SG&A Expenses up Sharply as Company Prepares for Launch of New Tissue
Processing System
TUCSON, Ariz., Feb. 4 /PRNewswire/ -- Ventana Medical Systems, Inc.
(Nasdaq: VMSI) today reported a 51% increase in sales for the quarter ended
December 31, 1998, compared to the same quarter last year. During the
quarter, 225 instrument modules were placed, a record.
Net sales for the three months ended December 31, 1998 increased to a
record $14.7 million from $9.7 million for the same period in 1997. Excluding
the impact of one-time charges related to the Company's two recent
acquisitions, net income for the fourth quarter of $1.5 million was up
125% from $0.7 million reported in the same quarter last year or $.11 net
income per diluted share compared to $.05 net income diluted per share last
year. Including the one-time acquisition-related expenses of $3.2 million, the
Company reported a net loss for the fourth quarter of $1.6 million, or
$.12 net loss per diluted share. The acquisition-related expenses principally
represent expensed in-process R&D.
"We were extremely happy with our record placements and revenues in the
quarter," commented Hank Pietraszek, president and chief executive officer.
"The placement of 225 IHC, special stain and tissue processor modules and
instruments significantly exceeded the 158 modules placed in the last quarter
of 1997, which was our previous best quarter for instrument placements. This
increase is even more compelling when considering that only 111 of last year's
placements were through our own sales organization," added Pietraszek.
"Strong year end instrument sales helped us achieve a 64% growth in
instrument revenue to $5.3 million and reagent revenue increased by 44% to
$9.4 million in the quarter. Gross margin of 71% in the fourth quarter was up
290 basis points from last year and up 30 basis points from the third
quarter," Pietraszek went on to say.
"We also experienced substantial growth in SG&A expenses during the
quarter as we further increased the size of our U.S. and European sales forces
to handle the launch of the NexES Special Stains instrument, as we recruited
and trained a special sales force for selling tissue processor and microtome
instruments and as we accrued sales commissions on extraordinarily high
placements, a portion of which do not create immediate revenue benefits. An
increase in our reserve for doubtful accounts also contributed to the SG&A
expense growth. Research and development expense only increased by 14% due to
the capitalization of special stain instruments and parts that had been
expensed before the launch," Pietraszek further added.
Net sales for the full year period ended December 31, 1998 of
$47.7 million were up 48% from $32.2 million in the prior year comparable
period. Excluding the impact of one-time charges in both years, net income
for all of 1998 of $4.8 million was up almost four-fold compared to net income
of $1.3 million for 1997. Including the one-time charges in both years, net
income for the twelve month period of 1998 was $1.6 million, as contrasted
with a loss of $0.4 million in the prior year and diluted earnings per share
for the full year of 1998 were $.11 per share versus a loss of $.03 per share
in the prior year.
Safe Harbor Statement: Statements in this press release which are not
strictly historical are "forward-looking" statements that are made pursuant to
the Safe Harbor provisions of the Private Securities Litigation Reform Act of
1995. Forward-looking statements involve known and unknown risks, which may
cause the company's actual results in the future to differ materially from the
expected results. The risks and uncertainties that may affect the results of
the company's business are described in the company's specific filings with
the Securities and Exchange Commission.
Ventana develops, manufactures and markets instrument/reagent systems that
automate tissue preparation and slide staining in histology laboratories
worldwide. Ventana's systems are important tools used in the diagnosis and
treatment of cancer and infectious diseases.
VENTANA MEDICAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share data)
(Audited)
Three Months Ended:
December 31,
1998 1997
Sales:
Instruments $5,268 $3,216
Reagents and other 9,391 6,512
Total net sales 14,659 9,728
Cost of goods sold 4,309 3,146
Gross profit 10,350 6,582
Operating expenses:
Research and development 1,031 905
Selling, general and administrative 7,585 5,390
Non-recurring expenses 3,160 --
Amortization of intangibles 217 127
Income (loss) from operations (1,643) 160
Other income 23 524
Net income (loss) $(1,620) $684
Basic earnings (loss) per share $(0.12) $0.05
Diluted earnings (loss) per share $(0.12) $0.05
Note: The financial statements presented herein have been derived from
the audited financial statements, but do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
VENTANA MEDICAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share data)
(Audited)
Twelve Months Ended:
December 31,
1998 1997
Sales:
Instruments $15,737 $9,248
Reagents and other 31,967 22,905
Total net sales 47,704 32,153
Cost of goods sold 14,542 11,138
Gross profit 33,162 21,015
Operating expenses:
Research and development 5,057 3,050
Selling, general and administrative 23,805 16,953
Non-recurring expenses 3,160 1,656
Amortization of intangibles 599 509
Income from operations 541 (1,153)
Other income 1,089 781
Net income $1,630 $(372)
Basic earnings (loss) per share $0.12 $(0.03)
Diluted earnings (loss) per share $0.11 $(0.03)
Note: The financial statements presented herein have been derived from
the audited financial statements, but do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
VENTANA MEDICAL SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET
(in thousands except share data)
(Audited)
Dec. 31, Dec. 31,
ASSETS 1998 1997
Current assets:
Cash and cash equivalents $2,424 $18,902
Accounts receivable 16,531 8,047
Inventories 11,009 5,134
Other current assets 902 1,919
Total current assets 30,866 34,002
Property and equipment, net 9,938 6,105
Intangibles, net 14,592 8,055
Other non-current assets 884 190
Total assets $56,280 $48,352
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $3,537 $2,584
Other current liabilities 4,994 2,894
Total current liabilities 8,531 5,478
Long term debt 1,966 471
Stockholders' equity:
Common stock - $0.001 par value; 50,000,000
shares authorized; 13,381,819 and 13,247,226
shares issued and outstanding at December 31,
1998 and December 31, 1997, respectively 13 13
Additional Paid-In Capital 78,116 76,313
Accumulated deficit (32,152) (33,782)
Cumulative foreign currency translation
adjustment (194) (141)
Total stockholders' equity 45,783 42,403
Total liabilities and stockholders' equity $56,280 $48,352
VENTANA MEDICAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Audited)
Twelve Months Ended
December 31,
1998 1997
Operating activities:
Net income (loss) $1,630 $(372)
Adjustments to reconcile net loss to
cash used in operating activities:
Depreciation and amortization 2,751 2,029
Changes in operating assets and
liabilities, net (9,034) (6,551)
Net cash used in operating activities (4,653) (4,894)
Investing activities:
Purchase of property and equipment, net (5,772) (4,263)
Purchase of intangible assets (7,109) (44)
Increase in other non-current assets (694) (190)
Sales of short-term investments -- 4,877
Net cash provided by (used in) investing
activities (13,575) 380
Financing activities:
Repayments of notes payable -- (10,279)
Issuance of stock 1,803 1,296
Net proceeds from public offering -- 26,134
Net cash provided by financing activities 1,803 17,151
Effect of exchange rate change on cash (53) 75
Net increase (decrease) in cash and cash
equivalents (16,478) 12,712
Cash and cash equivalents, beginning
of period 18,902 6,190
Cash and cash equivalents, end of period $2,424 $18,902
SOURCE Ventana Medical Systems, Inc.
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CONTACT:
Henry T. Pietraszek, President and Chief
Executive Officer of Ventana Medical Systems, Inc., 520-887-2155;
or General Inquiries, Bill Murphy, Analysts, Kathy Brunson, or
Media Inquiries, Bess Gallanis, 312-266-7800, all of the
Financial Relations Board
NOTE TO EDITORS: For more information on Ventana Medical Systems,
Inc. via facsimile at no additional cost, simply dial
1-800-PRO-INFO and enter the stock symbol "VMSI."
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