Conceptus Reports Third Quarter Financial Results; Year-to-Date Net Sales Up 47%.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 nine months ended September 30, 2004. Consistent with guidance provided on October 1, 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 2004 were $2.8 million, up 26% over net sales of $2.3 million in the third quarter of 2003 and unchanged from net sales in the second quarter of 2004. The net loss for the third quarter of 2004 was $6.3 million, or $0.25 per share, an improvement of $0.2 to $0.5 million compared with recent guidance. This compares with a net loss of $9.0 million, or $0.41 per share, in the third quarter of 2003 and a net loss of $6.2 million, or $0.25 per share, in the second quarter of 2004. For the nine months ended September 30, 2004, Conceptus reported net sales of $8.0 million, up 47% over net sales of $5.4 million during the comparable period in 2003. The net loss for the nine months ended September 30, 2004 of $19.6 million, or $0.80 per share, compares favorably to the net loss of $30.5 million, or $1.42 per share, for the comparable period one year ago. The increase in net sales for the three and nine month period in 2004 over 2003, is attributable to higher commercial sales of Essure in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. as a result of an increase in the number of physicians using the product. During the third quarter of 2004, Conceptus enrolled 168 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 and there are now 1,401 physicians performing the Essure procedure. Utilization rates among physicians certified to perform the Essure procedure remained similar to levels in the second quarter of 2004 at slightly less than one procedure per month. Gross profit for the third quarter of 2004 was $1.3 million, or a gross margin of 45%. This compares with a gross profit of $0.4 million for the third quarter of 2003, or a gross margin of 20%. The increase in gross profit margin 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. is related to higher sales volume and lower product cost associated with the Company's outsourcing of production to Mexico. Research and development (R&D) expenses were $1.0 million for the third quarter of 2004, compared with $1.5 million in the third quarter of 2003. This decline is the result of 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 $6.7 million for the third quarter of 2004, down from $8.0 million in the third quarter of 2003 and up slightly from $6.5 million in the second quarter of 2004. The sequential-quarter increase reflects higher expenses related to advertising and to Sarbanes-Oxley compliance expenditures in 2004. The year-over-year decrease was due to lower legal fees and the Company's substantially different approach to training physicians in 2003, as well as to the previously reported spin-off of the Company's subsidiary in France in January 2004. Cash, cash equivalents, short-term investments and restricted cash were $37.3 million at September 30, 2004. For the quarter, the Company used $5.8 million in cash compared with a cash usage of $8.6 million during the third quarter of 2003 and $5.2 million during the second quarter of 2004. "Subsequent to the close of the quarter, we were pleased to receive news regarding the CPT CPT See: Carriage Paid To code values for Essure set by the Centers for Medicare and Medicaid Services The Centers for Medicare and Medicaid Services (CMS), previously known as the Health Care Financing Administration (HCFA), is a federal agency within the United States Department of Health and Human Services (DHHS) that administers the Medicare program and (CMS (1) See content management system and color management system. (2) (Conversational Monitor System) Software that provides interactive communications for IBM's VM operating system. )," said Mark Sieczkarek, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Conceptus. "We are encouraged by this reimbursement decision and expect it to be a very positive influence on our commercialization efforts for Essure. We also believe that the reimbursement levels set speak highly of the support in the medical community for the Essure procedure." 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 for international callers, please dial (706) 634-1250. 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 November 8, 2004 through 11:59 p.m. Eastern Time on November 10, 2004 by dialing (800) 642-1687 (domestic) or (706) 645-9291 (international) and entering conference ID number 1694299. 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 Tubal (t  `bəl), in the Bible, son of Japheth. access catheter. Once in place, the device is designed to elicit 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 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 99.80% 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 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 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 over 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 effect of CPT code reimbursement on commercialization efforts and market demand for our product, 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 within the Company's control, 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 and re-allocation of internal resources, or on factors outside of the Company's control, such as 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 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,
------------------ -------------------
2004 2003 2004 2003
--------- -------- --------- ---------
Net sales $2,840 $2,252 $7,990 $5,446
Cost of goods sold 1,559 1,809 5,355 4,725
--------- -------- --------- ---------
Gross profit 1,281 443 2,635 721
--------- -------- --------- ---------
Operating expenses:
Research and development 1,045 1,521 3,249 4,788
Selling, general and
administrative 6,734 7,995 19,403 26,944
--------- -------- --------- ---------
Total operating expenses 7,779 9,516 22,652 31,732
Operating loss (6,498) (9,073) (20,017) (31,011)
Interest and other income, net 158 97 368 464
--------- -------- --------- ---------
Net loss $(6,340) $(8,976) $(19,649) $(30,547)
========= ======== ========= =========
Basic and diluted net loss per
share $(0.25) $(0.41) $(0.80) $(1.42)
========= ======== ========= =========
Shares used in computing basic
and diluted net loss per share 25,304 21,635 24,540 21,506
========= ======== ========= =========
Conceptus, Inc.
Condensed Consolidated Balance Sheets
(In thousands, Unaudited)
September December
30, 2004 31, 2003
--------- ---------
Cash, cash equivalents, short-term investments and
restricted cash $37,273 $30,863
Accounts receivable, net 1,761 1,582
Inventories, net 1,790 2,682
Other current assets 1,056 504
--------- ---------
Total current assets 41,880 35,631
Property and equipment, net 1,433 2,031
Intangible assets, net 1,800 1,950
Other assets 2,038 2,238
--------- ---------
Total assets $47,151 $41,850
========= =========
Total liabilities 4,474 8,113
--------- ---------
Common stock and additional paid in capital 219,586 190,971
Accumulated other comprehensive income - 26
Accumulated deficit (176,909) (157,260)
--------- ---------
Total stockholders' equity 42,677 33,737
--------- ---------
Total liabilities and stockholders' equity $47,151 $41,850
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