Cholestech Announces Fiscal 2001 Revenue Increase 34 Percent With Record $10.2 Million in Sales in the 4th Quarter.Business Editors/Medical Writers HAYWARD Hayward, city (1990 pop. 111,498), Alameda co., W Calif.; settled 1851, inc. 1876. It is an important commercial and distribution center for farm products. Manufactures include wire, plastics, metal and paper products, textiles, machinery, and motor vehicles. , Calif.--(BW HealthWire)--April 25, 2001 Cholestech Corporation (Nasdaq:CTEC CTEC Course and Teacher Evaluation Council (Northwestern University, Office of the Register) CTEC Certified Technical Education Center CTEC Certified Technical Education Center (Microsoft) ) today announced net revenue of $37.0 million for the fiscal year ended March 30, 2001, which represents an increase of 34 percent from the prior year's revenue of $27.5 million. Prior to recording non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of $706,000 and $2.0 million, respectively, relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc amortization of goodwill and the impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of WellCheck.com intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. , and a non-recurring charge of $606,000 for legal and related expense pursuant to a previously filed class-action suit Noun 1. class-action suit - a lawsuit brought by a representative member of a large group of people on behalf of all members of the group class action , the Company reported net profit of $1.3 million, or $0.11 per share (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. ), compared to $3.4 million (also before goodwill amortization and non-recurring charges for impairment and legal and related expenses ), or $0.28 per share (diluted) in the prior year. Including all charges, the Company reported a net loss of $(1.9) million, or $(0.16) per share (diluted). The Company reported net revenue for the fourth quarter of $10.2 million, which represents the single largest revenue quarter in the Company's history, and an increase of 18 percent from the prior year quarter. Prior to the goodwill amortization and non-recurring charges listed in the first paragraph, the Company reported a net profit of $442,000 during the quarter, compared to a net profit of $1.4 million in the fourth quarter of fiscal 2000. Net profit, excluding goodwill amortization and non-recurring charges, represented $0.04 per share (diluted), and $0.12 per share (diluted), respectively. Including all charges, the Company reported a net loss for the fourth quarter of $(2.3) million, or $(0.19) per share (diluted). Commenting on the results, Warren E. Pinckert II, President and Chief Executive Officer of Cholestech, said, "Cholestech made significant progress this year toward our mission to be a leader in providing tools and information for the assessment of risk and monitoring of therapy for heart disease, the number one killer of Americans." "We continue to position WellCheck as a leading provider of cholesterol testing Cholesterol Test Definition The cholesterol test is a quantitative analysis of the cholesterol levels in a sample of the patient's blood. Total serum cholesterol (TC) is the measurement routinely taken. services and the information captured at the point of test. Our retail demonstration program last fall proved to us that the market was not yet ready for a retail oriented o·ri·ent n. 1. Orient The countries of Asia, especially of eastern Asia. 2. a. The luster characteristic of a pearl of high quality. b. A pearl having exceptional luster. 3. , sponsor funded, chronic disease management model. We took swift action and have redirected our marketing efforts. Focusing on health promotion and corporate wellness, WellCheck continues to expand its business. The WellCheck.com assets impaired by the Company resulted in nine months of amortization, or $653,000, in fiscal 2001 operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. in the WellCheck.com segment." "Our core diagnostics (1) Software routines that test hardware components (memory, keyboard, disks, etc.). Diagnostics are often stored in ROM chips and activated on startup. (2) Error messages in a programmer's source code that refer to statements or syntax that the compiler or assembler business continues to perform well and has funded our investment in WellCheck. As we continue to expand our shipments of test cassettes through Diagnostic Products' traditional customers and through growth in WellCheck services, we expect Cholestech's profitability to improve." About Diagnostic Products (All segment information is presented before goodwill amortization and non-recurring charges listed in the first paragraph) Sales in Cholestech's core Diagnostic Products business increased 20 percent over the prior year to $32.5 million in fiscal 2001. Fourth quarter sales of $8.9 million increased 9 percent from $8.1 million in the fourth quarter of the previous year, which included 14 weeks of results. Comparable sales increased 17 percent over the prior year, adjusted for a 13-week basis. New Cholestech L-D-X(R) System shipments were a strong contributor as the Company shipped approximately 3,500 revenue units during fiscal 2001, which represents a 46 percent increase from the prior year. The Company believes that increasing instrument sales will continue to have a positive impact on the sales volume of test cassettes going forward. The Company's core business continued its solid performance by achieving strong revenue growth, increasing L-D-X shipments and expanding international distribution. In addition, the Company announced on April 17, 2001 that it received a waiver The voluntary surrender of a known right; conduct supporting an inference that a particular right has been relinquished. The term waiver is used in many legal contexts. under CLIA CLIA Clinical Laboratory Improvement Amendments of 1988 Congressional legislation that promulgated quality assurance practices in clinical labs, and required them to measure performance at each step of the testing process from the beginning to the end-point of a to launch its alanine aminotransferase alanine aminotransferase /al·a·nine ami·no·trans·fer·ase/ (ah-me?no-trans´fer-as) alanine transaminase. alanine aminotransferase n. Abbr. ALT See SGPT. ("ALT (character) alt - /awlt/ 1. The alt modifier key on many keyboards, including the IBM PC. On some keyboards and operating systems, (but not the IBM PC) the alt key sets bit 7 of the character generated. See bucky bits. 2. ") test. This classification establishes Cholestech's ALT product as a unique diagnostic test for health care professionals to easily, reliably and conveniently assess the risk for certain liver-related diseases. The CLIA-waived ALT test further broadens the capabilities of Cholestech's line of personal health management solutions for chronic diseases, which include the Cholestech L-D-X System, WellCheck and WellCheck.com, and provides a new level of diagnostic testing Diagnostic testing Testing performed to determine if someone is affected with a particular disease. Mentioned in: Von Willebrand Disease convenience for healthcare professionals. The Company anticipates launching ALT as "waived under CLIA" on June June: see month. 1, 2001. The Company continued to address manufacturing issues relating to its two existing manufacturing lines during the latter half of the year. Gross margin of 56.7 percent in fiscal 2001 declined approximately two margin points from the 59.1 percent recorded in the prior year. The introduction of Cholestech's new manufacturing line, currently in validation See validate. validation - The stage in the software life-cycle at the end of the development process where software is evaluated to ensure that it complies with the requirements. , is expected to improve gross margins and provide the Company with production capacity to meet expected future growth. While operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. increased 10 percent over the prior year, the Diagnostic Products business contributed $5.6 million in operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. during the year, an increase of 30 percent from the $4.3 million recorded in fiscal 2000. About WellCheck & WellCheck.com (All segment information is presented before goodwill amortization and non-recurring charges listed in the first paragraph) The goal of WellCheck and WellCheck.com is to empower empower verb To encourage or provide a person with the means or information to become involved in solving his/her own problems people with tools and information to easily assess, manage and improve their health -- particularly in the area of coronary heart disease coronary heart disease: see coronary artery disease. coronary heart disease or ischemic heart disease Progressive reduction of blood supply to the heart muscle due to narrowing or blocking of a coronary artery (see atherosclerosis). . WellCheck is establishing a nationwide testing service capability while expanding and creating incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. demand for testing products offered by the Company's core Diagnostic Products business. WellCheck generated revenue of $4.4 million during its first year of operations, with an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $(675,000). WellCheck recently announced a significant promotional testing contract for calendar 2001, Screen Test for Health, valued at $5.6 to $7.0 million of revenue assuming the contract is not cancelled by either party. Cancellation is permissible per·mis·si·ble adj. Permitted; allowable: permissible tax deductions; permissible behavior in school. per·mis on 30 days notice. This program, which began in January January: see month. of 2001, and is part of the Company's promotional mobile testing program, represents the first nationwide implementation of the proprietary "TEAMS," or Test Event Activity Management System software for data capture and reporting developed by WellCheck.com. During the fourth quarter WellCheck generated $1.3 million of revenue, an increase of 61 percent on a normalized basis from the fourth quarter of the prior year. WellCheck recorded an operating loss of $(76,000) in the fourth quarter compared to $(51,000) in the same quarter of the prior year. WellCheck.com generated revenue of $85,000 during fiscal 2001, due exclusively to customer use of the Company's proprietary TEAMS software during the fourth quarter. Operating expense of $4.3 million combined with revenue, resulted in an operating loss of $(4.2) million in fiscal 2001. This compares with the operating loss of $(1.5) million recorded in the WellCheck.com business during the six months of operations in fiscal 2000. The Company recorded a non-cash, non-recurring charge of $2.0 million during the fourth quarter to reflect the impairment of intangible assets associated with the development of the WellCheck.com website and database. "During the fourth quarter the Company determined that the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of its WellCheck.com capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. website development and related database costs exceeded its future estimated cash flows. As a result, during the March quarter we wrote off the remainder of these assets, resulting in a non-recurring, non-cash charge of $2.0 million; or approximately $0.16 per share (diluted)," explained William W. Burke The name Burke (from Irish Gaelic de Burca, of Norman origin). In English the meaning of the name Burke is "fortified hill." See also Berkley. Places Australia
Disease that affects the heart and blood vessels. Mentioned in: Lipoproteins Test cardiovascular disease ." During the fourth quarter WellCheck.com generated $85,000 of revenue, and an operating loss of $(1.2) million prior to the impairment charge. Investor Conference Call The Company will conduct a conference call on fiscal 2001 results beginning at 7 a.m. (PDT PDT abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT ) today. The call will be available to all investors and media via the company's website www.cholestech.com or by dialing 888/833-1394. A replay of the call will be aired from approximately 9 a.m. today until 11 p.m. April 30 at the company's website or by dialing 800/633-8284 and entering reservation number 18565899 and following operator instructions. About Cholestech Cholestech is committed to helping people lead longer, healthier, and more active lives. Working together, the Cholestech business units of Diagnostic Products, WellCheck(TM) and WellCheck.com can provide simple, accessible and reliable personal health information to health care practitioners and consumers in over 35 countries around the world. By offering efficient and economic diagnostic screening for cholesterol, blood sugar and liver function, Cholestech hopes to help more people understand whether or not they face potentially serious health risks. Therapeutic monitoring options using the Cholestech L-D-X(R) System can help patients monitor their progress as they work with their health care provider to reduce their risk of cardiovascular cardiovascular /car·dio·vas·cu·lar/ (-vas´ku-ler) pertaining to the heart and blood vessels. car·di·o·vas·cu·lar adj. Abbr. and other diseases. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement of Cholestech Corporation under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995: This release contains 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. as defined in the Private Securities Litigations Reform Act of 1995, including statements regarding: the expected improvement in profitability, the anticipated increase in instrument sales and its positive impact on the sales volume of test cassettes; the anticipated launch date of the Company's ALT test; the expected improvement of gross margins and production capacity due to the introduction of the Company's new manufacturing line, the establishment of a nationwide testing service capability; and the estimated value of WellCheck's recently announced promotional testing contract. Actual results may differ materially from those in the forward-looking statements due to risks and uncertainties, including: those related to operating results; unanticipated expenditures; changing relationships with customers, suppliers, and strategic partners and the loss of a significant customer; potential manufacturing issues including the performance of manufacturing facilities; demand for the Company's products; the availability and pricing of competing products and services and the resulting effects on sales and pricing of our products and services; potential contractual issues and other factors. Note to Editors: Cholestech L-D-X(R), WellCheck(TM) and WellCheck.com are registered trademarks of Cholestech Corporation. All other trademarks mentioned in this document are the property of their respective owners. For more information about Cholestech and its products visit us on the web at www.cholestech.com.
Note: (1) Financial Schedules attached
(2) Cholestech executives available for interviews on
either financial results or business operations. Contact
Joe Graceffo, Kalt Rosen & Co., 415/397-2686 or
Graceffo@KRC-PR.com.
CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts, unaudited)
Thirteen weeks ended Fifty-two weeks ended
3/30/01 3/31/00 3/30/01 3/31/00
-------- -------- -------- --------
Net revenues:
Domestic $ 7,912 $ 6,724 $ 30,576 $ 22,691
International 2,326 1,968 6,427 4,859
--------- --------- --------- ---------
10,238 8,692 37,003 27,550
--------- --------- --------- ---------
Cost of revenue 4,299 3,324 15,280 11,212
--------- --------- --------- ---------
Gross profit 5,939 5,368 21,723 16,338
--------- --------- --------- ---------
Operating expense:
Sales & marketing 3,259 1,984 11,388 7,032
Research & development 548 774 2,586 3,021
Website operation &
content 607 0 1,952 0
General & administra-
tive 1,292 1,268 5,079 3,510
Goodwill amortization 205 100 709 100
Legal and related 606 --- 606 219
Impairment charge 1,958 --- 1,958 ---
--------- --------- --------- ---------
Operating expense 8,475 4,126 24,278 13,882
--------- --------- --------- ---------
Operating income (loss) (2,536) 1,242 (2,555) 2,456
--------- --------- --------- ---------
Net interest and other
income (expense) 187 249 655 805
Provision (benefit) for
income taxes (22) 58 --- 129
--------- --------- --------- ---------
Net income (loss) $ (2,327) $ 1,433 $ (1,900) $ 3,132
========= ========= ========= =========
Net income (loss) per
share:
Basic $ (0.19) $ 0.12 $ (0.16) $ 0.27
Diluted $ (0.19) $ 0.12 $ (0.16) $ 0.26
Shares used to compute
net income (loss) per
share:
Basic 12,099 11,901 12,046 11,724
Diluted 12,099 12,457 12,046 11,920
SEGMENT RESULTS OF OPERATIONS
Fifty-two weeks ended 3/30/01, unaudited
Diagnostic
Products WellCheck WellCheck.com Cholestech
---------- --------- ------------- ----------
Net revenues $ 32,489 $ 4,429 $ 85 $ 37,003
Cost of revenue 14,055 1,225 --- 15,280
---------- --------- ------------- ----------
Gross profit 18,434 3,204 85 21,723
---------- --------- ------------- ----------
Operating expenses:
Sales & marketing 7,969 2,736 683 11,388
Research & develop-
ment 2,194 --- 392 2,586
Website operation &
content --- --- 1,952 1,952
General & administra-
tive 2,647 1,143 1,289 5,079
Goodwill amortization --- 709 --- 709
Legal and related 202 202 202 606
Impairment charge --- --- 1,958 1,958
---------- --------- ------------- ----------
Operating expenses 13,012 4,790 6,476 24,278
---------- --------- ------------- ----------
Operating income
(loss) $ 5,422 $ (1,586) $ (6,391) $ (2,555)
========== ========== =========== ==========
Certain amounts in the financial statements have been reclassified
to conform to the current year's presentation. The reclassification
had no impact on previously reported income (loss) from operations or
net income (loss).
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