Research And Development Spending Expected To Increase To Support Entry Into
Genomics Market
Fourth Quarter Highlights
-- Sales increase 44%
-- Operating income increases 119%
-- Continued balance sheet improvement in receivables, inventory and
fixed assets
Full-year Highlights
-- Sales increased 45%
-- Entered the genomics market with Discovery ISH system
-- Competitive position strengthens in all geographic markets and product
segments
TUCSON, Ariz., Feb. 4 /PRNewswire/ -- Ventana Medical Systems, Inc.
(Nasdaq: VMSI); the leading company in supplying automated instrument reagent
systems to histology labs, today reported a 44% increase in sales for the
quarter ended December 31, 1999 compared to the same quarter last year, and
record earnings of $0.20 per share, before a one-time tax credit of
$5.5 million
Net sales for the three months ended December 31, 1999 increased to
$21.1 million from $14.7 million for the same period in 1998. Operating
earnings for the fourth quarter increased to $3.3 million, another record, and
a 119% increase over the $1.5 million reported in the same quarter of 1998
(before previously reported one-time acquisition related expenses of $3.2
million). Net income for the fourth quarter of $8.4 million was impacted by a
$5.5 million tax gain that recognizes the value of the Company's deferred
taxes assets. Without this one-time tax gain required by the Company's
auditors under FASB 109, diluted earnings per share were $0.20, and represent
an 82% increase over the same prior year period of $0.11 per share (before the
same previously reported acquisition-related expenses). Diluted earnings per
share for the fourth quarter on an as reported basis were $0.57.
"1999 was an outstanding year for Ventana on all fronts," reported Chris
Gleeson, president and chief executive officer. "From a financial perspective
we continued to grow our revenues at better than a 40% rate compared to the
prior year. We have begun to realize the leverage of our investments in R&D
and direct distribution by reporting record operating earnings. From an
operational perspective, we strengthened our competitive position in all
geographic markets and product segments. Our North American commercial
organization continued to enjoy rapid growth while our European and Japanese
commercial operations established clear leadership positions in their
respective markets. International operations are now a significant
contributor to our revenues and profits."
Gleeson continued, "We are no longer a one product company. Our core
immunohistochemistry (IHC) business remains strong. IHC placements during
1999 exceeded all competitors combined on a global basis. We have established
a clear leadership position in automating special stains following the launch
of this second major instrument system in late 1998. We successfully entered
the genomics market with the launch of the Discovery
in-situ hybridization (ISH) system late in the fourth quarter. The system was
strongly received by DNA and gene chip companies, genomics companies and
academic research institutions. We also significantly increased sales of our
tissue processor product line which was acquired during 1998."
"In addition to delivering strong operating results during the fourth
quarter, we also made sound progress in strengthening our balance sheet,"
Gleeson added. "Accounts receivable days sales outstanding decreased from 100
days at September 30, 1999 to 90 days at year-end. Days-inventory-on hand
also fell modestly from 199 days on September 30, 1999 to 194 days at
year-end. Net fixed assets declined by $1.3 million during the fourth quarter
due to our success in converting instruments at customer sites on an
evaluation basis into revenues."
Net sales for the 12 months ended December 31, 1999 were $69.4 million, a
45% increase over the $47.7 million reported for 1998. Operating earnings for
1999 were $7.7 million, compared to $541,000 reported for 1998. Diluted
earnings per share were $0.50 before the one-time $5.5 million tax credit.
This represents a 355% increase over $0.11 reported for 1998. As reported,
diluted earnings per share were $0.88.
Looking forward to the year 2000, Gleeson said, "We have established 2 key
strategic priorities - continuing to automate manual work cells in histology
labs with our IHC, special stain, ISH and tissue processing systems, and
establishing a foothold in the emerging Genomics market. To support our entry
into the Genomics market we plan to increase R&D spending dramatically from
around 10% of revenues in 1999 to around 13% of revenues in 2000. This
increased R&D spending could result in operating income being about $1.5
million lower than current analyst estimates for 2000. However, this
investment in R&D will have a large payback in 2001 and beyond. In addition,
we will be accruing income taxes in 2000 at a 40% rate due to the one-time
gain we booked this 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 may include general economic conditions, market
acceptance of new automated histology products, continued success in asset
management and other factors that 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.
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".
Ventana Medical Systems, Inc.
Consolidated Statements of Operations
(in thousands except per share data)
(Unaudited)
Three Months Ended:
December 31 '99/'98
1999 1998 %Change
Sales:
Instruments $9,490 $5,268 80%
Reagents and other 11,560 9,391 23%
Total net sales 21,050 14,659 44%
Cost of goods sold 6,317 4,309 47%
Gross profit 14,733 10,350 42%
Operating expenses:
Research and development 1,846 1,031 79%
Selling, general and
administrative 9,277 7,585 22%
Nonrecurring expenses - 3,160 -
Amortization of intangibles 284 217 31%
Income from operations 3,326 (1,643) -
Other income (416) 23 -
Pretax income $ 2,910 $(1,620) -
Provision for income tax (5,500) - -
Net income $ 8,410 $(1,620) -
Earnings per share as reported:
Basic $0.62 $(0.12) -
Diluted $0.57 $(0.12) -
Earnings per share before
provision for income tax:
Basic $0.21 $(0.12) -
Diluted $0.20 $(0.12) -
Ventana Medical Systems, Inc.
Consolidated Statements of Operations
(in thousands except per share data)
(Audited)
Twelve Months Ended
December 31, '99/'98
1999 1998 % Change
Sales:
Instruments $24,069 $15,737 53%
Reagents and other 45,340 31,967 42%
Total net sales 69,409 47,704 45%
Cost of goods sold 21,218 14,542 46%
Gross profit 48,191 33,162 45%
Operating expenses:
Research and development 7,078 5,057 40%
Selling, general and
administrative 32,381 23,805 36%
Nonrecurring expenses - 3,160 -
Amortization of intangibles 1,051 599 75%
Income from operations 7,681 541 1320%
Other income (370) 1,089 -
Pretax income $7,311 $1,630 349%
Provision for income tax (5,500) - -
Net income $12,811 $1,630 686%
Basic earnings per share $0.95 $0.12 692%
Diluted earnings per share $0.88 $0.11 700%
Note: The consolidated income statements at December 31, 1999 and
December 31, 1998 have been derived from the audited financial
statements at those dates 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 Sheets
(in thousands except share data)
(Audited)
December 31, December 31, Inc/(Dec)
ASSETS 1999 1998 $Amt %
Current assets:
Cash and cash equivalents $1,787 $ 2,424 (637) -26%
Accounts receivable 20,776 16,531 4,245 26%
Inventories 13,474 11,009 2,465 22%
Prepaid expenses 831 645 186 29%
Deferred tax benefit,
current portion 1,450 - 1,450 -
Other current assets 2,259 1,142 1,117 98%
Total current assets 40,577 31,751 8,826 28%
Property and equipment, net 14,441 9,937 4,504 45%
Intangibles, net 14,178 14,592 (414) -3%
Deferred tax benefit,
long term portion 4,885 - 4,885 -
Total assets $74,081 $56,280 $17,801 32%
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $4,017 $ 3,536 481 14%
Other current liabilities 6,965 5,053 1,912 38%
Total current liabilities 10,982 8,589 2,393 28%
Long term debt 2,599 1,907 692 36%
Stockholders' equity:
Common stock - $.001 par value;
50,000,000 shares authorized;
13,614,246 and 13,421,819
shares issued and outstanding
at December 31, 1999 and
December 31, 1998,
respectively 14 13 1 8%
Additional Paid-In Capital 80,542 78,716 1,826 2%
Accumulated deficit (19,341) (32,152) 12,811 -40%
Cumulative foreign currency
translation adjustment (115) (193) 78 -40%
Treasury stock - 40,000
shares, at cost (600) (600) - -
Total stockholders' equity 60,500 45,784 14,716 32%
Total liabilities and
stockholders' equity $74,081 $56,280 $17,801 32%
Note: The consolidated balance sheets at December 31, 1999 and
December 31, 1998 have been derived from the audited financial
statements at those dates 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 Cash Flows
(in thousands)
(Unaudited)
Twelve Months Ended
December 31
1999 1998
Operating activities:
Net income $12,811 $1,630
Adjustments to reconcile net income
to cash provided by operating activities:
Change in deferred tax benefit, net (6,335) -
Depreciation and amortization 3,821 2,850
Changes in operating assets and
liabilities, net (6,331) (7,024)
Net cash provided by operating activities 3,966 (2,544)
Investing activities:
Purchase of property and equipment, net (6,372) (5,377)
Purchase of intangible assets, net (672) (10,262)
Net cash used in investing activities (7,044) (15,639)
Financing activities:
Issuance of debt - net 692 (46)
Issuance of stock - net 1,827 1,803
Net cash provided by financing activities 2,519 1,757
Effect of exchange rate change on cash (78) (52)
Net (decrease) increase in cash and
cash equivalents (637) (16,478)
Cash and cash equivalents, beginning
of period 2,424 18,902
Cash and cash equivalents, end of period $1,787 $2,424
SOURCE Ventana Medical Systems, Inc.
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CONTACT:
Christopher Gleeson, President and Chief
Executive Officer of Ventana Medical Systems, Inc., 520-887-2155;
or Analysts, Kathy Brunson, or Media Inquiries Darcy Bretz, of
The Financial Relations Board, 312-266-7800
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