Conceptus Reports First Quarter Net Sales up 106%; Increases 2006 Net Sales Guidance; Lowers 2006 Net Loss Guidance.MOUNTAIN VIEW, Calif. -- Conceptus conceptus /con·cep·tus/ (-tus) the product of the union of oocyte and spermatozoon at any stage of development from fertilization until birth, including extraembryonic membranes as well as the embryo or fetus. , Inc. (Nasdaq:CPTS CPTS Certified Penetration Testing Specialist (network security) CPTS Comptroller Squadron CPTS Computer Program Test Specifications CPTS Catastrophe Personnel Tracking System CPTS Claims Procedure Training Specialist ), developer of the Essure(R) non-incisional permanent birth control system, today reported financial results for the three months ended March 31, 2006. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the first quarter of 2006 were $8.0 million, up 106% over net sales of $3.9 million for the first quarter of 2005 and up 18% over net sales of $6.8 million for the fourth quarter of 2005. First quarter 2006 net sales exceeded the Company's guidance of $7.2 million to $7.4 million. The net loss for the first quarter of 2006 was $5.8 million, or $0.20 per share. Reported results for the first quarter of 2006 include charges of $1.4 million, or $0.05 per share, for stock-based compensation due to the adoption of 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. The net loss for the first quarter of 2005 was $6.4 million, or $0.25 per share, and the net loss for the fourth quarter of 2005 was $4.4 million, or $0.15 per share. Results for the first quarter of 2006 excluding stock-based compensation were better than the Company's 2006 first quarter guidance for a net loss of $5.0 million to $5.2 million, which also excluded stock-based compensation expense. Net sales growth during the 2006 first quarter was due to higher commercial sales of the Essure system worldwide, and reflects increasing numbers of physicians trained in the use of the procedure, higher utilization by trained physicians and higher average selling prices The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. . During the first quarter of 2006, Conceptus enrolled 370 physicians into the Essure preceptorship pre·cep·tor·ship n. A period of practical experience and training for a student, especially of medicine or nursing, that is supervised by an expert or specialist in a particular field. program. As of March 31, 2006, 3,252 physicians in the U.S. had performed the Essure procedure, an increase of 1,403 physicians since March 31, 2005. The Company also certified See certification. a record 190 physicians during the first quarter of 2006 to perform the Essure procedure on their own. As of March 31, 2006, there were 1,434 physicians certified to perform Essure procedures. "Our business momentum has increased another notch notch (noch) incisure; an indentation on the edge of a bone or other organ. aortic notch dicrotic n. cardiac notch 1. with first quarter revenue growth in excess of 100% against prior year," commented Mark Sieczkarek, president and chief executive officer of Conceptus. "We are very pleased with the additions made to our sales force and the results they have achieved. We will continue our sales hiring as prudently and aggressively as we can. Sales to the physician office channel increased 17% quarter to quarter, and there were 47 new physicians performing in-office Essure procedures, so our progress on this important metric continues." Gross profit for the first quarter of 2006 was $5.1 million, or 64% of net sales. This compares favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. with gross profit for the first quarter of 2005 of $2.1 million, or 55% of net sales. The increase in gross margin was related to lower per-unit costs associated with higher sales volume and a domestic price increase instituted during the first quarter of 2006. Gross profit margins Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. increased from 62% in the fourth quarter of 2005 due to lower product costs, partially offset by lower margins from a higher proportion of international sales during the first quarter of 2006. Research and development expenses were $1.2 million for the first quarter of 2006, compared with $1.0 million for the first quarter of 2005 and $1.2 million for the fourth quarter of 2005. SFAS 123R stock-based compensation expenses included in the first quarter 2006 R&D totaled $0.1 million. These expenses reflect product development, clinical, and manufacturing engineering Manufacturing engineering Engineering activities involved in the creation and operation of the technical and economic processes that convert raw materials, energy, and purchased items into components for sale to other manufacturers or into end products for expenditures, which are substantially related to the ongoing development of improvements to the Essure device. Selling, general and administrative expenses were $10.0 million for the first quarter of 2006, up from $7.7 million for the first quarter of 2005 and $7.7 million for the fourth quarter of 2005. SFAS 123R stock-based compensation expenses included in first quarter 2006 SG&A totaled $1.2 million. The Company is continuing to expand its sales force, which numbered 50 sales representatives at the end of the first quarter 2006, an increase from 27 sales representatives at the end of the first quarter of 2005 and from 41 at the end of the fourth quarter of 2005. In addition, the Company increased expenditures related to patient awareness initiatives in the first quarter. Cash, cash equivalents, short-term investments and restricted cash were $28.6 million as of March 31, 2006, a reduction of $3.9 million from $32.5 million at December 31, 2005. For the first quarter of 2006, the Company used cash of $3.9 million, compared with $8.0 million for the first quarter of 2005 and $4.5 million for the fourth quarter of 2005. "We will continue to invest in our sales force, patient awareness efforts and product development, as planned," added Mark Sieczkarek. "With a technology that is proven to be very durable and safe and less expensive for the healthcare system compared with traditional incisional surgery, and with demonstrated market scalability we are confident that the Essure procedure will take its place as the gold standard for permanent birth control. We will continue to drive the paradigm shift A dramatic change in methodology or practice. It often refers to a major change in thinking and planning, which ultimately changes the way projects are implemented. For example, accessing applications and data from the Web instead of from local servers is a paradigm shift. See paradigm. towards in-office procedures, where the Essure system is preferred over the surgical alternative. Most important of all, the patient is the big winner as she experiences the truly dramatic benefits of this safe, effective and convenient procedure." Financial Guidance The Company also announced financial guidance for the second quarter of 2006, and raised full-year 2006 net sales and lowered full-year 2006 net loss guidance, excluding the effects of SFAS 123R. Conceptus expects net sales in the second quarter to be approximately $9.0 million, and net sales for the full year to be approximately $36.0 million. This full-year net sales guidance compares with previous guidance of $33.0 million to $35.0 million, which was issued on February 15, 2006. 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 the second quarter, excluding stock-based compensation, are estimated to be between $10.7 million and $10.9 million. The net loss for the second quarter, excluding stock-based compensation is expected to be $4.5 million to $4.7 million. The Company is lowering full-year net loss guidance to a range of $16.5 million to $17.0 million, or $0.57 to $0.59 per share, based on an estimated 29.0 million shares outstanding. This full-year net loss range compares with previous guidance for a net loss of $16.8 million to $17.3 million, or $0.58 to $0.60 per share, also on an estimated 29.0 million shares outstanding. Net loss guidance excludes the effects of SFAS 123R. About the Essure Procedure The Essure procedure deploys a soft micro-insert into the fallopian tube fallopian tube (fəlō`pēən), either of a pair of tubes extending from the uterus to the paired ovaries in the human female, also called oviducts, technically known as the uterine tube. through the cervix cervix /cer·vix/ (ser´viks) pl. cer´vices [L.] 1. neck. 2. the front portion of the neck. 3. cervix uteri. using a minimally invasive transcervical tubal Tubal (t  `bəl), in the Bible, son of Japheth. access catheter catheter /cath·e·ter/ (kath´e-ter)1. a tubular, flexible surgical instrument that is inserted into a cavity of the body to withdraw or introduce fluid. 2. urethral c. . Once in place, the device is designed to elicit e·lic·it tr.v. e·lic·it·ed, e·lic·it·ing, e·lic·its 1. a. To bring or draw out (something latent); educe. b. To arrive at (a truth, for example) by logic. 2. tissue growth in and around the micro-insert to form an occlusion occlusion /oc·clu·sion/ (o-kloo´zhun) 1. obstruction. 2. the trapping of a liquid or gas within cavities in a solid or on its surface. 3. or blockage blockage of intestine, urethra, etc. See obstruction under anatomical location, e.g. intestinal, urethral. blockage Wax, see there in the fallopian tube. An Essure procedure does not require cutting or penetrating penetrating breaching the tissues of the body. the abdomen abdomen, in humans and other vertebrates, portion of the trunk between the diaphragm and lower pelvis. In humans the wall of the abdomen is a muscular structure covered by fascia, fat, and skin. and can be performed in a less costly procedure setting without general anesthesia Anesthesia, General Definition General anesthesia is the induction of a state of unconsciousness with the absence of pain sensation over the entire body, through the administration of anesthetic drugs. . A woman is able to return home about 45 minutes after the procedure is completed. There is a three-month waiting period after the procedure during which women must use another form of birth control. The Essure procedure is 99.80% effective after four years of follow-up. The Essure procedure has been demonstrated in a small portion of the women undergoing clinical studies to be 99.74% effective based on 5 years of follow-up. Five year follow-up of all patients in clinical trials is ongoing. About Conceptus Conceptus, Inc. manufactures and markets the Essure Permanent Birth Control system, an innovative medical device and procedure designed to provide a non-incisional alternative to tubal ligation ligation /li·ga·tion/ (li-ga´shun) the application of a ligature. tubal ligation sterilization of the female by constricting, severing, or crushing the uterine tubes. , which is currently the leading form of birth control worldwide. The availability of the Essure procedure in the U.S. is expected to open up a market currently occupied by incisional tubal ligation and vasectomy vasectomy, male sterilization by surgical excision of the vas deferens, the thin duct that carries sperm cells from the testicles to the prostate and the penis. , which combined account for over 1 million procedures annually. Additional information about the Essure procedure is available at www.essure.com or by calling the Essure Information Center at 1-877-ESSURE1. Additional information about Conceptus is available at www.conceptus.com or by calling 1-877-ESSURE2. Except for the historical information contained herein, the matters discussed in this press release 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. , the accuracy of which is necessarily subject to risks and uncertainties. Discussions regarding growth in net sales and the sales force, guidance information, physician utilization and the performance of Essure in the office setting, and other matters discussed in this release, may differ significantly from the discussion of such matters in the forward-looking statements. Such differences may be based upon factors such as strategic planning Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people. decisions by management, re-allocation of internal resources, decisions by insurance companies, scientific advances by third parties, and introduction of competitive products, as well as those factors set forth in the Company's most recent 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 most recent Quarterly Report on Form 10-Q Form 10-Q See 10-Q. , and other filings with the Securities and Exchange Commission.
Conceptus, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended
March 31,
------------------
2006 2005
--------- --------
Net sales $7,962 $3,871
Cost of goods sold 2,883 1,727
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Gross profit 5,079 2,144
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Operating expenses:
Research and development 1,200 966
Selling, general and administrative 10,000 7,737
--------- --------
Total operating expenses 11,200 8,703
Operating loss (6,121) (6,559)
Interest and other income, net 333 190
--------- --------
Net loss $(5,788) $(6,369)
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Basic and diluted net loss per share $(0.20) $(0.25)
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Shares used in computing basic and diluted
net loss per share 28,860 25,447
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Conceptus, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
March 31, December 31,
2006 2005
---------- ------------
Cash, cash equivalents, short-term investments
and restricted cash $28,550 $32,492
Accounts receivable, net 4,975 4,519
Inventories, net 2,817 3,392
Other current assets 961 1,110
---------- ------------
Total current assets 37,303 41,513
Property and equipment, net 2,884 2,743
Intangible assets, net 1,500 1,550
Other assets 1,488 1,603
---------- ------------
Total assets $43,175 $47,409
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Total liabilities 6,677 7,238
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Common stock and additional paid in capital 247,416 245,301
Accumulated deficit (210,918) (205,130)
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Total stockholders' equity 36,498 40,171
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Total liabilities and stockholders' equity $43,175 $47,409
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