Conceptus Reports Fourth Quarter and Year-End Financial Results.SAN CARLOS San Carlos (săn kär`lōs), residential city (1990 pop. 26,167), San Mateo co., W Calif.; inc. 1925. The chief manufactures are plastic products, hardware, and machine parts. , 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 non-incisional permanent birth control procedure Essure(R), today reported financial results for the three and 12 months ended December 31, 2004. 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 fourth quarter of 2004 were $3.6 million, up 61% over net sales of $2.3 million for the fourth quarter of 2003 and up 28% over net sales of $2.8 million for the third quarter of 2004. These results are at the upper end of the Company's fourth quarter revenue guidance range of $3.4 million to $3.6 million. The net loss for the fourth quarter of 2004 decreased to $6.4 million, or $0.25 per share, compared with the net loss for the fourth quarter of 2003 of $9.0 million, or $0.41 per share, and was comparable to the net loss for the third quarter of 2004 of $6.3 million, or $0.25 per share. For the fourth quarter of 2004 the Company's cash burn was $5.0 million, compared with $11.0 million for the fourth quarter of 2003 and $5.7 million for the third quarter of 2004. For the 12 months ended December 31, 2004, Conceptus reported net sales of $11.6 million, up 51% over 2003 net sales of $7.7 million. The net loss for 2004 decreased to $26.1 million, or $1.05 per share, from the net loss for 2003 of $39.5 million, or $1.83 per share. The increase in net sales for the 2004 fourth quarter and full year over the comparable 2003 periods is attributable to higher commercial sales of Essure in the U.S. as a result of an increase in the number of physicians using the product, higher utilization rates among trained physicians and the anticipated implementation of the newly effective CPT CPT See: Carriage Paid To code covering the Essure procedure. During the fourth quarter of 2004, Conceptus enrolled 280 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, bringing the total number of U.S. physicians that perform the Essure procedure to 1,681 as of December 31, 2004. Gross profit for the fourth quarter of 2004 was $1.9 million, or 52% 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 fourth quarter of 2003 of $0.4 million, or 20% of net sales. The increase in gross margin is related to lower product cost associated with the outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. of production and higher sales volume. Research and development expenses were $0.8 million for the fourth quarter of 2004, compared with $1.3 million for the fourth quarter of 2003. This decline reflects decreased clinical and regulatory affairs Regulatory Affairs (RA), also called Government Affairs, is a profession within regulated industries, such as pharmaceuticals, medical devices, energy, and banking. Regulatory Affairs professionals usually have responsibility for the following general areas: Selling, general and administrative expenses were $7.7 million for the fourth quarter of 2004, down from $8.4 million for the fourth quarter of 2003 and up from $6.7 million for the third quarter of 2004. The sequential-quarter increase reflects higher expenses related to Sarbanes-Oxley compliance and an expanded sales force. The year-over-year decrease was primarily due to lower legal fees, lower training expenses and lower expenses due to the previously reported spin-off The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders. of the Company's subsidiary in France in January 2004. Cash, cash equivalents, short-term investments and restricted cash were $32.3 million as of December 31, 2004, compared with $30.9 million as of December 31, 2003. "We made solid progress in advancing our commercialization strategy throughout 2004, and look forward to further success during 2005," said Mark Sieczkarek, president and chief executive officer of Conceptus. "Importantly, on January 1, 2005 a dedicated CPT code went into effect for Essure that provides physicians the confidence in obtaining reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. when performing Essure procedures in the office setting." Mr. Sieczkarek continued, "We ended the year with positive third-party payer coverage decisions on 73% of covered lives, although we still face the challenge of getting the new code into the payer systems. We continue to work with United Healthcare and with Cigna to provide them the data they require to enable them to make a positive coverage decision. Last month we submitted a Pre-Market Approval supplement to the U.S. Food and Drug Administration in order to extend our current 99.8% effectiveness rate on the Essure product labeling to four and five years. If approved, this effectiveness rate would be the highest for any method of birth control, including surgical tubal Tubal (t  `bəl), in the Bible, son of Japheth. 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. . As we continue to successfully address the reimbursement and long-term effectiveness questions, we can now focus more aggressively on the growth of our sales force and awareness efforts." Regarding 2005 financial guidance, the Company affirms guidance provided on January 13, 2005. Conceptus expects net sales in 2005 to be $17.0 million to $18.0 million. The net loss for 2005 before non-cash stock option expenses is expected to narrow to $23.0 million to $24.0 million, or $0.89 to $0.91 per share. In addition, Conceptus today announced that it anticipates that it will file on Form 12b-25 with the Securities and Exchange Commission (SEC) a Notification of Inability to Timely File 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 2004. This delay is expected to allow management sufficient time to complete the extensive Sarbanes-Oxley Section 404 internal controls assessment and certification necessary for the first time with this year's filing. The Company expects to be able to file the 10-K by the end of March, within the extended time provided by the SEC. Conference Call Management will host an investment-community conference call beginning at 4:30 p.m. Eastern Time today to discuss the results and to answer questions. To participate in the live call by telephone, please dial (888) 803-8296 from the U.S., or (706) 634-1250 from outside the U.S. Individuals interested in listening to the live conference call via the Internet may do so by logging on to the Company's website, www.conceptus.com. A replay will be available on the website for 14 days. A telephone replay will be available from 7:30 p.m. Eastern Time March 14, 2005 through 11:59 p.m. Eastern Time on March 16, 2005 by dialing (800) 642-1687 (domestic) or (706) 645-9291 (international) and entering conference ID number 4586671. About Essure 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 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. Essure is 99.8% effective after three years of follow-up. About Conceptus Conceptus, Inc. manufactures and markets Essure, an innovative medical device and procedure designed to provide a non-incisional alternative to tubal ligation, which is the leading form of birth control worldwide. The availability of Essure 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 more than 1 million procedures annually. Additional information about the Essure procedure is available at www.Essure.com or by calling the Essure Information line 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. The availability of third party reimbursement for our product, the guidance regarding anticipated net sales and net loss for 2005, and our expectations regarding the timing of filing of our 10-K, among 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, delays by regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities , 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 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 Year Ended
December 31, December 31,
----------------- -------------------
2004 2003 2004 2003
-------- -------- --------- ---------
Net sales $3,622 $2,254 $11,612 $7,700
Cost of goods sold 1,757 1,862 7,112 6,587
-------- -------- --------- ---------
Gross profit 1,865 392 4,500 1,113
Operating expenses:
Research and development 818 1,260 4,067 6,048
Selling, general and
administrative 7,672 8,312 27,075 35,256
-------- -------- --------- ---------
Total operating expenses 8,490 9,572 31,142 41,304
Operating loss (6,625) (9,180) (26,642) (40,191)
Interest and other income, net 205 199 573 663
-------- -------- --------- ---------
Net loss $(6,420) $(8,981) $(26,069) $(39,528)
======== ======== ========= =========
Basic and diluted net loss per
share $(0.25) $(0.41) $(1.05) $(1.83)
======== ======== ========= =========
Weighted-average shares used in
computing basic and diluted
net loss per share 25,391 21,739 24,754 21,565
======== ======== ========= =========
Conceptus, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
December December
31, 31,
2004 2003
--------- ---------
Cash, cash equivalents, short-term investments
and restricted cash $32,271 $30,863
Accounts receivable, net 2,067 1,582
Inventories, net 2,022 2,682
Other current assets 937 504
--------- ---------
Total current assets 37,297 35,631
Property and equipment, net 1,322 2,031
Intangible assets, net 1,750 1,950
Other assets 1,808 2,238
--------- ---------
Total assets $42,177 $41,850
========= =========
Total liabilities $5,183 $8,113
--------- ---------
Common stock and additional paid-in capital 220,323 190,971
Accumulated other comprehensive income - 26
Accumulated deficit (183,329) (157,260)
--------- ---------
Total stockholders' equity 36,994 33,737
--------- ---------
Total liabilities and stockholders' equity $42,177 $41,850
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