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Uroplasty Reports Third Quarter Fiscal 2009 Results

MINNEAPOLIS, Feb. 3 /PRNewswire-FirstCall/ -- Uroplasty, Inc. (Amex: UPI), a medical device company that develops, manufactures and markets innovative proprietary products to treat voiding dysfunctions, today reported financial results for the third quarter of fiscal 2009 ended December 31, 2008. Net sales for the third quarter of fiscal 2009 were $3.4 million versus $3.7 million during last fiscal year's third quarter.

"As we discussed in conjunction with the release of our fiscal second quarter results, our Urgent PC system to treat overactive bladder syndrome has been facing a challenging market environment created by insurance reimbursement uncertainties," said David Kaysen, President and CEO. "While a growing number of physicians are recognizing the benefits of Urgent PC, and the treatment continues to receive reimbursement from many insurance plans, our market momentum has slowed due to the uncertainty with insurance reimbursement.

"A major part of our strategy to expand and support third-party reimbursement coverage of Urgent PC treatment is the SUmiT study, which we announced in October. The study is designed to directly compare the effectiveness of Urgent PC treatment to non-active treatment and the enrollment of 221 patients was completed two months ahead of schedule," added Mr. Kaysen. The SUmiT study is evaluating reductions in urinary urgency, urge incontinence and frequency of urinary voids, as well as patient quality of life measures. This study, now expected to be completed by late summer of 2009, is taking place at 23 urology and urogynecology centers across the United States.

"Meanwhile, U.S. sales of Macroplastique are building momentum," added Mr. Kaysen. "Through our expanded sales focus and training, we are capitalizing on recent market concerns regarding competitive products that treat urinary incontinence. In addition, the January 2009 issue of the Journal of Urology highlighted results from a clinical study of Macroplastique. The study concluded that in the Macroplastique patient group, the dry/cure rate was 36.9% versus 24.8% in the control patient group. The authors of the study concluded that Macroplastique is a safe, effective, minimally invasive material that can be administered on an outpatient basis. The combination of these factors resulted in record sales for Macroplastique in our fiscal third quarter," concluded Mr. Kaysen.

Fiscal Third Quarter and Nine Month Results for the Periods Ended December 31, 2008

Net sales for the three months ended December 31, 2008 were $3.4 million versus $3.7 million for the same period a year ago. Net sales for the nine months ended December 31, 2008 were $11.8 million, up 22% from $9.7 million for the same period a year ago.

Sales to customers in the U.S. for the three months ended December 31, 2008 were $1.9 million, down one percent, compared with $2.0 million in the same period a year ago. This decrease was due to the reimbursement uncertainty that has developed in the U.S. market for Urgent PC treatments. Sales to customers outside of the U.S. for the three months ended December 31, 2008 were $1.4 million, down 18% from $1.8 million in the year ago period. Excluding the translation impact of fluctuations in foreign currency exchange rates, sales to customers outside of the U.S. declined approximately 5%.

Nine month sales to customers in the U.S. were $6.4 million, an increase of 52% from $4.2 million for the same period last year. Nine month sales to customers outside of the U.S. were flat at $5.5 million as compared with the same period last year. Excluding the translation impact of fluctuations in foreign currency exchange rates, sales to customers outside of the U.S. declined approximately 2%.

Net loss for the third fiscal quarter ended December 31, 2008 was $894,000, or $0.06 per diluted share versus $900,000, or $0.06 per diluted share for the third quarter of last year. For the nine months ended December 31, 2008, net loss was $1.9 million, or $0.12 per diluted share compared with a net loss of $3.1 million, or $0.23 per diluted share for the same period last year.

At December 31, 2008, cash and cash equivalents, and short-term investments were $8.6 million compared with $9.0 million at September 30, 2008 and $10.1 million at March 31, 2008.

"We continue to implement a comprehensive program designed to educate Medicare carrier and private payer medical directors around the country about the benefits and clinical study results of Urgent PC," continued Mr. Kaysen. "The medical directors have asked for additional peer-reviewed publications in medical journals on PTNS treatments. We expect the first of such articles to be published within the next 30 days."

"In the meantime, physicians using Urgent PC are communicating their successes to these medical directors and we are in active communication with professional associations who are involved with reimbursement and believe we have the right people and the right resources to proactively address various reimbursement related issues. It is important to remember that reimbursement uncertainties are common with practically every new medical technology. Gaining a specific CPT code for the procedure is our end goal and we believe our strategies to achieve that endpoint are generating positive responses from the market and will lead to achieving our objective," Mr. Kaysen concluded.


For fiscal 2009, the Company currently expects overall sales to grow by approximately 4% to 7% over fiscal 2008, and U.S. sales to grow between 20% and 25%. The Company continues to expect consistent operating income breakeven on a non-GAAP basis, which excludes non-cash and unusual charges, to occur between revenues of $19 million to $20 million.

Conference Call

Uroplasty will host an audio conference call today at 3:30 pm Central, 4:30 pm Eastern, to review the financial results for the third fiscal quarter of 2009. David Kaysen, President and Chief Executive Officer and Medi Jiwani, Vice President, Chief Financial Officer and Treasurer will host the call. Individuals wishing to participate in the conference call should dial 800-218-0713 (domestic) or 303-262-2140 (international). An audio replay will be available for 30 days following the call at 800-405-2236 (domestic) or 303-590-3000 (international), with the passcode 11123736#.

About Uroplasty, Inc.

Uroplasty, Inc., headquartered in Minnetonka, Minnesota, with wholly-owned subsidiaries in The Netherlands and the United Kingdom, is a medical device company that develops, manufactures and markets innovative proprietary products for the treatment of voiding dysfunctions. Our focus is the continued commercialization of our Urgent PC system, which we believe is the only FDA-approved minimally invasive nerve stimulation device designed for office-based treatment of urinary urgency, urinary frequency and urge incontinence -- symptoms often associated with overactive bladder. We also offer Macroplastique(R) Implants, an injectable bulking agent for the treatment of adult female stress urinary incontinence primarily due to intrinsic sphincter deficiency. Please visit Uroplasty, Inc. at

Forward-Looking Information

This press release contains forward-looking statements, which reflect our best estimates regarding future events and financial performance. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from our anticipated results. We discuss in detail the factors that may effect the achievement of our forward-looking statements in our Annual Report on Form 10-K filed with the SEC. Further, we cannot assure you that our SUmiT clinical trial will produce favorable results, that even if it does produce favorable result third-party payors will provide or continue to provide coverage and reimbursement, or reimburse the providers an amount sufficient to cover their costs and expenses, or that we will timely obtain, or even succeed at all at obtaining, a specific "listed" CPT reimbursement code from the AMA for Urgent PC treatments. We further cannot assure that reimbursement or other issues will not further impact our fiscal 2009 results.

     For Further Information: Uroplasty, Inc.           EVC Group
     David Kaysen, President and CEO, or                Doug Sherk (Investors)
     Medi Jiwani, Vice President, CFO, and Treasurer,   415.896.6820
     952.426.6140                                       Chris Gale (Media)

                       UROPLASTY, INC. AND SUBSIDIARIES


                            Three Months Ended       Nine Months Ended
                               December 31,              December 31,
                            2008         2007         2008         2007

    Net sales           $3,387,285   $3,729,314  $11,833,422   $9,717,531
    Cost of goods sold     533,987      789,955    1,791,153    2,053,208

    Gross profit         2,853,298    2,939,359   10,042,269    7,664,323

    Operating expenses
      General and
       administrative      713,545      799,193    2,670,653    2,755,000
      Research and
       development         723,673      460,374    1,457,170    1,393,496
      Selling and
       marketing         2,125,274    2,399,227    7,250,906    6,006,598
      Amortization of
       intangibles         211,626      209,862      633,567      632,865
                         3,774,118    3,868,656   12,012,296   10,787,959

    Operating loss        (920,820)    (929,297)  (1,970,027)  (3,123,636)

    Other income (expense)
      Interest income       24,001       74,928      162,657      216,550
      Interest expense      (1,787)      (6,497)     (15,372)     (27,141)
      Foreign currency
       exchange loss             -      (37,632)        (731)     (53,538)
      Other, net                 -        2,134       (4,687)       4,014
                            22,214       32,933      141,867      139,885

    Loss before income
     taxes                (898,606)    (896,364)  (1,828,160)  (2,983,751)

    Income tax expense
     (benefit)              (4,684)       4,004       33,374      141,944

    Net loss             $(893,922)   $(900,368) $(1,861,534) $(3,125,695)

    Basic and diluted
     loss per common
     share                  $(0.06)      $(0.06)      $(0.12)      $(0.23)

    Weighted average
     common shares
      Basic and
       diluted          14,924,540   14,119,583   14,919,216   13,482,928

                         UROPLASTY, INC. AND SUBSIDIARIES


                                            December 31, 2008  March 31, 2008

      Current assets:
        Cash and cash equivalents & short-term
         investments                              $8,562,280    $10,146,081
        Accounts receivable, net                   1,501,037      2,318,604
        Income tax receivable                         56,488         50,841
        Inventories                                  549,653        558,657
        Other                                        215,086        244,517
          Total current assets                    10,884,544     13,318,700

    Property, plant, and equipment, net            1,506,053      1,638,953
    Intangible assets, net                         3,590,605      4,200,890
    Prepaid pension asset                             33,984         26,482
    Deferred tax assets                              104,840        105,298

          Total assets                           $16,120,026    $19,290,323

    Liabilities and Shareholders' Equity
        Total current liabilities                  1,675,169      2,739,933
        Long-term debt - less current maturities           -        413,279
        Deferred rent - less current portion         155,927        180,979
        Accrued pension liability                    329,155        353,411

          Total liabilities                        2,160,251      3,687,602

          Total shareholders' equity              13,959,775     15,602,721

          Total liabilities and shareholders'
           equity                                $16,120,026    $19,290,323

                         UROPLASTY, INC. AND SUBSIDIARIES
                   Nine Months Ended December 31, 2008 and 2007
                                                      Nine Months Ended
                                                         December 31,
                                                      2008           2007

    Cash flows from operating activities:
      Net loss                                   $(1,861,534)   $(3,125,695)
      Adjustments to reconcile net loss to
       net cash used in operating activities:
        Depreciation and amortization                849,933        796,748
        (Gain) Loss on disposal of equipment           4,687         (2,769)
        Share-based consulting expense                52,567         37,942
        Share-based compensation expense             583,013        829,146
        Deferred income taxes                        (11,531)         7,113
        Deferred rent                                (26,250)       (26,250)
      Changes in operating assets and liabilities:
        Accounts receivable                          668,510       (534,542)
        Inventories                                  (34,427)        64,390
        Other current assets and income tax
         receivable                                    8,173        191,921
        Accounts payable                             (91,686)        94,198
        Accrued liabilities                         (802,027)       312,158
        Accrued pension liability, net                (7,585)      (247,388)
    Net cash used in operating activities           (668,157)    (1,603,028)

    Cash flows from investing activities:
      Proceeds from sale of short-term
       investments                                14,157,410      4,200,000
      Purchase of short-term investments          (7,891,373)    (3,648,447)
      Purchases of property, plant and equipment    (181,354)      (210,875)
      Proceeds from sale of equipment                      -          4,811
      Payments for intangible assets                 (23,282)       (92,013)
    Net cash provided by investing activities      6,061,401        253,476

    Cash flows from financing activities:
      Proceeds from financing obligations                  -        178,374
      Repayment of debt obligations                 (455,913)      (239,872)
      Net proceeds from issuance of common
       stock, warrants and option exercise                 -      5,374,233
    Net cash provided by (used in) financing
     activities                                     (455,913)     5,312,735

    Effect of exchange rates on cash and
     cash equivalents                               (255,095)       131,929

    Net increase in cash and cash equivalents      4,682,236      4,095,112

    Cash and cash equivalents at beginning
     of period                                     3,880,044      3,763,702

    Cash and cash equivalents at end of period    $8,562,280     $7,858,814

    Supplemental disclosure of cash flow
      Cash paid during the period for interest       $13,612        $25,204
      Cash paid during the period for income
       taxes                                          53,739         87,900

    Supplemental disclosure of non-cash
     financing and investing activities:
      Purchase of intellectual property funded
       by issuance of stock                              $ -     $4,658,861

Non-GAAP Financial Measures: The following table reconciles our financial results calculated in accordance with accounting principles generally accepted in the U.S. (GAAP) to non-GAAP financial measures that exclude non-cash charges for share-based compensation under SFAS 123(R), and depreciation and amortization expenses from gross profit, operating expenses and operating loss. The non-GAAP financial measures used by management and disclosed by us are not a substitute for, or superior to, financial measures and consolidated financial results calculated in accordance with GAAP, and you should carefully evaluate our reconciliations to non-GAAP. We may calculate our non-GAAP financial measures differently from similarly titled measures used by other companies. Therefore, our non-GAAP financial measures may not be comparable to those used by other companies. We have described the reconciliations of each of our non-GAAP financial measures above to the most directly comparable GAAP financial measures.

We use these non-GAAP financial measures, and in particular non-GAAP operating loss, for internal managerial purposes because we believe such measures are one important indicator of the strength and the performance of our business as they provide a link to operating cash flow. We also believe that analysts and investors use such measures to evaluate the overall operating performance of companies in our industry, including as a means of comparing period-to-period results and as a means of evaluating our results with those of other companies.

Our non-GAAP operating loss for each of the three-month periods ended December 31, 2008 and 2007 was approximately $0.5 million. Compared to the year-ago period, an improvement in gross profit rate and a decrease in cash operating expenses were about offset by a decrease in sales. Our non-GAAP operating performance improved from a loss of approximately $1.5 million for the nine months ended December 31, 2007 to a loss of approximately $0.5 million for the same period in 2008. We attribute this improvement in non-GAAP operating performance to the increase in sales and an improvement in gross profit rate, offset partially by an increase in cash operating expenses.

                            Three Months Ended       Nine Months Ended
                                December 31,              December 31,
                             2008         2007         2008         2007

    Gross Profit
      GAAP gross
       profit           $2,853,298   $2,939,359  $10,042,269   $7,664,323
      % of sales                84%          79%          85%          79%
      SFAS 123(R)
       compensation          8,879        9,008       34,132       18,695
       expenses             12,436       13,277       38,283       41,882
      Non-GAAP gross
       profit            2,874,613    2,961,644   10,114,684    7,724,900
    Operating Expenses
      GAAP operating
       expenses          3,774,118    3,868,656   12,012,296  $10,787,959
      SFAS 123(R)
       compensation        136,701      187,438      601,448      848,394
       expenses             58,922       43,842      178,083      122,001
       expenses            211,626      209,862      633,567      632,865
       expenses          3,366,869    3,427,514   10,599,198    9,184,699
    Operating Loss
      GAAP operating
       loss               (920,820)    (929,297)  (1,970,027)  (3,123,636)
      SFAS 123(R)
       compensation        145,580      196,446      635,580      867,089
       expenses             71,358       57,119      216,366      163,883
       expenses            211,626      209,862      633,567      632,865
       operating loss    $(492,256)   $(465,870)   $(484,514) $(1,459,799)

SOURCE Uroplasty, Inc.
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