of and adverse
results in any ongoing or future legal proceedings, adverse impact
to our business of healthcare reform and related legislation and
regulations, including changes in reimbursements, adverse
conditions in the general domestic and global economic markets
and volatility and disruption of the credit markets,
our inability to protect our intellectual property and intellectual
property claims of third parties, availability of inventory and
components from suppliers, adverse outcome of FDA inspections, the
receipt of FDA clearance and other regulatory approvals to market
new products or applications and the timeliness of any clearance
and approvals, product defects or recalls and product
liability claims, cybersecurity breaches, ability to manufacture
sufficient volumes to fulfill customer demand, our dependence on
third party vendors, suppliers, consultants and physicians,
unexpected delays or costs associated with any planned improvements
to our manufacturing processes, risks associated with international
operations, lack of cash necessary to satisfy our cash obligations
under our outstanding 2.625% Convertible Senior Notes due 2034 and
our term loan and revolving loan facilities, our debt adversely
affecting our financial health and preventing us from fulfilling
our debt service and other obligations, and share price volatility
due to the initiation or cessation of coverage, or changes in
ratings, by securities analysts. For a further list and description
of such risks and uncertainties that could cause our actual
results, performance or achievements to materially differ from any
anticipated results, performance or achievements, please see our
previously filed SEC reports, including those risks set forth in
our 2015 Annual Report on Form 10-K. We disclaim any intention or
obligation to update or revise any financial or other projections
or other forward-looking statements, whether because of new
information, future events or otherwise.
Use of Non-GAAP Financial MeasuresTo supplement
our condensed consolidated financial statements prepared in
accordance with U.S. generally accepted accounting principles
(GAAP), we use certain non-GAAP financial measures in this release.
Reconciliations of the non-GAAP financial measures used in this
release to the most directly comparable GAAP measures for the
respective periods, and an explanation of our use of these non-GAAP
measures, can be found in “Reconciliation of Non-GAAP Financial
Measures” immediately following the financial tables. Non-GAAP
financial measures have limitations as analytical tools and should
not be considered in isolation or as a substitute for our financial
results prepared in accordance with GAAP.
-Financial tables follow-
THE SPECTRANETICS CORPORATION |
Condensed Consolidated Statements of Operations |
(in thousands, except per share data and
percentages) |
(unaudited) |
|
|
|
Three Months Ended March 31, |
|
|
2016 |
|
2015 |
Revenue |
|
$ |
62,884 |
|
|
$ |
57,422 |
|
Cost of products
sold |
|
16,082 |
|
|
14,802 |
|
Amortization of
acquired inventory step-up |
|
— |
|
|
251 |
|
Gross profit |
|
46,802 |
|
|
42,369 |
|
Operating
expenses: |
|
|
|
|
Selling, general and
administrative |
|
40,789 |
|
|
36,942 |
|
Research, development and other
technology |
|
16,337 |
|
|
15,261 |
|
Medical device excise
tax |
|
— |
|
|
806 |
|
Acquisition transaction,
integration and legal costs |
|
292 |
|
|
10,391 |
|
Acquisition-related intangible
asset amortization |
|
3,203 |
|
|
3,170 |
|
Contingent consideration
expense |
|
100 |
|
|
1,024 |
|
Total operating
expense |
|
60,721 |
|
|
67,594 |
|
Operating
loss |
|
(13,919 |
) |
|
(25,225 |
) |
Other expense |
|
(3,167 |
) |
|
(1,933 |
) |
Loss before income tax
expense |
|
(17,086 |
) |
|
(27,158 |
) |
Income tax expense |
|
205 |
|
|
147 |
|
Net loss |
|
$ |
(17,291 |
) |
|
$ |
(27,305 |
) |
|
|
|
|
|
Net loss per common
share: |
|
|
|
|
Basic and diluted |
|
$ |
(0.40 |
) |
|
$ |
(0.65 |
) |
Weighted average shares
outstanding: |
|
|
|
|
Basic and diluted |
|
42,697 |
|
|
42,156 |
|
|
|
|
|
|
|
|
THE SPECTRANETICS CORPORATION |
Condensed Consolidated Balance Sheets |
(in thousands) |
(unaudited) |
|
|
|
March 31, 2016 |
|
December 31, 2015 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
67,494 |
|
|
$ |
84,594 |
|
Accounts receivable, net |
|
44,204 |
|
|
43,359 |
|
Inventories, net |
|
26,315 |
|
|
25,155 |
|
Other current assets |
|
5,951 |
|
|
5,171 |
|
Total current
assets |
|
143,964 |
|
|
158,279 |
|
Property and equipment, net |
|
44,761 |
|
|
44,719 |
|
Goodwill and intangible assets |
|
259,869 |
|
|
263,072 |
|
Other assets |
|
1,953 |
|
|
1,929 |
|
Total assets |
|
$ |
450,547 |
|
|
$ |
467,999 |
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
Borrowings under revolving line of
credit |
|
$ |
19,234 |
|
|
$ |
24,232 |
|
Other current liabilities |
|
38,646 |
|
|
39,447 |
|
Convertible debt, net of debt
issuance costs |
|
224,328 |
|
|
224,076 |
|
Term loan, net of debt issuance
costs |
|
59,611 |
|
|
59,601 |
|
Other non-current liabilities |
|
3,770 |
|
|
3,674 |
|
Stockholders’ equity |
|
104,958 |
|
|
116,969 |
|
Total liabilities and
stockholders’ equity |
|
$ |
450,547 |
|
|
$ |
467,999 |
|
|
|
|
|
|
|
|
|
|
THE SPECTRANETICS CORPORATION |
Supplemental Financial Information |
(Unaudited) |
|
Financial Summary |
|
2015 |
|
2016 |
(000’s,
except laser sales and installed base amounts) |
|
1st Qtr |
|
2nd Qtr |
|
3rd Qtr |
|
4th Qtr |
|
1st Qtr |
Disposable products
revenue: |
|
|
|
|
|
|
|
|
|
|
Vascular Intervention |
|
36,513 |
|
|
40,630 |
|
|
40,370 |
|
|
42,967 |
|
|
41,912 |
|
Lead Management |
|
16,431 |
|
|
17,257 |
|
|
17,961 |
|
|
18,250 |
|
|
17,096 |
|
Total disposable products |
|
52,944 |
|
|
57,887 |
|
|
58,331 |
|
|
61,217 |
|
|
59,008 |
|
Laser, service, and
other |
|
4,478 |
|
|
3,790 |
|
|
3,329 |
|
|
3,980 |
|
|
3,876 |
|
Total revenue |
|
57,422 |
|
|
61,677 |
|
|
61,660 |
|
|
65,197 |
|
|
62,884 |
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
percentage |
|
74 |
% |
|
74 |
% |
|
74 |
% |
|
75 |
% |
|
74 |
% |
|
|
|
|
|
|
|
|
|
|
|
Net loss . |
|
(27,305 |
) |
|
(7,216 |
) |
|
(14,493 |
) |
|
(10,460 |
) |
|
(17,291 |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash flow used in
operating activities |
|
(22,461 |
) |
|
(10,082 |
) |
|
(10,225 |
) |
|
(16,691 |
) |
|
(12,444 |
) |
Total cash and cash
equivalents at end of quarter |
|
43,639 |
|
|
49,255 |
|
|
41,721 |
|
|
84,594 |
|
|
67,494 |
|
|
|
|
|
|
|
|
|
|
|
|
Worldwide
Installed Base Summary: |
|
|
|
|
|
|
|
|
|
|
Laser placements during
quarter |
|
54 |
|
|
49 |
|
|
41 |
|
|
46 |
|
|
44 |
|
Buy-backs/returns
during quarter |
|
(16 |
) |
|
(11 |
) |
|
(16 |
) |
|
(26 |
) |
|
(18 |
) |
Net laser placements
during quarter |
|
38 |
|
|
38 |
|
|
25 |
|
|
20 |
|
|
26 |
|
Total lasers placed at
end of quarter |
|
1,309 |
|
|
1,347 |
|
|
1,372 |
|
|
1,392 |
|
|
1,418 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Financial
Measures
To supplement our condensed consolidated financial statements
prepared in accordance with GAAP, we use certain non-GAAP financial
measures in this release. Reconciliations of these non-GAAP
financial measures to the most directly comparable GAAP measures
for the respective periods can be found in the tables below.
An explanation of the manner in which our management uses these
non-GAAP measures to conduct and evaluate our business and the
reasons management believes these non-GAAP measures provide useful
information to investors are provided following the reconciliation
tables.
Reconciliation of revenue by geography to non-GAAP
revenue by geographyon a constant currency basis(in thousands,
except percentages)(unaudited) |
|
|
Three Months Ended |
|
|
|
|
|
March 31, 2016 |
|
March 31, 2015 |
|
% Change |
|
Revenue, as reported |
|
Foreign exchange impact as compared to prior
period |
|
Revenue on a constant currency basis |
|
Revenue, as reported |
|
As reported |
|
Constant currency basis |
United
States |
$ |
52,982 |
|
|
$ |
— |
|
|
$ |
52,982 |
|
|
$ |
48,600 |
|
|
9 |
% |
|
9 |
% |
International |
9,902 |
|
|
331 |
|
|
10,233 |
|
|
8,822 |
|
|
12 |
% |
|
16 |
% |
Total revenue |
$ |
62,884 |
|
|
$ |
331 |
|
|
$ |
63,215 |
|
|
$ |
57,422 |
|
|
10 |
% |
|
10 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of revenue by product line to non-GAAP
revenue by product lineon a constant currency basis(in thousands,
except percentages)(unaudited) |
|
|
Three Months Ended |
|
|
|
|
March 31, 2016 |
|
March 31, 2015 |
|
% Change |
|
Revenue, as reported |
|
Foreign exchange impact as compared to prior
period |
|
Revenue on a constant currency basis |
|
Revenue, as reported |
|
As reported |
Constant currency basis |
Vascular
Intervention |
$ |
41,912 |
|
|
$ |
139 |
|
|
$ |
42,051 |
|
|
$ |
36,513 |
|
|
15 |
% |
15 |
% |
Lead Management |
17,096 |
|
|
158 |
|
|
17,254 |
|
|
16,431 |
|
|
4 |
% |
5 |
% |
Laser, service, and
other |
3,876 |
|
|
34 |
|
|
3,910 |
|
|
4,478 |
|
|
(13 |
)% |
(13 |
)% |
Total revenue |
$ |
62,884 |
|
|
$ |
331 |
|
|
$ |
63,215 |
|
|
$ |
57,422 |
|
|
10 |
% |
10 |
% |
Reconciliation of Net Loss to Non-GAAP Net Loss(in
thousands) (unaudited) |
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, 2016 |
|
March 31, 2015 |
Net loss, as
reported |
|
$ |
(17,291 |
) |
|
$ |
(27,305 |
) |
Amortization of
acquired inventory step-up (1) |
|
— |
|
|
251 |
|
Acquisition
transaction, integration and legal costs (2) |
|
292 |
|
|
10,391 |
|
Acquisition-related
intangible asset amortization (3) |
|
3,203 |
|
|
3,170 |
|
Contingent
consideration expense (4) |
|
100 |
|
|
1,024 |
|
Non-GAAP net
loss |
|
$ |
(13,696 |
) |
|
$ |
(12,469 |
) |
|
|
|
|
|
|
|
|
|
Reconciliation of Net Loss Per Share to Non-GAAP Net
Loss Per Share(unaudited) |
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, 2016 |
|
March 31, 2015 |
Net loss per share, as
reported |
|
$ |
(0.40 |
) |
|
$ |
(0.65 |
) |
Amortization of
acquired inventory step-up (1) |
|
— |
|
|
0.01 |
|
Acquisition
transaction, integration and legal costs (2) |
|
0.01 |
|
|
0.25 |
|
Acquisition-related
intangible asset amortization (3) |
|
0.07 |
|
|
0.08 |
|
Contingent
consideration expense (4) |
|
— |
|
|
0.02 |
|
Non-GAAP net loss per
share (5) |
|
$ |
(0.32 |
) |
|
$ |
(0.30 |
) |
|
|
|
|
|
|
|
|
|
Reconciliation of 2016 Projected Net Loss to Non-GAAP
Projected Net Loss(in millions) (unaudited) |
|
|
Projected Range |
|
|
Twelve Months EndingDecember 31, 2016 |
|
|
Low |
|
High |
Net loss,
GAAP |
|
$ |
(64.0 |
) |
|
$ |
(59.0 |
) |
Acquisition
transaction, integration and legal costs (6) |
|
0.9 |
|
|
0.9 |
|
Acquisition-related
amortization and contingent consideration expense (7) |
|
12.8 |
|
|
12.8 |
|
Non-GAAP net
loss |
|
$ |
(50.3 |
) |
|
$ |
(45.3 |
) |
|
|
|
|
|
|
|
|
|
Reconciliation of 2016 Projected Net Loss Per Share to
Non-GAAP Projected Net Loss Per Share(unaudited) |
|
|
Projected Range |
|
|
Twelve Months Ending December 31, 2016 |
|
|
Low |
|
High |
Net loss per share,
GAAP |
|
$ |
(1.45 |
) |
|
$ |
(1.34 |
) |
Acquisition
transaction, integration and legal costs (6) |
|
0.02 |
|
|
0.02 |
|
Acquisition-related
amortization and contingent consideration expense (7) |
|
0.29 |
|
|
0.29 |
|
Non-GAAP net loss per
share (5) |
|
$ |
(1.14 |
) |
|
$ |
(1.03 |
) |
|
|
|
|
|
|
|
|
|
______________
1) Amortization of acquired inventory step-up relates to the
inventory acquired in the AngioScore acquisition.
2) Acquisition transaction, integration and legal costs relate
to the AngioScore and Stellarex acquisitions, which closed on June
30, 2014 and January 27, 2015, respectively, and included
investment banking fees, accounting, consulting, and legal fees,
severance and retention costs, and non-recurring costs associated
with establishing manufacturing operations to support the Stellarex
program. In addition, these costs included $0.2 million and
$8.0 million in the three months ended March 31, 2016, and 2015,
respectively, for legal fees, including legal fees and costs
advanced, associated with a patent and breach of fiduciary duty
matter in which AngioScore is the plaintiff.
3) Acquisition-related intangible asset amortization relates
primarily to intangible assets acquired in the AngioScore
acquisition in June 2014 and the Stellarex acquisition in January
2015.
4) Contingent consideration expense primarily represents the
accretion of the estimated contingent consideration liability
related to future amounts payable to former AngioScore
stockholders, based on sales of the AngioScore products and
achievement of regulatory milestones.
5) Per share amounts may not add due to rounding.
6) Acquisition transaction, integration and legal costs consist
of integration costs for the Stellarex and AngioScore acquisitions,
which include legal fees and costs advanced associated with a
patent and breach of fiduciary duty matter in which AngioScore is
the plaintiff.
7) Acquisition-related intangible asset amortization relates
primarily to intangible assets acquired in the AngioScore
acquisition in June 2014 and the Stellarex acquisition in January
2015. Contingent consideration expense primarily represents the
accretion of the estimated contingent consideration liability
related to future amounts payable to former AngioScore
stockholders, based on sales of the AngioScore products and
achievement of regulatory milestones.
Management uses the non-GAAP financial measures as supplemental
measures to analyze the underlying trends in our business, assess
the performance of our core operations, establish operational goals
and forecasts that are used in allocating resources and evaluate
our performance period over period and in relation to our
competitors’ operating results.
The impact of foreign exchange rates is highly variable and
difficult to predict. We use a constant currency basis to show the
impact from foreign exchange rates on current period revenue
compared to prior period revenue using the prior period’s foreign
exchange rates. In order to properly understand the underlying
business trends and performance of our ongoing operations, we
believe that investors may find it useful to consider the impact of
excluding changes in foreign exchange rates from our revenue.
We believe presenting the non-GAAP financial measures used in
this release provides investors greater transparency to the
information used by our management for financial and operational
decision-making and allows investors to see our results “through
the eyes” of management. We also believe providing this information
better enables our investors to understand our operating
performance and evaluate the methodology used by management to
evaluate and measure such performance.
Non-GAAP financial measures have limitations as analytical tools
and should not be considered in isolation or as a substitute for
our financial results prepared in accordance with GAAP. Some
limitations associated with using these non-GAAP financial measures
are provided below:
- Management exercises judgment in determining which types of
charges or other items should be excluded from the non-GAAP
financial measures used.
- Amortization expense, while not requiring cash settlement, is
an ongoing and recurring expense and has a material impact on GAAP
net income or loss and reflects costs to us not reflected in
non-GAAP net loss.
- Items such as the acquisition transaction and integration costs
and contingent consideration expense excluded from non-GAAP net
loss can have a material impact on cash flows and GAAP net loss and
reflect economic costs to us not reflected in non-GAAP net
loss.
- Revenue growth rates stated on a constant currency basis, by
their nature, exclude the impact of changes in foreign currency
exchange rates, which may have a material impact on GAAP
revenue.
- Non-GAAP financial measures are not based on any comprehensive
set of accounting rules or principles and therefore other companies
may calculate similarly titled non-GAAP financial measures
differently than we do, limiting the usefulness of those measures
for comparative purposes.
Investor Relations Contacts
Zach Stassen
Investor.relations@spnc.com
(719) 447-2292
Michaella Gallina
Investor.relations@spnc.com
(719) 246-1713
The Spectranetics Corp. (MM) (NASDAQ:SPNC)
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