FOXH Foxhollow Technologies (MM)

REDWOOD CITY, Calif., Feb. 13 /PRNewswire-FirstCall/ -- FoxHollow Technologies (NASDAQ:FOXH), which manufactures and markets minimally invasive devices for the treatment of peripheral artery disease (PAD), today reported results for the fourth quarter and full year 2006. For the quarter ended December 31, 2006, the company reported revenues of $44.5 million, a six percent increase over revenues of $41.9 million in the fourth quarter a year ago. Revenues for the fourth quarter of 2006 include $39.9 million in product revenues and $4.6 million of research collaboration revenues related to the company's partnership with Merck & Co. FoxHollow reported a net loss of $4.9 million, or $0.18 per share, in the fourth quarter of 2006 compared with a net loss of $160,000, or $0.01 per share, in the same period a year ago. The company reported a gross margin on product revenues of 74 percent compared with 70 percent in the same period a year ago. For the full year 2006, FoxHollow reported revenues of $193.1 million, a 51 percent increase over revenues of $128.2 million in fiscal 2005. The company reported a net loss of $12.2 million, or $0.48 per share, compared with a net loss of $11.6 million, or $0.51 per share, in fiscal 2005. In analyzing the company's operations and financial performance, investors may wish to consider the impact of the following charges which are included in costs and expenses under generally accepted accounting principles: Three Months Ended Twelve Months Ended (in thousands) December 31, December 31, -------------------------------------- 2006 2005 2006 2005 ------- ------- ------- ------- Stock-based compensation $3,074 $1,240 $23,695 $7,077 Lease termination charges 3,415 - 3,415 - ------- ------- ------- ------- Total charges $6,489 $1,240 $27,110 $7,077 ------- ------- ------- ------- "While our financial performance during the fourth quarter fell short of our expectations, 2006 was, nevertheless, a year of many remarkable accomplishments for FoxHollow," noted Dr. John Simpson, chief executive officer of the company. "We grew revenues by over 50 percent, entered into a major expansion of our collaboration with Merck and made significant progress in our product development initiatives, including the launch of the MiniHawk and the first-in-man use of our NightHawk on-board imaging technology. I take pride in these results and want to thank all FoxHollow employees for making them happen," he continued. In a press release dated January 8, 2006, FoxHollow provided an update on its corporate strategy, based on the results of an extensive market analysis of more than 200 clinicians and their approaches for treating peripheral artery disease. "The findings of this study validated our increased focus on product development, clinical trial programs and business development-as we address the various segments within the PAD market and seek to foster increased adoption among the less frequent SilverHawk users," Simpson noted. Other recently announced developments within the company include: -- Entry into an agreement with ev3 Inc. to conduct a joint clinical study of FoxHollow's calcium cutting device (the RockHawk) and ev3's SpideRX embolic protection device. As part of the agreement, FoxHollow will have the exclusive right to market the two devices together in the United States. -- Plans to conduct a new clinical trial that will randomize the SilverHawk against another mainstream therapy for PAD. The study will directly compare the efficacy and safety of the SilverHawk to balloon angioplasty. The company expects to have the trial design completed by the end of the first quarter. -- The naming of Michael Ennen, M.D. as vice president, global marketing. Dr. Ennen comes to FoxHollow from the consulting firm of McKinsey & Company and previously was associated with the investment banking firm of Goldman Sachs and Stanford University's Office of Medical Development. -- The departure at the end of the current quarter of FoxHollow's senior vice president of sales. An active search is underway for a new head of the company's 200-plus person sales organization. "We are well-positioned in the large and growing PAD market, and we are confident in our strategies for increasing our share of that market. We expect to hit a number of key product introduction milestones during 2007 and continue to produce compelling clinical data that demonstrates the efficacy of our offerings," noted Duke Rohlen, the company's president of strategic operations. "At the same time, over the past several months, we have expanded the company's product portfolio through our acquisition of Kerberos Proximal Solutions and our partnership with ev3, and we will continue to explore strategic opportunities that can further our strong position in the treatment of PAD," he added. Guidance for Fiscal 2007 FoxHollow expects revenues in fiscal 2007 will be in the range of $205- $215 million. This includes $173-$183 million in product revenues and $32 million in research collaboration revenues. The company expects net income on a GAAP basis in 2007 of breakeven to $6.0 million and earnings per diluted share of $0.00-$0.20. Included in these figures are approximately $15 million in non-cash stock-based compensation expense and $1.6 million in amortization of purchased intangible assets. Conference Call The company will hold a conference call today at 2 p.m. Pacific Time (5 p.m. Eastern). The teleconference can be accessed via the investor relations section of the company's website at http://investor.foxhollowtech.com/, or by calling 800-322-9079 (domestic) or 973-582-2717 (international). Please dial in or access the website 10-15 minutes prior to the beginning of the call. A replay of the conference call will be available four hours after the conference call concludes through 12 a.m. Eastern Time, February 27, 2007, by dialing 877-519-4471 (domestic) or 973-341-3080 (international), passcode 8414274. An online archive of the webcast will be available for a minimum of two months by accessing the investor relations portion of the website at http://investor.foxhollowtech.com/. About FoxHollow Technologies FoxHollow Technologies, Inc. develops and markets minimally invasive devices for the removal of plaque and thrombus for the treatment of peripheral artery disease (PAD). PAD results from plaque that accumulates in the arteries and blocks blood flow in the legs. These blockages can result in severe pain for patients and very limited physical mobility. The company's SilverHawk Plaque Excision System is a minimally invasive method of removing obstructive plaque and restoring blood flow to the legs and feet. The company's Rinspirator thrombectomy system removes thrombus, or blood clots, from occluded arteries in patients suffering from PAD or coronary artery disease (CAD). For more information, please visit our website at http://www.foxhollowtech.com/. Forward-Looking Statements This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Statements in this press release regarding FoxHollow's business that are not historical facts may be "forward-looking statements" that involve risks and uncertainties. Specifically, statements regarding the company's financial guidance for 2007, expectations regarding future product releases and clinical trials are forward-looking statements involving risks and uncertainties. FoxHollow's fourth quarter 2006 financial results, as discussed in this release, are preliminary and unaudited, and subject to adjustment. Forward- looking statements are based on management's current, preliminary expectations, and are subject to risks and uncertainties that could cause actual results to differ from the results predicted and which are included under the caption, "Factors Affecting Future Operating Results," in "Management's Discussion and Analysis of Financial Condition and Results of Operations," in our most recent quarterly report on Form 10-Q for the quarter ended September 30, 2006 filed with the SEC on November 9, 2006, and available on our investor relations website at http://investor.foxhollowtech.com/ and on the SEC's website at http://www.sec.gov/ . Undue reliance should not be placed on forward-looking statements, which speak only as of the date they are made. FoxHollow undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made, or to reflect the occurrence of unanticipated events. Contacts: Matt Ferguson Chief Financial Officer 650-421-8449 Robin Gaffney Media Relations 650-421-8614 FOXHOLLOW TECHNOLOGIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) December 31, -------------------------- 2006 2005 ---------- ---------- Assets Current assets: Cash and cash equivalents $59,546 $24,249 Short-term investments 107,369 35,666 Accounts receivable, net 19,450 21,831 Research collaboration receivable 2,826 - Inventories 14,346 15,607 Prepaid expenses and other current assets 2,826 1,846 ---------- ---------- Total current assets 206,363 99,199 Property and equipment, net 8,328 8,442 Intangibles, net 12,116 - Goodwill 19,186 - Other assets 1,119 564 ---------- ---------- Total assets $247,112 $108,205 ========== ========== Liabilities and Stockholders' Equity Current liabilities: Accounts payable $9,385 $7,072 Accrued liabilities 13,320 11,163 Deferred revenue, current 32,444 6,206 ---------- ---------- Total current liabilities 55,149 24,441 Deferred revenue 5,968 - ---------- ---------- Total liabilities 61,117 24,441 ---------- ---------- Stockholders' equity: Common stock 29 24 Additional paid-in capital 285,129 178,011 Deferred stock-based compensation (1,866) (9,066) Other comprehensive income (loss) 38 (99) Accumulated deficit (97,335) (85,106) ---------- ---------- Total stockholders' equity 185,995 83,764 ---------- ---------- Total liabilities and stockholders' equity $247,112 $108,205 ========== ========== FOXHOLLOW TECHNOLOGIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (unaudited) Three Months Ended Twelve Months Ended December 31, December 31, --------------------------------------- 2006 2005 2006 2005 ------- ------- ------- ------- Revenue: Product $39,885 $39,515 $182,245 $125,362 Research collaboration 4,634 2,363 10,840 2,794 ------- ------- ------- ------- Net revenue 44,519 41,878 193,085 128,156 ------- ------- ------- ------- Costs and expenses: Product 10,176 11,760 42,136 39,335 Research collaboration 410 408 3,128 614 Research and development 5,546 2,846 20,115 10,321 Selling, general and administrative 33,661 27,585 142,494 91,396 Amortization of purchased intangible assets 395 - 474 - ------- ------- ------- ------- Total costs and expenses 50,188 42,599 208,347 141,666 ------- ------- ------- ------- Loss from operations (5,669) (721) (15,262) (13,510) Interest and other income and expense, net 1,623 561 3,838 1,899 ------- ------- ------- ------- Loss before income taxes (4,046) (160) (11,424) (11,611) Provision for income taxes 805 - 805 - ------- ------- ------- ------- Net loss $(4,851) $(160) $(12,229) $(11,611) ------- ------- ------- ------- Net loss per common share: Basic and diluted $(0.18) $(0.01) $(0.48) $(0.51) ------- ------- ------- ------- Weighted-average number of shares used in per common share calculations: Basic and diluted 27,571 23,642 25,521 22,975 ------- ------- ------- ------- DATASOURCE: FoxHollow Technologies, Inc. CONTACT: Matt Ferguson, Chief Financial Officer, +1-650-421-8449, or ; or Robin Gaffney, +1-650-421-8614, or Web site: http://www.foxhollowtech.com/

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