Revenues Increase 7% Over Third-Quarter 1999;
Manufacturing Issues Now Resolved
TUCSON, Ariz., Oct. 20 /PRNewswire/ -- Ventana Medical Systems, Inc.
(Nasdaq: VMSI), a leading supplier of automated instrument reagent systems to
clinical histology and drug discovery labs, today reported $17.6 million in
sales for the third quarter ending September 30, 2000, a 7 percent increase
over the $16.4 million reported in the same quarter of 1999. Ventana also
reported a net loss of $(485,000) and a diluted loss per share of $(0.03).
These figures were in line with consensus expectations.
For the nine-month period, Ventana reported sales rose 10 percent to
$53.2 million from $48.4 million in the comparable 1999 period. The company
had an operating loss of $(23.5) million, a net loss of $(23) million and a
diluted loss per share of $(1.58). The nine-month period was negatively
impacted by $22.5 million in one-time writeoffs and accruals resulting from
previously announced manufacturing challenges with dispensers, the decision to
exit a non-strategic business, and the restructuring of manufacturing
operations.
"I am pleased to report that the manufacturing issues that adversely
impacted our second- and early third-quarter results are now resolved,"
commented Christopher Gleeson, Ventana's president and chief executive
officer. "As a result of our corrective and preventative action program, we
are now shipping high-quality reagent dispensers to our customers and have
taken steps to ensure we will not have a re-occurrence of the problem in the
future. Reflecting the improvements we have made to our manufacturing
operations, gross margins came in at 67 percent for the quarter, up from the
66 percent reported for the first quarter and the negative gross margin
reported in the second quarter as a result of a number of one-time writeoffs.
We expect to see additional improvement in our gross margins in 2001."
Gleeson noted, "Our international operations continued to show strong
growth in the third quarter. International sales were $3.9 million, a 31
percent increase over sales for the same prior-year quarter. Our North
American operations reported a 5 percent increase in sales in the third
quarter as they were most directly impacted by our manufacturing issues with
dispensers. We continue to provide a high management focus on getting North
America back on a high-growth track and expect to be able to report
encouraging growth figures for the fourth quarter."
Ventana also reported R&D spending for the quarter of $2.7 million, up 57
percent compared with the prior-year quarter. Gleeson noted, "Our commitment
to new products and growth is evidenced by the fact that our R&D spending is
now at a rate of 15 percent of sales versus 10 percent of sales for the same
quarter of 1999. This increase in R&D spending has already paid off as it
enabled us to launch our new flagship clinical product, the Benchmark, on
schedule late in the third quarter. We will also be launching three
additional major new products in the fourth quarter.
"We have already initiated Benchmark customer shipments," Gleeson added.
"Benchmark is the most advanced staining system offered to clinical labs and
clearly sets Ventana apart from the competition. The system automates a
series of time-consuming manual steps that now must be done prior to a
staining run. It offers customers the convenience of performing both
protein-targeted IHC stains and molecular-targeted ISH stains on the same
instrument."
Gleeson continued, "Late in the fourth quarter, we expect to receive final
FDA approval for our Her-2/neu breast cancer diagnostic and launch this
product into the clinical market. We also plan to launch an initial menu of
ISH clinical tests for the Benchmark. Further, our flagship research system,
the Discovery, complete with relevant reagent applications, will be launched
during the quarter into the market for hybridizing nucleic acid microarrays.
Microarrays are a key tool in the early phases of new drug discovery."
Ventana also reported its days-sales-outstanding of receivables improved
during the quarter. DSOs fell to 91 days compared with 94 days for the second
quarter and 108 days for the first quarter. Days inventory on hand increased
in the quarter to 107 days from 83 days for the second quarter as a result of
an inventory buildup for the Benchmark launch.
Third-Quarter Conference Call
Ventana will hold a conference call to discuss third-quarter results and
management's outlook for the fourth quarter and next year at 11 a.m. EDT on
Friday, October 20, 2000. The call can be accessed live and will be available
for replay over the Internet via http://www.vcall.com, and available for replay only
via http://www.streetevents.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, favorable FDA action on our Her/2-neu breast cancer test,
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."
Ventana Medical Systems, Inc.
Consolidated Statements of Operations
(in thousands except per share data)
(Unaudited)
Three Months Ended:
September 30 '00/'99
2000 1999 B/(W) % Change
Sales:
Instruments $4,899 $4,733 $166 4%
Reagents and other 12,703 11,679 1,024 9%
Total net sales 17,602 16,412 1,190 7%
Cost of goods sold 5,733 5,148 585 11%
Gross profit 11,869 11,264 605 5%
Operating expenses:
Research and development 2,665 1,696 (969) 57%
Selling, general and
administrative 9,816 7,829 (1,987) 25%
Nonrecurring expenses - - - -
Amortization of intangibles 381 256 (125) 49%
(Loss) income from operations (993) 1,483 (2,476) -167%
Other income 508 44 464 1055%
Pretax (loss) income $(485) $1,527 $(2,012) -132%
Provision for income tax - - - -
Net (loss) income $(485) $1,527 $(2,012) -132%
Per Share Data:
Basic (loss) earnings
per share $(0.03) $0.11 $(0.14) -129%
Diluted (loss) earnings
per share $(0.03) $0.11 $(0.14) -129%
Outstanding Shares:
Basic 15,186 13,520
Diluted 15,186 14,465
Ventana Medical Systems, Inc.
Consolidated Statements of Operations
(in thousands except per share data)
(Unaudited)
Nine Months Ended:
September 30 '00/'99
2000 1999 B/(W) % Change
Sales:
Instruments $16,163 $14,579 $1,584 11%
Reagents and other 37,008 33,780 3,228 10%
Total net sales 53,171 48,359 4,812 10%
Cost of goods sold 30,331 14,901 15,430 104%
Gross profit 22,840 33,458 (10,618) -32%
Operating expenses:
Research and development 8,110 5,233 (2,877) 55%
Selling, general and
administrative 32,706 23,103 (9,603) 42%
Nonrecurring expenses 4,519 - (4,519) -
Amortization of intangibles 1,050 767 (283) 37%
(Loss) income from operations (23,545) 4,355 (27,900) -641%
Other income 912 46 866 1883%
Pretax (loss) income $(22,633) $4,401 $(27,034) -614%
Provision for income tax 350 - (350) -
Net (loss) income $(22,983) $4,401 $(27,384) -622%
Per Share Data:
Basic (loss) earnings
per share $(1.58) $0.33 $(1.91) -579%
Diluted (loss) earnings
per share $(1.58) $0.30 $(1.88) -627%
Outstanding Shares:
Basic 14,559 13,462
Diluted 14,559 14,603
Ventana Medical Systems, Inc.
Consolidated Balance Sheet
(in thousands except share data)
(Unaudited)
Sept 30, Dec 31, Inc/(Dec)
ASSETS 2000 1999 $ Amt %
Current assets:
Cash and cash equivalents $42,029 $1,787 40,242 2252%
Accounts receivable 17,605 20,776 (3,171) -15%
Inventories 6,726 13,474 (6,748) -50%
Prepaid expenses 614 574 40 7%
Deferred tax benefit,
current portion 1,692 1,692 - -
Other current assets 938 722 216 30%
Total current assets 69,604 39,025 30,579 78%
Property and equipment, net 18,474 14,441 4,033 28%
Intangibles, net 11,045 14,178 (3,133) -22%
Other assets 2,281 1,084 1,197 110%
Deferred tax benefit,
long-term portion 5,674 4,433 1,241 28%
Total assets $107,078 $73,161 $33,917 46%
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $4,020 $4,017 3 -
Other current liabilities 8,302 6,600 1,702 26%
Total current liabilities 12,322 10,617 1,705 16%
Long-term debt 3,971 2,044 1,927 94%
Stockholders' equity:
Common stock - $.001 par
value; 50,000,000 shares
authorized; 15,233,68 and
13,593,640 shares issued
and outstanding at
September 30, 2000 and
December 31, 1999,
respectively 15 14 1 7%
Additional paid-in capital 134,075 80,542 53,533 66%
Accumulated deficit (42,324) (19,341) (22,983) 119%
Cumulative foreign currency
translation adjustment (381) (115) (266) 231%
Treasury stock - 40,000
shares, at cost (600) (600) - -
Total stockholders' equity 90,785 60,500 30,285 50%
Total liabilities and
stockholders' equity $107,078 $73,161 $33,917 46%
Note:The consolidated balance sheet at December 31, 1999 has been derived
from theaudited financial statements at that date but does not
include all of the informationand footnotes required by generally
accepted accounting principles for completefinancial statements.
Ventana Medical Systems, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Nine Months Ended
September 30
2000 1999
Operating activities:
Net (loss) income $(22,983) $4,401
Adjustments to reconcile net income
to cash provided by operating activities:
Change in deferred tax benefit, net (1,241) -
Depreciation and amortization 4,098 2,769
Non-cash intangibles and property
and equipment charges 7,914 -
Changes in operating assets and liabilities, net 10,489 (3,157)
Net cash (used) provided by operating activities (1,723) 4,013
Investing activities:
Purchase of property and equipment, net (10,798) (7,718)
Purchase of intangible assets, net (2,393) (546)
Net cash used in investing activities (13,191) (8,264)
Financing activities:
Issuance of debt - net 1,888 1,400
Issuance of stock - net 53,534 1,493
Net cash provided by financing activities 55,422 2,893
Effect of exchange rate change on cash (266) (95)
Net increase (decrease) in cash and
cash equivalents 40,242 (1,453)
Cash and cash equivalents, beginning of period 1,787 2,424
Cash and cash equivalents, end of period $42,029 $971
SOURCE Ventana Medical Systems, Inc.
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CONTACT:
Christopher Gleeson, President and Chief
Executive Officer of Ventana Medical Systems, 520-887-2155; or
Analyst, Kathy Brunson, 312-640-6696, or General, Marilyn
Windsor, 312-640-6692, or Media, Cindy Martin, 312-266-7800, all
of The Financial Relations Board
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