Uroplasty Reports Results for Second Quarter FY2010
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MINNEAPOLIS, Nov. 2 /PRNewswire-FirstCall/ -- Uroplasty, Inc. (NYSE Amex: UPI), a medical device company that develops, manufactures and markets innovative proprietary products to treat voiding dysfunctions, today reported financial results for the second fiscal quarter ended September 30, 2009.
"Our team continues to execute our strategy for the current fiscal year by growing U.S. Macroplastique sales and maximizing the potential for gaining a unique CPT code for Urgent PC® treatments," said David Kaysen, President & CEO. "During the quarter, we learned that a manuscript of the results from the SUmiT Trial has been recommended for publication in The Journal of Urology® and is tentatively scheduled to appear in the April 2010 issue. This study reports on a 220-subject, multicenter, randomized, controlled clinical trial designed to directly compare the effectiveness of PTNS using Urgent PC to a validated sham intervention over a 12-week period and is a major component of our strategy to expand and support third-party reimbursement coverage of Urgent PC treatments. The investigators' submission of this manuscript was ahead of the original timetable. We fully anticipate submitting an application to the American Medical Association (AMA) for a unique CPT code for PTNS prior to the November 11, 2009 deadline.
"While our fiscal second quarter and first half financial performance is below year-ago results, we are encouraged by the continued strong growth of our U.S. Macroplastique product sales," continued Mr. Kaysen. "Sales of our Macroplastique product in the U.S. through six months of our current fiscal year have about doubled in each quarter over the corresponding year-ago quarter. At the same time, Urgent PC sales in the U.S., while continuing to be challenged by the uncertain insurance reimbursement environment, have stabilized at about $1 million per quarter in each of the last two quarters. While European sales continue to be impacted by a competitive product launch, we saw growth in sales in the second fiscal quarter from distributors in two major European markets which had recorded a decline in the first fiscal quarter. At the same time, with the SUmiT clinical study expenses largely behind us, and our vigilant efforts to manage expenses to conserve cash, we have adequate liquidity to meet our needs for the next 12 months."
Fiscal Second Quarter and First Half Results for the Period Ended September 30, 2009
Net sales for the three months ended September 30, 2009 were $3.0 million versus $3.9 million for the second quarter of fiscal 2009. Net sales for the six months ended September 30, 2009 were $5.8 million versus $8.4 million for same period a year ago.
Net sales to customers in the U.S. during the three months ended September 30, 2009 totaled $1.5 million, as compared to net sales of $2.2 million for the three months ended September 30, 2008. Sales of Urgent PC of $960,000 declined from $2.0 million in the year-ago quarter. The trend in decline of Urgent PC sales over corresponding year-ago periods began in the second half of fiscal 2009 due to reimbursement related issues. Partially offsetting this decline was an increase in Macroplastique product sales to $528,000 from $254,000 in the year-ago quarter. Sales of Macroplastique have steadily increased because of increased sales and marketing focus. Net sales of Macroplastique to customers in the U.S. for the first half of fiscal 2010 totaled $949,000 versus $441,000 for the first six months of fiscal 2009.
Sales to customers outside of the U.S. for the three months ended September, 2009 were $1.5 million, down from $1.7 million in the year-ago period. Excluding the translation impact of fluctuations in foreign currency exchange rates, sales decreased by approximately 5%. The second fiscal quarter is normally the weakest of the year for the Company's international business. The sales decrease as compared to last year is mainly attributed to increased competition from a newly-introduced product competitive with Uroplasty's Macroplastique.
Sales to customers outside of the U.S. for the first half of fiscal 2010 were $2.8 million as compared to $4.0 million, a decrease of 29%, for the six months ended September 30, 2008. Excluding the translation impact of fluctuations in foreign currency exchange rates, sales decreased by approximately 20%. Also contributing to the decline in sales is the discontinuation in the current fiscal year in the U.K. of our I-Stop urethral sling product which accounted for approximately $101,000 in sales for the six months ended September 30, 2009 and $191,000 in sales in fiscal 2009.
Net loss for the second fiscal quarter ended September 30, 2009 was $875,000, or $0.06 per diluted share, versus a net loss of $561,000, or $0.04 per diluted share for the second quarter of last year. For the first half of fiscal 2010, the net loss was $2.2 million, or $0.15 per diluted share as compared with a net loss for the first half of fiscal 2009 of $968,000, or $0.06 per diluted share.
At September 30, 2009, cash and cash equivalents, and short-term investments were $5.8 million compared with $6.3 million at June 30, 2009 and $7.8 million as of March 31, 2009.
"Looking ahead, we expect U.S. sales of Macroplastique to continue to grow during the remainder of the fiscal year as we expect to benefit from our increased sales and marketing effort," continued Mr. Kaysen. "However, we do not expect that we will be able to return to significant sales growth or return to the historic sales level of Urgent PC in the U.S. until a new listed CPT code is assigned and payors create coverage policies that provide adequate reimbursement.
"For the past four quarters we have implemented a comprehensive program designed to educate Medicare carriers and private payer medical directors about the clinical efficacy of Urgent PC. I am pleased with how we have executed this strategy, and we are well ahead of our planned publication and presentation schedule. Phase I OrBIT data, published in September 2009 demonstrated that PTNS had comparable efficacy to the leading anticholinergic drug prescribed for overactive bladder. The data demonstrating sustained symptom improvement at one year from Phase 2 of the OrBIT study has been accepted for publication in the January 2010 edition of The Journal of Urology. With SUmiT study results available in spring 2010, we believe these publications, as well as others, will lead the medical directors to reaffirm or reinstate reimbursement, as well as aid us in our CPT Code application. Our overall goal remains to obtain a unique CPT code that will encourage broader use of Urgent PC. We are confident that we are moving closer toward attaining that goal," Mr. Kaysen concluded.
Conference Call
Uroplasty will host an audio conference call today at 3:30 pm Central, 4:30 pm Eastern, to review the financial results for the second fiscal quarter of 2010. David Kaysen, President and Chief Executive Officer and Medi Jiwani, Vice President, Chief Financial Officer and Treasurer will host the call. Individuals wishing to participate in the conference call should dial 866-561-1721 (domestic) or 480-629-9868 (international). An audio replay will be available for 30 days following the call at 800-406-7325 (domestic) or 303-590-3030 (international), with the passcode 4171526#.
About Uroplasty, Inc.
Uroplasty, Inc., headquartered in Minnetonka, Minnesota, with wholly-owned subsidiaries in
The Netherlands and the United Kingdom, is a medical device company that develops, manufactures and markets innovative proprietary products for the treatment of voiding dysfunctions. Our focus is the continued commercialization of our Urgent PC system, which we believe is the only FDA-approved minimally invasive nerve stimulation device designed for office-based treatment of urinary urgency, urinary frequency and urge incontinence - symptoms often associated with overactive bladder.
We also offer Macroplastique Implants, an injectable urethral bulking agent for the treatment of adult female stress urinary incontinence primarily due to intrinsic sphincter deficiency. For more information on the company and its products, please visit Uroplasty, Inc. at www.uroplasty.com.
Forward-Looking Information
This press release contains forward-looking statements, which reflect our best estimates regarding future events and financial performance. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from our anticipated results. We discuss in detail the factors that may affect the achievement of our forward-looking statements in our Annual Report on Form 10-K filed with the SEC. Further, we cannot assure you that our SUmiT clinical trial will produce favorable results, that even if it does produce favorable results third-party payors will provide or continue to provide coverage and reimbursement, or reimburse the providers an amount sufficient to cover their costs and expenses, or that we will timely obtain, or even succeed at all at obtaining, a specific "listed" CPT reimbursement code from the AMA for Urgent PC treatments. We further cannot assure that reimbursement or other issues will not further impact our fiscal 2010 results.
For Further Information: Uroplasty, Inc.
David Kaysen, President and CEO, or
Medi Jiwani, Vice President, CFO, and Treasurer
952.426.6140
EVC Group
Doug Sherk (Investors)
415.896.6820
Chris Gale (Media)
646.201.5431
UROPLASTY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Net sales $2,986,475 $3,920,516 $5,812,404 $8,446,138
Cost of goods sold 535,074 549,199 1,087,044 1,257,166
------- ------- --------- ---------
Gross profit 2,451,401 3,371,317 4,725,360 7,188,972
--------- --------- --------- ---------
Operating expenses
General and
administrative 713,040 918,394 1,561,591 1,957,108
Research and
development 435,898 327,978 963,713 733,498
Selling and marketing 1,968,054 2,505,598 4,025,342 5,125,632
Amortization 211,503 210,966 423,316 421,941
------- ------- ------- -------
3,328,495 3,962,936 6,973,962 8,238,179
--------- --------- --------- ---------
Operating loss (877,094) (591,619) (2,248,602) (1,049,207)
-------- -------- ---------- -----------
Other income
(expense)
Interest income 24,230 63,542 55,629 138,656
Interest expense (1,788) (6,750) (9,694) (13,585)
Foreign currency
exchange gain (loss) (7,365) 5,038 (14,697) (732)
Other, net 2,000 (4,687) (183) (4,687)
----- ------ ---- ------
17,077 57,143 31,055 119,652
------ ------ ------ -------
Loss before income
taxes (860,017) (534,476) (2,217,547) (929,555)
Income tax expense 14,642 26,487 22,887 38,057
------ ------ ------ ------
Net loss $(874,659) $(560,963) $(2,240,434) $(967,612)
========= ========== =========== =========
Basic and diluted
loss per common
share $(0.06) $(0.04) $(0.15) $(0.06)
Weighted average
common shares
outstanding:
Basic and diluted 14,946,540 14,916,540 14,942,179 14,916,540
UROPLASTY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, March 31,
2009 2009
(unaudited)
---------- ----------
Assets
Current assets:
Cash and cash equivalents & Short-term
investments $5,792,867 $7,776,299
Accounts receivable, net 1,196,518 1,214,049
Inventories 486,269 495,751
Other 326,278 279,898
------- -------
Total current assets 7,801,932 9,765,997
Property, plant, and equipment, net 1,389,493 1,401,229
Intangible assets, net 2,955,332 3,378,648
Prepaid pension asset 86,687 66,130
Deferred tax assets 79,367 68,793
------ ------
Total assets $12,312,811 $14,680,797
=========== ===========
Liabilities and Shareholders' Equity
Current liabilities:
Current portion - deferred rent $35,000 $35,000
Accounts payable 431,016 604,593
Income tax payable - 56,785
Accrued liabilities 902,718 1,231,620
------- ---------
Total current liabilities 1,368,734 1,927,998
Deferred rent - less current portion 130,114 147,576
Accrued pension liability 283,008 296,646
------- -------
Total liabilities 1,781,856 2,372,220
--------- ---------
Total shareholders' equity 10,530,955 12,308,577
---------- ----------
Total liabilities and shareholders' equity $12,312,811 $14,680,797
=========== ===========
UROPLASTY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
September 30,
-------------
2009 2008
---- ----
Cash flows from operating
activities:
Net loss $(2,240,434) $(967,612)
Adjustments to reconcile
net loss to net cash used
in operating activities:
Depreciation and
amortization 567,238 566,949
Loss on disposal of
equipment 186 4,687
Share-based consulting
expense - 36,409
Share-based compensation
expense 291,462 453,592
Deferred income taxes (3,249) (10,164)
Deferred rent (17,500) (17,500)
Changes in operating assets
and liabilities:
Accounts receivable 91,206 537,959
Inventories 47,499 (11,128)
Other current assets and
income tax receivable (102,998) (108,041)
Accounts payable (185,406) (145,610)
Accrued liabilities (348,381) (634,851)
Accrued pension liability,
net and income tax payable (58,492) (44,772)
------- -------
Net cash used in operating
activities (1,958,869) (340,082)
---------- --------
Cash flows from investing
activities:
Proceeds from sale of
short-term investments 2,500,000 8,808,304
Purchase of short-term
investments (2,000,000) (7,891,373)
Purchases of property,
plant and equipment (61,334) (130,421)
Proceeds from sale of
property, plant and
equipment 2,000 -
----- ---
Net cash provided by
investing activities 440,666 786,510
------- -------
Cash flows from financing
activities:
Repayment of debt
obligations - (455,913)
--- --------
Net cash used in financing
activities - (455,913)
--- --------
Effect of exchange rates on
cash and cash equivalents 34,771 (194,967)
------ --------
Net decrease in cash and
cash equivalents (1,483,432) (204,452)
Cash and cash equivalents
at beginning of period 3,276,299 3,880,044
--------- ---------
Cash and cash equivalents
at end of period $1,792,867 $3,675,592
========== ==========
Supplemental disclosure of
cash flow information:
Cash paid during the period
for interest $6,145 $13,612
Cash paid during the period
for income taxes 105,877 35,474
Non-GAAP Financial Measures: The following table reconciles our financial results calculated in accordance with accounting principles generally accepted in the U.S. (GAAP) to non-GAAP financial measures that exclude non-cash charges for share-based compensation, and depreciation and amortization expenses from gross profit, operating expenses and operating loss. The non-GAAP financial measures used by management and disclosed by us are not a substitute for, or superior to, financial measures and consolidated financial results calculated in accordance with GAAP, and you should carefully evaluate our reconciliations to non-GAAP. We may calculate our non-GAAP financial measures differently from similarly titled measures used by other companies. Therefore, our non-GAAP financial measures may not be comparable to those used by other companies. We have described the reconciliations of each of our non-GAAP financial measures above to the most directly comparable GAAP financial measures.
We use these non-GAAP financial measures, and in particular non-GAAP operating loss, for internal managerial purposes because we believe such measures are one important indicator of the strength and the performance of our business as they provide a link to operating cash flow. We also believe that analysts and investors use such measures to evaluate the overall operating performance of companies in our industry, including as a means of comparing period-to-period results and as a means of evaluating our results with those of other companies.
Our non-GAAP operating loss of approximately $475,000 for the three months ended September 30, 2009 was greater than the $98,000 operating loss in same period in fiscal 2009. Our non-GAAP operating loss was approximately $1,390,000 for the six months ended September 30, 2009 compared to an operating income of $8,000 in same period fiscal in 2009. We attribute the increased operating loss primarily to the decrease in sales and a lower gross margin rate, offset partially by a decrease in cash operating expenses.
Three Months Ended Six Months Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Gross Profit
GAAP gross
profit $2,451,401 $3,371,317 $4,725,360 $7,188,972
% of sales 82% 86% 81% 85%
Share-based
compensation 4,903 8,879 18,448 25,253
Depreciation
expense 14,150 13,057 28,299 25,847
------ ------ ------ ------
Non-GAAP
gross profit 2,470,454 3,393,253 4,772,107 7,240,072
--------- --------- --------- ---------
Operating
Expenses
GAAP
operating
expenses 3,328,495 3,962,936 6,973,962 8,238,179
Share-based
compensation 113,909 198,131 273,014 464,748
Depreciation
expense 57,546 62,104 115,623 119,161
Amortization
expense 211,503 210,966 423,316 421,941
------- ------- ------- -------
Non-GAAP
operating
expenses 2,945,537 3,491,735 6,162,009 7,232,329
--------- --------- --------- ---------
Operating
Loss
GAAP
operating
loss (877,094) (591,619) (2,248,602) (1,049,207)
Share-based
compensation 118,812 207,010 291,462 490,001
Depreciation
expense 71,696 75,161 143,922 145,008
Amortization
expense 211,503 210,966 423,316 421,941
------- ------- ------- -------
Non-GAAP
operating
income
(loss) $(475,083) $(98,482) $(1,389,902) $7,743
--------- -------- ----------- ------
SOURCE Uroplasty, Inc.
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