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| American Medical Systems Reports Third-Quarter Results; Sales and Operating Performance Exceed Company's Expectations |
MINNEAPOLIS, Oct. 25 /PRNewswire/ --
American Medical Systems (Nasdaq: AMMD), the leading independent
manufacturer of surgical devices for urologists and their patients, reported
financial results for the first time since its initial public offering,
completed on August 11, 2000.
(Photo: http://www.newscom.com/cgi-bin/prnh/20000710/AMSLOGO )
American Medical Systems (AMS) reported that its net sales for the third
quarter ended September 30, 2000, reached $23.5 million, a 20.5 percent
increase over sales of $19.5 million in the same quarter last year. The
company reported a loss for the third quarter of $348,000, or $0.02 per share,
versus net income of $699,000 in the year-ago quarter. The company's
third-quarter earnings before interest, taxes and amortization (EBITA) was
$4.2 million, compared to $3.9 million in the 1999 period. Excluding the
negative impact of currency exchange rate fluctuations, third-quarter sales
growth was 22.1 percent.
Douglas W. Kohrs, AMS president and CEO, commented: "We are pleased that
the third-quarter financial results of AMS, its first quarterly report as a
public company, exceeded our expectations. As a public company, we are
confident that AMS will be able to enhance its franchise and technology base
to better serve the needs of urologists and their patients."
For the nine months ended September 30, 2000, AMS reported net sales of
$73.6 million, an increase of 23.2 percent from sales of $59.8 million during
the same period a year ago. The company had a net loss for the nine-month
period of $904,000, or $0.06 per share, versus a net loss of $5.1 million for
the same period last year.
Revenue growth for the third quarter of 2000 benefited from a 68 percent
increase in the company's line of incontinence products. Sales in 2000
included those of Influence, a manufacturer of incontinence products acquired
by AMS in December 1999. Third-quarter sales of erectile dysfunction products
were slightly higher and prostate disease products were unchanged versus the
year-ago period.
Third-quarter gross margin rose to 79.1 percent in the third quarter of
2000 versus 77.0 percent in the same quarter in 1999 led by improvements in
scrap rates and warranty costs. The improvement in gross margin was offset by
increases in other operating expense categories. Marketing and sales costs
were 38.5 percent of sales in the quarter versus 39.0 percent in the third
quarter of 1999. Third-quarter general and administrative expenses increased
to 13.2 percent of sales from 10.3 percent in the third quarter of 1999 due to
infrastructure expansion to support the Influence acquisition. Research and
development expenses rose 27.0 percent to 12.8 percent of sales in the third
quarter of 2000 in order to support the company's expanded product and
technology portfolio.
Product Development Update
"Urology has been an under-served specialty," said Kohrs. "We see
significant growth potential in developing solutions that address needs among
the three most common urological disorders. We are delivering value to our
business through both internal and external R&D efforts." AMS has three
primary product areas -- incontinence, erectile dysfunction and prostate
disease.
In mid-2000, AMS launched the InVance male sling system, a novel approach
to treating stress urinary incontinence. Sling procedures are rapidly gaining
acceptance as a more effective treatment for this type of incontinence. The
InVance sling is implanted in a minimally invasive procedure in a hospital
outpatient setting, and offers immediate relief and minimal recovery time.
The product has been well received but a limited supply of sling material has
constrained sales of the device. AMS is negotiating with suppliers to improve
the availability of materials.
AMS plans to introduce a next-generation sling procedure for female
patients suffering from stress urinary incontinence. This less-invasive
surgery can be completed in less than an hour on a hospital outpatient basis.
The Staple-Tac, a product used in the sling procedure, is in development and
scheduled for an early 2001 market launch.
In the erectile dysfunction area, AMS has developed an
antimicrobial-treated penile prosthesis, an enhancement of its market-leading
product. In August, AMS submitted a PMA supplement to the FDA requesting
approval in the United States. The Canadian regulatory agency, Health Canada
Therapeutic Products Programme, recently approved the AMS
antimicrobial-treated penile prosthesis, and the first implants in that
country are scheduled for the fourth quarter of this year.
AMS has received CE Mark approval for ProstaJect, a new technology for the
treatment of benign prostatic hyperplasia (BPH) (enlarged prostate disease).
The ProstaJect device ablates tissue in the prostate using dehydrated alcohol.
AMS has initiated European marketing trials and is targeting a mid-year 2001
launch in many markets outside of the United States. In the United States, an
Investigational New Drug (IND) application will be submitted to the FDA in the
fourth quarter of 2000.
Outlook
Kohrs said that for the fourth quarter, AMS expects net sales in the range
of $25 million to $27 million with EBITA margin at or above the third quarter
rate. Looking ahead to 2001, management anticipates net sales growth of
between 10 and 15 percent with EBITA margin improvement. These projections
are subject to risks and uncertainties described further below.
About Urological Disorders
The three most prevalent urological disorders are male and female
incontinence, erectile dysfunction and enlarged prostate disease.
Approximately 60 million people in the United States suffer from one or more
of these disorders. An estimated 11 million of these people have a disorder
severe enough to be candidates for treatment with AMS products. Although not
life-threatening, these disorders can diminish quality of life significantly.
In recent years, the number of people seeking treatment has increased markedly
as a result of greater awareness of new treatment alternatives, especially new
drug therapies.
About AMS
American Medical Systems (AMS), headquartered in Minneapolis, is a medical
technology company with 500 employees worldwide. AMS products include a large
portfolio of devices to treat both male and female incontinence, devices for
the diagnosis and treatment of erectile dysfunction; devices for urethral
obstruction caused by benign prostatic hyperplasia (BPH) (enlarged prostate
disease) and advanced surgical products used in transurethral resection of the
prostate. The company markets its products in more than 60 countries
worldwide. For more information about AMS, visit the Web site at
http://www.visitAMS.com .
Except for historical information contained herein, the disclosures in
this news release are forward-looking statements made under the Safe Harbor
Provisions of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from those anticipated. These
risks and uncertainties include: continued use of non-invasive treatment
alternatives; continued physician use and endorsement of the company's
products; increased supply of sling material; increasing penetration of the
penile implant market; successful introduction of new products and product
improvements; actions related to reimbursement for the company's products and
potential product recalls. These risks and others relevant risks are
described in more detail in the company's prospectus, dated August 10, 2000,
for its initial public offering of common stock.
AMERICAN MEDICAL SYSTEMS HOLDINGS, INC.
STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2000 1999 2000 1999
Net sales $23,539 $19,536 $73,618 $59,770
Cost of sales 4,911 4,497 16,426 25,606
Gross profit 18,628 15,039 57,192 34,164
Operating expenses:
Research and development 3,021 2,378 9,014 6,914
Marketing and sales 9,059 7,621 28,942 22,013
General and
administrative 3,105 2,019 8,734 5,743
Transition and
reorganization expenses -- -- 1,000 3,000
Amortization of
intangibles 2,234 996 6,235 2,966
Total operating expenses 17,419 13,014 53,925 40,636
Operating income (loss) 1,209 2,025 3,267 (6,472)
Royalty and other income 801 835 2,228 3,043
Interest expense, net (1,823) (1,690) (5,904) (5,048)
Income (loss) before
income taxes 187 1,170 (409) (8,477)
Income tax benefit
(expense) (a) (535) (471) (495) 3,397
Net income (loss) ($348) $699 ($904) ($5,080)
Net loss per share --
basic and diluted (b) $(0.02) -- $(0.06) --
Weighted average common
shares outstanding 14,056 -- 14,056 --
EBITA (c) $4,244 $3,856 $11,730 $11,150
EBITA as a percent of
net sales 18.0% 19.7% 15.9% 18.7%
NOTES
(a) Comparison of effective tax rates between periods is meaningless as
permanent non-deductible expenses exceed taxable income during 2000.
(b) No common shares were outstanding during 1999 therefore no net income
(loss) per share is presented.
(c) EBITA consists of net income (loss) excluding net interest, taxes,
amortization of intangibles, and the non-cash charges related to
acquired inventory and in-process research and development.
AMERICAN MEDICAL SYSTEMS HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
Assets September 30, December 31,
2000 1999
Current assets: (Unaudited)
Cash and cash equivalents $12,108 $6,940
Accounts receivable, net 22,299 19,809
Inventories 11,010 11,045
Deferred taxes and other current assets 7,788 7,811
Total current assets 53,205 45,605
Property, plant and equipment, net 25,267 26,774
Intangibles, net 102,838 101,951
Deferred taxes and other assets 11,511 12,960
Total assets $192,821 $187,290
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable $4,199 $2,753
Accrued liabilities and taxes 34,142 37,087
Current portion of notes payable 6,033 6,000
Total current liabilities 44,374 45,840
Long-term notes payable 39,967 95,300
Minority interest 521 521
Convertible preferred stock -- 67,465
Stockholder's equity (deficit) 107,959 (21,836)
Total liabilities and shareholders' equity $192,821 $187,290
AMERICAN MEDICAL SYSTEMS HOLDINGS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands, except share data)
(Unaudited)
For the nine months ended
September 30,
2000 1999
Cash flows from operating activities:
Net income (loss) ($905) ($5,080)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 2,817 1,880
Amortization of intangibles, including
deferred financing costs 6,359 2,966
Noncash pension charge 1,295 1,569
Noncash deferred compensation 318 --
Change in net deferred taxes 726 (1,665)
Changes in operating assets and
liabilities (3,948) 10,369
Net cash provided by (used in)
operating activities 6,662 10,039
Cash flows from investing activities:
Purchase of property, plant and
equipment (1,310) (4,597)
Purchase of businesses, net of cash
acquired (4,111) (5,460)
Purchase of other intangibles (3,135) --
Net cash provided by (used in)
investing activities (8,556) (10,057)
Cash flows from financing activities:
Sale of preferred stock -- 2,000
Issuance of common stock 63,306 --
Net borrowings on long-term debt (55,300) 2,500
Net cash provided by financing
activities 8,006 4,500
Effect of exchange rates (944) (246)
Net increase (decrease) in cash and
cash equivalents $5,168 $4,236
SOURCE American Medical Systems
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CONTACT:
Greg Melsen, Chief Financial Officer of
American Medical Systems, 952-933-4666, greg.melsen@visitAMS.com
, or Marian Briggs, mbriggs@psbpr.com , or Nancy A. Johnson,
njohnson@psbpr.com , both of Padilla Speer Beardsley Inc.,
612-871-8877, for American Medical Systems
