EX-99.1 2 d19629exv99w1.htm PRESS RELEASE exv99w1
 

Exhibit 99.1

     
(ANS LOGO)
  FOR IMMEDIATE RELEASE
     
Agency Contact:
  Company Contact:
Neil Berkman Associates
  Chris Chavez, President & CEO
(310) 277-5162
  (972) 309-8000
info@BerkmanAssociates.com
  www.ANS-medical.com

Advanced Neuromodulation Systems
Reports Record Third Quarter Sales and Net Income

Neuro Sales Increase 37%

     DALLAS, TEXAS, October 28, 2004 — Advanced Neuromodulation Systems, Inc. (ANS) (NASDAQ:ANSI) today announced record financial results for the third quarter and first nine months of 2004, highlighted by continued rapid growth in sales of neuromodulation products for the treatment of chronic pain.

Third Quarter Results

     For the three months ended September 30, 2004, revenue increased 34% to a record $31,330,000 from $23,419,000 for the third quarter of 2003. Sales of neuro products increased 37% to a record $28,223,000 from $20,612,000 for the same period last year. Gross margin was approximately 73% for both periods. Net income for this year’s third quarter increased 20% to a record $4,742,000, or $0.23 per diluted share. This compares to net income for the third quarter of 2003 of $3,953,000, or $0.19 per diluted share, which included other income of $969,000 pre-tax, or $0.03 per diluted share after tax, from the reversal of an accrued tax abatement liability.

Nine Month Results

     For the nine months ended September 30, 2004, revenue increased 35% to a record $88,451,000 from $65,414,000 for the first nine months of 2003. Neuro sales increased 42% to a record $80,084,000 from $56,587,000 last year. Gross margin increased to 73% from 69%. Net income increased 37% to a record $13,034,000, or $0.62 per diluted share, from $9,496,000, or $0.46 per diluted share, for the first nine months of 2003.

Operations Review

     Noting that sales of ANS’ Genesis® and GenesisXPTM implantable spinal cord stimulation (SCS) systems and its Renew® radio frequency (RF) SCS system continued to meet management’s expectations in the third quarter, Chief Executive Officer Chris Chavez said, “The primary mission of the ANS team is to create, manufacture and market neuromodulation products that provide real help to people who suffer from chronic pain and other neurological disorders. Our strong financial performance is one sign that we are on the right track. Another important indicator of our progress is the steady growth in the number of interventional pain practitioners and their patients who put their trust in ANS’ products.”

     Chavez continued, “Our strategy to develop our direct sales team and invest in our corporate infrastructure, technology platforms and product pipeline is delivering the growth we anticipated in what is now close to a billion dollar industry. We see exciting opportunities for continued growth as we pursue the expanding list of clinical applications for implantable neurostimulation devices to address a variety of intractable conditions for which few effective treatments currently are available.”

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ADVANCED NEUROMODULATION SYSTEMS, INC.
6901 PRESTON ROAD / PLANO, TEXAS 75024 /972-309-8000 / FAX: 972-309-8150

 

 

Advanced Neuromodulation Systems Reports Record Third Quarter Sales and Net Income
October 28, 2004
Page Two

     Chavez said that ANS continues to expect to receive FDA approval of its first generation rechargeable IPG and to file for approval of a second rechargeable IPG in the fourth quarter. “Pain practitioners want the flexibility to apply the right product to the right indication — one size does not fit all. ANS will offer a full array of SCS devices, including RF, nonrechargeable IPGs and rechargeable IPGs to meet this demand,” he said. He added that ANS plans to expand the launch of its very thin and steerable Axxess lead in the fourth quarter, following the recent launch of its line of C-Series Lamitrode® leads, the market’s first set of leads to mimic the curve of the spinal cord. ANS has also received FDA approval and a CE mark for a significant upgrade to its MTS® trial system that it will launch in the fourth quarter.

Management Updates Guidance for 2004 and Provides Initial Guidance for 2005

     ANS’ management currently expects revenue for the fourth quarter 2004 in the range of $32 to $33 million, and net income of $0.25 per diluted share, after litigation expenses.

     ANS also provided initial guidance for 2005. Management currently expects revenue for 2005 of approximately $145 million, and net income of approximately $1.15 per diluted share.

Conference Call

     ANS has scheduled a conference call today at 11:00 a.m. EDT. The simultaneous webcast is available at www.ANS-medical.com/investors/index.html. A replay will be available at this same Internet address, or at (800) 633-8284, reservation #21209796, after 1:00 p.m. EDT.

About Advanced Neuromodulation Systems

     Advanced Neuromodulation Systems designs, develops, manufactures and markets implantable systems used to manage chronic intractable pain and other disorders of the central nervous system. Fortune magazine recently ranked ANS as the 8th fastest growing small company in its annual list of the Top 200 Fastest Growing Small Companies in the United States. Forbes magazine recently recognized ANS as one of America’s 200 Best Small Companies. Frost & Sullivan, an international strategic market research firm, also recently presented ANS with its Product Innovation Award, recognizing ANS as the technology innovation leader in the neurostimulation market and ANS’ Genesis® Implantable Pulse Generator system as the most advanced fully implantable spinal cord stimulator on the market. Additional information is available at www.ans-medical.com.

“Safe harbor” statement under the Private Securities Litigation Reform Act of 1995:

     Statements contained in this document that are not based on historical facts are “forward-looking statements.” Terms such as “plan,” “should,” “would,” “anticipate,” “believe,” “intend,” “estimate,” “expect,” “predict,” “scheduled,” “new market,” “potential market applications” and similar expressions are intended to identify forward-looking statements. Such statements are by nature subject to uncertainties and risks, including but not limited to: the launch of new competitive products by Medtronic, Advanced Bionics/Boston Scientific or others, as well as other market factors, could impede growth in or reduce sales of our IPG and RF systems, which could adversely affect our revenues and profitability; continued market acceptance of the Genesis® IPG and GenesisXPTM IPG; competition from Medtronic, Advanced Bionics/Boston Scientific and future competitors; continued market acceptance of our Renew® system; the risk of adverse changes in the value or marketability of Cyberonics securities that the Company owns; Cyberonics growth potential and future prospects; patient or physician selection of less invasive or less expensive alternatives; adverse changes in coverage or reimbursement amounts by Medicare, Medicaid, private insurers, managed care organizations or workers’ comp programs; intellectual property protection and potential infringement issues; the cost, uncertainty and other risks inherent in our intellectual property litigation against Advanced Bionics; obtaining necessary government approvals for our rechargeable IPGs and other new products or applications and maintaining compliance with FDA product and manufacturing requirements; product liability; reliance on single suppliers for certain components; completion of research and development projects in an efficient and timely manner; the satisfactory completion of clinical trials and/or market tests prior to the introduction of new products; successful integration of acquired businesses, products and technologies; the cost, uncertainty and other risks inherent in patent and intellectual property litigation; international trade risks; and other risks detailed from time to time in the Company’s SEC filings. Consequently, if such management assumptions prove to be incorrect or such risks or uncertainties materialize, anticipated results could differ materially from those forecast in forward-looking statements. Such forward-looking statements speak only as of the date on which they are made and the company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release.

     
  tables attached) #3712

 

 

ADVANCED NEUROMODULATION SYSTEMS, INC. and SUBSIDIARIES
Condensed Consolidated Statements of Income (Unaudited)

                                 
    Three Months Ended   Nine Months Ended
    September 30,
   September 30,
    2004
   2003
   2004
   2003
Net revenue
   $ 31,330,408     $ 23,418,505     $ 88,451,122     $ 65,413,557  
Cost of revenue
     8,414,174       6,384,445       23,751,017       20,317,415  
 
    
 		      
 		      
 		      
 		  
Gross profit
     22,916,234       17,034,060       64,700,105       45,096,142  
 
    
 		      
 		      
 		      
 		  
Operating expenses:
                                
Sales and marketing
     9,791,838       6,970,941       27,810,611       18,460,993  
Research and development
     2,911,698       2,552,951       8,096,308       6,597,850  
General and administrative
     2,974,620       1,871,833       7,998,316       5,504,084  
Amortization of intangibles
     626,191       472,821       1,824,838       1,278,093  
 
    
 		      
 		      
 		      
 		  
 
     16,304,347       11,868,546       45,730,073       31,841,020  
 
    
 		      
 		      
 		      
 		  
Income from operations
     6,611,887       5,165,514       18,970,032       13,255,122  
 
    
 		      
 		      
 		      
 		  
Other income (expense):
                                
Foreign currency transaction gain
     81,009       —       26,156       —  
Other income
     —       969,204       —       969,204  
Investment income
     482,850       200,243       964,021       776,370  
 
    
 		      
 		      
 		      
 		  
 
     563,859       1,169,447       990,177       1,745,574  
 
    
 		      
 		      
 		      
 		  
Income before income taxes
     7,175,746       6,334,961       19,960,209       15,000,696  
Income taxes
     2,433,791       2,382,109       6,926,251       5,504,915  
 
    
 		      
 		      
 		      
 		  
Net income
   $ 4,741,955     $ 3,952,852     $ 13,033,958     $ 9,495,781  
 
    
 		      
 		      
 		      
 		  
Basic income per share:
                                
Net income
   $ 0.23     $ 0.20     $ 0.65     $ 0.50  
 
    
 		      
 		      
 		      
 		  
Number of basic shares
     20,189,242       19,382,991       20,075,223       19,040,105  
 
    
 		      
 		      
 		      
 		  
Diluted income per share:
                                
Net income
   $ 0.23     $ 0.19     $ 0.62     $ 0.46  
 
    
 		      
 		      
 		      
 		  
Number of diluted shares
     21,032,695       20,860,041       21,116,735       20,441,351  
 
    
 		      
 		      
 		      
 		  

 

 

ADVANCED NEUROMODULATION SYSTEMS, INC. and SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)

                 
    September 30,   December 31,
    2004
   2003
Assets
                
Current assets:
                
Cash and marketable securities
   $ 121,793,391     $ 94,802,122  
Receivable, trade net
     24,954,560       17,892,416  
Receivable, interest and other
     517,704       259,687  
Inventories
     23,299,266       22,113,159  
Deferred income taxes
     971,088       1,423,228  
Income taxes receivable
     —       1,324,001  
Prepaid expenses and other current assets
     2,378,893       1,007,244  
 
    
 		      
 		  
Total current assets
     173,914,902       138,821,857  
Net property, equipment and fixtures
     32,456,397       21,150,010  
Minority equity investments in preferred stock
     1,104,000       1,104,000  
Goodwill, patents, trademarks, purchased technology & other assets, net
     35,586,029       33,730,420  
 
    
 		      
 		  
Total assets
   $ 243,061,328     $ 194,806,287  
 
    
 		      
 		  
Liabilities and Stockholders’ Equity
                
Current liabilities:
                
Accounts payable
   $ 4,446,320     $ 5,717,222  
Accrued salary and employee benefit costs
     2,507,214       4,045,361  
Accrued commissions
     2,134,442       1,424,471  
Short-term obligation
     5,020,708       —  
Deferred revenue
     205,826       503,093  
Warranty reserve
     95,480       294,290  
Other accrued expenses
     558,033       400,159  
 
    
 		      
 		  
Total current liabilities
     14,968,023       12,384,596  
Deferred income taxes
     12,576,608       3,389,255  
Non-current deferred revenue
     802,703       907,513  
Total stockholders’ equity
     214,713,994       178,124,923  
 
    
 		      
 		  
Total liabilities and stockholders’ equity
   $ 243,061,328     $ 194,806,287