PLYMOUTH, Minn., Oct. 27 /PRNewswire-FirstCall/ -- ev3 Inc. , a global endovascular device company, reported today its financial results for its fiscal third quarter ended October 2, 2005.
As reported on October 5, 2005, ev3's net sales in the third quarter of 2005 were $33.5 million, an increase of 70% versus net sales of $19.7 million in the third quarter of 2004. This growth was generated internally and reflected strong net sales growth in each of ev3's reportable business segments and geographic markets. New products and an expansion of the ev3 world-wide sales and distribution organization were the important growth drivers. Reported net sales for ev3 include the consolidated net sales of the company's majority-owned subsidiary, Micro Therapeutics, Inc. , an endovascular device company focused on neurovascular disease and disorders.
For the nine months ended October 2, 2005, ev3's net sales were $92.7 million, an increase of 52% compared to net sales in the first nine months of 2004. Sales growth in the first nine months of 2005 also was generated internally and reflected net sales growth in each of ev3's reportable business segments and geographic markets.
James Corbett, President and CEO of ev3 Inc. and Chairman of the Board of MTI, commented, "We are extremely pleased that ev3's third quarter net sales results reflected significant growth across all lines of the company's cardio peripheral and neurovascular products globally. ev3's United States net sales benefited specifically from the launch of the Diver C.E. aspiration catheter in the cardio peripheral segment and the Onyx Embolic System in the neurovascular segment."
Cost of goods sold as a percentage of net sales for the third quarter of 2005 decreased to 40.6% of sales from 47.5% in the third quarter of 2004. ev3's improvement in cost of goods sold as a percentage of net sales continues to reflect the benefits of increased production volumes, recently completed plant consolidations, in-house manufacturing of certain stent components, and other cost reduction initiatives.
The Company's loss from operations of $21.9 million in the third quarter of 2005 represents a decrease of $4.8 million, or 18%, from the third quarter of 2004 when considering the $14.5 million gain realized in the third quarter of 2004 on the sale of certain intellectual property. The as reported third quarter 2004 loss from operations, including the above referenced gain, was $12.2 million.
ev3's net loss attributable to common shareholders for the third quarter of 2005 was $20.5 million or $0.42 per common share, compared to $21.3 million or $8.35 per common share in the third quarter 2004. ev3's net loss attributable to common shareholders for the first nine months of 2005 was $100.1 million or $4.99 per common share, compared to $86.7 million or $43.07 per common share for the first nine months of 2004. ev3's net loss attributable to common shareholders for the third quarter of 2004 and for the first nine months of 2004 was reduced by the $14.5 million gain noted above. Total weighted average common shares outstanding used in the per share calculations were 49,099,357 for the third quarter of 2005 and 2,547,809 for the third quarter of 2004. ev3's operating expenses for the third quarter of 2005 included $1.4 million in stock-based compensation charges.
Corbett continued, "ev3's third quarter operating loss narrowed to $21.9 million compared to $29.0 million in the second quarter of 2005, primarily due to operating expense reductions and improved operating leverage. We expect our operating loss to continue to narrow in future quarters as our sales growth allows us to leverage our investments in our world-wide sales and marketing infrastructure, manufacturing capabilities and corporate general and administrative support."
Proposal to Acquire Public Minority Stake in Micro Therapeutics, Inc.
As previously announced on October 10, 2005 ev3 delivered a proposal to Micro Therapeutics, Inc. (MTI) to acquire all of the outstanding shares of common stock of MTI that ev3 does not already own. ev3 currently owns approximately 70.2% of MTI's outstanding common stock. Under the terms of the proposal, ev3 would issue approximately 6.6 million new shares of its common stock, bringing ev3's total pro forma outstanding shares to approximately 56 million.
Sales Review
By segment, ev3's third quarter net sales of cardio peripheral products were $19.8 million, representing an increase of 65% versus the year-ago quarter, and net sales of neurovascular products were $13.7 million, representing an increase of 80% versus the year-ago quarter. On a geographic basis, ev3's third quarter United States net sales were $19.1 million, representing an increase of 87% versus the year-ago quarter, and third quarter international net sales were $14.4 million, representing an increase of 52% versus the year-ago quarter.
Outlook
ev3 expects its net sales in the fourth quarter and full year 2005 to be in the range of $38 to $42 million and $131 to $135 million, respectively. ev3 also expects its quarterly operating loss to be reduced during the final quarter of 2005 as compared to its operating loss in the third quarter of 2005.
Earnings Call Information
ev3 will host a conference call today, October 27, 2005, beginning at 9:00 a.m. EDT to review its results of operations for the third quarter of 2005 and other recent events and to discuss its fourth quarter 2005 business outlook. Discussions during the conference call may include forward-looking statements regarding such topics as, but not limited to, the company's net sales, cost of goods sold, operating expenses, distribution arrangements, clinical studies, regulatory status, and financial position, and comments the company may make about its future in response to questions from participants on the conference call. Any interested party may listen to the conference call through a live audio Internet broadcast at . For those unable to listen to the live broadcast, a playback of the webcast will be available at for approximately 90 days. An audio playback of the conference call will be available from 10:30 a.m. CT, October 27, 2005 until noon CT on November 3, 2005 by calling 888-286-8010 (United States) or 617-801-6888 (international), pass code 82466094.
ev3 and the ev3 logo are trademarks of ev3 Inc., registered in the U.S. and other countries.
Statements contained in this press release that are not historical information are forward-looking statements as defined within the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected or implied. Such potential risks and uncertainties relate, but are not limited, to, in no particular order: product demand and market acceptance; the impact of competitive products and pricing; success of clinical testing; and the risks associated with ev3's proposal to acquire the public minority stake in MTI, including the recommendation of the transaction by MTI's special committee, the result of the review of the proposed transaction by various regulatory agencies and any conditions imposed on ev3 in connection with consummation of the transaction, and satisfaction of various conditions to the closing of the transaction. More detailed information on these and additional factors which could affect ev3 Inc.'s operating and financial results are described in the company's filings with the Securities and Exchange Commission, including its most recent quarterly report on Form 10-Q. ev3 Inc. urges all interested parties to read these reports to gain a better understanding of the many business and other risks that the company faces. Additionally, ev3 Inc. undertakes no obligation to publicly release the results of any revisions to these forward-looking statements, which may be made to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events.
Additional Information and Where to Find It. In connection with ev3's proposed acquisition of the public minority stake in MTI, a registration statement on Form S-4, containing a prospectus, will be filed with the SEC. MTI STOCKHOLDERS ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE PROSPECTUS THAT WILL BE PART OF THE REGISTRATION STATEMENT, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION. The final prospectus will be mailed to stockholders of MTI. Investors and security holders will be able to obtain the registration statement containing the prospectus (and the filings with the SEC that will be incorporated by reference into such documents) free of charge at the SEC's web site, , and from ev3 Investor Relations at (763) 398-7000.
ev3 Inc.
COMBINED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
For the three months For the nine months
ended ended
October 2, October 3, October 2, October 3,
2005 2004 2005 2004
Net sales $33,500 $19,654 $92,722 $60,803
Operating expenses
Cost of goods sold (a) 13,590 9,327 38,484 27,484
Sales, general and
administrative (a) 30,666 24,003 94,823 71,960
Research and development (a) 8,436 10,577 30,653 30,320
Amortization of intangible
assets 2,674 2,438 7,877 7,416
(Gain) loss on sale or
disposal of assets, net 40 (14,514) 204 (14,495)
Acquired in-process
research and development - - 868 -
Total operating expenses 55,406 31,831 172,909 122,685
Loss from operations (21,906) (12,177) (80,187) (61,882)
Other (income) expense:
Gain on sale of
investments, net - - (4,611) (1,728)
Interest (income) expense, net (953) 9,802 10,833 20,415
Minority interest in loss
of subsidiary (486) (6,910) (1,212) (11,982)
Other (income) expense, net (8) 213 2,912 319
Loss before income taxes (20,459) (15,282) (88,109) (68,906)
Income tax benefit (2) - (61) -
Net loss (20,457) (15,282) (88,048) (68,906)
Accretion of preferred
membership units to
redemption value - 5,988 12,061 17,792
Net loss attributable to
common shareholders $(20,457) $(21,270) $(100,109) $(86,698)
Net loss per common share
attributed to common
shareholders (basic and
diluted) (b) $(0.42) $(8.35) $(4.99) $(43.07)
Weighted average common
shares outstanding (b) 49,099,357 2,547,809 20,069,139 2,012,829
(a) Includes stock based
compensation charges of:
Cost of goods sold $198 $45 $445 $143
Sales, general and
administrative 859 192 1,904 1,565
Research and
development 295 179 729 577
$1,352 $416 $3,078 $2,285
(b) Net loss per common share attributable to common shareholders reflects
the June 21, 2005 1-for-6 reverse stock split for all periods
presented.
ev3 Inc.
COMBINED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
(unaudited)
October 2, December 31,
2005 2004
Assets
Current assets
Cash and cash equivalents $94,762 $20,131
Short-term investments 12,010 -
Accounts receivable, less allowance
of $3,342 and $2,694, respectively 23,132 18,956
Inventories 31,911 22,500
Prepaid expenses and other assets 5,784 4,576
Other receivables 949 2,446
Total current assets 168,548 68,609
Restricted cash 3,363 2,638
Property and equipment, net 15,816 9,130
Goodwill 94,456 94,514
Other intangible assets, net 28,511 31,851
Other assets 3,860 5,304
Total assets $314,554 $212,046
Liabilities and stockholders' equity
(deficit)
Current liabilities
Accounts payable $10,967 $8,931
Accrued compensation and benefits 12,922 9,523
Accrued liabilities 12,110 13,821
Accrued acquisition consideration - 3,750
Total current liabilities 35,999 36,025
Demand notes payable - related parties - 299,453
Other long-term liabilities 482 702
Total liabilities 36,481 336,180
Commitments and contingencies - -
Class A preferred membership units:
stated value $3.56; 24,040,718 units
authorized; issued and outstanding:
zero and 24,040,718, respectively - 95,105
Class B preferred membership units:
stated value $3.56; 41,077,336 units
authorized; issued and outstanding:
zero and 41,077,336, respectively - 158,923
Minority interest 13,329 16,310
Stockholders' equity (deficit)
Members' capital - 47,927
Common stock: $0.01 par value;
100,000,000 shares authorized;
issued and outstanding: 49,147,954 and
zero, respectively 491 -
Additional paid in capital 805,086 -
Accumulated deficit (540,663) (440,705)
Accumulated other comprehensive loss (170) (1,694)
Total stockholders' equity
(deficit) 264,744 (394,472)
Total liabilities and stockholders'
equity (deficit) $314,554 $212,046
ev3 Inc.
COMBINED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands, except per share amounts)
(unaudited)
For the nine months ended
October 2, October 3,
2005 2004
Operating activities
Net loss $(88,048) $(68,906)
Adjustments to reconcile net loss to
net cash used in operating activities
Depreciation and amortization 10,790 10,416
Provision for bad debts 393 1,179
Provision for inventory
obsolescence 1,775 1,416
Acquired in-process research and
development 868 -
(Gain) loss on disposal of assets 217 (14,493)
Amortization of beneficial
conversion feature and non-cash
interest expense - 6,778
Gain on sale of investment (4,611) (1,728)
Stock compensation expense 3,078 2,285
Minority interest in loss of
subsidiary (1,212) (11,982)
Increase (decrease) in cash
resulting from changes in
operating assets and liabilities
Accounts receivable (5,854) (3,389)
Inventories (11,318) (7,050)
Prepaids and other assets 2,474 (5,424)
Accounts payable 3,012 389
Accrued expenses and other
liabilities 1,984 2,710
Accrued interest on notes
payable 12,156 13,660
Net cash used in operating
activities (74,296) (74,139)
Investing activities
Purchase of short-term investments (12,010) -
Purchase of property and equipment (9,913) (2,033)
Purchase of patents and licenses (1,150) (1,094)
Proceeds from sale of assets 8 10,278
Proceeds from sale of investments 4,611 1,728
Acquisitions, net of cash acquired (1,626) (3,750)
Restricted cash (527) (208)
Other 840 -
Net cash (used in) provided by
investing activities (19,767) 4,921
Financing activities
Issuance of demand notes payable 49,100 59,314
Payments on demand notes payable (36,475) -
Proceeds from issuance of notes
payable, net of costs - 21,008
Proceeds from exercise of stock
options 931 79
Proceeds from issuance of
subsidiary stock to minority
shareholders 294 178
Proceeds from initial public
offering, net 154,946 -
Other - (1,187)
Net cash provided by financing
activities 168,796 79,392
Effect of exchange rate changes on
cash (102) (75)
Net increase in cash and cash
equivalents 74,631 10,099
Cash and cash equivalents, beginning
of year 20,131 23,625
Cash and cash equivalents, end of
year $94,762 $33,724
ev3 Inc.
SELECTED SALES INFORMATION
(Dollars in thousands, except per share amounts)
(unaudited)
SALES BY SEGMENT For the three months For the nine months
ended ended
October 2, October 3, October 2, October 3,
2005 2004 2005 2004
Cardio Peripheral
Stents $9,913 $4,772 $25,792 $14,777
Thrombectomy and embolic
protection 2,949 1,748 9,410 5,683
Procedural support
and other 6,981 5,528 20,690 17,320
Total Cardio
Peripheral 19,843 12,048 55,892 37,780
Neurovascular
Embolic products 6,220 2,850 14,417 8,337
Neuro access and
delivery products 7,437 4,756 22,413 14,686
Total Neurovascular 13,657 7,606 36,830 23,023
Total Company $33,500 $19,654 $92,722 $60,803
For the three months For the nine months
SALES BY GEOGRAPHY ended ended
October 2, October 3, October 2, October 3,
2005 2004 2005 2004
United States $19,081 $10,178 $49,141 $30,888
International 14,419 9,476 43,581 29,915
Total net sales $33,500 $19,654 $92,722 $60,803
ev3 Inc.
CONTACT: Patrick D. Spangler, CFO of ev3 Inc., +1-763-398-7000,pspangler@ev3.net
Web site: