OrthoLogic Reports Second-Quarter, Six-Month Results; Record Sales of Bone Growth Stimulation Products Drive Significant Improvement In Net Income Compared With Prior Year.Business Editors & Health/Medical Writers TEMPE, Ariz.--(BW HealthWire)--Aug. 1, 2002 OrthoLogic Corp. (Nasdaq:OLGC OLGC Ontario Lottery and Gaming Corporation ) today reported that strong quarterly sales for the company's bone growth stimulation Bone Growth Stimulation Definition Bone growth stimulation is the technique of promoting bone growth in difficult to heal fractures by applying a low electrical current or ultrasound to the fracture. products resulted in improved net income for the second quarter of 2002 compared with the prior-year quarter. For the quarter ended June 30, 2002, the company reported net income of $1.3 million, or $0.04 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, on sales of $9.7 million compared with a net loss of $15 million, or ($0.48) per diluted share, on sales of $22.1 million for the second quarter of 2001. The comparable quarter in 2001 included revenues of $14 million, related expenses and one-time costs associated with the sale of the company's continuous passive motion continuous passive motion n. Abbr. CPM A technique in which a joint, usually the knee, is moved constantly in a mechanical splint to prevent stiffness and to increase the range of motion. (CPM (1) (Critical Path Method) A project management planning and control technique implemented on computers. The critical path is the series of activities and tasks in the project that have no built-in slack time. ) business, which was sold in July 2001. Total 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. in the second quarter of 2002 were reduced in part because the company currently anticipates it will collect approximately $200,000 more of the CPM accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying than was previously estimated at the beginning of the quarter. For the six months ended June 30, 2002, the company reported net income of $2.7 million, or $0.08 per diluted share, on sales of $19.3 million compared with a net loss of $14.8 million, or ($0.47) per diluted share, on sales of $43.8 million for the first six months of 2001. The comparable six months of 2001 included revenues of $28 million, as well as related expenses and costs associated with the divested CPM business. Operating expenses for the six months ended June 30, 2002 were reduced approximately $800,000 to reflect the company's current estimate that it will collect more of the CPM accounts receivable than was previously estimated at the beginning of the year. "OrthoLogic posted outstanding financial results for the second quarter of 2002," said Thomas R. Trotter trotter: see Standardbred horse. , OrthoLogic's 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. . "Excellent sales of our bone growth stimulation products, combined with improving margins and lower expenses, led to a significant improvement in net income versus prior year." Trotter added: "We achieved a 22% increase in sales of our bone growth stimulation products for the second quarter of 2002 compared with the second quarter of 2001. Sales for both the OL-1000 and SpinaLogic showed significant growth over the second quarter prior year. "We received a record number of prescriptions for our bone growth stimulation products during the second quarter, including a significant number from new physicians ordering the products for the first time." Update on the Chrysalin Program OrthoLogic recently announced that the company had received authorization from the U.S. Food and Drug Administration (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. ) to begin a Phase III Noun 1. phase III - a large clinical trial of a treatment or drug that in phase I and phase II has been shown to be efficacious with tolerable side effects; after successful conclusion of these clinical trials it will receive formal approval from the FDA human clinical trial for its Chrysalin product for acceleration of fracture repair Fracture Repair Definition Fracture repair is the process of rejoining and realigning the ends of broken bones. This procedure is usually performed by an orthopedist, general surgeon, or family doctor. . The clinical trial is expected to take approximately two years to complete, and the company expects to begin enrolling patients during the current quarter. In addition, during the second quarter of 2002, the company presented pre-clinical animal data using Chrysalin for the repair of articular cartilage articular cartilage n. The cartilage covering the articular surfaces of the bones forming a synovial joint. Also called arthrodial cartilage, diarthrodial cartilage, investing cartilage. defects at a major worldwide symposium. OrthoLogic expects to file an Investigational New Drug (IND) application with the FDA later this year for an articular cartilage defect indication. "We are very pleased with the progress we are making with the overall Chrysalin Product Platform," said Dr. Jim Ryaby, OrthoLogic's vice president of research and clinical affairs. "We continue to believe that small-molecule 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. such as the Chrysalin peptide technology offer the broadest potential for product development and commercial success in the emerging market for orthobiologic products." Looking Ahead "We achieved excellent overall results for the first half of 2002 and are looking forward to an excellent second half as well," said Trotter. "With the continuing success of the Chrysalin program, we believe that OrthoLogic's transition from a pure-play device company into a leading-edge orthobiologics concern is well underway." About OrthoLogic OrthoLogic is a specialty orthopedic orthopedic /or·tho·pe·dic/ (-pe´dik) pertaining to the correction of deformities of the musculoskeletal system; pertaining to orthopedics. medical company poised to enter the orthobiologics market -- one of the most promising areas in the biotech bi·o·tech n. Informal Biotechnology. biotech Noun short for biotechnology Noun 1. sector. The company's current products include the OL1000, which utilizes patented Combined Magnetic Field technology to deliver a highly specific, low-energy signal for the non-invasive treatment of an established nonunion fracture nonunion fracture Orthopedics A fracture unhealed after 9 months. See Pseudoarthrosis. ; and SpinaLogic(R), a state-of-the-art device used as an adjunct adjunct (aj´ungkt), n a drug or other substance that serves a supplemental purpose in therapy. adjunct to lumbar lumbar /lum·bar/ (lum´bar) pertaining to the loins. lum·bar adj. Of, near, or situated in the part of the back and sides between the lowest ribs and the pelvis. spinal fusion spinal fusion n. A surgical procedure in which vertebrae are joined. Also called spondylosyndesis. Spinal fusion surgery. OrthoLogic's strategic plan is to post continued solid growth in its core stimulation business as well as enter the orthobiologics market with its exciting new potential product, Chrysalin(R), currently the only small-molecule therapeutic of its kind in human clinical trials. For more information, visit the company's Web site: www.orthologic.com. Conference Call Information A conference call to discuss second quarter financial results and provide financial guidance for the remainder of 2002 will take place today at noon EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT (9 a.m. PDT/Arizona time). A live webcast and Internet replay of the call will be provided, and can be accessed from the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of OrthoLogic's Web site at www.orthologic.com. Additionally, all StreetEvents subscribers can access the webcast from www.streetevents.com. Statements in this news release or otherwise attributable to OrthoLogic regarding the company's business that are not historical facts 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. made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Word such as "improving," "believe," "expect," "looking forward to," "continuing," "poised to enter," "strategic plan" and similar expressions are intended to identify such forward-looking statements. Some examples of forward-looking statements in this news release include the company's ability to continue to increase its sales particularly to new customers, improve the company's margins and lower its expenses; the expected schedule of the Chrysalin Phase III human clinical trial, the ability of the company to obtain the necessary regulatory approval for Chrysalin trials and uses, the speed with which the company can bring Chrysalin to the market, and the size of the market for Chrysalin. These forward-looking statements are not guarantees of performance and are inherently subject to risks and uncertainties, some of which cannot be predicted or anticipated. Many factors could cause actual results to differ from those expressed in the forward-looking statements including, the seasonality of the company's sales which favor summer and fall, when more people are involved in outdoor activities; the efficacy of the company's outside marketing and distribution partners to continue to promote new sales of its products; delays in commencing or completing the clinical trials due to lack of available patients or funding; unexpected and unfavorable results from the clinical trials; inability to obtain ultimate approval for marketing of Chrysalin regardless of the results of the clinical trials due to changes in the regulatory schemes; and advances in the company's competitor's products. For additional risks associated with the company, see the "Risk Factors" in the company's 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 regular periodic reports filed with the Securities and Exchange Commission.
OrthoLogic Corp.
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)
Three months ended Six months ended
June 30, June 30,
2002 2001 2002 2001
Net revenues $ 9,705 $ 22,094 $ 19,313 $ 43,776
Cost of revenues 1,443 3,899 2,755 8,631
Gross profit 8,262 18,195 16,558 35,145
Operating expenses
Selling, general and
administrative 6,652 17,087 13,356 33,190
Research and development 749 1,957 1,669 2,661
CPM Divestiture and
related charges (226) 14,327 (826) 14,327
Total operating expenses 7,175 33,371 14,199 50,178
Operating income (loss) 1,087 (15,176) 2,359 (15,033)
Total other income 181 130 368 259
Income (loss) before
income taxes 1,268 (15,046) 2,727 (14,774)
Provision for income
taxes 12 (60) 25 8
Net income (loss) $ 1,256 $ (14,986) $ 2,702 $ (14,782)
Basic earnings per share
Net income (loss) per
common share $ 0.04 $ (0.48) $ 0.08 $ (0.47)
Weighted average
number of common
shares outstanding 32,609 31,444 32,556 31,293
Diluted earnings per
share
Net income (loss)
per common and
equivalent shares $ 0.04 $ (0.48) $ 0.08 $ (0.47)
Weighted number of
diluted shares
outstanding 33,415 31,444 33,364 31,293
OrthoLogic Corp.
Condensed Consolidated Balance Sheets
(in thousands)
June 30, Dec. 31,
2002 2001
ASSETS (Unaudited)
Cash and cash equivalents $ 16,435 $ 19,503
Short-term investments 16,125 11,008
Accounts receivable 10,314 11,361
Inventory 2,529 1,762
Prepaids and other current assets 822 688
Deferred income tax 2,631 2,631
Total current assets 48,856 46,953
Furniture and equipment 8,522 8,325
Accumulated depreciation (6,769) (6,423)
Furniture and equipment, net 1,753 1,902
Chrysalin investment 750 750
Deposits and other assets 96 92
Total assets $ 51,455 $ 49,697
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable $ 1,307 $ 1,031
Accrued liabilities 4,583 5,883
Total current liabilities 5,890 6,914
Deferred rent 319 287
Total liabilities 6,209 7,201
Series B Convertible Preferred Stock - 600
Stockholders' Equity
Common stock 16 16
Additional paid-in capital 135,974 135,326
Common stock to be used for legal
settlement 2,969 2,969
Accumulated deficit (93,576) (96,278)
Treasury Stock (137) (137)
Total stockholders' equity 45,246 41,896
$ 51,455
Total Liabilities and
Stockholders' Equity $ 51,455 $ 49,697
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