ARTHROCARE REPORTS 2ND QTR 201O TOTAL REVENUE OF $88.8 MIL.
SECOND QUARTER 2010 HIGHLIGHTS
Second quarter 2010 total revenue of $88.8 million
Product margin of 65.9 percent
Operating income of $12.3 million
Net income available to common stockholders of $7.3 million, or $0.22 per diluted share
Total revenue for the second quarter of 2010 was $88.8 million, compared to $80.8 million for the second quarter of 2009. Product sales increased in both the Company's core Sports Medicine and ENT businesses and across all geographies. Changes in exchange rates decreased the U.S. dollar reported value of product sales by approximately $0.3 million. Sports Medicine product sales increased $4.9 million, or 9.8 percent, in the second quarter of 2010 compared to the same period of 2009. Americas Sports Medicine product sales increased $2.3 million, or 6.4 percent, in the second quarter of 2010 compared to the same period in 2009, due to higher contract manufacturing volume, partially offset by lower sales of the Company's proprietary Sports Medicine products. International Sports Medicine product sales increased $2.6 million, or 18.0 percent, in the second quarter of 2010 compared to the same period in 2009.
ENT product sales increased $2.5 million, or 11.2 percent, in the second quarter of 2010 compared to the same period of 2009, from increased volume of the Company's tonsil and turbinate products as well as higher average sales prices. Spine product sales declined $0.3 million, or 5.5 percent, in the second quarter of 2010 compared to the second quarter of 2009.
Product margin was 65.9 percent for the second quarter of 2010 compared to 71.5 percent for the second quarter of 2009. Product margin for the second quarter of 2010 was lower due to higher contract manufactured product sales which generally realize lower margins and adjustments made to the carrying value of inventory for excess and obsolete items.
INCOME (LOSS) FROM OPERATIONS
Income from operations for the second quarter of 2010 was $12.3 million compared to a loss from operations of $2.4 million for the same period in 2009. Investigation and restatement related expenses were $0.5 million in the second quarter of 2010 compared to $7.3 million in the second quarter of 2009. Sales and marketing and general and administrative expenses declined by $2.6 million and $3.1 million, respectively, compared to the second quarter of 2009. The improvement in sales and marketing expenses was a result of lower product demonstration costs, lower bad debt allowance requirements due to accounts receivable collection and aging improvement, and a quarter over quarter decline in sales expenses associated with the Company's Spine business following the restructuring of its Americas sales organization in 2009. Moreover, contract manufactured products did not incur direct sales and marketing costs, such as commission expense. The improvement in general and administrative expenses was a result of lower legal fees after the completion of the arbitration matter involving Gyrus and Ethicon in December 2009. Research and development expenses were $1.0 million lower in the second quarter of 2010 compared to the same period in 2009, primarily due to one-time charges associated with third party service contracts that have since terminated, offset by higher personnel headcount.
NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS
Second quarter 2010 net income available to common stockholders was $7.3 million, or $0.22 per diluted share, compared to a net loss of $2.7 million, or ($0.10) per share, for the second quarter of 2009.
BALANCE SHEET AND CASH FLOWS
Cash, cash equivalents, restricted cash equivalents, and investments increased $25.8 million to $83.2 million as of June 30, 2010 from $57.4 million at December 31, 2009. Cash flows provided by operating activities for the six months ended June 30, 2010 was $32.4 million compared to $22.8 million for the six months ended June 30, 2009. Net inventory balances decreased approximately $6.4 million and accounts receivable decreased $1.1 million from December 31, 2009. The company continues to focus on working capital efficiency, process improvements, and cash conversion.
Founded in 1993, ArthroCare Corp. is a highly innovative, multi-business medical device company that develops, manufactures, and markets minimally invasive surgical products. With these products, ArthroCare targets a multi-billion dollar market across several medical specialties, significantly improving existing surgical procedures and enabling new, minimally invasive procedures. Many of ArthroCare's products are based on its patented Coblation[R] technology, which uses low-temperature radiofrequency energy to gently and precisely dissolve rather than burn soft tissue minimizing damage to healthy tissue. Used in surgeries worldwide, Coblation-based devices have been developed and marketed for sports medicine; spine/neurologic; ear, nose and throat (ENT); cosmetic; urologic; and gynecologic procedures. ArthroCare also has added a number of other technologies to its portfolio, including Opus Medical sports medicine, Parallax spine and Applied Therapeutics ENT products, to complement Coblation within key indications.
For more information, call 512/391-3907.
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|Publication:||Biotech Financial Reports|
|Article Type:||Financial report|
|Date:||Aug 28, 2010|
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