Fourth-Quarter Results Consistent with Prior Guidance;
Confirms Outlook for 2001
TUCSON, Ariz., Feb. 8 /PRNewswire/ -- Ventana Medical Systems, Inc.
(Nasdaq: VMSI), a leading supplier of automated instrument reagent systems to
histology and drug discovery labs worldwide, today reported sales of
$17.4 million for the quarter ending December 31, 2000, a net loss of
$2.5 million, and a loss per share of $0.17. The results were in the expected
range announced by the company on December 15, 2000. Sales for calendar year
2000 were $71.1 million. The net loss for the year was $25.1 million, before
the change in accounting principle required under SAB No. 101. 2000 net
earnings were negatively impacted by a $22.5 million one-time charge taken in
the second quarter.
Ventana advised that fourth-quarter and full-year 2000 results were
reported under a more conservative revenue recognition policy adopted in
response to SEC Staff Accounting Bulletin No. 101. Under this policy, Ventana
now defers revenue recognition on instrument sales until instruments have been
installed in customer labs. Previously, revenues were recognized at the time
of shipment to the customer. This new revenue recognition policy did not
significantly impact the Company's reported sales and earnings in the fourth
quarter. However when comparing 2000 financial results to 1999 financial
results, it should be noted that 2000 figures reflect the new revenue
recognition policy, while 1999 figures reflect the old policy. The earnings
impact of Ventana's new revenue recognition policy on 1999 and prior years
will be reflected in its SEC 10-K filing for 2000.
CALENDAR YEAR 2000
"2000 was a challenging year for Ventana but one in which we built a
foundation for a return to profitability and strong growth in 2001," reported
Christopher Gleeson, Ventana's president and chief executive officer. "While
we were challenged with manufacturing issues in the second and third quarters,
we made sound progress on a number of fronts that will benefit the Company in
2001."
Accomplishments Ventana highlighted for 2000 include -
-- A strengthening of its manufacturing and quality operations in response
to the challenges it faced with its dispensers.
-- A strengthening of the Company's North American Commercial Organization
through an increased emphasis on retention, training, coaching and
motivating. Sales force turnover is currently at a two-year low.
-- The successful launch of the BenchMark advanced IHC and ISH staining
systems in the fourth quarter. This system offers customer labs a
substantial improvement in staining quality and a reduction in labor
costs by automating "baking through staining" of tissue sections.
-- The upgrading and expansion of the menu for its Special Stains System.
During 2000, five improved and four new stains were launched.
-- The December 2000 launch of its FDA approved Pathway(TM) test to
determine if metastatic breast cancer patients will benefit from
Genentech's Herceptin(R) drug.
-- The November 2000 U.S. launch of its Discovery System for staining
nucleic acid microarrays. Microarrays are enjoying rapid growth in
biotech and pharmaceutical company drug discovery labs. The Discovery
is the most advanced instrument available for hybridizing microarrays
on a high-throughput basis.
For the year ending December 31, 2000, Ventana reported $71.1 million in
sales, a 3 percent increase over the $69.4 million reported in 1999. The
reported gross margin for 2000 was 49 percent compared with 69 percent in
1999. The decline was principally attributable to one-time charges taken in
the second quarter of 2000. R&D spending in 2000 was up 57 percent over 1999
levels to $11.1 million, or 16 percent of sales. The operating loss for the
year of $26.1 million was after $22.5 million in one-time charges were taken
in the second quarter. This compares with $7.7 million in operating profits
in 1999. The net loss for 2000 was $25.1 million before the change in
accounting principle required under SAB No. 101. The net loss per share in
2000 was $1.85 including the SAB No. 101 change. This compares with a net
profit of $12.8 million in 1999, or $0.88 per diluted share. The 1999 figure
includes a deferred tax benefit of $5.5 million.
FOURTH-QUARTER 2000
Revenues for the fourth quarter were $17.4 million compared with
$21.1 million during the same quarter of 1999. The decline was principally
attributable to the previously announced adoption of a more conservative
approach to revenue recognition in Japan. Fourth-quarter gross margins were
66 percent compared with 70 percent in 1999. The operating loss for the
fourth quarter of $3.0 million compares with $3.3 million in operating profits
reported in 1999. The net loss for the fourth quarter was $2.5 million, or
$0.17 per share, compared with a net profit of $8.4 million in 1999, or
$0.56 per diluted share. Again, the 1999 figure includes a deferred tax
benefit of $5.5 million.
CALENDAR-YEAR 2001 OUTLOOK
Ventana confirmed and expanded upon the guidance for 2001 it gave in its
December 15, 2000 press release and conference call. "We anticipate strong
revenue growth and a return to profitability in 2001," noted Gleeson. "We
anticipate sales growth in a 25 to 30 percent range, gross margin improvement
to our more normal 68 to 70 percent range, and operating earnings at around
2 percent of sales. R&D spending in 2001 will be at around 18 percent of
sales, well above our longer-term target of 10 to 12 percent of sales. While
this high level of R&D spending will depress our earnings in the short term,
it is a prudent investment in the exciting growth opportunities we have in our
clinical histology business and our entry into drug discovery labs."
CONFERENCE CALL
Ventana will hold a conference call to discuss 2000 results and the
outlook for 2001 at 9:00 a.m. EST on Thursday, February 8, 2001. The call can
be accessed live and will be available for replay over the Internet via
http://www.vcall.com .
This news release contains certain "forward-looking" statements and
information within the meaning of Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements, by their very nature, include risks and uncertainties.
Accordingly, the company's actual results could differ materially from those
discussed in this release. A wide variety of factors could cause or contribute
to such differences and could adversely impact revenues, profitability, cash
flows and capital needs. Such factors, many of which are beyond the control of
the company, include the following: market acceptance of new automated
histology products, continued success in asset management, continued
improvements in our manufacturing efficiencies, on-schedule launches of our
new products, currency exchange rate variability, competition and competitive
pressures on pricing and general economic conditions in the United States and
in the regions served by the company. A more complete listing of cautionary
statements and risk factors is contained in the company's report on Form
10-K for the year ended Dec. 31, 1999, filed with the Securities and Exchange
Commission.
Ventana develops, manufactures and markets instrument/reagent systems that
automate tissue preparation and slide staining in clinical histology and drug
discovery laboratories worldwide. Ventana's clinical systems are important
tools used in the diagnosis and treatment of cancer and infectious diseases.
Ventana's drug discovery systems are used to accelerate the discovery of new
drug targets and evaluate the safety of new drug compounds.
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."
Visit the Ventana Medical Systems, Inc. website at http://www.ventanamed.com
The Molecular Discovery Systems Division has its own website
at http://www.ventanadiscovery.com
Ventana Medical Systems, Inc.
Condensed Consolidated Statements of Operations
(in thousands except per share data)
Three Months Ended
December 31 '00/'99
%
2000 1999 B/(W) Change
Sales:
Instruments $4,727 $9,490 $(4,763) -50%
Reagents and other 12,674 11,560 1,114 10%
Total net sales 17,401 21,050 (3,649) -17%
Cost of goods sold 5,839 6,317 478 8%
Gross profit 11,562 14,733 (3,171) -22%
Operating expenses:
Research and development 3,006 1,845 (1,161) -63%
Selling, general and administrative 11,094 9,278 (1,816) -20%
Non-recurring expenses - - - -
Amortization of intangibles 424 284 (140) -49%
(Loss) income from operations (2,962) 3,326 (6,288) -
Other income (expense) 434 (416) 850 -
(Loss) income before taxes and
cumulative $(2,528) $2,910 $(5,438) -
effect of accounting change
(Benefit) provision for income tax - (5,500) 5,500 -100%
(Loss) income before cumulative
effect of accounting change (2,528) 8,410 (10,938) -
Cumulative effect to December 31, 1999
of accounting change net of tax - - - -
Net (loss) income $(2,528) $8,410 $(10,938) -
Net (loss) income per share
Basic $(0.17) $0.62 $(0.79) -
Diluted $(0.17) $0.56 $(0.73) -
Ventana Medical Systems, Inc.
Condensed Consolidated Statements of Operations
(in thousands except per share data)
Twelve Months Ended '00/'99
December 31 %
2000 1999 B/(W) Change
Sales:
Instruments $21,467 $24,069 $(2,602) -11%
Reagents and other 49,682 45,340 4,342 10%
Total net sales 71,149 69,409 1,740 3%
Cost of goods sold 36,377 21,218 (15,159) -71%
Gross profit 34,772 48,191 (13,419) -28%
Operating expenses:
Research and development 11,116 7,078 (4,038) -57%
Selling, general and
administrative 43,800 32,381 (11,419) -35%
Non-recurring expenses 4,519 - (4,519) -
Amortization of intangibles 1,474 1,051 (423) -40%
(Loss) income from operations (26,137) 7,681 (33,818) -
Other income (expense) 1,346 (370) 1,716 -
(Loss) income before taxes and
cumulative $(24,791) $7,311 $(32,102) -
effect of accounting change
Provision (benefit) for income tax 350 (5,500) 5,850 -
(Loss) income before cumulative
effect of accounting change (25,141) 12,811 (37,952) -
Cumulative effect to December 31,
1999
of accounting change net of tax (2,154) - (2,154) -
Net (loss) income $(27,295) $12,811 $(40,106) -
Net (loss) income per share
Basic $(1.85) $0.95 $(2.80) -
Diluted $(1.85) $0.88 $(2.73) -
Ventana Medical Systems, Inc.
Condensed Consolidated Balance Sheets
(in thousands except share data)
December 31 Inc/(Dec)
2000 1999 $ Amt %
ASSETS
Current assets:
Cash and cash equivalents $38,512 $1,787 36,725 2055%
Accounts receivable 16,682 20,776 (4,094) -20%
Inventories 8,100 13,474 (5,374) -40%
Prepaid expenses 460 574 (114) -20%
Deferred tax benefit, current
portion 1,692 1,692 - -
Other current assets 492 722 (230) -32%
Total current assets 65,938 39,025 26,913 69%
Property and equipment, net 22,329 14,441 7,888 55%
Intangibles, net 11,887 14,178 (2,291) -16%
Other assets 2,318 1,084 1,234 114%
Deferred tax benefit, long-term
portion 7,110 4,433 2,677 60%
Total assets $109,582 $73,161 $36,421 50%
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $5,943 $4,017 1,926 48%
Other current liabilities 12,869 6,600 6,269 95%
Total current liabilities 18,812 10,617 8,195 77%
Long-term debt 3,682 2,044 1,638 80%
Stockholders' equity
Common stock - $.001 par value;
50,000,000 shares
authorized; 15,444,122 and
13,593,640 shares
issued and outstanding at
December 31, 2000 and
December 31, 1999, respectively 15 14 1 7%
Additional paid-in capital 134,862 80,542 54,320 67%
Accumulated deficit (46,636) (19,341) (27,295) 141%
Cumulative other comprehensive
income (553) (115) (438) 381%
Treasury stock - 40,000 shares,
at cost (600) (600) - -
Total stockholders' equity 87,088 60,500 26,588 44%
Total liabilities and stockholders'
equity $109,582 $73,161 $36,421 50%
Ventana Medical Systems, Inc.
Consolidated Statements of Cash Flows
(in thousands)
Twelve Months Ended
December 31
2000 1999
Operating activities:
Net (loss) income $(27,295) $12,811
Adjustments to reconcile net (loss)
income to cash (used in) provided
by operating activities:
Change in deferred tax benefit (2,677) (5,980)
Depreciation and amortization 5,361 3,689
Cumulative effect of accounting
change 2,154 -
Non-cash intangibles and property
and equipment charges 7,914 -
Changes in operating assets and
liabilities 14,113 (6,416)
Net cash (used in) provided by
operating activities (430) 4,104
Investing activities:
Purchase of property and equipment (15,590) (6,843)
Purchase of intangible assets (3,652) (436)
Net cash used in investing
activities (19,242) (7,279)
Financing activities:
Issuance of debt 1,638 333
Issuance of stock 54,321 2,127
Net cash provided by financing
activities 55,959 2,460
Effect of exchange rate change on
cash 438 78
Net increase (decrease) in cash and
cash equivalents 36,725 (637)
Cash and cash equivalents, beginning
of period 1,787 2,424
Cash and cash equivalents, end of
period $38,512 $1,787
SOURCE Ventana Medical Systems, Inc.
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Related links:
http://www.ventanadiscovery.com
CONTACT:
Christopher Gleeson, President and CEO,
520-690-3557, or Nick Malden, CFO, 520-690-2794, both of Ventana
Medical Systems; or Analyst Contact, Kathy Brunson of The
Financial Relations Board, 312-640-6696
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