Cholestech Corporation Announces Revenue of $27.4 Million in Fiscal 2000.Business Editors/Health & 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 26, 2000 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 strong financial performance for fiscal 2000, ended March 31, 2000, due in large part to the contribution of the Company's 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. On a consolidated basis, Cholestech generated $27.4 million in revenue, up 24 percent from the previous year with earnings per share of $0.26 (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. ) versus a loss per share of $(0.01) in the prior fiscal year. Cholestech consolidates three business units in its financial statements:
-- Diagnostic Products,
-- WellCheck(TM), and
-- WellCheck.com(TM)
Contributing to the record sales was an extra week of business in the fourth quarter when compared to the prior fiscal year. International sales increased 71% to $4.9 million and domestic sales were helped by $422,000 of sales contributed by the Company's WellCheck testing service, which, subsequent to the acquisition of Health Net, Inc., began operations at the beginning of fiscal February 2000. Cholestech's gross margin improved to 59.6 percent of sales from 53.5 percent last fiscal year. 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. on a consolidated basis decreased to 50.6 percent of sales from 56.8 percent of sales during the prior year. General & administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. increased $1.1 million, or 47 percent, with $657,000 of the increase due to the addition of two senior-level Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. positions in the Company's Diagnostic Products and WellCheck.com business units. Without these additions, general & administrative costs increased $472,000, or 19.8 percent, with the largest increase, $161,000, coming from increased legal costs. Expenses in sales & marketing increased $426,000, or 6 percent, due in large part to the Company's launch of 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. and expansion of the U.S. field sales force. Increases in research & development costs of $318,000 were due exclusively to the WellCheck.com expenses associated with the design of its website. Cholestech consolidated earned $0.26 per share (diluted) for fiscal 2000, up from a loss of $(0.01) per share (diluted) during the prior fiscal year, with the fourth quarter contributing $0.11 per share (diluted). About Diagnostic Products Cholestech's core diagnostics business recorded revenue of $27.0 million in fiscal 2000, up 23 percent from the previous fiscal year. Sales were driven in large part by a 71 percent increase over last year in International sales, and continued strong sales in the Physician Office Laboratory market, which contributed $8.9 million, or 32 percent of sales. Sales of the Company's new ALT product, which received a limited launch as moderately complex in mid-December, were not material. Cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold and 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. for Diagnostic Products during the year were $11.1 million and $11.8 million, respectively. Diagnostic Products recorded gross margin of 59.1 percent and operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: of 15.2 percent, both of which represented new annual financial milestones for the Company. Gross margin was favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. affected by strong continued control of manufacturing expenses and record production of the Company's single-use test cassettes. On a segment basis, Diagnostic Products earned $4.1 million in operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. , up 659 percent from the $736,000 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. recorded in fiscal 1999. "Our core diagnostics business turned in a solid year of improvement in both sales and profits", said Mr. Warren E. Pinckert II, President and Chief Executive Officer. "We are particularly pleased with our gross margin of 59.1% and operating income of 15.2%. Of note was a strong year turned in by our largest distributor, Physician Sales and Service (Nasdaq:PSSI PSSI Persatuan Sepak Bola Seluruh Indonesia (Football Association of Indonesia) PSSI Performance Salary Step Increase PSSI Peninsula Sanitary Service, Inc. ). Shipments to PSSI increased by over $1.2 million versus the prior year." The Diagnostic Products business unit, Cholestech's traditional business, remains the core of Cholestech's new strategy. Beginning with the Cholestech L.D.X(R) System, Diagnostic Products is focused on developing, manufacturing, and marketing products which support consumers' personal health goals. From the launch of the new liver function test on the Cholestech L.D.X(R) System, to improvements in the quality and efficiency of the current products we manufacture, Diagnostic Products is focused on better testing technology. About WellCheck On January 24, 2000, Cholestech announced the acquisition of Health Net, Inc. as the cornerstone cornerstone Ceremonial building block, dated or otherwise inscribed, usually placed in an outer wall of a building to commemorate its dedication. Often the stone is hollowed out to contain newspapers, photographs, or other documents reflecting current customs, with a view to of the Company's expanded WellCheck strategy of personal health management. WellCheck recorded revenue of $422,000 after inter-company eliminations during its first two months of operations post-acquisition. On a segment basis, WellCheck lost $151,000, after recording corporate overhead and goodwill (the acquisition of Health Net, Inc. was accounted for using the purchase method of accounting). Exclusive of these indirect costs Indirect costs are costs that are not directly accountable to a particular function or product; these are fixed costs. Indirect costs include taxes, administration, personnel and security costs. See also
Commenting, Mr. Pinckert said, "This quarter marked the beginning of WellCheck providing convenient access to accurate, affordable assessment of high cholesterol Cholesterol, High Definition Cholesterol is a fatty substance found in animal tissue and is an important component to the human body. It is manufactured in the liver and carried throughout the body in the bloodstream. , a major risk factor for 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). , the number one killer of Americans. WellCheck is responsible for ongoing testing programs in retail venues, promotional events, and corporate facilities, and will be a primary vehicle for attracting members to our 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 website, WellCheck.com, scheduled to be launched soon. No other health care Internet site currently has the capability to test and enroll self-selected members on a national basis. Our intent is to expand our testing capability through both acquisition and internal growth." One of Cholestech's three new business units, WellCheck will provide key face-to-face interaction with the consumer by bringing 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. to venues which are convenient to the general public. Starting in selected regions, and broadening its coverage through a combination of acquisition and internal growth, Cholestech plans to develop the first truly nationwide consumer testing service; bringing physicians, healthcare providers, and consumers together with the information they need to improve 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. health, and other potentially life-threatening chronic conditions. About WellCheck.com The third business unit within Cholestech's new strategy, WellCheck.com is still in the development stage. Mr. Pinckert continued, "We are in the process of testing our site and are still on plan to 'soft launch' in the summer. We are currently involved in securing corporate sponsorships for our WellCheck offering and expect to launch 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. programs this fall. Offering testing in consumer convenient venues will assist those companies, with products aimed at reducing cholesterol levels, to reach the consumer who has self selected himself as interested in controlling cholesterol levels. Through interactive compliance tools and marketing services, WellCheck.com will enable these companies to more efficiently work with consumers and health care professionals to lower cholesterol." WellCheck.com did not record any revenue during fiscal 2000. Operating expenses during the year were $1.5 million shared equally between website design costs and general and administrative costs, including corporate overhead. On a segment basis, WellCheck.com recorded an operating loss of $1.5 million. The Company anticipates recording additional development expense over the next few quarters to bring WellCheck.com to market. "For investors to get a true understanding of the financial impact of WellCheck.com's development, it will be important to note a significant clarification in the accounting for website development costs which was recently recommended by the SEC", said Andrea J. Tiller, Chief Financial Officer. "The Company has adopted Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). Emerging Issues Task Force Consensus 00-2 (FASB FASB See: Financial Accounting Standards Board FASB See Financial Accounting Standards Board (FASB). EITF EITF Emerging Issues Task Force EITF Edinburgh International Television Festival EITF Europe International Taekwon-Do Federation 00-2): Accounting for Website Development Costs. FASB EITF 00-2, an extension of SOP 98-1 relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc accounting for cost of internal use software, requires that costs of developing web applications and infrastructure, as well as costs of graphic development be 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. , rather than the historical common practice of same period expense. Costs of website planning and operation continue to be expensed as incurred. Due to this change, Cholestech has recorded $2.0 million of development costs associated with the WellCheck.com website onto the balance sheet in fiscal 2000, which will be amortized over a three year period beginning immediately after the launch of the website. In the absence of such accounting, WellCheck.com would have realized $3.5 million in expense during fiscal 2000 on a segment basis. Without FASB EITF 00-2, Cholestech would have realized consolidated earnings of $0.09 per share (diluted) for fiscal 2000, and a consolidated loss of $(0.05) per share (diluted) for the fourth quarter ending March 31, 2000." As Cholestech developed its new strategy, it was immediately apparent how important the role of providing information to the consumer would be. During the last nine years of Cholestech operations, the Company has shipped sufficient single-use, 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. cassettes to test twelve million people -- one of the broadest means of testing outside of the clinical laboratory. Cholestech estimates that, based on unit shipments of single-use test cassettes, close to three and a half million people have been tested using the Cholestech L.D.X(R) System in the last twelve months alone. Managing this information on cardiovascular health, helping individuals identify and measure their risk of cardiovascular disease Cardiovascular disease Disease that affects the heart and blood vessels. Mentioned in: Lipoproteins Test cardiovascular disease utilizing the data from the long established Framingham Study, and facilitating the flow of this information through the broad channel of the Internet is the goal of the new WellCheck.com business. Together with Diagnostic Products and WellCheck, WellCheck.com will provide personal health information directly to consumers via the Internet. Cholestech will be holding a conference call regarding fiscal 2000 financial performance on Wednesday, April 26, 2000. A playback Playback could mean:
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 may contain 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. based on our current expectations, estimates, and projections about our industry, management's beliefs, and certain assumptions made by us. Words such as "anticipates", "expects", "intends", "plans", "believes", "may", "will", and similar expressions are intended to identify forward-looking statements. Forward-looking statements in this release include statements regarding the estimated number of people tested using Cholestech product based upon shipments of single-use test cassettes, Cholestech's future key role in facilitating personal health management; Cholestech's development of the first nationwide consumer testing service and Cholestech's ability to manage cholesterol and other cardiovascular health information over the internet. These statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict. Therefore our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. Important factors that may cause our results to differ materially from those expressed in forward-looking statements include, but are not limited to, the risks inherent in acquisitions of technologies and businesses; integration issues; unanticipated expenditures; changing relationships with customers, suppliers, and strategic partners; potential contractual, intellectual property, or employment issues; and the risk that the acquisition can not be completed successfully or that anticipated benefits are not realized; delays; the loss of a significant customer; the availability and pricing of competing products and services and the resulting effects on sales and pricing of our products and services; our ability to hire and retain key executives, technical personnel, and other employees in the numbers, with the capabilities, and at the compensation levels needed to implement our business and product plans; the quality of our products; general economic conditions and specific conditions in the markets we address; and other factors. Our 1999 Annual Report of 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 recent Quarterly Report on Form 10-Q Form 10-Q See 10-Q. and other Securities and Exchange Commission filings discuss some of the important risk factors that may affect our business, results of operations, and financial condition. Cholestech undertakes no obligation to revise or update publicly any forward-looking statements for any reason. All such forward-looking statements are current only as of the date on which such statements were made. 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
CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts, unaudited)
Fourteen(1) weeks Fifty-three(1) weeks
ended ended
3/31/00 3/26/99 3/31/00 3/26/99
Net revenues:
Domestic $ 6,597 $ 5,149 $ 22,564 $ 19,196
International 1,967 699 4,858 2,836
8,564 5,848 27,422 22,032
Cost of goods sold 3,196 2,764 11,084 10,252
Gross profit 5,368 3,084 16,338 11,780
Sales & marketing 1,984 1,698 7,032 6,606
Research & development 774 606 3,021 2,703
General & administrative 1,286 626 3,510 2,381
Other 100 251 319 826
Total operating expenses 4,144 3,181 13,882 12,516
Operating income (loss) 1,224 (97) 2,456 (736)
Net interest and other income
(expense) 249 116 805 683
Provision for income taxes 58 7 129 20
Net income (loss) $ 1,415 $ 12 $ 3,132 $ (73)
======= ====== ======= ========
Net income (loss) per share:
Basic $0.12 $0.00 $0.27 ($0.01)
Diluted $0.11 $0.00 $0.26 ($0.01)
Shares used to compute net
income (loss) per share:
Basic 11,901 11,516 11,724 11,484
Diluted 12,457 11,586 11,920 11,484
SEGMENT RESULTS OF OPERATIONS
Fifty-three(1) weeks ended 3/31/00
Diagnostic
Products WellCheck WellCheck.com Cholestech
Net revenues $ 27,000 $ 422 $ -- $ 27,422
Cost of goods sold 11,056 28 -- 11,084
Gross profit 15,944 394 -- 16,338
Sales & marketing 6,832 200 -- 7,032
Research & development 2,412 0 609 3,021
General &
administrative 2,369 245 896 3,510
Other 219 100 -- 319
Total operating
expenses 11,832 545 1,505 13,882
Operating income
(loss) $ 4,112 $ (151) $(1,505) $ 2,456
(1) Fiscal 2000 included fifty-three weeks; the extra week was taken during the fourth fiscal quarter ended March 31, 2000. All other fiscal quarters, with the sole exception of every fifth year, consist of thirteen weeks. |
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