Delaware | 000-19711 | 84-0997049 | ||||
(State or other jurisdiction | (Commission | (IRS Employer | ||||
of incorporation) | File Number) | Identification No.) |
9965 Federal Drive |
Colorado Springs, Colorado 80921 |
(Address of principal executive offices) (Zip Code) |
THE SPECTRANETICS | |||
CORPORATION | |||
Date: | July 23, 2015 | By: | /s/ Jeffrey A. Sherman |
Jeffrey A. Sherman | |||
Vice President, Deputy General Counsel and Corporate Secretary | |||
COMPANY CONTACT | INVESTOR CONTACT |
The Spectranetics Corporation | Westwicke Partners |
Guy Childs, Chief Financial Officer | Lynn Pieper |
(719) 633-8333 | (415) 202-5678 |
lynn.pieper@westwicke.com |
• | Revenue of $61.7 million increased 42% (45% constant currency1); 9% (12% constant currency) excluding AngioSculpt® |
• | Vascular Intervention revenue of $26.4 million, excluding AngioSculpt, increased 17% (19% constant currency) |
• | U.S. peripheral atherectomy revenue grew 21% |
• | AngioSculpt revenue of $14.2 million |
• | Lead Management revenue of $17.3 million increased 7% (11% constant currency) |
• | Laser, service and other revenue of $3.8 million decreased 23% (21% constant currency) |
Previous Outlook | Revised Outlook | Growth vs. 2014 | |||||
(in millions) | Low | High | Low | High | |||
Vascular Intervention, excluding AngioSculpt | $107.6 | $103 | $107 | 16% | 21% | ||
AngioSculpt | $59.0 | $55 | $58 | 86% | 96% | ||
Total Vascular Intervention | $166.6 | $158 | $165 | 34% | 40% | ||
Lead Management | $72.6 | $67 | $69 | 1% | 4% | ||
Laser Service and Other | $18.8 | $15 | $16 | -25% | -20% | ||
Total Revenue | $258.0 | $240 | $250 | 17% | 22% | ||
Total Revenue, excluding AngioSculpt | $199.0 | $185 | $192 | 6% | 10% | ||
Includes $5.0 - $5.5 million of negative currency impact, which represents 2% - 3% of 2014 revenue. | |||||||
Results for 2014 include six months of AngioSculpt revenue because the acquisition closed on June 30, 2014. |
• | The revised Vascular Intervention guidance reflects the impact of competitive drug-coated balloon launches on AngioSculpt revenue and ongoing sales team optimization. |
• | Projected Lead Management revenue reflects expectations for procedural softness and a reduction in market development spending in the second half of 2015. |
• | The reduction of projected laser, service & other revenue is primarily due to increased focus on laser placements versus sales. |
• | Gross margin is expected to be within a range of 73.5% to 74.0%, approximately 100 basis points less than previously projected, primarily due to lower projected revenue associated with higher margin products. |
• | Research, development and other technology expenses are expected to be approximately 26.5% to 27.5% of revenue, revised from 27% to 28% previously projected. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Revenue | $ | 61,677 | $ | 43,555 | $ | 119,099 | $ | 83,169 | ||||||||
Cost of products sold | 15,914 | 10,506 | 30,716 | 20,840 | ||||||||||||
Amortization of acquired inventory step-up | — | — | 251 | — | ||||||||||||
Gross profit | 45,763 | 33,049 | 88,132 | 62,329 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling, general and administrative | 35,562 | 28,452 | 72,504 | 56,192 | ||||||||||||
Research, development and other technology | 16,660 | 5,704 | 31,921 | 11,791 | ||||||||||||
Medical device excise tax | 821 | 588 | 1,627 | 1,113 | ||||||||||||
Acquisition transaction, integration and other costs | 11,106 | 3,958 | 21,497 | 4,229 | ||||||||||||
Acquisition-related intangible asset amortization | 3,612 | 136 | 6,782 | 273 | ||||||||||||
Contingent consideration expense | 1,060 | 40 | 2,084 | 78 | ||||||||||||
Change in fair value of contingent consideration liability | (17,800 | ) | — | (17,800 | ) | — | ||||||||||
Total operating expenses | 51,021 | 38,878 | 118,615 | 73,676 | ||||||||||||
Operating loss | (5,258 | ) | (5,829 | ) | (30,483 | ) | (11,347 | ) | ||||||||
Other expense | (1,838 | ) | (490 | ) | (3,771 | ) | (486 | ) | ||||||||
Loss before taxes | (7,096 | ) | (6,319 | ) | (34,254 | ) | (11,833 | ) | ||||||||
Income tax expense (benefit) | 120 | (1,020 | ) | 267 | (873 | ) | ||||||||||
Net loss | $ | (7,216 | ) | $ | (5,299 | ) | $ | (34,521 | ) | $ | (10,960 | ) | ||||
Net loss per common share: | ||||||||||||||||
Basic and diluted | $ | (0.17 | ) | $ | (0.13 | ) | $ | (0.82 | ) | $ | (0.26 | ) | ||||
Weighted average shares outstanding: | ||||||||||||||||
Basic and diluted | 42,389 | 41,603 | 42,273 | 41,479 |
June 30, 2015 | December 31, 2014 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 49,255 | $ | 95,505 | |||
Accounts receivable, net | 39,954 | 41,090 | |||||
Inventories, net | 27,769 | 25,446 | |||||
Deferred income taxes | 2,200 | 2,200 | |||||
Other current assets | 6,606 | 8,093 | |||||
Total current assets | 125,784 | 172,334 | |||||
Property and equipment, net | 42,551 | 33,819 | |||||
Debt issuance costs, net | 6,422 | 6,912 | |||||
Goodwill and intangible assets | 272,262 | 252,514 | |||||
Other assets | 1,958 | 1,371 | |||||
Total assets | $ | 448,977 | $ | 466,950 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Borrowings under revolving line of credit | $ | 18,542 | $ | — | |||
Other current liabilities | 46,035 | 41,343 | |||||
Convertible senior notes | 230,000 | 230,000 | |||||
Other non-current liabilities | 18,178 | 33,450 | |||||
Stockholders’ equity | 136,222 | 162,157 | |||||
Total liabilities and stockholders’ equity | $ | 448,977 | $ | 466,950 |
THE SPECTRANETICS CORPORATION |
Supplemental Financial Information |
(Unaudited) |
Financial Summary | 2014 | 2015 | |||||||||||||||||
(000’s, except laser sales and installed base amounts) | 2nd Qtr | 3rd Qtr | 4th Qtr | 1st Qtr | 2nd Qtr | ||||||||||||||
Disposable products revenue: | |||||||||||||||||||
Vascular Intervention (ex-AngioSculpt) | $ | 22,496 | $ | 21,634 | $ | 24,371 | $ | 22,492 | $ | 26,385 | |||||||||
AngioSculpt | — | 14,942 | 14,684 | 14,021 | 14,245 | ||||||||||||||
Total Vascular Intervention | 22,496 | 36,576 | 39,055 | 36,513 | 40,630 | ||||||||||||||
Lead Management | 16,114 | 17,569 | 18,509 | 16,431 | 17,257 | ||||||||||||||
Total disposable products | 38,610 | 54,145 | 57,564 | 52,944 | 57,887 | ||||||||||||||
Laser, service, and other | 4,945 | 4,641 | 5,395 | 4,478 | 3,790 | ||||||||||||||
Total revenue | 43,555 | 58,786 | 62,959 | 57,422 | 61,677 | ||||||||||||||
Non-GAAP gross margin percentage (excluding amortization of acquired inventory step-up) (1) | 76 | % | 75 | % | 75 | % | 74 | % | 74 | % | |||||||||
Net loss | (5,299 | ) | (13,944 | ) | (14,731 | ) | (27,305 | ) | (7,216 | ) | |||||||||
Cash flow used in operating activities | (1,111 | ) | (3,403 | ) | (7,576 | ) | (22,461 | ) | (10,082 | ) | |||||||||
Total cash and cash equivalents at end of quarter | 107,027 | 103,538 | 95,505 | 43,639 | 49,255 | ||||||||||||||
Laser sales summary: | |||||||||||||||||||
Laser sales from inventory | 8 | 7 | 11 | 6 | 2 | ||||||||||||||
Laser sales from evaluation/rental units | 1 | 5 | 2 | 2 | — | ||||||||||||||
Total laser sales | 9 | 12 | 13 | 8 | 2 | ||||||||||||||
(1) Non-GAAP gross margin percentage (excluding amortization of acquired inventory step-up) is a non-GAAP financial measure. Please refer to the non-GAAP reconciliation tables following this table for the reconciliation to the most comparable GAAP measure. | |||||||||||||||||||
Worldwide Installed Base Summary: | |||||||||||||||||||
Laser sales from inventory | 8 | 7 | 11 | 6 | 2 | ||||||||||||||
Rental placements | 32 | 34 | 26 | 37 | 42 | ||||||||||||||
Evaluation placements | 6 | 11 | 8 | 11 | 5 | ||||||||||||||
Laser placements during quarter | 46 | 52 | 45 | 54 | 49 | ||||||||||||||
Buy-backs/returns during quarter | (15 | ) | (11 | ) | (10 | ) | (16 | ) | (11 | ) | |||||||||
Net laser placements during quarter | 31 | 41 | 35 | 38 | 38 | ||||||||||||||
Total lasers placed at end of quarter | 1,195 | 1,236 | 1,271 | 1,309 | 1,347 |
THE SPECTRANETICS CORPORATION | ||||||||||||||||||||
Reconciliation of revenue by geography to non-GAAP revenue by geography on a constant currency basis (in thousands, except percentages) (unaudited) | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
June 30, 2015 | June 30, 2014 | Change | ||||||||||||||||||
Revenue, as reported | Foreign exchange impact as compared to prior period | Revenue on a constant currency basis | Revenue, as reported | As reported | Constant currency basis | |||||||||||||||
United States | $ | 51,593 | $ | — | $ | 51,593 | $ | 34,854 | 48 | % | 48 | % | ||||||||
International | 10,084 | 1,359 | 11,443 | 8,701 | 16 | % | 32 | % | ||||||||||||
Total revenue | $ | 61,677 | $ | 1,359 | $ | 63,036 | $ | 43,555 | 42 | % | 45 | % | ||||||||
Six Months Ended | ||||||||||||||||||||
June 30, 2015 | June 30, 2014 | Change | ||||||||||||||||||
Revenue, as reported | Foreign exchange impact as compared to prior period | Revenue on a constant currency basis | Revenue, as reported | As reported | Constant currency basis | |||||||||||||||
United States | $ | 100,193 | $ | — | $ | 100,193 | $ | 66,626 | 50 | % | 50 | % | ||||||||
International | 18,906 | 2,276 | 21,182 | 16,543 | 14 | % | 28 | % | ||||||||||||
Total revenue | $ | 119,099 | $ | 2,276 | $ | 121,375 | $ | 83,169 | 43 | % | 46 | % |
THE SPECTRANETICS CORPORATION | ||||||||||||||||||||
Reconciliation of revenue by product line to non-GAAP revenue by product line on a constant currency basis (in thousands, except percentages) (unaudited) | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
June 30, 2015 | June 30, 2014 | Change | ||||||||||||||||||
Revenue, as reported | Foreign exchange impact as compared to prior period | Revenue on a constant currency basis | Revenue, as reported | As reported | Constant currency basis | |||||||||||||||
Vascular Intervention, ex-AngioSculpt | $ | 26,385 | $ | 429 | $ | 26,814 | $ | 22,496 | 17 | % | 19 | % | ||||||||
AngioSculpt | 14,245 | 193 | 14,438 | — | — | % | — | % | ||||||||||||
Total Vascular Intervention | $ | 40,630 | $ | 622 | $ | 41,252 | $ | 22,496 | 81 | % | 83 | % | ||||||||
Lead Management | 17,257 | 604 | 17,861 | 16,114 | 7 | % | 11 | % | ||||||||||||
Laser System, Service & Other | 3,790 | 133 | 3,923 | 4,945 | (23 | )% | (21 | )% | ||||||||||||
Total revenue | $ | 61,677 | $ | 1,359 | $ | 63,036 | $ | 43,555 | 42 | % | 45 | % | ||||||||
Six Months Ended | ||||||||||||||||||||
June 30, 2015 | June 30, 2014 | Change | ||||||||||||||||||
Revenue, as reported | Foreign exchange impact as compared to prior period | Revenue on a constant currency basis | Revenue, as reported | As reported | Constant currency basis | |||||||||||||||
Vascular Intervention, ex-AngioSculpt | $ | 48,877 | $ | 667 | $ | 49,544 | $ | 42,517 | 15 | % | 17 | % | ||||||||
AngioSculpt | 28,266 | 318 | 28,584 | — | — | % | — | % | ||||||||||||
Total Vascular Intervention | $ | 77,143 | $ | 985 | $ | 78,128 | $ | 42,517 | 81 | % | 84 | % | ||||||||
Lead Management | 33,688 | 1,006 | 34,694 | 30,584 | 10 | % | 13 | % | ||||||||||||
Laser System, Service & Other | 8,268 | 285 | 8,553 | 10,068 | (18 | )% | (15 | )% | ||||||||||||
Total revenue | $ | 119,099 | $ | 2,276 | $ | 121,375 | $ | 83,169 | 43 | % | 46 | % |
THE SPECTRANETICS CORPORATION | ||||||||||||||||||||
Reconciliation of gross margin to non-GAAP gross margin excluding amortization of acquired inventory step-up (in thousands, except percentages) (unaudited) | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
June 30, 2014 | Sept. 30, 2014 | Dec. 30, 2014 | March 31, 2015 | June 30, 2015 | ||||||||||||||||
Gross profit, as reported | $ | 33,049 | $ | 43,086 | $ | 46,040 | $ | 42,369 | $ | 45,763 | ||||||||||
Amortization of acquired inventory step-up (1) | — | 1,014 | 1,060 | 251 | — | |||||||||||||||
Adjusted gross profit, excluding amortization of acquired inventory step-up | $ | 33,049 | $ | 44,100 | $ | 47,100 | $ | 42,620 | $ | 45,763 | ||||||||||
Gross margin, as reported | 76 | % | 73 | % | 73 | % | 74 | % | 74 | % | ||||||||||
Non-GAAP gross margin, excluding amortization of acquired inventory step-up | 76 | % | 75 | % | 75 | % | 74 | % | 74 | % |
Reconciliation of Net Loss to Non-GAAP Net Loss (in thousands) (unaudited) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2015 | June 30, 2014 | June 30, 2015 | June 30, 2014 | |||||||||||||
Net loss, as reported | $ | (7,216 | ) | $ | (5,299 | ) | $ | (34,521 | ) | $ | (10,960 | ) | ||||
Acquisition transaction, integration and other costs (2) | 11,106 | 3,958 | 21,497 | 4,229 | ||||||||||||
Amortization of acquired inventory step-up (1) | — | — | 251 | — | ||||||||||||
Acquisition-related intangible asset amortization (3) | 3,612 | 136 | 6,782 | 273 | ||||||||||||
Contingent consideration expense (4) | 1,060 | 40 | 2,084 | 78 | ||||||||||||
Change in fair value of contingent consideration liability (5) | (17,800 | ) | — | (17,800 | ) | — | ||||||||||
Release of valuation allowance related to AngioScore acquisition (6) | — | (1,266 | ) | — | (1,266 | ) | ||||||||||
Non-GAAP net loss | $ | (9,238 | ) | $ | (2,431 | ) | $ | (21,707 | ) | $ | (7,646 | ) |
THE SPECTRANETICS CORPORATION | ||||||||||||||||
Reconciliation of Net Loss Per Share to Non-GAAP Net Loss Per Share (unaudited) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2015 | June 30, 2014 | June 30, 2015 | June 30, 2014 | |||||||||||||
Net loss per share, as reported | $ | (0.17 | ) | $ | (0.13 | ) | $ | (0.82 | ) | $ | (0.26 | ) | ||||
Acquisition transaction, integration and other costs (2) | 0.26 | 0.10 | 0.51 | 0.10 | ||||||||||||
Amortization of acquired inventory step-up (1) | — | — | 0.01 | — | ||||||||||||
Acquisition-related intangible asset amortization (3) | 0.09 | — | 0.16 | 0.01 | ||||||||||||
Contingent consideration expense (4) | 0.03 | — | 0.05 | — | ||||||||||||
Change in fair value of contingent consideration liability (5) | (0.42 | ) | — | (0.42 | ) | — | ||||||||||
Release of valuation allowance due to AngioScore acquisition (6) | — | (0.03 | ) | — | (0.03 | ) | ||||||||||
Non-GAAP net loss per share (7) | $ | (0.22 | ) | $ | (0.06 | ) | $ | (0.51 | ) | $ | (0.18 | ) |
Reconciliation of 2015 Projected Net Loss to Non-GAAP Projected Net Loss (in millions) (unaudited) | ||||||||
Projected Range | ||||||||
Twelve Months Ending | ||||||||
December 31, 2015 | December 31, 2015 | |||||||
Net loss, GAAP | $ | (69.0 | ) | $ | (65.0 | ) | ||
Acquisition transaction, integration and other costs (8) | 26.3 | 26.3 | ||||||
Acquisition-related amortization and contingent consideration expense (9) | 15.5 | 15.5 | ||||||
Change in fair value of contingent consideration liability (5) | (17.8 | ) | (17.8 | ) | ||||
Non-GAAP net loss | $ | (45.0 | ) | $ | (41.0 | ) |
Reconciliation of 2015 Projected Net Loss Per Share to Non-GAAP Projected Net Loss Per Share (unaudited) | ||||||||
Projected Range | ||||||||
Twelve Months Ending | ||||||||
December 31, 2015 | December 31, 2015 | |||||||
Net loss per share, GAAP | $ | (1.62 | ) | $ | (1.53 | ) | ||
Acquisition transaction, integration and other costs (8) | 0.62 | 0.62 | ||||||
Acquisition-related amortization and contingent consideration expense (9) | 0.36 | 0.36 | ||||||
Change in fair value of contingent consideration liability (5) | (0.42 | ) | (0.42 | ) | ||||
Non-GAAP net loss per share (7) | $ | (1.07 | ) | $ | (0.96 | ) |
1) | Amortization of acquired inventory step-up relates to the inventory acquired in the AngioScore acquisition. |
2) | Acquisition transaction, integration and other costs relate to the AngioScore and Stellarex acquisitions, which closed on June 30, 2014 and January 27, 2015, respectively, and included investment banking fees, accounting, consulting, and legal fees, severance and retention costs, and non-recurring costs associated with establishing manufacturing operations to support the Stellarex program. In addition, these costs included $8.0 million and $8.5 million during the first quarter and second quarters of 2015, respectively, for legal fees, including legal fees and costs advanced, associated with a patent and breach of fiduciary duty matter in which AngioScore is the plaintiff. |
3) | Acquisition-related intangible asset amortization relates primarily to intangible assets acquired in the AngioScore acquisition in June 2014 and the Stellarex acquisition in January 2015. |
4) | Contingent consideration expense represents the accretion of the estimated contingent consideration liability related to future amounts payable to former AngioScore stockholders primarily based on sales of the AngioScore products and achievement of product development milestones. |
5) | During the three months ended June 30, 2015, we remeasured the contingent consideration liability related to the AngioScore acquisition to its fair value and reduced it by approximately $17.8 million. This reduction was the result of a decrease in our estimate of the likelihood of exceeding the 10% revenue growth threshold for the AngioSculpt products subject to the contingent consideration payments. The contingent consideration liability is based on required payments of two times annual revenue growth greater than 10% for the annual periods 2015 through 2017. |
6) | Income tax benefit for the three months ended June 30, 2014 included a tax benefit of $1.3 million resulting from a reduction in the valuation allowance against our deferred tax assets related to the acquisition of AngioScore. |
7) | Per share amounts may not add due to rounding. |
8) | Acquisition transaction, integration and other costs consist of integration costs for the Stellarex acquisition of $6.3 million, integration costs for the AngioScore acquisition of $2.5 million, and legal fees of $17.5 million, which includes legal fees and costs advanced, associated with a patent and breach of fiduciary duty matter in which AngioScore is the plaintiff. |
9) | Acquisition-related intangible asset amortization relates primarily to intangible assets acquired in the AngioScore acquisition in June 2014 and the Stellarex acquisition in January 2015. Contingent consideration expense represents the accretion of the estimated contingent consideration liability related to future amounts that may be payable to former AngioScore stockholders primarily based on sales of the AngioScore products and achievement of product development milestones. |
• | Management exercises judgment in determining which types of charges or other items should be excluded from the non-GAAP financial measures used. |
• | Amortization expense, while not requiring cash settlement, is an ongoing and recurring expense and has a material impact on GAAP net income or loss and reflects costs to us not reflected in non-GAAP net loss. |
• | Items such as the acquisition transaction and integration costs, contingent consideration expense and the change in fair value of contingent consideration liability excluded from non-GAAP net loss can have a material impact on cash flows and GAAP net loss and reflect economic costs to us not reflected in non-GAAP net loss. |
• | Revenue growth rates stated on a constant currency basis, by their nature, exclude the impact of changes in foreign currency exchange rates, which may have a material impact on GAAP revenue. |
• | Non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles and therefore other companies may calculate similarly titled non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes. |
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