The Spectranetics Corporation (NASDAQ:SPNC) today reported
financial results for the three months ended June 30,
2016. Highlights of the quarter, all compared with the three
months ended June 30, 2015, include:
- Revenue of $67.7 million increased 10% (both as reported and
constant currency1)
- Vascular Intervention revenue of $46.2 million increased 14%
(13% constant currency)
- Lead Management revenue of $17.8 million increased 3% (both as
reported and constant currency)
Net loss for the three months ended June 30, 2016 was $14.9
million, or $0.35 per share, compared with net loss of $7.2
million, or $0.17 per share, for the three months ended
June 30, 2015.
“Broad-based execution and strength in our innovation pipeline
drove solid second quarter results,” said Scott Drake, President
and CEO. “Overall, I am pleased with the growth that our team has
delivered in the first half of the year and continue to be
encouraged by progress in our clinical and product pipeline.”
2016 Financial OutlookSpectranetics’ management
is providing the following updated full year 2016 financial
outlook:
- Revenue is projected to be within a range of $258 million to
$268 million, an increase of 5% to 9% over 2015
- Loss per share for 2016 is projected to be within a range of
$1.37 to $1.49. Non-GAAP loss per share for 2016 is projected to be
within a range of $1.06 to $1.18. See “Reconciliation of
Non-GAAP Financial Measures” later in this release
The following guidance metrics, as previously disclosed on
February 25, 2016, remain unchanged:
- 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 projected to
be in the range of 61% to 63% of revenue
- Net loss for 2016 is projected to be within a range of $59
million to $64 million. Non-GAAP net loss for 2016 is projected to
be within a range of $45 million to $50 million. See
“Reconciliation of Non-GAAP Financial Measures” later in this
release
__________________________1Constant currency is a non-GAAP
financial measure. See “Reconciliation of Non-GAAP Financial
Measures” later in this release.
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 42100557,
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, including FDA warning letters and any remediation
efforts, 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, and our Quarterly
Report on Form 10-Q for the three months ended March 31, 2016. 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 June 30, |
|
Six Months Ended June 30, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Revenue |
|
$ |
67,748 |
|
|
$ |
61,677 |
|
|
$ |
130,632 |
|
|
$ |
119,099 |
|
Cost of products
sold |
|
16,983 |
|
|
15,914 |
|
|
33,065 |
|
|
30,967 |
|
Amortization of
acquired inventory step-up |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Gross profit |
|
50,765 |
|
|
45,763 |
|
|
97,567 |
|
|
88,132 |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Selling, general and
administrative |
|
40,643 |
|
|
35,562 |
|
|
81,432 |
|
|
72,504 |
|
Research, development and other
technology |
|
17,657 |
|
|
16,660 |
|
|
33,994 |
|
|
31,921 |
|
Medical device excise
tax |
|
— |
|
|
821 |
|
|
— |
|
|
1,627 |
|
Acquisition transaction,
integration and legal costs |
|
500 |
|
|
11,106 |
|
|
792 |
|
|
21,497 |
|
Acquisition-related intangible
asset amortization |
|
3,202 |
|
|
3,612 |
|
|
6,405 |
|
|
6,782 |
|
Contingent consideration
expense |
|
67 |
|
|
1,060 |
|
|
167 |
|
|
2,084 |
|
Change in fair value of contingent
consideration liability |
|
— |
|
|
(17,800 |
) |
|
— |
|
|
(17,800 |
) |
Total operating
expense |
|
62,069 |
|
|
51,021 |
|
|
122,790 |
|
|
118,615 |
|
Operating
loss |
|
(11,304 |
) |
|
(5,258 |
) |
|
(25,223 |
) |
|
(30,483 |
) |
Other expense |
|
(3,452 |
) |
|
(1,838 |
) |
|
(6,619 |
) |
|
(3,771 |
) |
Loss before income tax
expense |
|
(14,756 |
) |
|
(7,096 |
) |
|
(31,842 |
) |
|
(34,254 |
) |
Income tax expense |
|
150 |
|
|
120 |
|
|
355 |
|
|
267 |
|
Net loss |
|
$ |
(14,906 |
) |
|
$ |
(7,216 |
) |
|
$ |
(32,197 |
) |
|
$ |
(34,521 |
) |
|
|
|
|
|
|
|
|
|
Net loss per common
share: |
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
(0.35 |
) |
|
$ |
(0.17 |
) |
|
$ |
(0.75 |
) |
|
$ |
(0.82 |
) |
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
Basic and diluted |
|
42,804 |
|
|
42,389 |
|
|
42,751 |
|
|
42,273 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE SPECTRANETICS CORPORATION |
Condensed Consolidated Balance Sheets |
(in thousands) |
(unaudited) |
|
|
|
June 30, 2016 |
|
December 31, 2015 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash
equivalents |
|
$ |
64,343 |
|
|
$ |
84,594 |
|
Accounts receivable, net |
|
43,248 |
|
|
43,359 |
|
Inventories, net |
|
25,672 |
|
|
25,155 |
|
Other current assets |
|
5,924 |
|
|
5,171 |
|
Total current
assets |
|
139,187 |
|
|
158,279 |
|
Property and equipment,
net |
|
44,624 |
|
|
44,719 |
|
Goodwill and intangible
assets |
|
253,533 |
|
|
263,072 |
|
Other assets |
|
1,917 |
|
|
1,929 |
|
Total assets |
|
$ |
439,261 |
|
|
$ |
467,999 |
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
Borrowings under revolving line of
credit |
|
$ |
19,232 |
|
|
$ |
24,232 |
|
Other current
liabilities |
|
41,798 |
|
|
39,447 |
|
Convertible debt, net of debt
issuance costs |
|
224,581 |
|
|
224,076 |
|
Term loan, net of debt issuance
costs |
|
59,628 |
|
|
59,601 |
|
Other non-current
liabilities |
|
3,771 |
|
|
3,674 |
|
Stockholders’ equity |
|
90,251 |
|
|
116,969 |
|
Total liabilities and
stockholders’ equity |
|
$ |
439,261 |
|
|
$ |
467,999 |
|
|
|
|
|
|
|
|
|
|
THE SPECTRANETICS CORPORATION |
Supplemental Financial Information |
(Unaudited) |
|
Financial Summary |
|
|
2015 |
|
2016 |
(000’s,
except laser sales and installed base amounts) |
|
|
2nd Qtr |
|
3rd Qtr |
|
4th Qtr |
|
1st Qtr |
|
2nd Qtr |
Disposable products
revenue: |
|
|
|
|
|
|
|
|
|
|
|
Vascular Intervention |
|
|
40,630 |
|
|
40,370 |
|
|
42,967 |
|
|
41,912 |
|
|
46,218 |
|
Lead Management |
|
|
17,257 |
|
|
17,961 |
|
|
18,250 |
|
|
17,096 |
|
|
17,767 |
|
Total disposable products |
|
|
57,887 |
|
|
58,331 |
|
|
61,217 |
|
|
59,008 |
|
|
63,985 |
|
Laser, service, and
other |
|
|
3,790 |
|
|
3,329 |
|
|
3,980 |
|
|
3,876 |
|
|
3,763 |
|
Total revenue |
|
|
61,677 |
|
|
61,660 |
|
|
65,197 |
|
|
62,884 |
|
|
67,748 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
percentage |
|
|
74 |
% |
|
74 |
% |
|
75 |
% |
|
74 |
% |
|
75 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
(7,216 |
) |
|
(14,493 |
) |
|
(10,460 |
) |
|
(17,291 |
) |
|
(14,906 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow used in
operating activities |
|
|
(10,082 |
) |
|
(10,225 |
) |
|
(16,691 |
) |
|
(12,444 |
) |
|
(1,873 |
) |
Total cash and cash
equivalents at end of quarter |
|
|
49,255 |
|
|
41,721 |
|
|
84,594 |
|
|
67,494 |
|
|
64,343 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Worldwide
Installed Base Summary: |
|
|
|
|
|
|
|
|
|
|
|
Laser placements during
quarter |
|
|
49 |
|
|
41 |
|
|
46 |
|
|
44 |
|
|
45 |
|
Buy-backs/returns
during quarter |
|
|
(11 |
) |
|
(16 |
) |
|
(26 |
) |
|
(18 |
) |
|
(21 |
) |
Net laser placements
during quarter |
|
|
38 |
|
|
25 |
|
|
20 |
|
|
26 |
|
|
24 |
|
Total lasers placed at
end of quarter |
|
|
1,347 |
|
|
1,372 |
|
|
1,392 |
|
|
1,418 |
|
|
1,442 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
June 30, 2016 |
|
June 30, 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 |
|
$ |
56,334 |
|
|
$ |
— |
|
|
$ |
56,334 |
|
|
$ |
51,593 |
|
|
9 |
% |
|
9 |
% |
International |
|
11,414 |
|
|
(209 |
) |
|
11,205 |
|
|
10,084 |
|
|
13 |
% |
|
11 |
% |
Total revenue |
|
$ |
67,748 |
|
|
$ |
(209 |
) |
|
$ |
67,539 |
|
|
$ |
61,677 |
|
|
10 |
% |
|
10 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
|
June 30, 2016 |
|
June 30, 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 |
|
$ |
109,316 |
|
|
$ |
— |
|
|
$ |
109,316 |
|
|
$ |
100,193 |
|
|
9 |
% |
|
9 |
% |
International |
|
21,316 |
|
|
123 |
|
|
21,439 |
|
|
18,906 |
|
|
13 |
% |
|
13 |
% |
Total revenue |
|
$ |
130,632 |
|
|
$ |
123 |
|
|
$ |
130,755 |
|
|
$ |
119,099 |
|
|
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 |
|
|
|
|
|
June 30, 2016 |
|
June 30, 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 |
|
$ |
46,218 |
|
|
$ |
(136 |
) |
|
$ |
46,082 |
|
|
$ |
40,630 |
|
|
14 |
% |
13 |
% |
Lead
Management |
|
17,767 |
|
|
(62 |
) |
|
17,705 |
|
|
17,257 |
|
|
3 |
% |
3 |
% |
Laser, service, and
other |
|
3,763 |
|
|
(11 |
) |
|
3,752 |
|
|
3,790 |
|
|
(1 |
)% |
(1 |
)% |
Total revenue |
|
$ |
67,748 |
|
|
$ |
(209 |
) |
|
$ |
67,539 |
|
|
$ |
61,677 |
|
|
10 |
% |
10 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
June 30, 2016 |
|
June 30, 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 |
|
$ |
88,130 |
|
|
$ |
3 |
|
|
$ |
88,133 |
|
|
$ |
77,143 |
|
|
14 |
% |
14 |
% |
Lead
Management |
|
34,863 |
|
|
96 |
|
|
34,959 |
|
|
33,688 |
|
|
3 |
% |
4 |
% |
Laser, service, and
other |
|
7,639 |
|
|
24 |
|
|
7,663 |
|
|
8,268 |
|
|
(8 |
)% |
(7 |
)% |
Total revenue |
|
$ |
130,632 |
|
|
$ |
123 |
|
|
$ |
130,755 |
|
|
$ |
119,099 |
|
|
10 |
% |
10 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Loss to Non-GAAP Net Loss(in
thousands) (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, 2016 |
|
June 30, 2015 |
|
June 30, 2016 |
|
June 30, 2015 |
Net loss, as
reported |
|
$ |
(14,906 |
) |
|
$ |
(7,216 |
) |
|
$ |
(32,197 |
) |
|
$ |
(34,521 |
) |
Acquisition
transaction, integration and legal costs (1) |
|
500 |
|
|
11,106 |
|
|
792 |
|
|
21,497 |
|
Acquisition-related
intangible asset amortization (2) |
|
3,202 |
|
|
3,612 |
|
|
6,405 |
|
|
6,782 |
|
Contingent
consideration expense (3) |
|
67 |
|
|
1,060 |
|
|
167 |
|
|
2,084 |
|
Change in fair value of
contingent consideration liability (4) |
|
— |
|
|
(17,800 |
) |
|
— |
|
|
(17,800 |
) |
Non-GAAP net loss |
|
$ |
(11,137 |
) |
|
$ |
(9,238 |
) |
|
$ |
(24,833 |
) |
|
$ |
(21,958 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Loss Per Share to Non-GAAP Net
Loss Per Share(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, 2016 |
|
June 30, 2015 |
|
June 30, 2016 |
|
June 30, 2015 |
Net loss per share, as
reported |
|
$ |
(0.35 |
) |
|
$ |
(0.17 |
) |
|
$ |
(0.75 |
) |
|
$ |
(0.82 |
) |
Acquisition
transaction, integration and legal costs (1) |
|
0.01 |
|
|
0.26 |
|
|
0.02 |
|
|
0.51 |
|
Acquisition-related
intangible asset amortization (2) |
|
0.07 |
|
|
0.09 |
|
|
0.15 |
|
|
0.16 |
|
Contingent
consideration expense (3) |
|
— |
|
|
0.03 |
|
|
— |
|
|
0.05 |
|
Change in fair value of
contingent consideration liability (4) |
|
— |
|
|
(0.42 |
) |
|
— |
|
|
(0.42 |
) |
Non-GAAP net loss per
share (5) |
|
$ |
(0.26 |
) |
|
$ |
(0.22 |
) |
|
$ |
(0.58 |
) |
|
$ |
(0.52 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
$ |
(1.49 |
) |
|
$ |
(1.37 |
) |
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) |
|
$ |
(1.18 |
) |
|
$ |
(1.06 |
) |
______________
1) 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 $0.5 million and
$8.5 million in the three months ended June 30, 2016 and 2015,
respectively, and $0.7 million and $16.5 million in the six months
ended June 30, 2016, and 2015, respectively, for legal fees,
including legal fees associated with a patent matter and breach of
fiduciary duty matter in which AngioScore is the plaintiff, and
costs advanced associated with the breach of fiduciary duty
matter.
2) 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.
3) 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.
4) During the three months ended June 30, 2015, we
remeasured the contingent consideration liability related to the
AngioScore acquisition to its fair value and reduced it by
approximately $17.8 million. This reduction was the result of a
decrease in future revenue estimates for the AngioSculpt
products.
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 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
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