Cytyc Reports Record Fourth Quarter and 2005 Results; Q4 '05 Revenue Increases 25 Percent to $138.6 Million; Q4 '05 Net Income Increases 31 Percent to $33.4 Million.MARLBOROUGH Marl·bor·ough or Marl·bo·ro A city of east-central Massachusetts east-northeast of Worcester. Settled in 1657, it was nearly destroyed in 1676 during King Philip's War. Population: 38,100. , Mass. -- Cytyc Cytyc Corporation (NASDAQ: CYTC) engages in the design, development, manufacture, and marketing of clinical products that focus on women’s health. Its products cover a range of women's health applications, including cervical cancer screening, breast cancer risk Corporation (Nasdaq: CYTC), a leading women's health Women's Health Definition Women's health is the effect of gender on disease and health that encompasses a broad range of biological and psychosocial issues. company, today announced results for the fourth quarter and year ended December December: see month. 31, 2005. Revenue for the quarter ended December 31, 2005, rose to $138.6 million, compared to revenue of $110.6 million for the same period of 2004. Net income for the quarter was $33.4 million, or $0.27 per 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. share, compared to net income for the same period in 2004 of $25.4 million, or $0.21 per diluted share. Q4 2005 Highlights --Surgical products worldwide revenue increased 80 percent over fourth quarter 2004 to $44 million, representing more than 31 percent of total Company revenue. --Domestic diagnostic products revenue increased 6 percent over fourth quarter 2004 to $80.8 million and included shipment of 9 million ThinPrep ThinPrep™ Cytology A proprietary system–Cytec, Inc, in which specimens are obtained with a special fluid collection system and the slides for cytologic examination are spread in one-cell-thick layers. See thin prep. (R) Pap Tests Pap test, Pap smear, or Papanicolaou test (păp'ənē`kəlou), medical procedure used to detect cancer of the uterine cervix. and 32 new ThinPrep(R) Imaging Systems. --International diagnostics (1) Software routines that test hardware components (memory, keyboard, disks, etc.). Diagnostics are often stored in ROM chips and activated on startup. (2) Error messages in a programmer's source code that refer to statements or syntax that the compiler or assembler revenue increased 36 percent over fourth quarter 2004 to $13.8 million. Patrick J. Sullivan, Cytyc's chairman, president, and chief executive officer, stated, "Our fourth quarter financial and operating performance was very strong. The surgical products division performed extremely well, as the NovaSure(R) endometrial ablation Endometrial ablation is a medical procedure that is used to remove (ablate) or destroy the endometrial lining of a woman's uterus. This technique is most often employed for women who suffer from excessive or prolonged bleeding during their menstrual cycle but can not or do not wish product line demonstrated impressive growth. The MammoSite(R) radiation therapy product for breast cancer treatment This article or section recently underwent a major revision or rewrite and needs further review. You can help! The mainstay of breast cancer treatment is surgery when the tumor is localized, with possible adjuvant hormonal therapy (with tamoxifen or an aromatase is gaining adoption and is well received by physicians. The fourth quarter results for the domestic diagnostic products division were driven by 9 million ThinPrep Pap Tests sold and the solid growth of the ThinPrep Imaging System installed base. At the end of 2005, more than 30 percent of ThinPrep Pap Test slides were imaged and we are excited about the ThinPrep Imaging System emerging as a new standard of care. The strong fourth quarter performance of the international business is a further indication of its growth potential and demonstrates the strength of our international business model. We are extremely pleased by the strong performance of each of our three business segments and the overall growth in 2005 of our increasingly diversified diversified (di·verˑ·s product offerings." Revenue for the year ended December 31, 2005, grew 29 percent to $508.3 million, compared to fiscal year 2004 revenue of $393.6 million. Full Year 2005 Highlights --Surgical products worldwide revenue increased 131 percent over 2004 to $146.7 million for 2005. --Domestic diagnostic product revenue increased 8 percent over 2004 to $311.3 million for 2005, which was driven by 132 new ThinPrep Imaging Systems shipped in the U.S. --International diagnostic revenue increased 24 percent over 2004 to $50.3 million. For the full year 2005, net income was $113.5 million, or $0.94 per diluted share, and adjusted net income, which excludes the impact of an arbitration arbitration Process of resolving a dispute or a grievance outside a court system by presenting it for decision to an impartial third party. Both sides in the dispute usually must agree in advance to the choice of arbitrator and certify that they will abide by the decision in February February: see month. 2005, was $118.4 million, or $0.98 per diluted share. For 2004, net income was $73.6 million, or $0.63 per diluted share, and adjusted net income, which excludes the charge for in-process research and development related to the acquisition of Novacept in March 2004, was $92.7 million, or $0.79 per diluted share. Mr. Sullivan concluded, "These results demonstrate our successful efforts in 2005 to drive growth in our surgical products division while maintaining a strong focus on our core diagnostics business. We believe our strategy of offering a diverse mix of best-in-class See best-of-class. products for women's health will continue to drive the Company's growth and expansion in 2006."
Three Months Ended Year Ended
December 31, December 31,
------------------------- -------------------------
2005 2004 % Change 2005 2004 % Change
------- ------- --------- ------- ------- ---------
($ in millions) ($ in millions)
Diagnostic
Product Revenue
Domestic $80.8 $75.9 6% $311.3 $289.5 8%
International 13.8 10.2 36% 50.3 40.5 24%
------- ------- --------- ------- ------- ---------
Total
Diagnostic
Product
Revenue 94.6 86.1 10% 361.6 330.0 10%
Surgical Products
Revenue
(worldwide) 44.0 24.5 80% 146.7 63.6 131%
------- ------- --------- ------- ------- ---------
Total
Company
Revenue $138.6 $110.6 25% $508.3 $393.6 29%
======= ======= ========= ======= ======= =========
Diagnostic products revenue consists primarily of revenue from the ThinPrep Pap Test and the ThinPrep Imaging System. Worldwide revenue from surgical products consists primarily of sales of the NovaSure System and the MammoSite Radiation Therapy System and includes approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $2.8 million of international sales for 2005. Revenue for the full year ended December 31, 2005 includes MammoSite sales from the date of the acquisition of Proxima Noun 1. Proxima - the nearest star to the sun; distance: 4.3 light years Proxima Centauri Centaurus, Centaur - a conspicuous constellation in the southern hemisphere near the Southern Cross Therapeutics therapeutics Treatment and care to combat disease or alleviate pain or injury. Its tools include drugs, surgery, radiation therapy, mechanical devices, diet, and psychiatry. , Inc. on March 7, 2005. Revenue for the full year ended December 31, 2004 includes NovaSure revenue from the date of the acquisition of Novacept on March 24, 2004. During 2005, Cytyc generated $176.0 million of cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses bringing the total cash and investments at the end of the year to $220.6 million after the purchase of Proxima Therapeutics, Inc. and the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of $50 million of common stock through the Company's stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program during 2005. Non-GAAP Information In addition to disclosing results determined in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting , or GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). , Cytyc also discloses adjusted, or non-GAAP, results of operations that exclude certain items. By disclosing this non-GAAP information, management intends to provide investors with additional information to further analyze an·a·lyze v. 1. To examine methodically by separating into parts and studying their interrelations. 2. To separate a chemical substance into its constituent elements to determine their nature or proportions. 3. Cytyc's performance, core results and underlying trends. In order to better assess operating trends, management utilizes a measure of adjusted net income and adjusted diluted net income per common share on a non-GAAP basis that excludes for the applicable periods (1) a charge, net of tax effects, related to the DEKA DEKA Dean Kamen (of DEKA Research and Development Corporation, Manchester, NH, USA) DEKA Deutsche Kapitalanlagegesellschaft Mbh (German investment fund) Products Limited Partnership arbitration panel arbitration panel A group of individuals charged with resolving a dispute between individuals and/or organizations. Arbitration panels to resolve investment disputes are sponsored by self-regulatory organizations such as NASD. decision in the first quarter of 2005 and (2) a charge related to in-process research and development from Cytyc's acquisition of Novacept in the first quarter of 2004. Excluded charges are considered to be non-recurring and non-operational in the applicable period. Management believes adjusted net income provides useful supplemental information to management and investors regarding the performance and underlying trends of Cytyc's business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets and facilitates comparisons to its historical operating results. Management uses this information internally for forecasting, budgeting and evaluating the effectiveness of Cytyc's operational strategies. Management believes it is important to provide investors with the same metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. used by management to measure core operating performance, which assists investors in analyzing the underlying trends in Cytyc's business over time. Non-GAAP information should not be viewed as a substitute for, or superior to, net income or other data prepared in accordance with GAAP as measures of Cytyc's profitability or liquidity. Users of this financial information should consider the types of events and transactions for which adjustments have been made. See the tables to this press release for a reconciliation of non-GAAP amounts to amounts reported under GAAP. Cytyc management will discuss fourth quarter results, business highlights and future expectations during a conference call on February 2, at 8:30 a.m. (Eastern). The call will be hosted by Patrick Sullivan, chairman, president, and chief executive officer; Daniel Daniel, book of the Bible Daniel, book of the Bible. It combines "court" tales, perhaps originating from the 6th cent. B.C., and a series of apocalyptic visions arising from the time of the Maccabean emergency (167–164 B.C. Levangie, executive vice president and chief commercial officer; and Timothy Adams
Timothy Adams (born August 4, 1967 in Bellville, New Jersey) is an American actor. , chief financial officer. A live webcast of the call may be accessed at Cytyc's website, http://ir.cytyc.com, and the event will be available for replay at this site approximately two hours following the call until February 16, 2006. Those without web access may access the call by dialing 201-689-8560. A telephonic replay of the call will be available through February 16, 2006, by dialing 201-612-7415; enter account # 3055 and conference ID # 186032. Cytyc Corporation is a leading women's health company that designs, develops, manufactures, and markets innovative and clinically effective products for cervical cancer Cervical Cancer Definition Cervical cancer is a disease in which the cells of the cervix become abnormal and start to grow uncontrollably, forming tumors. screening, breast cancer risk assessment, treatment of excessive menstrual menstrual /men·stru·al/ (men´stroo-al) pertaining to the menses or to menstruation. men·stru·al or men·stru·ous adj. Of or relating to menstruation. bleeding bleeding /bleed·ing/ (-ing) 1. the escape of blood, as from an injured vessel. 2. phlebotomy. dysfunctional uterine bleeding , and treatment of breast cancer. Cytyc is traded on The Nasdaq Stock Market Nasdaq stock market The first electronic stock market listing over 5000 companies. The Nasdaq stock market comprises two separate markets, namely the Nasdaq National Market, which trades large, active securities and the Nasdaq Smallcap Market that trades emerging growth companies. under the symbol CYTC. Cytyc, ThinPrep, NovaSure, MammoSite, and GliaSite are registered trademarks of Cytyc Corporation. 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. in this press release are made pursuant to the provisions of Section 21E of the Securities Exchange Act of 1934. Investors are cautioned that statements in this press release which are not strictly historical statements, including, without limitation, statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc Cytyc's future financial condition, operating results and economic performance, and management's expectations regarding key customer relationships, future growth opportunities, product acceptance and business strategy, constitute forward-looking statements. These statements are based on current expectations, forecasts and assumptions that are subject to risks and uncertainties, which could cause actual outcomes and results to differ materially from those statements. Risks and uncertainties include, among others, dependence on key personnel and customers as well as reliance on proprietary technology, uncertainty of product development efforts and product acceptance, management of growth and product diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. , entry into new market segments domestically and new markets internationally, risks associated with litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. , the effective integration of acquired businesses and technologies, competition and competitive pricing pressures, risks associated with the 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. regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. approval processes and healthcare reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. policies 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. and abroad, introduction of technologies that are disruptive disruptive /dis·rup·tive/ (-tiv) 1. bursting apart; rending. 2. causing confusion or disorder. to Cytyc's business and operations, the impact of new accounting requirements and governmental rules and regulations, as well as other risks detailed in Cytyc's filings with the Securities and Exchange Commission, including under the heading "Certain Factors Which May Affect Future Results" in its 2004 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 its most recent Quarterly Report on Form 10-Q Form 10-Q See 10-Q. filed with the Commission. Cytyc cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date they were made. Cytyc disclaims any obligation to publicly update or revise any such statements to reflect any change in its expectations or events, conditions, or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.
Cytyc Corporation
Condensed Consolidated Statements of Income
(in thousands, except per share data)
Three Months Ended
December 31,
2005 2004
--------- ---------
Net sales $138,641 $110,607
Cost of sales 29,193 24,351
--------- ---------
Gross profit 109,448 86,256
--------- ---------
Operating expenses:
Research and development 9,328 5,789
Sales and marketing 35,194 28,098
General and administrative 11,648 10,607
--------- ---------
Total operating expenses 56,170 44,494
--------- ---------
Income from operations 53,278 41,762
Other expense, net:
Interest income 1,266 821
Interest expense (1,792) (1,786)
Other expense (127) 193
--------- ---------
Total other expense, net (653) (772)
--------- ---------
Income before provision for income taxes 52,625 40,990
Provision for income taxes 19,208 15,576
--------- ---------
Net income $33,417 $25,414
========= =========
Net income per common share:
Basic $0.29 $0.23
========= =========
Diluted $0.27 $0.21
========= =========
Weighted average common and potential common
shares outstanding:
Basic 114,388 112,466
========= =========
Diluted 126,513 125,946
========= =========
Cytyc Corporation
Condensed Consolidated Statements of Income
(in thousands, except per share data)
Years Ended
December 31,
2005 2004
--------- ---------
Net sales $508,251 $393,593
Cost of sales 107,149 82,523
--------- ---------
Gross profit 401,102 311,070
--------- ---------
Operating expenses:
Research and development 32,330 20,820
In-process research and development - 19,100
Sales and marketing 131,346 102,011
General and administrative 45,298 35,274
Arbitration decision 7,807 -
--------- ---------
Total operating expenses 216,781 177,205
--------- ---------
Income from operations 184,321 133,865
Other expense, net:
Interest income 3,280 2,418
Interest expense (7,168) (5,376)
Other expense (1,715) (510)
--------- ---------
Total other expense, net (5,603) (3,468)
--------- ---------
Income before provision for income taxes 178,718 130,397
Provision for income taxes 65,232 56,809
--------- ---------
Net income $113,486 $73,588
========= =========
Net income per common share:
Basic $1.00 $0.66
========= =========
Diluted $0.94 $0.63
========= =========
Weighted average common and potential common
shares outstanding:
Basic 113,528 111,148
========= =========
Diluted 125,446 121,922
========= =========
Cytyc Corporation
Reconciliation of Non-GAAP Measures
(in thousands, except per share data)
Years Ended
December 31,
2005 2004
--------- --------
Net income reconciliation:
----------------------------------------------------
Net income, as reported $113,486 $73,588
Arbitration decision charge (1) 4,957 -
Acquired in-process research and development
charge (2) - 19,100
--------- --------
Adjusted net income $118,443 $92,688
========= ========
Net income per common share reconciliation:
----------------------------------------------------
Net income per common share, diluted, as reported $0.94 $0.63
Arbitration decision charge (1) 0.04 -
Acquired in-process research and development
charge (2) - 0.16
--------- --------
Adjusted net income per common share, diluted $0.98 $0.79
========= ========
Weighted average common and potential common shares
outstanding:
Diluted 125,446 121,922
(1) Charge related to the DEKA Partnership arbitration panel decision
in the first quarter of 2005, which was $7.8 million, net of a
$2.8 million tax benefit.
(2) Charge related to in-process research and development from Cytyc's
acquisition of Novacept in the first quarter of 2004.
Cytyc Corporation
Condensed Consolidated Balance Sheets
(in thousands)
December 31,
2005 2004
----------- ---------
Assets:
Current assets
Cash and investment securities $220,619 $232,295
Accounts receivable, net 82,833 63,636
Inventories, net 24,033 17,310
Other current assets 9,805 7,549
----------- ---------
Total current assets 337,290 320,790
----------- ---------
Property and equipment:
Property and equipment 101,604 95,040
Equipment under customer usage agreements 66,832 42,380
Less: accumulated depreciation and
amortization (54,826) (45,908)
----------- ---------
Total property and equipment, net 113,610 91,512
----------- ---------
Goodwill and other intangible assets, net 581,957 388,908
Other assets, net 7,022 8,140
----------- ---------
Total Assets $1,039,879 $809,350
=========== =========
Liabilities and Stockholders' Equity:
Current liabilities $89,183 $42,585
Long-term debt and other non-current
liabilities 322,345 279,320
Stockholders' equity 628,351 487,445
----------- ---------
Total Liabilities and Stockholders' Equity $1,039,879 $809,350
=========== =========
Cytyc Corporation
Reconciliation of Net Income per Common Share
(in thousands, except per share data)
The following tables provide reconciliations of the net income and
weighted average common shares used in calculating basic and diluted
net income per share (using the if-converted method):
Years Ended
December 31,
2005 2004
--------- --------
Numerator:
Net income, as reported, for basic earnings per
share $113,486 $73,588
Interest expense, net of tax 4,552 3,333
------------------
Net income, as adjusted, for diluted earnings per
share $118,038 $76,921
==================
Denominator:
Basic weighted average common shares outstanding 113,528 111,148
Dilutive effect of assumed exercise of stock
options 3,492 4,267
Dilutive effect of assumed conversion of
convertible debt 8,426 6,507
------------------
Weighted average common shares outstanding assuming
dilution 125,446 121,922
==================
Basic net income per common share $1.00 $0.66
==================
Diluted net income per common and potential common
share $0.94 $0.63
==================
Three Months Ended
December 31,
2005 2004
--------- --------
Numerator:
Net income, as reported, for basic earnings per
share $33,417 $25,414
Interest expense, net of tax 1,138 1,107
------------------
Net income, as adjusted, for diluted earnings per
share $34,555 $26,521
==================
Denominator:
Basic weighted average common shares outstanding 114,388 112,466
Dilutive effect of assumed exercise of stock
options 3,699 5,054
Dilutive effect of assumed conversion of
convertible debt 8,426 8,426
------------------
Weighted average common shares outstanding assuming
dilution 126,513 125,946
==================
Basic net income per common share $0.29 $0.23
==================
Diluted net income per common and potential common
share $0.27 $0.21
==================
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