Cyberonics, Inc. (Cyberonics), a medical device company which provides treatment for epilepsy and TRD, has reported net sales of $143.6 million for the fiscal 2009, up 18%, compared with the net sales of $121.2 million in the previous year. It also reported a net income of $26.7 million, or $0.61 per diluted share, for the fiscal 2009, compared with the net income of $2.9 million, or $0.11 per diluted share, in the previous year.
Net sales attributable to the epilepsy indication of $140 million compared to $115.3 million in fiscal year 2008, a 21% increase;
Gross margin of 86.0%, compared with 82.6% in the prior year;
Income from operations of $19 million compared with a loss of $8.2 million in the prior year;
Operating cash flow of $24.6 million and debt reduction of $62.7 million during fiscal 2009.
Results for the fourth quarter of fiscal 2009 compared to the fourth quarter of fiscal 2008 included:
Net sales of $38.6 million, a 14% increase from $33.9 million, with foreign currency translations reducing fourth quarter sales in fiscal 2009 by an estimated $1.3 million. On a constant currency basis, the increase was an estimated 18%;
Net US product sales attributable to the epilepsy indication increased by an estimated $5.2 million, or 20%, to $30.7 million in fiscal 2009;
Income from operations of $6.7 million represented 17.4% of net sales, compared with $3 million in the fourth quarter of the prior year;
International unit sales attributable to the epilepsy indication grew by 8%;
Net income of $6.5 million (including a net gain of $0.6 million on early extinguishment of debt adjusted for tax impact), compared with net income of $2.9 million.
US net product sales attributable to the epilepsy indication in fiscal 2009 increased by an estimated $23.7 million, or 26%, to $113.4 million.
International net sales increased in fiscal 2009 to $27.2 million, up from the $26.3 million reported in fiscal 2008.
The gross profit for fiscal 2009 represented 86.0% of net sales compared to 82.6% in fiscal 2008, due to a combination of higher prices, increased production levels, and improved manufacturing efficiencies.
Operating expenses for the fourth quarter of fiscal 2009 totaled $26.8 million, and for fiscal 2009 totaled $104.6 million; for the comparable periods of fiscal 2008 operating expenses were $25 million and $108.4 million, respectively. The fourth quarter of fiscal 2008 included credits of $1.3 million for insurance recoveries.
Equity compensation expense for the quarter and the fiscal year ended April 24, 2009 were $2.3 million and $9.7 million respectively. For the comparable periods of fiscal 2008, the amounts were $2.7 million and $11.7 million, respectively.
Operating income (loss)
The company reported operating income of $6.7 million in the recently completed quarter, and operating income for fiscal 2009 of $19 million, compared with operating income of $3 million, and an operating loss of $8.2 million, respectively, in the comparable periods of fiscal 2008.
Debt repurchase / other income
During the recently completed quarter, the company repurchased $2.5 million of its outstanding convertible debt for total cash consideration of $1.9 million, and recorded a net gain of about $0.6 million, including the impact of tax and the accelerated amortization of deferred issuance costs. Over the last six fiscal quarters, the company has retired a total of $70.2 million of debt, including $62.7 million of convertible debt. Subsequent to the end of the fiscal year, the company repurchased an additional $3.6 million of convertible debt for total cash consideration of $3.1 million, and expects to report a net gain of approximately $0.5 million in its fiscal 2010 first quarter relating to this repurchase. Convertible debt outstanding as of the date of this release totals $58.7 million.
Net income (loss)
The company reported net income of $6.5 million, or $0.22 cents per diluted share, for the fourth quarter of fiscal 2009. For fiscal 2008, the company reported fourth quarter net income of $2.9 million, or $0.11 cents per share. Although the gain on early extinguishment of the convertible debt is included in the calculation of net income for fiscal 2009, it is excluded from the calculation of net income per diluted share as per the applicable accounting rules.
Balance sheet and cash flow
The company reported operating cash flow of $24.6 million for the year ended April 24, 2009. Cash balances were $66.2 million at year end, compared with total debt outstanding of $62.3 million.
Results and objectives
“The end of fiscal 2009 represents the successful completion of the financial and commercial phase of the turnaround at Cyberonics,” stated Dan Moore, president and chief executive officer. “During the last two years, the Cyberonics team accomplished a number of key objectives including:
Returning the company to profitability and positive cash flow;
Establishing consistent and growing operating profitability;
Restoring growth to our core epilepsy business;
Strongly improving our gross profit margins;
Restructuring the organization, both domestically and internationally;
Stabilizing the balance sheet and reducing debt;
Launching several new products, including the Demipulse generator, two new Perenia leads and the Generator Field Upgrader;
Significantly enhancing the R & D effort to bring new medical devices to patients with epilepsy.
Fiscal 2010 guidance
Net sales are anticipated to be in the range of $157 million to $161 million on a constant currency basis.
The company anticipates the gross profit margin to be materially unchanged from fiscal 2009 at 86%, and that operating income will be in the range of $24 million to $27 million.