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Spectranetics Reports 2008 Results

The Spectranetics Corporation (Spectranetics), a developer and distributor of single-use medical devices, has reported revenues of $104 million for the full year of 2008, up 26%, compared with the revenues of $82.9 million in the previous year-end. It posted a net loss of $4 million, or $0.12 per diluted share, for the full year of 2008, compared with the net income of $7.2 million, or $0.21 per diluted share, in the previous year-end.

Revenue for the fourth quarter of 2008 was $26.6 million, up 11% against revenue of $23.9 million for the fourth quarter of 2007, and consistent with the preliminary results previously reported. Disposable product revenue rose 12% to $22.0 million, laser revenue increased 8% to $2.3 million, and service and other revenue increased 8% to $2.3 million, all against the fourth quarter of 2007. The increase in disposable product revenue was comprised of a 14% increase in vascular intervention product sales and a 9% increase in lead management product sales. Of note, lead management revenue was particularly strong in the fourth quarter of 2007, reaching $6.9 million, up 45% compared to the fourth quarter of 2006. Vascular intervention product sales include atherectomy products, which decreased 9%, and support catheters, which increased 36%, all compared to the year ago quarter. Vascular intervention product sales also include $1.4 million of sales of aspiration and thrombectomy products that were acquired from Kensey Nash Corporation on May 31, 2008.

The worldwide installed base of lasers increased to 850 as of December 31, 2008 (672 in the US), which included net laser placements of 25 units in the fourth quarter of 2008, against 30 net placements in the fourth quarter of 2007.

The pre-tax loss for the fourth quarter of 2008 was $1.1 million, against pre-tax income of $628,000 for the fourth quarter of 2007. The pre-tax loss during the fourth quarter of 2008 includes legal and other costs of approximately $2.0 million associated with the federal investigation announced on September 4, 2008. Given the company’s significant historical net operating losses that are available to offset future taxable income, any income tax expense or benefit is a non-cash item. As a result, management believes that pre-tax income or loss is the most appropriate measure of its operating performance.

For the fourth quarter of 2008, Spectranetics reported a net loss of $1.1 million, or $0.03 per share, against a net loss of $89,000, or $0.0 per share, in the fourth quarter of 2007.

“We are pleased with our ability to have achieved 26% revenue growth and a new $100 million annual sales milestone. This is a significant milestone for a medical device company and reflects the growing acceptance of our products,” said Emile J. Geisenheimer, chairman, president and chief executive officer. “We have a number of initiatives in place that we believe will support growth in both vascular interventions and lead management revenue in 2009.”

Cash, cash equivalents and investment securities totaled $36.0 million as of December 31, 2008, against $53.0 million as of December 31, 2007. The decrease of $17.0 million consists primarily of the purchase of endovascular assets from Kensey Nash of $11.7 million, capital expenditures of $5.1 million, and cash used from operating activities of $1.1 million, all of which was partially offset by proceeds from the exercise of stock options during the year.

Within its non-current investment securities, the company currently holds $15.6 million of auction rate securities backed by student loans, which reflects a temporary impairment write-down of $2.1 million based on an analysis performed by a third party with expertise in valuation of these securities. Of the temporary impairment write-down, $.9 million was recorded during the fourth quarter. This temporary impairment has been recorded within other comprehensive loss and did not impact the calculation of earnings per share during the year.

Year-to-date financial results

Disposable product revenue for 2008 was $86.3 million, up 26% against disposable product revenue of $68.6 million in 2007, and laser equipment revenue was up 37% to $8.6 million, from $6.3 million in 2007. Within disposable product revenue, vascular intervention and lead management product revenue increased 21% and 36%, respectively, against last year. Service and other revenue for 2008 was $9.0 million, up 14% against service and other revenue of $7.9 million in 2007.

The pre-tax loss for the full year 2008 was $4.7 million, inclusive of the $3.8 million in-process research and development costs recorded in connection with the acquisition of certain product lines from Kensey Nash Corporation during the second quarter of 2008, and $2.4 million of costs associated with the federal investigation, which compares with pre-tax income of $2.7 million in 2007. The net loss for 2008 was $4.0 million, or $0.12 per share, inclusive of after-tax IPR&D costs of $2.4 million, or $0.08 per share, against net income of $7.2 million, or $0.21 per diluted share, in 2007. Net income in 2007 included a $6.6 million income tax benefit associated with establishing a deferred tax asset for the estimated amount of net operating losses expected to be offset with future taxable income.