Conceptus Reports Sales up 94% in Third Quarter; Raises Full Year Financial Guidance.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 Essure(R) non-incisional permanent birth control system, today reported financial results for the three months ended September 30, 2005. 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 third quarter of 2005 were $5.5 million, up 94% compared with net sales of $2.8 million for the third quarter of 2004 and up 9% compared with net sales of $5.0 million for the second quarter of 2005. These results exceeded the Company's third quarter net sales guidance range of $5.0 million to $5.2 million. The net loss for the third quarter of 2005 was $5.0 million, or $0.18 per share, a reduction from the net loss for the third quarter of 2004 of $6.3 million, or $0.25 per share, and from the net loss for the second quarter of 2005 of $6.0 million, or $0.24 per share. The net loss for the third quarter of 2005 was lower than the Company's third quarter guidance range of $6.0 million to $6.2 million. "This has been a remarkably strong quarter for Essure product sales with August and then September being record months," said Mark Sieczkarek, president and chief executive officer of Conceptus. "U.S. net sales were up 16% quarter to quarter and continue to respond favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. to the additions in our sales force which has doubled since the beginning of the year. With 349 physicians entering 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. during the quarter, we now have 2,531 doctors performing Essure procedures. Most importantly Adv. 1. most importantly - above and beyond all other consideration; "above all, you must be independent" above all, most especially , certified See certification. physician utilization continues to increase with the significant improvements in reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. ." International sales accounted for 29% of the units shipped during the third quarter of 2005, and worldwide average selling prices The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. increased 11% due to channel mix when compared with the second quarter of 2005. Gross profit for the third quarter of 2005 was $3.5 million, or 64% of net sales. This compares favorably with gross profit for the third quarter of 2004 of $1.3 million, or 45% of net sales, and gross profit for the second quarter of 2005 of $2.9 million, or 58% of net sales. The increase in gross margin is related to increases in the worldwide average selling prices, higher sales volumes (related to the year-to-year comparison) and lower product costs associated with product improvements and the outsourcing of production in early 2004. Research and development expenses were $1.1 million for the third quarter of 2005, compared with $1.0 million for the third quarter of 2004 and $0.9 million for the second quarter of 2005. Research and development expenditures fluctuate in relation to product development, clinical affairs and regulatory expenses. Selling, general and administrative expenses were $7.6 million for the third quarter of 2005, up from $6.7 million for the third quarter of 2004 and down from $8.2 million for the second quarter of 2005. The year-over-year increase was primarily due to selling expenses associated with the Company's expanded field sales force, and higher costs for Sarbanes-Oxley compliance. The quarter to quarter decrease is primarily attributable to the termination of the Gynecare agreement. Cash, cash equivalents, short-term investments and restricted cash were $37.0 million as of September 30, 2005, compared with $32.3 million as of December 31, 2004 and $19.8 million as of June 30, 2005. During the third quarter of 2005, the Company raised $23.0 million in gross proceeds from a private placement of equity. For the third quarter of 2005, the Company's cash burn was $5.7 million, compared with $5.7 million for the third quarter of 2004 and $4.6 million for the second quarter of 2005. Although the Company reduced its net loss, its cash burn was comparable year over year due to an increase in expenditures in the current quarter associated with manufacturing tooling and improvements to the company's website, which were recorded as a fixed asset. The Company's websites are used extensively as a marketing and information tool for women seeking more information about permanent, non-surgical birth control and for referrals to physicians certified to perform the Essure procedure. "In addition to achieving solid financial results during the quarter, we have strengthened our balance sheet with the financing and received FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. approval to terminate the required post-approval study of placement rates earlier than originally scheduled," Mr. Sieczkarek continued. "Our near-term focus continues to be on building our sales force to drive utilization and marketing the advantages of the Essure procedure performed only under local anesthesia Anesthesia, Local Definition Local or regional anesthesia involves the injection or application of an anesthetic drug to a specific area of the body, as opposed to the entire body and brain as occurs during general anesthesia. . Everyone benefits when the Essure procedure is performed on a patient who is awake, and we are prepared to drive this 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. for physicians." For the nine months ended September 30, 2005, Conceptus reported net sales of $14.4 million, up 80% over net sales of $8.0 million during the comparable nine-month period in 2004. The net loss for the first nine months of 2005 of $17.4 million, or $0.67 per share, compares favorably with the net loss of $19.6 million, or $0.80 per share, for the first nine months of 2004. Financial Guidance The Company also announced financial guidance for the fourth quarter of 2005, and raised full-year 2005 net sales and lowered full-year 2005 net loss guidance. Conceptus expects net sales in the fourth quarter to be $6.0 million to $6.2 million and net sales for the full year to be $20.4 million to $20.6 million. This full-year net sales range compares with previous guidance of $19.0 million to $20.0 million issued on July 27, 2005. 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 fourth quarter are estimated to be between $9.3 million and $9.5 million. The net loss for the fourth quarter is expected to be $5.1 million to $5.2 million, and the full-year net loss guidance is lowered to $22.5 million to $22.6 million, or $0.84 to $0.85 per share, which includes the impact of the additional shares issued for the recent financing. This full-year net loss range compares with previous guidance for a net loss of $23.0 million to $24.0 million, or $0.90 to $0.94 per share. Conference Call Management will host an investment-community conference call beginning at 4:30 p.m. Eastern Time today to discuss these 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 October 27, 2005 through 11:59 p.m. Eastern Time on October 29, 2005 by dialing (800) 642-1687 (domestic) or (706) 645-9291 (international) and entering conference ID number 1259310. About the Essure(R) 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 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 fourth quarter and full year 2005 results, building the sales force, increasing utilization and physicians entering preceptorship, 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, 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 Nine Months Ended
September 30, September 30,
------------------- -------------------
2005 2004 2005 2004
---------- -------- --------- ---------
Net sales $5,499 $2,840 $14,402 $7,990
Cost of goods sold 1,999 1,559 5,828 5,355
---------- -------- --------- ---------
Gross profit 3,500 1,281 8,574 2,635
---------- -------- --------- ---------
Operating expenses:
Research and development 1,145 1,045 3,020 3,249
Selling, general and
administrative 7,618 6,734 23,568 19,403
---------- -------- --------- ---------
Total operating expenses 8,763 7,779 26,588 22,652
Operating loss (5,263) (6,498) (18,014) (20,017)
Interest and other income, net 260 158 611 368
---------- -------- --------- ---------
Net loss $(5,003) $(6,340) $(17,403) $(19,649)
========== ======== ========= =========
Basic and diluted net loss per
share $(0.18) $(0.25) $(0.67) $(0.80)
========== ======== ========= =========
Shares used in computing basic
and diluted net loss per
share 27,218 25,304 26,046 24,540
========== ======== ========= =========
Conceptus, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
September 30, December 31,
2005 2004
------------- ------------
Cash, cash equivalents, short-term
investments and restricted cash $37,001 $32,271
Accounts receivable, net 3,477 2,067
Inventories, net 3,711 2,022
Other current assets 734 937
------------- ------------
Total current assets 44,923 37,297
Property and equipment, net 1,949 1,322
Intangible assets, net 1,600 1,750
Other assets 1,701 1,808
------------- ------------
Total assets $50,173 $42,177
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