ArthroCare Announces Strong Revenue and Earnings Growth; Company Reports 78 Percent Revenue Increase For Third Quarter.SUNNYVALE Sunnyvale, city (1990 pop. 117,229), Santa Clara co., W Calif., near San Francisco; settled 1849, inc. 1912. A city in Silicon Valley, its many manufactures include semiconductors; machinery and instruments; electrical, electronic, and aerospace products; , Calif.--(BW HealthWire)--October 7, 1999-- ArthroCare Corporation (Nasdaq:ARTC ARTC Arthrocare Corp (stock symbol) ARTC Australian Rail Track Corporation ARTC Air Route Traffic Control ARTC Association de la Recherche Theatrale au Canada ARTC Andean Root and Tuber Crops ) today announced strong revenue growth for the third quarter of 1999, ended October 2, 1999. Total revenue in the quarter reached $12.3 million, a 78 percent increase over $6.9 million reported in the same quarter of 1998. Product sales grew 72 percent to $11.5 million compared with product sales of $6.7 million in the third quarter a year ago. Net income for the quarter was $1.2 million or $0.12 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with a net loss of $1.1 million, or $(0.12) per share posted in the same quarter a year ago. Sales were driven by robust growth in arthroscopy Arthroscopy Definition Arthroscopy is the examination of a joint, specifically, the inside structures. The procedure is performed by inserting a specifically designed illuminated device into the joint through a small incision. and meaningful contributions from the new spinal spinal /spi·nal/ (spi´n'l) 1. pertaining to a spine or to the vertebral column. 2. pertaining to the spinal cord's functioning independently from the brain. spi·nal adj. surgery and ENT ENT ears, nose, and throat (otorhinolaryngology). ENT abbr. ear, nose, and throat ENT ear, nose and throat. ENT Ears, nose & throat; formally, otorhinolaryngology (ear, nose and throat) business units, both of which launched soft-tissue surgical systems during the quarter. International turned in a strong performance accounting for more than 15 percent of product sales for the second consecutive quarter. For the current nine-month period the company reported product sales of $30.7 million and total revenue of $34.2 million in 1999. In the comparable period of 1998, product sales and total revenue were $17.3 million and $20.1 million, respectively. Net income reached $2.7 million, or $0.28 per diluted share, for the first nine months of 1999 compared with a net loss of $1.9 million, or $(0.22) per share, in the first nine months of 1998. "Our strategy is to leverage our patented technology platform across a variety of soft-tissue surgical markets," said Michael A. Baker Michael Allen Baker (Captain, USN, Ret.) is the International Space Station Program Manager for International and Crew Operations, at NASA's Johnson Space Center. He is responsible for the coordination of program operations, integration and flight crew training and support , ArthroCare's president and chief executive officer. "We are encouraged that two newly commercialized markets, ear, nose and throat surgery and spinal surgery, are beginning to make meaningful contributions so soon after product launch. We believe this is an indication not only of the intrinsic intrinsic /in·trin·sic/ (in-trin´sik) situated entirely within or pertaining exclusively to a part. in·trin·sic adj. 1. Of or relating to the essential nature of a thing. 2. performance of the products, but also of the tremendous leverage created by our large installed base and the excellent clinical reputation the company has built over the past several years." ArthroCare's soft-tissue surgery systems allow surgeons to operate with increased precision and accuracy, limiting damage to surrounding sur·round tr.v. sur·round·ed, sur·round·ing, sur·rounds 1. To extend on all sides of simultaneously; encircle. 2. To enclose or confine on all sides so as to bar escape or outside communication. n. tissue thereby potentially reducing pain and speeding recovery for the patient. The company's products operate at lower temperatures than traditional electrosurgical or laser surgery tools, and enable surgeons to remove or shrink shrink Vox populi noun A psychiatrist soft tissue and to simultaneously seal bleeding vessels. Except for historical information, this press release includes 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. that involve risks and uncertainties, including, but not limited to, the company's fundamental position, continued success of certain product lines and strategies, the strength of the company's market position, and risks as detailed from time to time in the company's Securities and Exchange Commission filings, including ArthroCare's 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. for the year ended January 2, 1999 and its Registration Statement on Form S-3 dated September 28, 1999. Such statements are indicated by words or phrases such as "anticipates", "estimates", "projects", "believes", "intends", "expects", and similar words and phrases Words and Phrases® A multivolume set of law books published by West Group containing thousands of judicial definitions of words and phrases, arranged alphabetically, from 1658 to the present. . Actual results may differ materially from management expectations. The company disclaims any obligation to update any of the forward-looking statements contained herein to reflect future events or developments. ArthroCare is a medical device company that develops, manufactures and markets products based on its patented Coblation technology. The company believes Coblation technology can replace the multiple surgical tools traditionally used in soft-tissue surgery procedures with one multi-purpose surgical system. The company's soft-tissue surgery systems consist of a controller unit and an assortment assortment /as·sort·ment/ (ah-sort´ment) the random distribution of nonhomologous chromosomes to daughter cells in metaphase of the first meiotic division. as·sort·ment n. of disposable disposable Nursing adjective Referring to that which is discarded or disposed of noun An item used in health care-related Pt contact which is discarded after use–eg masks, gloves, gowns, needles, paper products, syringes, wipes. See Biohazardous waste. devices that are specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. for specific types of surgery. Coblation technology is applicable across many soft-tissue surgical markets. ArthroCare's systems are used to perform many types of arthroscopic surgery Arthroscopic Surgery Definition Arthroscopic surgery is a procedure to visualize, diagnose, and treat joint problems. The name is derived from the Greek words arthron, which means joint, and skopein, which means to look at. . The company's strategy includes applying its patented Coblation technology to a broad range of other soft-tissue surgical markets including cosmetic surgery cosmetic surgery, plastic surgery for cosmetic purposes, such as the improvement of the appearance of the face by removing wrinkles or reshaping the nose. , ear nose and throat (or ENT) surgery, spinal surgery and various cardiology cardiology Medical specialty dealing with heart diseases and disorders. It began with the 1749 publication by Jean Baptiste de Sénac of contemporary knowledge of the heart. Diagnostic methods improved in the 19th century, and in 1905 the electrocardiograph was invented. applications. ArthroCare's web site can be found at www.arthrocare.com. -0-
ARTHROCARE CORPORATION
Condensed Consolidated Balance Sheets
(In thousands)
October 2, January 2,
ASSETS 1999 1999
(unaudited)
Current assets:
Cash, cash equivalents, and
available-for-sale securities $ 8,668 $ 8,058
Accounts receivable, net 9,003 5,972
Inventory 7,321 7,069
Prepaid expenses and other
current assets 625 1,038
Total current assets 25,617 22,137
Property and equipment, net 6,270 4,560
Related party receivables 1,205 723
Other assets 265 340
Total assets $33,357 $27,760
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,006 $ 1,797
Accrued liabilities 3,558 2,850
Deferred revenue 208 517
Total current liabilities 5,772 5,164
Capital lease obligations 102 151
Deferred rent 128 140
Total liabilities 6,002 5,455
Stockholders' equity 27,355 22,305
Total liabilities and
stockholders' equity $33,357 $27,760
ARTHROCARE CORPORATION
Condensed Consolidated Statements of Operations
(In thousands, except per share data; unaudited)
For the Three For the Nine
Months Ended Months Ended
Oct. 2, Oct. 3, Oct. 2, Oct. 3,
1999 1998 1999 1998
Revenues:
Product sales $ 11,531 $ 6,721 $ 30,708 $ 17,265
License fees
and royalty
income 769 207 3,519 2,832
Total revenues 12,300 6,928 34,227 20,097
Cost of
product sales 5,015 3,136 13,201 9,131
Gross profit 7,285 3,792 21,026 10,966
Operating expenses:
Research and
development 1,278 1,304 3,454 3,444
Sales and
marketing 3,876 2,815 11,022 7,353
General and
administrative 947 972 3,975 2,896
Total operating
expenses 6,101 5,091 18,451 13,693
Income (loss)
from operations 1,184 (1,299) 2,575 (2,727)
Interest and
other income, net 49 219 264 806
Income (loss)
before income
tax provision 1,233 (1,080) 2,839 (1,921)
Income tax
provision 49 -- 114 --
Net income (loss) $ 1,184 $ (1,080) $ 2,725 $ (1,921)
Basic net
income (loss)
per share $ 0.13 $ (0.12) $ 0.30 $ (0.22)
Diluted net
income (loss)
per share $ 0.12 $ (0.12) $ 0.28 $ (0.22)
Shares used
in computing
basic net
income (loss)
per share 9,185 8,950 9,042 8,921
Shares used
in computing
diluted net
income (loss)
per share 10,144 8,950 9,810 8,921
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