Company reports 21% sequential growth in domestic handpiece unit sales
IRVINE, Calif., May 15 /PRNewswire-FirstCall/ -- Cardiogenesis Corporation (Pink Sheets: CGCP), a leading developer of surgical products and accessories used in angina-relieving procedures, today reported financial results for its first quarter ended March 31, 2008.
Sales in the first quarter of 2008 totaled $2,982,000, a 12% decrease from the prior year first quarter sales of $3,370,000. During the first quarter of 2008, the Company sold three lasers and 540 handpiece units as compared to five lasers and 656 handpieces during the first quarter of 2007. The lower revenue in the current year quarter is primarily attributable to a $260,000, or 11%, decline in disposable handpiece revenue, and a $104,000, or 14%, decrease in capital sales as compared with the prior year quarter.
"We are very encouraged by the 21% sequential growth in domestic sales of disposable units from the fourth quarter of 2007. We believe it is an indication of the impact our new sales team is having in establishing themselves and increasing the usage of our technology," commented Richard Lanigan, Cardiogenesis' President. Lanigan also noted "The Company continues to balance its investment in sales and marketing with its finances. A combination of an increased ending cash balance of $2,917,000, and the fact that we were essentially break even from operations in the first quarter, means that we can continue to invest in "feet on the street" to maintain our sales momentum."
Cardiogenesis reported a first quarter 2008 operating loss of $37,000 as compared with operating income of $465,000 in the prior year quarter. The net loss for the quarter was $36,000, or $0.00 per basic and diluted share, as compared with net income of $327,000, or $0.01 per basic and diluted share, in the 2007 first quarter.
Gross margin was 82% of sales for the first quarter of 2008 as compared with an 81% gross margin in the first quarter of 2007. Gross profit in absolute dollars decreased by $270,000, or 10%, to $2,457,000 for the current year quarter as compared with $2,727,000 for the 2007 first quarter.
Research and development costs were $216,000 in the first quarter of 2008 as compared with $212,000 in the first quarter of 2007.
Salaries and employee benefit expenditures of $1,524,000 in the quarter ended March 31, 2008 increased $200,000, or 15%, when compared to $1,324,000 for the quarter ended March 31, 2007.
Sales, general and administrative expenditures for the quarter ended March 31, 2008 totaled $754,000 as compared to $726,000 during the quarter ended March 31, 2007. This represents an increase of $28,000, or 4%.
As the Company noted in its recent filings, due to disruptions of, and the resulting reduced liquidity in certain financial markets, the Company's AAA rated auction rate securities with a total purchased cost of approximately $350,000 experienced failed auctions during 2008. The securities in question do not have stated maturity dates since they are perpetual securities and reset every 7 to 28 days. Due to the failed auctions, the Company was unable to sell the securities at their respective costs, resulting in a temporary decrease in fair value. As a result, the Company has classified $350,000 of auction rate securities as long-term investments in marketable securities. The Company has concluded that any unrealized losses on these investments are temporary because the Company believes that the decline in market value that has occurred is due to general market conditions, the auction rate securities continue to be of a high credit quality and interest is paid as due and the Company has the intent and ability to hold these investments to maturity or until a recovery in market value occurs. The fair value of these securities could change significantly in the future and the Company may be required to record other-than-temporary impairment charges or additional unrealized losses in future periods.
About Cardiogenesis Corporation
Cardiogenesis is a medical device company specializing in the treatment of cardiovascular disease and is a leader in devices that stimulate cardiac angiogenesis. The company's market leading Holmium:YAG laser system and disposable fiber-optic accessories are used to perform a FDA-cleared surgical procedure known as Transmyocardial Revascularization (TMR) to treat patients suffering from angina. Surgical products and accessories for the Cardiogenesis TMR procedure, which are marketed in the U.S. and around the world, have been shown to reduce angina and improve the quality of life in patients with coronary artery disease.
With the exception of historical information, the statements set forth
above include forward-looking statements. Any forward-looking statements in
this news release related to the company's sales, profitability, the
adoption of its technology and products and FDA clearances are based on
current expectations and beliefs and are subject to numerous risks and
uncertainties, many of which are outside the company's control, that could
cause actual results to differ materially. Factors that could affect the
accuracy of these forward-looking statements include, but are not limited
to: any inability by the company to sustain profitable operations or obtain
additional financing on favorable terms if and when needed; any failure to
obtain required regulatory approvals; failure of the medical community to
expand its acceptance of TMR or PMC procedures; possible adverse
governmental rulings or regulations, including any FDA regulations or
rulings; the company's ability to comply with international and domestic
regulatory requirements; possible adverse Medicare or other third-party
reimbursement policies or adverse changes in those policies; any inability
by the company to ship product on a timely basis; the company's ability to
manage its growth; adverse economic developments that could adversely
affect the market for our products or our ability to raise needed
financing; actions by our competitors; restrictions contained in our
convertible debt obligations requiring the issuance of shares rather than
repayment in cash; and the company's ability to protect its intellectual
property. Other factors that could cause Cardiogenesis' actual results to
differ materially are discussed in the "Risk Factors" section of the
company's Annual Report on Form 10-KSB for the year ended December 31, 2007
and the company's other recent SEC filings. The company disclaims any
obligation to update any forward-looking statements as a result of
developments occurring after the date of this press release.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three months ended
Net revenues $ 2,982 $ 3,370
Cost of revenues 525 643
Gross profit 2,457 2,727
Research and development 216 212
Salaries and employee benefits 1,524 1,324
Sales, general and administrative 754 726
Total operating expenses 2,494 2,262
Operating (loss) income (37) 465
Other income (expense):
Interest expense (20) (31)
Interest income 21 28
Non-cash interest expense - (46)
Change in fair value of derivatives - (114)
Other non-cash income, net - 25
Total other income (expense), net 1 (138)
Net (loss) income (36) $ 327
Net (loss) earnings per share:
Basic $ - $ 0.01
Diluted $ - $ 0.01
Weighted average shares outstanding:
Basic 45,274 45,274
Diluted 45,274 45,290
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
Cash and cash equivalents $ 2,917 $ 2,824
Accounts receivable, net of allowance for
doubtful accounts of $28 1,268 1,763
Inventories 1,492 1,602
Prepaids and other current assets 389 486
Total current assets 6,066 6,675
Long-term investments in marketable securities 350 -
Property and equipment, net 403 457
Other assets, net 27 27
Total assets $ 6,846 $ 7,159
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 257 $ 169
Accrued liabilities 1,040 1,458
Deferred revenue 1,240 1,210
Current portion of capital lease obligation 10 12
Total current liabilities 2,547 2,849
Capital lease obligation, less current portion 18 19
Total liabilities 2,565 2,868
Commitments and Contingencies
no par value; 5,000 shares authorized;
none issued and outstanding - -
no par value; 75,000 shares authorized;
45,274 shares issued and outstanding 173,852 173,826
Accumulated deficit (169,571) (169,535)
Total shareholders' equity 4,281 4,291
Total liabilities and shareholders' equity $ 6,846 $ 7,159
|SOURCE Cardiogenesis Corporation|
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