Cooper Companies Announces Third Quarter Results; Pretax EPS Up 30% to 61 Cents; Revenue Increases 39%, Income from Operations Up 52%; CooperVision Sales Climb 82%.IRVINE, Calif.--(BW HealthWire)--Aug. 26, 1998--The Cooper Companies, Inc. (NYSE/PCX:COO (Cell Of Origin) See mobile positioning. ) today reported results for its third fiscal quarter ended July 31, 1998. Revenue of $54.2 million was 39% above the third quarter of 1997. Income from operations was $11.3 million, up 52%. Sales of the Company's medical devices businesses, CooperVision (CVI CVI C (Language) Virtual Instrument CVI Clinical and Vaccine Immunology (journal) CVI Chronic Venous Insufficiency CVI Coastal Vulnerability Index CVI Canaan Valley Institute ), which markets contact lenses contact lenses contact npl → verres mpl de contact contact lenses contact npl → Kontaktlinsen pl contact lenses npl and CooperSurgical (CSI CSI Crime Scene Investigator CSI CompuServe, Inc. CSI Commodity Systems, Inc. CSI Commodity Systems Inc. (Boca Raton, FL) CSI Crime Scene Investigation (CBS TV show) CSI Christian Schools International ), which markets diagnostic and surgical products for the women's healthcare market, grew 59%. Hospital Group of America (HGA HGA High-Gain Antenna HGA Handweavers Guild of America HGA Hammel Green and Abrahamson HGA Hercules Graphics Adapter HGA Homogentisic Acid HGA Honor Guard Academy HGA Holy Guardian Angels (Reading, PA catholic church) ) revenue rose 3%. Before a net tax benefit of 5 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , earnings per share grew 30% to 61 cents from 47 cents before 8 cents per share net tax benefit in 1997's third quarter.
Business Unit Results
P&L OPERATING HIGHLIGHTS BY BUSINESS UNIT
($'s in millions)
Quarter Ended July 31,
Revenue Operating Income
% %
1998 1997 Inc. 1998 1997 Inc. % Revenue % Revenue
1998 1997
CVI $32.5 $17.8 82% $10.7 $6.2 72% 33% 35%
CSI 7.2 7.1 1% 0.3 0.9 (70%) 4% 12%
Medical
Devices 39.7 24.9 59% 11.0 7.1 54% 28% 29%
HGA 14.5 14.0 3% 1.8 1.8 -- 13% 13%
Business
Units 54.2 38.9 39% 12.8 8.9 43% 24% 23%
HQ Expense -- -- (1.5) (1.5) -- n/a n/a
TOTAL $54.2 $38.9 39% $11.3 $7.4 52% 21% 19%
P&L OPERATING HIGHLIGHTS BY BUSINESS UNIT
($'s in millions)
Nine Months Ended July 31,
Revenue Operating Income
% %
1998 1997 Inc. 1998 1997 Inc. %Revenue %Revenue
1998 1997
CVI $85.8 $44.9 91% $26.2 $16.2 61% 31% 36%
CSI 20.8 17.7 17% 1.9 1.8 4% 9% 10%
Medical
Devices 106.6 62.6 70% 28.1 18.0 56% 26% 29%
HGA 42.2 38.4 10% 3.7 4.1 (10%) 9% 11%
Business
Units 148.8 101.0 47% 31.8 22.1 44% 21% 22%
HQ Expense -- -- (5.0) (4.3)(15%) n/a n/a
TOTAL $148.8 $101.0 47% $26.8 $17.8 51% 18% 18%
Business Unit Review CVI Results During the third quarter, CVI posted record sales, 82% above the comparable period in 1997. "CVI's growth," said A. Thomas (language) Thomas - A language compatible with the language Dylan(TM). Thomas is NOT Dylan(TM). The first public release of a translator to Scheme by Matt Birkholz, Jim Miller, and Ron Weiss, written at Digital Equipment Corporation's Cambridge Research Laboratory runs Bender, Cooper's president and chief executive officer, "continues to be driven by our specialty toric tor·ic adj. Of, relating to, or shaped like a torus or part of a torus. lens business. Growth in this segment is outpacing the more commodity-like spherical segment the segment of a sphere. See under Segment. See also: Spherical . According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. recent independent market research data, the U.S. toric segment grew 27% in the first half of the year while the spherical segment was essentially flat. During the first nine months of fiscal 1998, CVI's U.S. spherical lens spherical lens n. Abbr. sph A lens in which all refracting surfaces are spherical. business grew 32% and its toric lens sales grew 44%." Year to date, CVI worldwide revenue has grown 91%. Excluding Aspect Vision Care, the British contact lens contact lens, thin plastic lens worn between the eye and eyelid that may be used instead of eyeglasses. Actors, models, and others wear them for appearance, and athletes use them for safety and convenience. company acquired in December 1997, CVI revenue grew 26% in the third quarter and 36% year to date. Aspect sales during the third quarter were $10 million. For the eight months that it has been part of the Company, Aspect revenue was about $25 million. Aspect's revenue is on track with pre-acquisition expectations. Over 80% of its sales are in the disposable-planned replacement sphere category with most of its business in Europe. During the third quarter, Aspect began selling CooperVision's toric lens products in European markets. Before the end of the calendar year, Aspect will introduce in Europe a new molded mold 1 n. 1. A hollow form or matrix for shaping a fluid or plastic substance. 2. A frame or model around or on which something is formed or shaped. 3. Something that is made in or shaped on a mold. , disposable toric lens designed for two week replacement. This product will be manufactured using CVI's proven lens design and Aspect's patented UltraSync technology that provides improved patient comfort. "Aspect's contribution to earnings," said Bender, "continues as projected. It was somewhat dilutive in the first quarter, turned neutral in the second quarter and is now accretive." "With Aspect," Bender pointed out, "CooperVision will broaden its product line and compete effectively in the large and growing worldwide disposable-planned replacement spherical segment of the market where margins have traditionally been lower. Since the Aspect Vision acquisition, we have greatly accelerated 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. growth-up 72% in the third quarter and 61% year to date -- despite lower operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: . "In our core toric lens business, gross margins remain high and are not under pressure from competitive pricing strategies There are many ways in which the price of a product can be determined. The following are the foremost strategies that businesses are likely to use. Competition-based pricing Setting the price based upon prices of the similar competitor products. . By combining CooperVision North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and Aspect Vision, we expect overall operating margins to improve as disposable spherical lens unit volume grows and gross margins increase." Sales of toric lenses to correct astigmatism astigmatism (əstĭg`mətĭz'əm), type of faulty vision caused by a nonuniform curvature in the refractive surfaces—usually the cornea, less frequently the lens—of the eye. now account for 39% of CVI's worldwide business and about 60% of its U.S. business. During the third quarter, toric sales in the U.S. grew 43% over the comparable 1997 quarter and nine-month periods. In the toric disposable-planned replacement segment, which, according to recent independent market research grew 46% in the first six months of the year, Preference Toric continues to exceed expectations, with third quarter and year-to-date revenue growing 65% and 81% over the respective 1997 periods. The Company believes that Preference Toric is the fastest growing major brand in the worldwide contact lens market. In the U.S., CVI's brands of disposable-planned replacement spherical lenses grew 56% in the third quarter and 70% year to date. Worldwide, including Aspect's brands, CVI disposable-planned replacement spheres now account for over 40% of CVI's business. Together, sales of disposable-planned replacement toric and spherical lenses in the U.S. grew 71% in the third quarter and 83% year to date and now comprise over 50% of CVI's North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. revenue, up from 40% last year. Worldwide, CVI's Toric and disposable-planned replacement sphere lines now represent nearly 75% of its business. CVI Strategy "To appreciate how CVI plans to continue to deliver strong results like this and compete effectively in the worldwide contact lens market over the next few years, it's important to understand our basic strategy," said Bender. "Our primary objective is to lead the specialty contact lens market worldwide, particularly the rapidly growing toric segment where we already have a leading position. Up to now, we've concentrated on the `high performance/high value' market segment of the toric disposable-planned replacement market with our rapidly growing planned replacement lens Preference Toric, now the leading product in the category. It has been successful because our customers are willing to pay a premium for the wider range of fitting options that Preference Toric offers so that their patients can have crisper crisp·er n. One that crisps, especially a compartment in a refrigerator used for storing vegetables and keeping them fresh. , clearer vision than they can get with most competitive lenses. "Our next strategic step is to leverage the success of the Preference Toric brand and enter a second toric market segment: the larger but slower growing `lower price point' toric segment. Frequency 55 Toric, launched in May of this year, is a product that, compared with the competition in this segment, delivers higher performance at a comparable cost. While the lower price point segment is getting more crowded -- we expect more competition here next year -- we think our product has a clinical advantage over both the new and the existing products, and that our entry ahead of competition will give us an advantage. Also, we don't expect to sacrifice our Preference Toric revenue, which we expect will grow at 20% to 25% for several more years in a market that should be free from serious new competition during that time, as our patented manufacturing process remains a strong barrier to entry. "We are also moving aggressively in the worldwide market for disposable-planned replacement spheres, a large segment that represents about 60% of the total worldwide contact lens market. In Europe, the Aspect acquisition gives us a superb vehicle in this segment. In the U.S. we will again leverage our strong toric market position to capture significant additional revenue with Frequency 55, the disposable-planned replacement spherical lens -- also made with Aspect's UltraSync system -- that we introduced last January. In Japan, our marketing arrangement with Rohto Pharmaceuticals, the leading manufacturer of over-the-counter ophthalmic ophthalmic /oph·thal·mic/ (of-thal´mik) ocular (1). oph·thal·mic adj. Of or relating to the eye; ocular. Ophthalmic Pertaining to the eye. products in Japan, will give us a strong presence in the second largest contact lens market in the world, a market where spherical lenses dominate. We expect revenue from this marketing alliance by the end of 1999. "We recognize that these strategies will lead to somewhat lower margins than we had when we were only in the higher priced segment of the market, but we feel that the trade-off between higher margins on revenue limited to torics and lower margins on revenue greatly expanded by sphere volume is worth it in order to continue to grow operating income. "The strategies we have recently put in place around the world will, I believe, lead to a sustainable competitive advantage for us in the contact lens market as we enter the next decade." CSI CSI's sales grew 1% over last year's third quarter, as sales from the 1997 acquisition of Marlow Surgical Technologies are included in both periods. Revenue in women's healthcare products grew 3%. Year to date, sales have increased 17%. CSI gross margins improved three basis points compared with last year's third quarter and also for the year-to-date comparable period as CSI continued to improve manufacturing efficiency. Operating margins declined 8% in the third quarter due primarily to expenses associated with the introduction of three new products, a delay in shipping two of these products during the quarter due to manufacturing start-up issues and amortization of goodwill from acquisitions. "In the future," said Bender, "I expect CSI's core business of older and recently acquired gynecology gynecology (gīn'əkŏl`əjē), branch of medicine specializing in the disorders of the female reproductive system. Modern gynecology deals with menstrual disorders, menopause, infectious disease and maldevelopment of the products to grow modestly, perhaps in the mid-single digits. This platform of solid technologies has allowed us to obtain the critical mass that we needed to fund the development and launch of our recently introduced new products. CSI's success going forward will be determined by the acceptance of these products and by selective acquisitions and strategic alliances that will help us further consolidate the in-office gynecology market. Our objective is to double the size of CSI by the end of the year 2000." The new products include:
-- The FemExam pH and Amines TestCard, the first of four novel,
patented diagnostic tests comprising the FemExam TestCard
System that CSI recently licensed. These tests, designed for
use primarily in the physician's office, rapidly and
economically screen and diagnose common vaginal infections such
as bacterial vaginosis, yeast and trichomonasis. They are
designed to replace current testing practices that are
subjective, costly and inconvenient to perform. CSI anticipates
that over the next three to five years, these tests could add
between $30 million and $50 million in incremental revenue.
-- The Cerveillance Scope, the first in a planned series of
products using digital imaging and proprietary software to
provide enhanced visualization and documentation in
examinations of the cervix. The Cerveillance Scope is a fully
integrated compact colposcope, an optical device used to
examine the vagina and the cervix. It improves image capture,
enhancement and analysis allowing measurement of lesion size
and documentation of cervical changes over time. CSI expects
that revenue from this product will approach $10 million in the
next three years.
-- The CooperSurgical Infrared Coagulator that offers a non-
traumatic, nonsurgical, noninvasive procedure to treat genital
lesions in the office. This low-cost single use technique
coagulates tissue without carbonization, providing the surgeon
with a smoke free environment that reduces the possibility of
contamination.
These three products were introduced in May at the meeting of the American College of Obstetricians and Gynecologists The American College of Obstetricians and Gynecologists (ACOG) is a professional association of medical doctors specializing in obstetrics and gynecology in the United States. It has a membership of over 49,000[1] and represents 90 percent of U.S. . Since that time, the Cerveillance Scope and the CooperSurgical Infrared An invisible band of radiation at the lower end of the visible light spectrum. With wavelengths from 750 nm to 1 mm, infrared starts at the end of the microwave spectrum and ends at the beginning of visible light. Coagulator coagulator /co·ag·u·la·tor/ (ko-ag´u-la?ter) a surgical device that utilizes electrical current or light to stop bleeding. argon beam coagulator have, due to manufacturing start-up delays, accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. a backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. of approximately $500 thousand. Demonstration units for both products will be in the hands of the sales force in September. Initial acceptance of the FemExam pH and Amines amines (  mēnz´),n.pl organic compounds that contain nitrogen. TestCard has been favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. and the initial anticipated revenue target ranges remain intact. CSI continues in discussions to co-market this product with a multi-national pharmaceutical company who markets a product to treat bacterial vaginosis Bacterial Vaginosis Definition Bacterial vaginosis (BV) is a type of vaginal infection in which the normal balance of bacteria in the vagina is disrupted, allowing the overgrowth of harmful anaerobic bacteria at the expense of protective bacteria. and expects to announce details of that arrangement very shortly. Hospital Group of America HOSPITAL GROUP OF AMERICA SELECTED STATISTICAL INFORMATION Three months ended Nine months ended July 31(a) July 31(a) 1998 1998 1997 %Change 1998 1997 %Change Licensed inpatient inpatient /in·pa·tient/ (in´pa-shent) a patient who comes to a hospital or other health care facility for diagnosis or treatment that requires an overnight stay. in·pa·tient n. beds 319 319 -- 319 319 -- Inpatient admissions 1,838 1,616 14% 5,432 4,711 15% Total inpatient days 23,101 20,392 13% 67,331 55,699 21% Average length of stay (days)(b) 10.4 11.0 (5%) 10.2 11.3 (10%) Total outpatient outpatient /out·pa·tient/ (-pa-shent) a patient who comes to the hospital, clinic, or dispensary for diagnosis and/or treatment but does not occupy a bed. out·pa·tient n. visits 12,840 13,576 (5%) 44,245 39,143 13% (a) Data is for HGA-owned hospitals only (b) Excludes Midwest Center
HGA revenue grew 3% over last year's third quarter with a 14%
increase in inpatient admissions and a 5% decline in outpatient visits
compared with last year's third quarter. Year to date, revenue has
grown 10% with admissions up 15%, outpatient visits up 13% and length
of stay moderately below the nine-month period last year. Operating
Income was flat compared with last year's third quarter and year to
date is 10% lower than last year's nine-month period. Medicare
inpatient revenue has been impacted by the Tax Equity and Financial
Responsibility Act of 1982 ("TEFRA"), which lowered the cap on the
amount reimbursable for a Medicare discharge.
Regarding the Company's HGA strategy Bender said, "Although
Hospital Group of America continues to contribute to our earnings and
help leverage our net operating loss carryforwards, it remains a
non-core business for us.
"During the third quarter, we evaluated several alternative
strategies to exit the psychiatric services market, and we have
decided that the best exit strategy is a sale of the assets rather
than a spin-off of the business to shareholders. Given current capital
market conditions, however, we feel that it is important to dispose of
them in an orderly fashion. It is not necessary to sacrifice
shareholder value merely for an expedient exit, and we intend to get
fair value for them. In the interim, we plan to take whatever steps we
consider necessary to maintain or enhance their value."
Forward-Looking Statements
Statements in this release that are not based on historical fact
may be "forward-looking statements" as defined by the Private
Securities Litigation Reform Act of 1995. They include words like
"may", "will", "expect", "estimate", "anticipate", "continue" or
similar terms and reflect the Company's current analysis of existing
trends. Actual results could differ materially from those indicated
due to: major changes in business conditions and the economy, loss of
key senior management, major disruptions in the operations of the
Company's manufacturing facilities or hospitals, new competitors or
technologies, significant disruptions caused by the failure to
adequately address the Year 2000 issue, acquisition integration costs,
foreign currency exchange exposure, investments in research and
development and other start-up projects, dilution to earnings per
share from stock issuances or acquisitions, regulatory issues, changes
in reimbursement rates and payor mix, significant environmental
clean-up costs more than those already accrued, litigation costs,
costs of business divestitures, and items listed in the Company's SEC
reports, including the section entitled "Business" in its Annual
Report on Form 10-K for the year ended October 31, 1997.
The Cooper Companies, Inc. and its subsidiaries develop,
manufacture and market specialty healthcare products and services.
Corporate offices are located in Irvine and Pleasanton, Calif.
CooperVision, headquartered in Irvine, Calif., with manufacturing
facilities in Huntington Beach, Calif., Rochester, N.Y., Toronto,
Canada and Southampton, England, markets a broad range of contact
lenses for the vision care market. CooperSurgical, headquartered in
Shelton, Conn., markets diagnostic and surgical instruments, equipment
and accessories for the gynecological market. Hospital Group of
America, provides psychiatric services through facilities in Delaware,
Illinois, Indiana and New Jersey and satellite locations.
NOTE: A toll free interactive telephone system at 1-800-334-1986
provides stock quotes, recent press releases and financial data. The
Company's Internet address is www.coopercos.com.
Trademarks
Cerveillance Scope, FemExam pH and Amines TestCard, Preference,
Preference Toric, Frequency 55, Frequency 55 Toric and UltraSync are
trademarks of The Cooper Companies, Inc., its subsidiaries or
affiliates.
Please note that the earnings per share figures in this release
refer to diluted earnings per share.
THE COOPER COMPANIES, INC. AND SUBSIDIARIES Consolidated Condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. Statements of Income (In thousands, except per share figures) (Unaudited) Three Months Ended Nine Months Ended July 31, July 31, 1998 1997 1998 1997 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 of products $ 39,709 $ 24,951 $106,543 $ 62,608 Net service revenue 14,471 13,998 42,239 38,380 Net operating revenue operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. 54,180 38,949 148,782 100,988 Cost of products sold 14,873 8,277 39,177 19,412 Cost of services provided 12,578 12,107 38,422 34,162 Selling, general and administrative expense 13,960 10,173 40,218 27,213 Research and development expense 512 487 1,511 1,225 Amortization of intangibles 977 503 2,679 1,195 Income from operations 11,280 7,402 26,775 17,781 Settlements of disputes, net 200 -- 200 -- Interest expense 1,539 1,335 4,547 3,819 Other income (expense), net (237) 94 835 37 Income before income taxes 9,304 6,161 22,863 13,999 (Benefit of) income taxes (870) (1,025) (1,787) (1,870) Net income $ 10,174 $ 7,186 $ 24,650 $ 15,869 Earnings per share: Basic $ 0.68 $ 0.57 $ 1.66 $ 1.31 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. $ 0.66 $ 0.55 $ 1.60 $ 1.28 Number of shares used to compute To perform mathematical operations or general computer processing. For an explanation of "The 3 C's," or how the computer processes data, see computer. earnings per share: Basic 14,896 12,645 14,859 12,083 Diluted 15,342 13,012 15,378 12,395 Memo diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of data: Income before income taxes $ 0.61 $ 0.47 $ 1.49 $ 1.13 THE COOPER COMPANIES, INC. AND SUBSIDIARIES Consolidated Condensed Balance Sheets (In thousands) (Unaudited) July 31, October 31, 1998 1997 ASSETS Current assets Current Assets Appearing on a company's balance sheet, it represents cash, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that can be converted to cash within one year. : Cash and cash equivalents $ 10,059 $ 18,249 Trade receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed , net 40,290 27,469 Inventories 30,201 15,096 Other current assets Other Current Assets A balance sheet item that includes the value of non-cash assets due within one year. Notes: Examples are things like prepaid expenses and accounts receivable. 14,461 7,755 Total current assets 95,011 68,569 Property, plant and equipment, net 62,297 39,523 Intangibles, net 89,531 36,698 Other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. 34,776 30,508 $281,615 $175,298 LIABILITIES AND STOCKHOLDERS' EQUITY Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. Current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. : Short-term debt Short-term debt Debt obligations, recorded as current liabilities, requiring payment within the year. $ 5,963 $ 447 Other current liabilities Other Current Liabilities A balance sheet entry used by companies to group together current liabilities that are not assigned to common liabilities such as debt obligations or accounts payable. 36,249 33,170 Total current liabilities 42,212 33,617 Long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. 76,388 9,125 Other liabilities other liabilities Small and relatively insignificant liabilities. For financial reporting purposes, firms often combine small liabilities into this single category rather than listing each liability separately. 25,391 21,023 Total liabilities 143,991 63,765 Stockholders' equity 137,624 111,533 $281,615 $175,298 CONTACT: The Cooper Companies Inc., Irvine Norris Battin, 714/597-4700 E-mail: nbattin@usa.net |
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