Full-Year 2009 Revenue and Earnings Guidance Increased
Constant Currency Second Quarter Net Product Sales
Increase 12% to $109.1 million
GAAP Profitability Achieved
Operating Cash Flow of $20.0 million for the Second Quarter
PLYMOUTH, Minn., July 28, 2009 (GLOBE NEWSWIRE) -- ev3 Inc. (Nasdaq:EVVV), a global endovascular device company, today reported financial results for its fiscal second quarter and increased financial guidance for 2009. Reconciliations of non-GAAP financial measures used in this release to the most comparable U.S. GAAP measures for the respective periods can be found immediately following the detail of net sales by geography later in this release.
ev3's net sales totaled $109.1 million in the second quarter of 2009 versus $107.7 million in the same quarter of the prior year. Second quarter of 2008 net sales included $6.2 million of research collaboration revenues from our former agreement with Merck, which was terminated on July 22, 2008. Second quarter of 2009 net product sales of $109.1 million increased approximately 7% versus the prior year product sales. Excluding approximately $4.5 million of negative impact due to foreign currency exchange rates, net product sales increased 12% versus the prior year quarter.
ev3's GAAP net income for the second quarter of 2009 was $24.0 million, including a tax benefit of $19.0 million resulting from the purchase accounting for the acquisition of Chestnut Medical Technologies, Inc., compared to a net loss of $(27.4) million in the second quarter of 2008. ev3's net earnings per common share for the second quarter of 2009 was $0.23 including $0.18 of tax benefit compared to a net loss of $(0.26) per share in the second quarter of 2008. Without the one-time effect of the tax benefit, net earnings per share would have been $0.05. These results include approximately $1.1 million of one-time transaction expenses associated with the Chestnut acquisition.
Robert Palmisano, president and chief executive officer of ev3 Inc., commented, "We achieved another quarter of solid top line growth, and for the first time in the company's history, we achieved GAAP profitability driven by another significant improvement in our gross margin and continued expense leverage. These results reflect the significant strides the company has made in the first half of 2009 in achieving sales growth across our neurovascular and peripheral vascular segments and expanding our international business. Notably, our atherectomy net sales increased by approximately 21% during the second quarter from the first quarter of 2009 driven by the restructuring activities and strategic programs implemented earlier in the year to improve our U.S. peripheral vascular sales force execution and productivity."
For the second quarter of 2009, ev3's non-GAAP adjusted net income was $14.6 million, or $0.14 per diluted share, compared to an adjusted net loss of $(5.1) million, or $(0.05) per diluted share, in the second quarter of 2008. Non-GAAP adjusted net income and adjusted net earnings per share for the second quarter of 2009 excludes non-cash amortization expense of $5.8 million, non-cash stock-based compensation of $3.6 million, accounting charges resulting from the change in fair value of the future contingent consideration associated with the Chestnut acquisition of approximately $200,000, and a tax benefit of $19.0 million resulting from the purchase accounting for the acquisition of Chestnut.
Cash and cash equivalents totaled $60.4 million as of the end of the second quarter of 2009, a decrease of $6.6 million compared to the end of the first quarter of 2009 as a result of approximately $24.7 million in net cash paid in conjunction with the acquisition of Chestnut, which closed on June 23, 2009. Cash flow from operating activities was positive for the fourth consecutive quarter, totaling $20.0 million in the second quarter of 2009.
Palmisano concluded, "These second quarter results demonstrate the excellent progress we have made to enhance our business processes and improve our operating leverage. We also closed our acquisition of Chestnut during the second quarter, adding a new platform for future revenue and earnings growth that complements our best-in-class neurovascular product portfolio and leverages the strength of our neurovascular sales channel and established customer relationships. As we head into the second half of the year, we will remain focused on achieving revenue growth at or above market growth rates, sustained profitability and cash generation."
Sales Review
By product segment, peripheral vascular net product sales increased 2% versus the prior year quarter and 5% on a constant currency basis. Excluding atherectomy, peripheral vascular sales increased 13% on a constant currency basis. Neurovascular net sales increased 21% versus the prior year quarter and 28% on a constant currency basis. Product sales from recently acquired Chestnut were insignificant.
On a geographic basis, ev3 U.S. net product sales increased approximately 3% versus the prior year quarter. International net sales increased 15% versus the prior year quarter and 28% on a constant currency basis. Changes in foreign currency exchange rates had negative impact of approximately $4.5 million on net sales compared to the second quarter of the prior year.
An investor presentation summarizing the company's second quarter 2009 results is available at http://ir.ev3.net.
Outlook
The Company has increased its fiscal year 2009 net sales guidance to a range of $435 to $445 million, from its previously issued guidance range of $420 to $430 million. The 2009 guidance includes anticipated net sales of $4 to $5 million from the Chestnut acquisition and compares to $402.2 million of product sales in 2008. Net product sales growth on a constant currency basis is expected to be approximately 11% to 13%. Foreign currency exchange rate fluctuations are expected to negatively impact revenue growth by 2% to 3% in 2009. ev3 increased non-GAAP adjusted earnings per share to a range of $0.47 to $0.53 per diluted share from its previously issued guidance range of $0.40 to $0.45 per diluted share, based on approximately 108.6 million of average outstanding shares. ev3's adjusted net earnings per share guidance excludes estimated amortization expense of approximately $24.7 million, inclusive of amortization relating to Chestnut of approximately $3.1 million, non-cash stock-based compensation of approximately $14.3 million, accounting charges relating to the estimated change in fair value of the future contingent consideration associated with the Chestnut acquisition of $4.9 million, vacant leased facilities reserve expense of $3.4 million, gain on the divestiture of non-strategic investment assets of $4.1 million, and a tax benefit of $19.0 million resulting from the purchase accounting for the acquisition of Chestnut.
The company expects third quarter 2009 net sales to be in the range of $109 to $112 million compared to $100.0 million of net product sales in the third quarter of 2008 and non-GAAP adjusted net earnings per share to be in the range of $0.09 to $0.12 per diluted share, based on approximately 111.3 million of average outstanding shares. ev3's non-GAAP adjusted net earnings per share for the third quarter of 2009 excludes estimated amortization expense of approximately $6.5 million, inclusive of amortization relating to Chestnut of approximately $1.4 million, non-cash stock-based compensation of approximately $3.4 million and accounting charges relating to the estimated change in fair value of the future contingent consideration associated with the Chestnut acquisition of $2.3 million.
Earnings Call Information
ev3 will host a conference call today, July 28, 2009, beginning at 7:30 a.m. Central Time (8:30 a.m. Eastern Time) to review its results of operations for the second quarter of 2009 and future outlook, followed by a question and answer session.
The conference call will be available to interested parties through a live audio webcast at http://ir.ev3.net, where it will be archived and accessible for approximately 12 months. The live dial-in number for the call is 888-679-8040 (U.S.) or 617-213-4851 (International). The participant passcode is 31069484.
If you do not have access to the Internet and want to listen to an audio replay of the conference call, dial 888-286-8010 (U.S.) or 617-801-6888 (International) and enter passcode 80793229. The audio replay will be available beginning at 10:30 a.m. Central Time on Tuesday, July 28, 2009 until Tuesday, August 4, 2009.
About ev3 Inc.
Since its founding in 2000, ev3 has been dedicated to developing innovative, breakthrough and clinically proven technologies and solutions for the treatment of peripheral vascular and neurovascular diseases. ev3's products are used by endovascular specialists to treat a wide range of peripheral vascular and neurovascular diseases and disorders. The company offers a comprehensive portfolio of treatment options, including the primary interventional technologies used today -- peripheral angioplasty balloons, stents, plaque excision systems, embolic protection devices, liquid embolics, embolization coils and flow diversion devices, thrombectomy catheters and occlusion balloons. More information about the company and its products can be found at www.ev3.net.
ev3, the ev3 logo, Axium, Onyx, Solitaire, Pipeline and Alligator are trademarks of ev3 Inc. and its subsidiaries, registered in the U.S. and other countries. All other trademarks and trade names referred to in this press release are the property of their respective owners.
Forward-Looking Statements
Statements contained in this press release that relate to future, not past, events are forward-looking statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements often can be identified by words such as "expect," "anticipate," "intend," "will," "may," "believe," "could," "continue," "future," "estimate," "outlook," "guidance," or the negative of these words or other words of similar meaning. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Uncertainties and risks may cause ev3's actual results to be materially different than those expressed in or implied by ev3's forward-looking statements. For ev3, particular uncertainties and risks include, among others, ev3's future operating results and financial performance, fluctuations in foreign currency exchange rates, the effect of the current global economic crisis, ev3's ability to implement, fund and achieve sustainable cost savings measures that will better align its operating expenses with its anticipated net sales levels and reallocate resources to better support growth initiatives, the timing of regulatory approvals and introduction of new products, market acceptance of new products, success of clinical testing, availability of third party reimbursement, impact of competitive products and pricing and effect of regulatory actions. More detailed information on these and additional factors that could affect ev3's actual results are described in ev3's filings with the Securities and Exchange Commission, including its most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q. Except as required by law, ev3 undertakes no obligation to update publicly its forward-looking statements.
Use of Non-GAAP Financial Measures
To supplement ev3's consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP), ev3 uses certain non-GAAP financial measures in this release. Reconciliations of the non-GAAP financial measures used in this release to the most comparable U.S. GAAP measures for the respective periods can be found in tables later in this release immediately following the detail of net sales by geography.
