Adeza Announces 2006 Second Quarter Financial Results; Achieves 16th Consecutive Quarter of Profitability on Record Product Sales; Company Affirms 2006 Revenue Guidance; Conference Call to Begin at 4:30 p.m. Eastern Time Today.SUNNYVALE, Calif. -- Adeza (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :ADZA) today announced financial results for the second quarter ended June 30, 2006. Adeza reported record product sales of $13.0 million for the second quarter of 2006, an increase of 23% from product sales of $10.6 million for the second quarter of 2005. This increase was due to higher sales volume of FullTerm(TM), The Fetal Fibronectin Fetal fibronectin (fFN) is a protein produced by fetal cells and a type of fibronectin. fFN is found at the interface of the chorion and the decidua (between the fetal sack and the uterine lining). Test. Net income for the second quarter of 2006 was $537,000, or diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of $0.03, which included charges of $931,000 for stock-based compensation expense. Net income for the second quarter of 2005 was $1.8 million, or diluted earnings per share of $0.10, which included no stock-based compensation expense related to SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 123R and a 5% tax rate. Gross profit for the second quarter of 2006 was $11.1 million, or 85.4%, and included stock-based compensation expense of $48,000. This compares with gross profit of $9.2 million, or 86.6%, for the second quarter of 2005. Sales and marketing expenses for the second quarter of 2006 were $7.4 million, including stock-based compensation expense of $457,000, compared with $4.8 million for the same quarter in 2005. This increase reflects expansion of the company's direct sales force and marketing programs. General and administrative expenses for the second quarter of 2006 were $2.2 million, including stock-based compensation expense of $352,000, compared with $1.9 million in the comparable quarter of the prior year. Research and development expenses were $1.6 million for the second quarter of 2006, including stock-based compensation expense of $75,000, compared with $1.2 million in the same quarter of the prior year. This increase was mainly due to product development efforts, including costs related to Gestiva(TM), Adeza's drug candidate for the prevention of preterm preterm /pre·term/ (-term´) before completion of the full term; said of pregnancy or of an infant. pre·term adj. birth in women with a history of preterm delivery. Product sales for the first half of 2006 totaled $23.8 million, an increase of 18% from $20.2 million for the first half of 2005. For the six months ended June 30, 2006 Adeza reported net income of $543,000, or diluted earnings per share of $0.03, which included $1.8 million for stock-based compensation expense due to the adoption of SFAS 123R. This compares with net income of $3.3 million, or diluted earnings per share of $0.18, for the six months ended June 30, 2005, which included no employee stock-based compensation expense related to SFAS 123R and a 5% tax rate. As of June 30, 2006 Adeza had cash and cash equivalents of $93.4 million, an increase of $2.8 million from $90.5 million of cash and cash equivalents as of March 31, 2006 and an increase of $3.6 million since December 31, 2005. Stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. was $100.2 million and working capital was $99.5 million as of June 30, 2006. "We see significant opportunity for growth in the 'signs-and-symptoms' market, while continuing marketing programs aimed at expanding FullTerm, The Fetal Fibronectin Test to women who are at risk for preterm birth," said Emory V. Anderson Anderson, river, Canada Anderson, river, c.465 mi (750 km) long, rising in several lakes in N central Northwest Territories, Canada. It meanders north and west before receiving the Carnwath River and flowing north to Liverpool Bay, an arm of the Arctic , president and chief executive officer. "We are pleased with the regulatory progress of Gestiva, our drug candidate for the prevention of preterm birth in women with a history of preterm delivery," he continued. "Since announcing the submission of the Gestiva New Drug Application (NDA (Non Disclosure Agreement) An agreement signed between two parties that have to disclose confidential information to each other in order to do business. In general, the NDA states why the information is being divulged and stipulates that it cannot be used for any ) in early May, the U.S. Food and Drug Administration (FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. ) has accepted the NDA filing and assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. a date of August 29 for an advisory committee meeting. The FDA has also granted the NDA Priority Review designation, setting a goal to complete its review or otherwise respond to the Gestiva NDA by October 20. If approved, Gestiva will have a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impact on our 2007 product sales." 2006 Financial Guidance Adeza today affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. guidance for 2006 revenue to be in the range of $54 million to $57 million. It also affirmed that gross margin for 2006 is expected to exceed 80%, and has revised the full-year tax rate to a range of 48% to 52%, which is higher than the statutory tax rate primarily as a result of accounting for stock-based compensation expense under SFAS 123R. Conference Call Adeza's management will host an investment-community conference call today beginning at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these results and to answer questions. Individuals interested in participating in the conference call may do so by dialing (888) 463-4383 for domestic callers, or (706) 634-5615 for international callers. A telephone replay will be available for 48 hours following the conclusion of the call by dialing (800) 642-1687 for domestic callers, or (706) 645-9291 for international callers, and entering reservation code 3584280. The live call also will be available via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the on the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of the company's Web site at www.adeza.com. A webcast replay of the call will be available following the conclusion of the call. About Adeza Adeza designs, manufactures and markets innovative products for women's health Women's Health Definition Women's health is the effect of gender on disease and health that encompasses a broad range of biological and psychosocial issues. . Adeza's initial focus is on reproductive re·pro·duc·tive adj. 1. Of or relating to reproduction. 2. Tending to reproduce. reproductive subserving or pertaining to reproduction. healthcare using its proprietary technologies to predict preterm birth and assess infertility infertility, inability to conceive or carry a child to delivery. The term is usually limited to situations where the couple has had intercourse regularly for one year without using birth control. . Adeza's principal product is a patented diagnostic test, FullTerm, The Fetal Fibronectin Test, which utilizes a single-use, disposable cassette A removable magnetic tape storage module that contains supply and takeup reels (hubs) in the same housing. Most audio tapes and videotapes use cassettes as well as backup tape technologies such as DAT, 8mm and Magstar MP (see below). and is analyzed an·a·lyze tr.v. an·a·lyzed, an·a·lyz·ing, an·a·lyz·es 1. To examine methodically by separating into parts and studying their interrelations. 2. Chemistry To make a chemical analysis of. 3. on Adeza's patented TLiIQ(R) System. This product is approved by the U.S. Food and Drug Administration (FDA) for use in assessing the risk of preterm birth. Adeza also markets and sells the E-tegrity(R) Test, an infertility-related test to assess receptivity receptivity, n the state of being open to the action of a drug or homeopathic remedy. See also reactivity. of the uterus to embryo embryo (ĕm`brēō), name for the developing young of an animal or plant. In its widest definition, the embryo is the young from the moment of fertilization until it has become structurally complete and able to survive as a separate organism. implantation implantation /im·plan·ta·tion/ (im?plan-ta´shun) 1. attachment of the blastocyst to the epithelial lining of the uterus, its penetration through the epithelium, and, in humans, its embedding in the stratum compactum of the in women with unexplained unexplained Adjective strange or unclear because the reason for it is not known Adj. 1. unexplained - not explained; "accomplished by some unexplained process" infertility. In May 2006, Adeza announced the submission of its New Drug Application (NDA) to the FDA for Gestiva, a long-acting form of a naturally occurring progesterone progesterone (prōjĕs`tərōn'), female sex hormone that induces secretory changes in the lining of the uterus essential for successful implantation of a fertilized egg. to prevent preterm birth in women with a history of preterm delivery. Adeza's NDA submission includes data from a clinical study conducted by the National Institutes of Health. In June 2006, the NDA for Gestiva was granted Priority Review status. More information is available at www.adeza.com. Adeza cautions you that statements included in this press release that are not a description of historical facts are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , including for example, projections about Adeza's anticipated expenses and financial performance and statements related to Gestiva's regulatory status and medical potential. The inclusion of forward-looking statements should not be regarded as a representation by Adeza that any of its plans will be achieved. Actual results may differ materially from those set forth in this release due to the risks and uncertainties inherent in Adeza's business including, without limitation, risks related to the anticipated regulatory or commercial path for its product candidates. Further information about these and other risks is included Adeza's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and other periodic and current reports filed by Adeza with the Securities Exchange Commission, which are available from the SEC's Web site (www.sec.gov), and also available on the Investor Relations section of Adeza's Web site. All forward-looking statements are qualified in their entirety The whole, in contradistinction to a moiety or part only. When land is conveyed to Husband and Wife, they do not take by moieties, but both are seised of the entirety. by this cautionary statement and Adeza undertakes no obligation to revise or update this news release to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" .
ADEZA BIOMEDICAL CORPORATION
CONDENSED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- -----------------
2006 2005 2006 2005
-------- -------- -------- --------
Product sales $ 13,029 $ 10,634 $23,822 $20,244
Cost of product sales 1,907 1,429 3,662 2,856
-------- -------- -------- --------
Gross profit 11,122 9,205 20,160 17,388
Operating costs and expenses:
Sales and marketing 7,416 4,787 13,461 9,512
General and administrative 2,160 1,867 4,462 3,404
Research and development 1,600 1,213 3,273 2,077
-------- -------- -------- --------
Total operating costs and
expenses 11,176 7,867 21,196 14,993
Income (loss) from operations (54) 1,338 (1,036) 2,395
Interest income 1,128 593 2,122 1,073
-------- -------- -------- --------
Income before provision for
income taxes 1,074 1,931 1,086 3,468
Provision for income taxes 537 102 543 183
-------- -------- -------- --------
Net income $ 537 $ 1,829 $ 543 $ 3,285
======== ======== ======== ========
Net income per share:
Basic $ 0.03 $ 0.11 $ 0.03 $ 0.20
======== ======== ======== ========
Diluted $ 0.03 $ 0.10 $ 0.03 $ 0.18
======== ======== ======== ========
Shares used to compute net
income per share:
Basic 17,467 16,755 17,442 16,707
======== ======== ======== ========
Diluted 18,128 17,697 18,187 17,762
======== ======== ======== ========
ADEZA BIOMEDICAL CORPORATION
CONDENSED BALANCE SHEETS
(In thousands, except par value)
June 30, Dec. 31,
2006 2005
----------- ---------
(Unaudited) (1)
ASSETS
Current assets:
Cash and cash equivalents $93,357 $89,722
Accounts receivable, net 9,173 9,182
Inventories 965 849
Prepaid expenses and other current assets 504 292
Current deferred tax asset 4,929 4,929
----------- ---------
Total current assets 108,928 104,974
Property and equipment, net 419 348
Noncurrent deferred tax asset 193 193
Intangible assets, net 104 128
----------- ---------
Total assets $109,644 $105,643
=========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,287 $1,994
Accrued compensation 2,588 2,216
Accrued royalties 1,411 1,427
Other accrued liabilities 1,813 1,246
Taxes payable 1,284 1,322
Deferred revenue 32 33
----------- ---------
Total current liabilities 9,415 8,238
Stockholders' equity:
Common stock, $0.001 par value; 100,000 shares
authorized; 17,482 and 17,376 shares
issued and outstanding at June 30, 2006 and
December 31, 2005, respectively 17 17
Additional paid-in capital 132,096 132,432
Deferred compensation -- (2,604)
Accumulated other comprehensive income 13 --
Accumulated deficit (31,897) (32,440)
----------- ---------
Total stockholders' equity 100,229 97,405
----------- ---------
Total liabilities and stockholders' equity $109,644 $105,643
=========== =========
(1) Derived from the December 31, 2005 audited financial statements
included in the Annual Report on Form 10-K of Adeza Biomedical
Corporation for 2005.
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