The Spectranetics Corporation (NASDAQ:SPNC) (“the Company”) today
reported financial results for the three months ended June 30,
2017. Highlights of the quarter, all compared with the three months
ended June 30, 2016, include:
- Revenue of $74.7 million increased 10% (11% constant
currency1)
- Vascular Intervention revenue of $51.0 million increased 10%
(11% constant currency1)
- Lead Management revenue of $19.7 million increased 11% (12%
constant currency1)
Net loss for the three months ended June 30, 2017 was $24.6
million, or $0.56 per share, compared with net loss of $14.9
million, or $0.35 per share, for the three months ended
June 30, 2016.
“In the second quarter we again delivered double-digit revenue
growth, reflecting continued, solid performance across our business
and innovation pipeline,” said Scott Drake, President and CEO. “The
impact we are making to improve patients’ lives has never been
greater, especially with the recent FDA approval of Stellarex.
Additionally, as we announced in June, we have entered into a
definitive agreement to be acquired by Royal Philips, and we expect
the transaction to close in the third quarter.”
Due to the pending transaction with Royal Philips, Spectranetics
will not host an earnings call to discuss the results.
__________________________1Constant currency is a non-GAAP
financial measure. See “Reconciliation of Non-GAAP Financial
Measures” later in this release.
About Spectranetics
The Spectranetics Corporation develops, manufactures, markets
and distributes medical devices used in minimally invasive
procedures within the cardiovascular system. The Company's products
are available in over 65 countries and are used to treat arterial
blockages in the heart and legs and to remove and support the
removal of pacemaker and defibrillator leads.
The Company's Vascular Intervention (VI) products include a
range of laser catheters for ablation of blockages in arteries
above and below the knee, the AngioSculpt scoring balloon used in
both peripheral and coronary procedures, and the Stellarex
drug-coated balloon peripheral angioplasty platform. The Company
also markets support catheters to facilitate crossing of peripheral
and coronary arterial blockages, and retrograde access and
guidewire retrieval devices used in the treatment of peripheral
arterial blockages, including chronic total occlusions. The Company
markets aspiration and cardiac laser catheters to treat blockages
in the heart.
The Lead Management (LM) product line includes excimer laser
sheaths, dilator sheaths, mechanical sheaths and accessories for
the removal of pacemaker and defibrillator cardiac leads, including
the Bridge™ Occlusion Balloon.
For more information, visit www.spectranetics.com.
Safe Harbor Statement
This release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, Section 21E
of the Securities Exchange Act of 1934 and the Private Securities
Litigation Reform Act of 1995. You can identify these statements
because they do not relate strictly to historical or current facts.
Such statements may include words such as “anticipate,” “will,”
“estimate,” “expect,” “look forward,” “strive,” “project,”
“intend,” “should,” “plan,” “believe,” “hope,” “see,” “enable,”
“potential,” and other words and terms of similar meaning in
connection with any discussion of, among other things, the pending
Philips Transaction, future operating or financial performance,
strategic initiatives and business strategies, clinical trials and
regulatory approvals, regulatory or competitive environments,
outcome of litigation, our intellectual property and product
development. These forward-looking statements include, but are not
limited to, statements regarding our competitive position, product
innovation and development, and commercialization schedule,
expectation of continued growth and the reasons for that growth,
growth rates, strength, integration and product launches,
regulatory approvals, and 2017 outlook and projected results
including projected revenue and expenses, gross margin, net loss
and loss per share. Such statements are based on current
assumptions that involve risks and uncertainties that could cause
actual outcomes and results to differ materially. You are cautioned
not to place undue reliance on these forward-looking statements and
to note they speak only as of the date of this release. These risks
and uncertainties may include financial results differing from
guidance; our need to comply with complex and evolving laws and
regulations; intense and increasing competition and consolidation
in our industry; the impact of rapid technological change; slower
revenue growth and continued losses; the inaccuracy of our
assumptions regarding AngioScore and Stellarex; market acceptance
of our technology and products; our inability to manage growth;
increased pressure on expense levels resulting from expanded sales,
marketing, product development and clinical activities; uncertain
success of our strategic direction; dependence on new product
development and successful commercialization of new products; loss
of key personnel; uncertain success of or delays in our clinical
trials; costs of and adverse results in any ongoing or future legal
proceedings; adverse impact to our business from healthcare reform
and related legislation and regulations, including changes in
reimbursements and the impact of fraud and abuse and information
privacy laws and regulations; adverse conditions in the general
domestic and global economic markets and volatility and disruption
of the credit markets or other factors that prevent us from
obtaining funding; our inability to protect our intellectual
property and intellectual property claims of third parties;
availability of inventory and components from suppliers, including
sole source suppliers; adverse outcome of FDA inspections,
including FDA warning letters and any remediation efforts; the
receipt of FDA clearance and other regulatory approvals to market
new products or applications and the timeliness of any clearance
and approvals; product defects or recalls and product liability
claims; cybersecurity breaches; interruptions of our manufacturing
operations and other events that affect our ability to manufacture
sufficient volumes to fulfill customer demand; our dependence on
third party vendors, suppliers, consultants and physicians; risks
associated with international operations, including international
sales using distributors and the impact of “Brexit” on our European
sales and operations; risks associated with any future
acquisitions; our ability to use net operating loss carryovers and
potential impairment charges; lack of cash necessary to satisfy our
cash obligations under our outstanding 2.625% Convertible Senior
Notes due 2034 and our term loan and revolving loan facilities; our
debt adversely affecting our financial health and preventing us
from fulfilling our debt service and other obligations; and share
price volatility due to the initiation or cessation of coverage, or
changes in ratings, by securities analysts. For a further list and
description of such risks and uncertainties that could cause our
actual results, performance or achievements to materially differ
from any anticipated results, performance or achievements, please
see our previously filed SEC reports, including those risks set
forth in our 2016 Annual Report on Form 10-K and any subsequent
Form 10-Qs. We disclaim any intention or obligation to update or
revise any financial or other projections or other forward-looking
statements, whether because of new information, future events or
otherwise.
Use of Non-GAAP Financial MeasuresTo supplement
our condensed consolidated financial statements prepared in
accordance with U.S. generally accepted accounting principles
(GAAP), we use a non-GAAP financial measure regarding constant
currency in this release. Reconciliations of the non-GAAP financial
measure used in this release to the most directly comparable GAAP
measure for the respective periods, and an explanation of our use
of this non-GAAP measure, can be found in “Reconciliation of
Non-GAAP Financial Measures” immediately following the financial
tables. Non-GAAP financial measures have limitations as analytical
tools and should not be considered in isolation or as a substitute
for our financial results prepared in accordance with GAAP.
-Financial tables follow-THE SPECTRANETICS
CORPORATIONCondensed Consolidated Statements of Operations(in
thousands, except per share data)(unaudited) |
|
|
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Revenue |
|
$ |
74,714 |
|
|
$ |
67,748 |
|
|
$ |
144,394 |
|
|
$ |
130,632 |
|
Cost of products
sold |
|
18,482 |
|
|
16,983 |
|
|
36,533 |
|
|
33,065 |
|
Gross profit |
|
56,232 |
|
|
50,765 |
|
|
107,861 |
|
|
97,567 |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Selling,
general and administrative (1) |
|
45,549 |
|
|
40,643 |
|
|
91,205 |
|
|
81,432 |
|
Research,
development and other technology |
|
19,901 |
|
|
17,657 |
|
|
37,751 |
|
|
33,994 |
|
Acquisition transaction, integration and legal costs |
|
9,157 |
|
|
500 |
|
|
9,344 |
|
|
792 |
|
Acquisition-related intangible asset amortization |
|
2,919 |
|
|
3,202 |
|
|
5,838 |
|
|
6,405 |
|
Contingent consideration expense |
|
— |
|
|
67 |
|
|
— |
|
|
167 |
|
Total operating
expense |
|
77,526 |
|
|
62,069 |
|
|
144,138 |
|
|
122,790 |
|
Operating loss |
|
(21,294 |
) |
|
(11,304 |
) |
|
(36,277 |
) |
|
(25,223 |
) |
Other
expense |
|
(2,942 |
) |
|
(3,452 |
) |
|
(6,234 |
) |
|
(6,619 |
) |
Loss before income tax
expense |
|
(24,236 |
) |
|
(14,756 |
) |
|
(42,511 |
) |
|
(31,842 |
) |
Income
tax expense |
|
368 |
|
|
150 |
|
|
617 |
|
|
355 |
|
Net loss |
|
$ |
(24,604 |
) |
|
$ |
(14,906 |
) |
|
$ |
(43,128 |
) |
|
$ |
(32,197 |
) |
|
|
|
|
|
|
|
|
|
Net loss per common
share: |
|
|
|
|
|
|
|
|
Basic and
diluted |
|
$ |
(0.56 |
) |
|
$ |
(0.35 |
) |
|
$ |
(0.99 |
) |
|
$ |
(0.75 |
) |
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
Basic and
diluted |
|
43,734 |
|
|
42,804 |
|
|
43,613 |
|
|
42,751 |
|
|
(1) Included in the three and six months ended June
30, 2017 is $9.0 million of external professional service
feesrelated to the pending Royal Philips transaction. |
THE SPECTRANETICS CORPORATIONCondensed Consolidated
Balance Sheets(in thousands)(unaudited) |
|
|
June 30, 2017 |
|
December 31, 2016 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
57,537 |
|
|
$ |
57,237 |
|
Accounts
receivable, net |
47,434 |
|
|
43,565 |
|
Inventories, net |
29,565 |
|
|
27,642 |
|
Other
current assets |
7,738 |
|
|
7,088 |
|
Total current
assets |
142,274 |
|
|
135,532 |
|
Property
and equipment, net |
46,268 |
|
|
44,827 |
|
Goodwill
and intangible assets |
242,194 |
|
|
247,040 |
|
Other
assets |
2,617 |
|
|
2,679 |
|
Total assets |
$ |
433,353 |
|
|
$ |
430,078 |
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY
|
|
|
|
Borrowings under revolving line of credit |
$ |
26,162 |
|
|
$ |
24,712 |
|
Other
current liabilities |
48,044 |
|
|
42,230 |
|
Total current
liabilities |
74,206 |
|
|
66,942 |
|
Convertible debt, net of debt issuance costs |
225,617 |
|
|
225,095 |
|
Term
loan, net of debt issuance costs |
88,011 |
|
|
59,664 |
|
Other
non-current liabilities |
4,327 |
|
|
4,054 |
|
Stockholders’ equity |
41,192 |
|
|
74,323 |
|
Total liabilities and
stockholders’ equity |
$ |
433,353 |
|
|
$ |
430,078 |
|
THE SPECTRANETICS CORPORATIONSupplemental Financial
Information(in thousands, except laser placement and
percentages)(Unaudited) |
|
Financial Summary |
|
2016 |
|
2017 |
|
|
2nd Qtr |
|
3rd Qtr |
|
4th Qtr |
|
1st Qtr |
|
2nd Qtr |
Disposable products
revenue: |
|
|
|
|
|
|
|
|
|
|
Vascular
Intervention |
|
$ |
46,218 |
|
|
$ |
45,906 |
|
|
$ |
47,566 |
|
|
$ |
46,448 |
|
|
$ |
51,002 |
|
Lead
Management |
|
17,767 |
|
|
18,616 |
|
|
19,786 |
|
|
19,033 |
|
|
19,686 |
|
Total disposable products |
|
63,985 |
|
|
64,522 |
|
|
67,352 |
|
|
65,481 |
|
|
70,688 |
|
Laser, service, and
other |
|
3,763 |
|
|
3,743 |
|
|
4,574 |
|
|
4,199 |
|
|
4,026 |
|
Total revenue |
|
$ |
67,748 |
|
|
$ |
68,265 |
|
|
$ |
71,926 |
|
|
$ |
69,680 |
|
|
$ |
74,714 |
|
Gross margin
percentage |
|
75 |
% |
|
75 |
% |
|
74 |
% |
|
74 |
% |
|
75 |
% |
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(14,906 |
) |
|
$ |
(13,312 |
) |
|
$ |
(12,611 |
) |
|
$ |
(18,524 |
) |
|
$ |
(24,604 |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash flow used in
operating activities |
|
$ |
(1,873 |
) |
|
$ |
(5,878 |
) |
|
$ |
(4,238 |
) |
|
$ |
(14,086 |
) |
|
$ |
(12,874 |
) |
Total cash and cash
equivalents at end of quarter
|
|
$ |
64,343 |
|
|
$ |
58,895 |
|
|
$ |
57,237 |
|
|
$ |
43,942 |
|
|
$ |
57,537 |
|
|
|
|
|
|
|
|
|
|
|
|
Worldwide
Installed Laser Base Summary: |
|
|
|
|
|
|
|
|
|
|
Laser placements during
quarter |
|
45 |
|
|
52 |
|
|
53 |
|
|
43 |
|
|
60 |
|
Buy-backs/returns
during quarter |
|
(21 |
) |
|
(16 |
) |
|
(20 |
) |
|
(14 |
) |
|
(26 |
) |
Net laser placements
during quarter |
|
24 |
|
|
36 |
|
|
33 |
|
|
29 |
|
|
34 |
|
Total lasers placed at
end of quarter |
|
1,442 |
|
|
1,478 |
|
|
1,511 |
|
|
1,540 |
|
|
1,574 |
|
Reconciliation of Non-GAAP Financial
Measures
To supplement our condensed consolidated financial statements
prepared in accordance with GAAP, we use a certain non-GAAP
financial measure in this release regarding revenue on a constant
currency basis. Reconciliations of this non-GAAP financial measure
to the most directly comparable GAAP measure for the respective
periods can be found in the tables below. An explanation of the
manner in which our management uses this non-GAAP measure to
conduct and evaluate our business and the reasons management
believes this non-GAAP measure provides useful information to
investors are provided following the reconciliation tables.
|
Reconciliation of revenue by geography to non-GAAP
revenue by geographyon a constant currency basis(in thousands,
except percentages)(unaudited) |
|
Three Months Ended June 30, |
|
|
|
|
2017 |
|
2016 |
|
% Change |
|
Revenue, asreported |
|
Foreignexchangeimpact ascomparedto priorperiod |
|
Revenue ona constantcurrencybasis |
|
Revenue, asreported |
|
As reported |
Constantcurrencybasis |
United
States |
$ |
61,588 |
|
|
$ |
— |
|
|
$ |
61,588 |
|
|
$ |
56,334 |
|
|
9 |
% |
9 |
% |
International |
13,126 |
|
|
305 |
|
|
13,431 |
|
|
11,414 |
|
|
15 |
% |
18 |
% |
Total
revenue |
$ |
74,714 |
|
|
$ |
305 |
|
|
$ |
75,019 |
|
|
$ |
67,748 |
|
|
10 |
% |
11 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
|
2017 |
|
2016 |
|
% Change |
|
Revenue, asreported |
|
Foreignexchangeimpact ascomparedto priorperiod |
|
Revenue ona constantcurrencybasis |
|
Revenue, asreported |
|
As reported |
Constant currencybasis |
United
States |
$ |
120,001 |
|
|
$ |
— |
|
|
$ |
120,001 |
|
|
$ |
109,316 |
|
|
10 |
% |
10 |
% |
International |
24,393 |
|
|
559 |
|
|
24,952 |
|
|
21,316 |
|
|
14 |
% |
17 |
% |
Total
revenue |
$ |
144,394 |
|
|
$ |
559 |
|
|
$ |
144,953 |
|
|
$ |
130,632 |
|
|
11 |
% |
11 |
% |
Reconciliation of revenue by product line to non-GAAP
revenue by product lineon a constant currency basis(in thousands,
except percentages)(unaudited) |
|
Three Months Ended June 30, |
|
|
|
|
2017 |
|
2016 |
|
% Change |
|
Revenue, asreported |
|
Foreignexchangeimpact ascomparedto priorperiod |
|
Revenue ona constantcurrencybasis |
|
Revenue, asreported |
|
As reported |
Constant currencybasis |
Vascular
Intervention |
$ |
51,002 |
|
|
$ |
124 |
|
|
$ |
51,126 |
|
|
$ |
46,218 |
|
|
10 |
% |
11 |
% |
Lead Management |
19,686 |
|
|
155 |
|
|
19,841 |
|
|
17,767 |
|
|
11 |
% |
12 |
% |
Laser, service, and
other |
4,026 |
|
|
26 |
|
|
4,052 |
|
|
3,763 |
|
|
7 |
% |
8 |
% |
Total
revenue |
$ |
74,714 |
|
|
$ |
305 |
|
|
$ |
75,019 |
|
|
$ |
67,748 |
|
|
10 |
% |
11 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
|
2017 |
|
2016 |
|
% Change |
|
Revenue, asreported |
|
Foreignexchangeimpact ascomparedto priorperiod |
|
Revenue ona constantcurrencybasis |
|
Revenue, asreported |
|
As reported |
Constantcurrencybasis |
Vascular
Intervention |
$ |
97,450 |
|
|
$ |
233 |
|
|
$ |
97,683 |
|
|
$ |
88,130 |
|
|
11 |
% |
11 |
% |
Lead Management |
38,719 |
|
|
277 |
|
|
38,996 |
|
|
34,863 |
|
|
11 |
% |
12 |
% |
Laser, service, and
other |
8,225 |
|
|
49 |
|
|
8,274 |
|
|
7,639 |
|
|
8 |
% |
8 |
% |
Total
revenue |
$ |
144,394 |
|
|
$ |
559 |
|
|
$ |
144,953 |
|
|
$ |
130,632 |
|
|
11 |
% |
11 |
% |
The impact of foreign exchange rates is highly variable and
difficult to predict. We use a constant currency basis to show the
impact from foreign exchange rates on current period revenue
compared to prior period revenue using the prior period’s foreign
exchange rates. In order to properly understand the underlying
business trends and performance of our ongoing operations, we
believe that investors may find it useful to consider the impact of
excluding changes in foreign exchange rates from our revenue.
We believe presenting the non-GAAP financial measure used in
this release provides investors greater transparency to the
information used by our management for financial and operational
decision-making and allows investors to see our results “through
the eyes” of management. We also believe providing this information
better enables our investors to understand our operating
performance and evaluate the methodology used by management to
evaluate and measure such performance.
Non-GAAP financial measures have limitations as analytical tools
and should not be considered in isolation or as a substitute for
our financial results prepared in accordance with GAAP. Some
limitations associated with using these non-GAAP financial measures
are provided below:
- Revenue growth rates stated on a constant currency basis, by
their nature, exclude the impact of changes in foreign currency
exchange rates, which may have a material impact on GAAP
revenue.
- Non-GAAP financial measures are not based on any comprehensive
set of accounting rules or principles and therefore other companies
may calculate similarly titled non-GAAP financial measures
differently than we do, limiting the usefulness of those measures
for comparative purposes.
Investor Relations Contacts
Zach Stassen
Investor.relations@spnc.com
(719) 447-2292
Michaella Gallina
Investor.relations@spnc.com
(719) 447-2417
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