Cyberonics Reports Operating Profit for Third Quarter FY08 and Announces Share Repurcha...( Epilepsy Sales Inc...),Health

Epilepsy Sales Increase Significantly

HOUSTON, Feb. 20 /PRNewswire-FirstCall/ -- Cyberonics, Inc. (Nasdaq: CYBX) today announced results for the fiscal year 2008 third quarter ended January 25, 2008.

Financial highlights

Net sales

Net sales for the third quarter of fiscal 2008 were $29.3 million, compared to $28.9 million in the second quarter of fiscal 2008 and $31.7 million in the third quarter of fiscal 2007. Net sales for the nine months ended January 25, 2008 were $87.3 million, compared to $99.5 million in the comparable period of the prior year; net sales in fiscal 2008 attributable to the epilepsy indication of $82.6 million have increased by 9.4% over fiscal 2007.

U.S. net sales for the third quarter of fiscal 2008 declined to $22.2 million, compared with $26.6 million in the comparable period of fiscal 2007. Overall, U.S. net sales declined due to the continued reduction in the number of VNS Therapy Systems attributable to treatment-resistant depression ("TRD"), following both the preliminary and final non-coverage determinations by the Centers for Medicare and Medicaid Services in February 2007 and May 2007, respectively; however, net sales attributable to the epilepsy indication increased by approximately 13% over the comparable prior year quarter.

International net sales increased by 36% to a record $6.9 million, up from the $5.1 million reported in the third quarter of fiscal 2007, due primarily to unit growth of 20%, the impact of foreign currency movements and improved pricing.

Net sales include $167,000 relating to the license fee of $9.5 million received during the third quarter. It is anticipated that this license fee will be recognized at a quarterly rate of $373,000 through the end of fiscal 2014. The unamortized amount is reflected as deferred revenue in long-term liabilities.

Gross margin

The gross margin for the third quarter of fiscal 2008 represente
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