Delaware | 000-19711 | 84-0997049 | ||||
(State or other jurisdiction | (Commission | (IRS Employer | ||||
of incorporation) | File Number) | Identification No.) |
9965 Federal Drive |
Colorado Springs, Colorado 80921 |
(Address of principal executive offices) (Zip Code) |
THE SPECTRANETICS | |||
CORPORATION | |||
Date: | July 24, 2014 | By: | /s/ Jeffrey A. Sherman |
Jeffrey A. Sherman | |||
Vice President, Deputy General Counsel and Corporate Secretary | |||
COMPANY CONTACT | INVESTOR CONTACT |
The Spectranetics Corporation | Westwicke Partners |
Guy Childs, Chief Financial Officer | Lynn Pieper |
(719) 633-8333 | (415) 202-5678 |
lynn.pieper@westwicke.com |
• | Revenue of $43.6 million, up 10% |
• | Vascular Intervention revenue of $22.5 million grew 19% (18% constant currency1), led by U.S. peripheral atherectomy revenue growth of 22% |
• | Lead Management revenue of $16.1 million increased 7% (6% constant currency) |
• | U.S. revenue grew 8% to $34.9 million; International revenue grew 22% (17% constant currency) to $8.7 million |
• | Gross margin increased to 76%, from 73% |
• | Closed AngioScore acquisition on June 30 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Revenue | $ | 43,555 | $ | 39,453 | $ | 83,169 | $ | 77,128 | ||||||||
Cost of products sold | 10,506 | 10,625 | 20,840 | 20,944 | ||||||||||||
Gross profit | 33,049 | 28,828 | 62,329 | 56,184 | ||||||||||||
Gross margin % | 76 | % | 73 | % | 75 | % | 73 | % | ||||||||
Operating expenses: | ||||||||||||||||
Selling, general and administrative | 28,452 | 23,065 | 56,192 | 45,866 | ||||||||||||
Research, development and other technology | 5,704 | 5,484 | 11,791 | 10,656 | ||||||||||||
Due diligence, transaction, and integration costs | 3,958 | — | 4,229 | — | ||||||||||||
Medical device excise tax | 588 | 509 | 1,113 | 1,031 | ||||||||||||
Acquisition-related intangible asset amortization | 136 | 246 | 273 | 410 | ||||||||||||
Contingent consideration expense | 40 | 202 | 78 | 404 | ||||||||||||
Total operating expenses | 38,878 | 29,506 | 73,676 | 58,367 | ||||||||||||
Operating loss | (5,829 | ) | (678 | ) | (11,347 | ) | (2,183 | ) | ||||||||
Other income (expense), net | (490 | ) | 14 | (486 | ) | (15 | ) | |||||||||
Loss before taxes | (6,319 | ) | (664 | ) | (11,833 | ) | (2,198 | ) | ||||||||
Income tax expense (benefit) | 246 | 64 | 393 | (511 | ) | |||||||||||
Net loss | $ | (6,565 | ) | $ | (728 | ) | $ | (12,226 | ) | $ | (1,687 | ) | ||||
Net loss per common share: | ||||||||||||||||
Basic and diluted | $ | (0.16 | ) | $ | (0.02 | ) | $ | (0.29 | ) | $ | (0.05 | ) | ||||
Weighted average shares outstanding: | ||||||||||||||||
Basic and diluted | 41,603 | 38,769 | 41,479 | 36,875 |
June 30, 2014 | December 31, 2013 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 107,027 | $ | 128,395 | |||
Accounts receivable, net | 38,045 | 26,766 | |||||
Inventories, net | 25,979 | 9,476 | |||||
Deferred income taxes, current portion, net | 445 | 445 | |||||
Other current assets | 4,193 | 2,748 | |||||
Total current assets | 175,689 | 167,830 | |||||
Property and equipment, net | 30,534 | 28,281 | |||||
Debt issuance costs, net | 7,421 | — | |||||
Goodwill and intangible assets | 261,311 | 20,455 | |||||
Other assets | 1,351 | 591 | |||||
Total assets | $ | 476,306 | $ | 217,157 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities | $ | 33,148 | $ | 23,225 | |||
Convertible senior notes | 230,000 | — | |||||
Other non-current liabilities | 30,045 | 3,932 | |||||
Stockholders’ equity | 183,113 | 190,000 | |||||
Total liabilities and stockholders’ equity | $ | 476,306 | $ | 217,157 |
THE SPECTRANETICS CORPORATION |
Supplemental Financial Information |
(Unaudited) |
Financial Summary | 2013 | 2014 | ||||||||||||||||||
(000’s, except laser sales and installed base amounts) | 2nd Qtr | 3rd Qtr | 4th Qtr | 1st Qtr | 2nd Qtr | |||||||||||||||
Disposable products revenue: | ||||||||||||||||||||
Vascular Intervention revenue | $ | 18,897 | $ | 18,956 | $ | 20,555 | $ | 20,021 | $ | 22,496 | ||||||||||
Lead Management revenue | 15,078 | 16,075 | 16,286 | 14,470 | 16,114 | |||||||||||||||
Total disposable products revenue | 33,975 | 35,031 | 36,841 | 34,491 | 38,610 | |||||||||||||||
Service and other revenue | 2,888 | 2,851 | 2,795 | 2,769 | 2,872 | |||||||||||||||
Laser revenue: | ||||||||||||||||||||
Equipment sales | 1,395 | 906 | 1,153 | 1,530 | 1,191 | |||||||||||||||
Rental fees | 1,195 | 975 | 1,131 | 824 | 882 | |||||||||||||||
Total laser revenue | 2,590 | 1,881 | 2,284 | 2,354 | 2,073 | |||||||||||||||
Total revenue | 39,453 | 39,763 | 41,920 | 39,614 | 43,555 | |||||||||||||||
Net income (loss) | (728 | ) | 434 | 883 | (5,661 | ) | (6,565 | ) | ||||||||||||
Adjusted EBITDA (1) | 2,147 | 3,784 | 3,984 | (2,610 | ) | 777 | ||||||||||||||
Cash flow generated by (used in) operating activities | 2,048 | 3,513 | 5,029 | (8,359 | ) | (1,111 | ) | |||||||||||||
Total cash and cash equivalents at end of quarter | 119,356 | 123,570 | 128,395 | 120,866 | 107,027 | |||||||||||||||
Laser sales summary: | ||||||||||||||||||||
Laser sales from inventory | 9 | 9 | 5 | 9 | 8 | |||||||||||||||
Laser sales from evaluation/rental units | 5 | — | 5 | 4 | 1 | |||||||||||||||
Total laser sales | 14 | 9 | 10 | 13 | 9 | |||||||||||||||
(1) Adjusted EBITDA is a non-GAAP financial measure. Please refer to the non-GAAP reconciliation tables following this table for the reconciliation to the most comparable GAAP measure. | ||||||||||||||||||||
Worldwide Installed Base Summary: | ||||||||||||||||||||
Laser sales from inventory | 9 | 9 | 5 | 9 | 8 | |||||||||||||||
Rental placements | 28 | 27 | 29 | 20 | 32 | |||||||||||||||
Evaluation placements | 11 | 4 | 9 | 8 | 6 | |||||||||||||||
Laser placements during quarter | 48 | 40 | 43 | 37 | 46 | |||||||||||||||
Buy-backs/returns during quarter | (23 | ) | (26 | ) | (18 | ) | (17 | ) | (15 | ) | ||||||||||
Net laser placements during quarter | 25 | 14 | 25 | 20 | 31 | |||||||||||||||
Total lasers placed at end of quarter | 1,105 | 1,119 | 1,144 | 1,164 | 1,195 |
THE SPECTRANETICS CORPORATION Reconciliation of revenue by geography to non-GAAP revenue by geography on a constant currency basis (in thousands, except percentages) (unaudited) | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
June 30, 2014 | June 30, 2013 | Change | ||||||||||||||||||
Revenue, as reported | Foreign exchange impact as compared to prior period | Revenue on a constant currency basis | Revenue, as reported | As reported | Constant currency basis | |||||||||||||||
United States | $ | 34,854 | $ | — | $ | 34,854 | $ | 32,310 | 8 | % | 8 | % | ||||||||
International | 8,701 | (329 | ) | 8,372 | 7,143 | 22 | % | 17 | % | |||||||||||
Total revenue | $ | 43,555 | $ | (329 | ) | $ | 43,226 | $ | 39,453 | 10 | % | 10 | % | |||||||
Six Months Ended | ||||||||||||||||||||
June 30, 2014 | June 30, 2013 | Change | ||||||||||||||||||
Revenue, as reported | Foreign exchange impact as compared to prior period | Revenue on a constant currency basis | Revenue, as reported | As reported | Constant currency basis | |||||||||||||||
United States | $ | 66,626 | $ | — | $ | 66,626 | $ | 63,101 | 6 | % | 6 | % | ||||||||
International | 16,543 | (508 | ) | 16,035 | 14,027 | 18 | % | 14 | % | |||||||||||
Total revenue | $ | 83,169 | $ | (508 | ) | $ | 82,661 | $ | 77,128 | 8 | % | 7 | % |
THE SPECTRANETICS CORPORATION Reconciliation of revenue by product line to non-GAAP revenue by product line on a constant currency basis (in thousands, except percentages) (unaudited) | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
June 30, 2014 | June 30, 2013 | Change | ||||||||||||||||||
Revenue, as reported | Foreign exchange impact as compared to prior period | Revenue on a constant currency basis | Revenue, as reported | As reported | Constant currency basis | |||||||||||||||
Vascular Intervention | $ | 22,496 | $ | (108 | ) | $ | 22,388 | $ | 18,897 | 19 | % | 18 | % | |||||||
Lead Management | 16,114 | (164 | ) | 15,950 | 15,078 | 7 | % | 6 | % | |||||||||||
Laser System, Service & Other | 4,945 | (57 | ) | 4,888 | 5,478 | (10 | )% | (11 | )% | |||||||||||
Total revenue | $ | 43,555 | $ | (329 | ) | $ | 43,226 | $ | 39,453 | 10 | % | 10 | % | |||||||
Six Months Ended | ||||||||||||||||||||
June 30, 2014 | June 30, 2013 | Change | ||||||||||||||||||
Revenue, as reported | Foreign exchange impact as compared to prior period | Revenue on a constant currency basis | Revenue, as reported | As reported | Constant currency basis | |||||||||||||||
Vascular Intervention | $ | 42,517 | $ | (162 | ) | $ | 42,355 | $ | 36,090 | 18 | % | 17 | % | |||||||
Lead Management | 30,584 | (249 | ) | 30,335 | 30,157 | 1 | % | 1 | % | |||||||||||
Laser System, Service & Other | 10,068 | (97 | ) | 9,971 | 10,881 | (7 | )% | (8 | )% | |||||||||||
Total revenue | $ | 83,169 | $ | (508 | ) | $ | 82,661 | $ | 77,128 | 8 | % | 7 | % |
THE SPECTRANETICS CORPORATION | ||||||||||||||||
Reconciliation of Net Loss to Non-GAAP Net Loss (in thousands) (unaudited) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2014 | June 30, 2013 | June 30, 2014 | June 30, 2013 | |||||||||||||
Net loss, as reported | $ | (6,565 | ) | $ | (728 | ) | $ | (12,226 | ) | $ | (1,687 | ) | ||||
Due diligence, transaction, and integration costs (1) | 3,958 | — | 4,229 | — | ||||||||||||
Acquisition-related intangible asset amortization (2) | 136 | 246 | 273 | 410 | ||||||||||||
Contingent consideration expense (2) | 40 | 202 | 78 | 404 | ||||||||||||
Non-GAAP net loss | $ | (2,431 | ) | $ | (280 | ) | $ | (7,646 | ) | $ | (873 | ) |
Reconciliation of Net Loss Per Share to Non-GAAP Net Loss Per Share (unaudited) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2014 | June 30, 2013 | June 30, 2014 | June 30, 2013 | |||||||||||||
Net loss per share, as reported | $ | (0.16 | ) | $ | (0.02 | ) | $ | (0.29 | ) | $ | (0.05 | ) | ||||
Due diligence, transaction, and integration costs (1) | 0.10 | — | 0.10 | — | ||||||||||||
Acquisition-related intangible asset amortization (2) | — | 0.01 | 0.01 | 0.01 | ||||||||||||
Contingent consideration expense (2) | — | 0.01 | — | 0.01 | ||||||||||||
Non-GAAP net loss per share (3) | $ | (0.06 | ) | $ | (0.01 | ) | $ | (0.18 | ) | $ | (0.02 | ) |
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA (in thousands) (unaudited) | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
June 30, 2013 | September 30, 2013 | December 31, 2013 | March 31, 2014 | June 30, 2014 | ||||||||||||||||
Net income (loss), as reported | $ | (728 | ) | $ | 434 | $ | 883 | $ | (5,661 | ) | $ | (6,565 | ) | |||||||
Income tax expense (benefit) | 64 | 406 | 885 | 147 | 246 | |||||||||||||||
Interest expense (income), net | (6 | ) | 1 | (2 | ) | (1 | ) | 489 | ||||||||||||
Depreciation and amortization | 2,369 | 2,463 | 2,419 | 2,459 | 2,473 | |||||||||||||||
Acquisition-related intangible asset amortization (2) | 246 | 246 | 245 | 137 | 136 | |||||||||||||||
EBITDA | 1,945 | 3,550 | 4,430 | (2,919 | ) | (3,221 | ) | |||||||||||||
Contingent consideration expense (2) | 202 | 234 | 229 | 38 | 40 | |||||||||||||||
Due diligence, transaction, and integration costs (1) | — | — | — | 271 | 3,958 | |||||||||||||||
Intangible asset impairment and change in contingent consideration liability, net (2) | — | — | (675 | ) | — | — | ||||||||||||||
Adjusted EBITDA (4) | $ | 2,147 | $ | 3,784 | $ | 3,984 | $ | (2,610 | ) | $ | 777 |
THE SPECTRANETICS CORPORATION Reconciliation of Net Loss to EBITDA and Adjusted EBITDA (in thousands) (unaudited) | ||||||||
Six Months Ended | ||||||||
June 30, 2014 | June 30, 2013 | |||||||
Net loss, as reported | $ | (12,226 | ) | $ | (1,687 | ) | ||
Income tax expense (benefit) | 393 | (511 | ) | |||||
Interest expense (income), net | 488 | (2 | ) | |||||
Depreciation and amortization | 4,932 | 4,823 | ||||||
Acquisition-related intangible asset amortization (2) | 273 | 410 | ||||||
EBITDA | (6,140 | ) | 3,033 | |||||
Contingent consideration expense (2) | 78 | 404 | ||||||
Due diligence, transaction, and integration costs (1) | 4,229 | — | ||||||
Adjusted EBITDA (4) | $ | (1,833 | ) | $ | 3,437 |
1) | Due diligence, transaction, and integration costs are related to the Angioscore acquisition, which closed on June 30, 2014, and primarily included investment banking fees, accounting, consulting, and legal fees. |
2) | Acquisition-related intangible asset amortization relates to intangible assets acquired from Upstream Peripheral Technologies Ltd. (“Upstream”) in January 2013. Contingent consideration expense represents the accretion of the estimated contingent consideration liability related to amounts payable to Upstream in 2014, 2015 and 2016, primarily based on sales of the products acquired. In the fourth quarter of 2013, we remeasured the contingent consideration liability to its fair value and reduced it by approximately $5.2 million and recorded an impairment charge of approximately $4.5 million related to the intangible assets acquired. |
3) | Per share amounts may not add due to rounding. |
4) | In 2014, we are not adding back the medical device excise tax to Adjusted EBITDA, as the tax was also included in 2013 results. Therefore, the 2013 quarterly Adjusted EBITDA numbers have been restated to include the medical device excise tax. |
Reconciliation of 2014 Projected Net Loss to Non-GAAP Projected Net Loss (in millions) (unaudited) | ||||||||
Projected Range | ||||||||
Twelve Months Ended | ||||||||
December 31, 2014 | December 31, 2014 | |||||||
Net loss, GAAP | $ | (38.0 | ) | $ | (36.0 | ) | ||
Acquisition-related amortization & contingent consideration expense (5) | 10.7 | 10.7 | ||||||
Due diligence, transaction, and integration costs (1) | 9.5 | 9.5 | ||||||
Litigation costs (6) | 2.5 | 2.5 | ||||||
Non-GAAP net loss | $ | (15.3 | ) | $ | (13.3 | ) |
THE SPECTRANETICS CORPORATION | ||||||||
Reconciliation of 2014 Projected Net Loss Per Share to Non-GAAP Projected Net Loss Per Share (unaudited) | ||||||||
Projected Range | ||||||||
Twelve Months Ended | ||||||||
December 31, 2014 | December 31, 2014 | |||||||
Net loss per share, GAAP | $ | (0.90 | ) | $ | (0.85 | ) | ||
Acquisition-related amortization & contingent consideration expense (5) | 0.25 | 0.25 | ||||||
Due diligence, transaction, and integration costs (1) | 0.23 | 0.23 | ||||||
Litigation costs (6) | 0.06 | 0.06 | ||||||
Non-GAAP net loss per share (3) | $ | (0.36 | ) | $ | (0.32 | ) |
Reconciliation of 2014 Projected Net Loss to EBITDA and Adjusted EBITDA (in millions) (unaudited) | ||||||||
Projected Range | ||||||||
Twelve Months Ended | ||||||||
December 31, 2014 | December 31, 2014 | |||||||
Net loss, GAAP | $ | (38.0 | ) | $ | (36.0 | ) | ||
Income tax expense | 0.9 | 0.9 | ||||||
Interest expense, net | 4.0 | 4.0 | ||||||
Depreciation and amortization | 10.4 | 10.4 | ||||||
Acquisition-related amortization (5) | 8.4 | 8.4 | ||||||
EBITDA | (14.3 | ) | (12.3 | ) | ||||
Contingent consideration expense (5) | 2.3 | 2.3 | ||||||
Due diligence, transaction, and integration costs (1) | 9.5 | 9.5 | ||||||
Litigation costs (6) | 2.5 | 2.5 | ||||||
Adjusted EBITDA | $ | — | $ | 2.0 |
5) | Acquisition-related amortization includes amortization of intangible assets acquired from Upstream in 2013 and from AngioScore in 2014, and amortization of the step-up in fair value of AngioScore inventory. Contingent consideration expense includes accretion on the contingent consideration liabilities incurred in both the Upstream and the AngioScore acquisitions. |
6) | Litigation costs represent legal costs in a patent-related matter in which AngioScore is the plaintiff. |
• | Management exercises judgment in determining which types of charges or other items should be excluded from the non-GAAP financial measures used. |
• | Depreciation and amortization expense, while not requiring cash settlement, are ongoing and recurring expenses and have a material impact on GAAP net income and reflect economic costs to us not reflected in Adjusted EBITDA. The intangible asset impairment, while not requiring cash settlement, reflects an economic cost to us not reflected in Adjusted EBITDA. |
• | Items such as the due diligence, transaction and integration costs, litigation costs, and contingent consideration expense excluded from Adjusted EBITDA and Non-GAAP Net Loss can have a material impact on cash flows and GAAP net income and reflect economic costs to us not reflected in Adjusted EBITDA. |
• | Revenue growth rates stated on a constant currency basis, by their nature, exclude the impact of changes in foreign currency exchange rates, which may have a material impact on GAAP revenue. |
• | Non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles and therefore other companies may calculate similarly titled non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes. |
COMPANY CONTACT | INVESTOR CONTACT |
The Spectranetics Corporation | Westwicke Partners |
Guy Childs, Chief Financial Officer | Lynn Pieper |
(719) 633-8333 | (415) 202-5678 |
lynn.pieper@westwicke.com |
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