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: | October 27, 2016 | By: | /s/ Paul Gardon |
Paul Gardon | |||
Senior Vice President, General Counsel and Corporate Secretary | |||
• | Revenue of $68.3 million increased 11% (both as reported and constant currency1) |
• | Vascular Intervention revenue of $45.9 million increased 14% (13% constant currency) |
• | Lead Management revenue of $18.6 million increased 4% (both as reported and constant currency) |
• | Revenue is projected to be within a range of $265 million to $270 million, an increase of 8% to 10% over 2015 |
• | Net loss for 2016 is projected to be within a range of $60 million to $63 million. Non-GAAP net loss for 2016 is projected to be within a range of $45 million to $48 million. See “Reconciliation of Non-GAAP Financial Measures” later in this release |
• | Loss per share for 2016 is projected to be within a range of $1.40 to $1.47. Non-GAAP loss per share for 2016 is projected to be within a range of $1.06 to $1.13. See “Reconciliation of Non-GAAP Financial Measures” later in this release |
• | Gross margin is projected to be within a range of 74.4% to 75.0% |
• | Research, development and other technology expenses are expected to be in the range of 25% to 26% of revenue |
• | Selling, general and administrative expenses are projected to be in the range of 61% to 63% of revenue |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Revenue | $ | 68,265 | $ | 61,660 | $ | 198,897 | $ | 180,759 | ||||||||
Cost of products sold | 16,884 | 15,809 | 49,949 | 46,776 | ||||||||||||
Gross profit | 51,381 | 45,851 | 148,948 | 133,983 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling, general and administrative | 40,737 | 34,116 | 122,169 | 106,620 | ||||||||||||
Research, development and other technology | 16,739 | 15,926 | 50,733 | 47,847 | ||||||||||||
Acquisition transaction, integration and legal costs | 823 | 5,403 | 1,615 | 26,900 | ||||||||||||
Acquisition-related intangible asset amortization | 2,903 | 3,290 | 9,308 | 10,072 | ||||||||||||
Contingent consideration expense | 41 | 387 | 208 | 2,471 | ||||||||||||
Change in fair value of contingent consideration liability | — | (4,256 | ) | — | (22,056 | ) | ||||||||||
Intangible asset impairment | — | 2,496 | — | 2,496 | ||||||||||||
Medical device excise tax | — | 916 | — | 2,543 | ||||||||||||
Total operating expense | 61,243 | 58,278 | 184,033 | 176,893 | ||||||||||||
Operating loss | (9,862 | ) | (12,427 | ) | (35,085 | ) | (42,910 | ) | ||||||||
Other expense | (3,318 | ) | (1,890 | ) | (9,937 | ) | (5,661 | ) | ||||||||
Loss before income tax expense | (13,180 | ) | (14,317 | ) | (45,022 | ) | (48,571 | ) | ||||||||
Income tax expense | 132 | 176 | 487 | 443 | ||||||||||||
Net loss | $ | (13,312 | ) | $ | (14,493 | ) | $ | (45,509 | ) | $ | (49,014 | ) | ||||
Net loss per common share: | ||||||||||||||||
Basic and diluted | $ | (0.31 | ) | $ | (0.34 | ) | $ | (1.06 | ) | $ | (1.16 | ) | ||||
Weighted average shares outstanding: | ||||||||||||||||
Basic and diluted | 43,054 | 42,556 | 42,853 | 42,369 |
September 30, 2016 | December 31, 2015 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 58,895 | $ | 84,594 | |||
Accounts receivable, net | 41,661 | 43,359 | |||||
Inventories, net | 26,698 | 25,155 | |||||
Other current assets | 6,308 | 5,171 | |||||
Total current assets | 133,562 | 158,279 | |||||
Property and equipment, net | 44,851 | 44,719 | |||||
Goodwill and intangible assets | 250,695 | 263,072 | |||||
Other assets | 2,754 | 1,929 | |||||
Total assets | $ | 431,862 | $ | 467,999 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Borrowings under revolving line of credit | $ | 21,288 | $ | 24,232 | |||
Other current liabilities | 39,351 | 39,447 | |||||
Total current liabilities | 60,639 | 63,679 | |||||
Convertible debt, net of debt issuance costs | 224,837 | 224,076 | |||||
Term loan, net of debt issuance costs | 59,646 | 59,601 | |||||
Other non-current liabilities | 3,830 | 3,674 | |||||
Stockholders’ equity | 82,910 | 116,969 | |||||
Total liabilities and stockholders’ equity | $ | 431,862 | $ | 467,999 |
THE SPECTRANETICS CORPORATION |
Supplemental Financial Information |
(Unaudited) |
Financial Summary | 2015 | 2016 | |||||||||||||
(000’s, except laser placement information and percentages) | 3rd Qtr | 4th Qtr | 1st Qtr | 2nd Qtr | 3rd Qtr | ||||||||||
Disposable products revenue: | |||||||||||||||
Vascular Intervention | 40,370 | 42,967 | 41,912 | 46,218 | 45,906 | ||||||||||
Lead Management | 17,961 | 18,250 | 17,096 | 17,767 | 18,616 | ||||||||||
Total disposable products | 58,331 | 61,217 | 59,008 | 63,985 | 64,522 | ||||||||||
Laser, service, and other | 3,329 | 3,980 | 3,876 | 3,763 | 3,743 | ||||||||||
Total revenue | 61,660 | 65,197 | 62,884 | 67,748 | 68,265 | ||||||||||
Gross margin percentage | 74 | % | 75 | % | 74 | % | 75 | % | 75 | % | |||||
Net loss | (14,493 | ) | (10,460 | ) | (17,291 | ) | (14,906 | ) | (13,312 | ) | |||||
Cash flow used in operating activities | (10,225 | ) | (16,691 | ) | (12,444 | ) | (1,873 | ) | (5,878 | ) | |||||
Total cash and cash equivalents at end of quarter | 41,721 | 84,594 | 67,494 | 64,343 | 58,895 | ||||||||||
Worldwide Installed Base Summary: | |||||||||||||||
Laser placements during quarter | 41 | 46 | 44 | 45 | 52 | ||||||||||
Buy-backs/returns during quarter | (16 | ) | (26 | ) | (18 | ) | (21 | ) | (16 | ) | |||||
Net laser placements during quarter | 25 | 20 | 26 | 24 | 36 | ||||||||||
Total lasers placed at end of quarter | 1,372 | 1,392 | 1,418 | 1,442 | 1,478 |
Reconciliation of revenue by geography to non-GAAP revenue by geography on a constant currency basis (in thousands, except percentages) (unaudited) | |||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||
September 30, 2016 | September 30, 2015 | % 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 | $ | 57,006 | $ | — | $ | 57,006 | $ | 51,936 | 10 | % | 10 | % | |||||||||
International | 11,259 | (31 | ) | 11,228 | 9,724 | 16 | % | 15 | % | ||||||||||||
Total revenue | $ | 68,265 | $ | (31 | ) | $ | 68,234 | $ | 61,660 | 11 | % | 11 | % | ||||||||
Nine Months Ended | |||||||||||||||||||||
September 30, 2016 | September 30, 2015 | % 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 | $ | 166,322 | $ | — | $ | 166,322 | $ | 152,129 | 9 | % | 9 | % | |||||||||
International | 32,575 | 92 | 32,667 | 28,630 | 14 | % | 14 | % | |||||||||||||
Total revenue | $ | 198,897 | $ | 92 | $ | 198,989 | $ | 180,759 | 10 | % | 10 | % |
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 | ||||||||||||||||||||
September 30, 2016 | September 30, 2015 | % 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 | $ | 45,906 | $ | (106 | ) | $ | 45,800 | $ | 40,370 | 14 | % | 13 | % | |||||||
Lead Management | 18,616 | 72 | 18,688 | 17,961 | 4 | % | 4 | % | ||||||||||||
Laser, service, and other | 3,743 | 3 | 3,746 | 3,329 | 12 | % | 13 | % | ||||||||||||
Total revenue | $ | 68,265 | $ | (31 | ) | $ | 68,234 | $ | 61,660 | 11 | % | 11 | % | |||||||
Nine Months Ended | ||||||||||||||||||||
September 30, 2016 | September 30, 2015 | % 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 | $ | 134,036 | $ | (102 | ) | $ | 133,934 | $ | 117,513 | 14 | % | 14 | % | |||||||
Lead Management | 53,479 | 168 | 53,647 | 51,649 | 4 | % | 4 | % | ||||||||||||
Laser, service, and other | 11,382 | 26 | 11,408 | 11,597 | (2 | )% | (2 | )% | ||||||||||||
Total revenue | $ | 198,897 | $ | 92 | $ | 198,989 | $ | 180,759 | 10 | % | 10 | % |
Reconciliation of Net Loss to Non-GAAP Net Loss (in thousands) (unaudited) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | |||||||||||||
Net loss, as reported | $ | (13,312 | ) | $ | (14,493 | ) | $ | (45,509 | ) | $ | (49,014 | ) | ||||
Acquisition transaction, integration and legal costs (1) | 823 | 5,403 | 1,615 | 26,900 | ||||||||||||
Acquisition-related intangible asset amortization (2) | 2,903 | 3,290 | 9,308 | 10,072 | ||||||||||||
Contingent consideration expense (3) | 41 | 387 | 208 | 2,471 | ||||||||||||
Change in fair value of contingent consideration liability (4) | — | (4,256 | ) | — | (22,056 | ) | ||||||||||
Intangible asset impairment (4) | — | 2,496 | — | 2,496 | ||||||||||||
Non-GAAP net loss | $ | (9,545 | ) | $ | (7,173 | ) | $ | (34,378 | ) | $ | (29,131 | ) |
Reconciliation of Net Loss Per Share to Non-GAAP Net Loss Per Share (unaudited) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | |||||||||||||
Net loss per share, as reported | $ | (0.31 | ) | $ | (0.34 | ) | $ | (1.06 | ) | $ | (1.16 | ) | ||||
Acquisition transaction, integration and legal costs (1) | 0.02 | 0.13 | 0.04 | 0.63 | ||||||||||||
Acquisition-related intangible asset amortization (2) | 0.07 | 0.08 | 0.22 | 0.24 | ||||||||||||
Contingent consideration expense (3) | — | 0.01 | — | 0.06 | ||||||||||||
Change in fair value of contingent consideration liability (4) | — | (0.10 | ) | — | (0.52 | ) | ||||||||||
Intangible asset impairment (4) | — | 0.06 | — | 0.06 | ||||||||||||
Non-GAAP net loss per share (5) | $ | (0.22 | ) | $ | (0.17 | ) | $ | (0.80 | ) | $ | (0.69 | ) |
Reconciliation of 2016 Projected Net Loss to Non-GAAP Projected Net Loss (in millions) (unaudited) | ||||||||
Projected Range | ||||||||
Twelve Months Ending December 31, 2016 | ||||||||
Low | High | |||||||
Net loss, GAAP | $ | (63.0 | ) | $ | (60.0 | ) | ||
Acquisition transaction, integration and legal costs (1) | 2.0 | 2.0 | ||||||
Acquisition-related amortization and contingent consideration expense (2,3) | 12.6 | 12.6 | ||||||
Non-GAAP net loss | $ | (48.4 | ) | $ | (45.4 | ) |
Reconciliation of 2016 Projected Net Loss Per Share to Non-GAAP Projected Net Loss Per Share (unaudited) | ||||||||
Projected Range | ||||||||
Twelve Months Ending December 31, 2016 | ||||||||
Low | High | |||||||
Net loss per share, GAAP | $ | (1.47 | ) | $ | (1.40 | ) | ||
Acquisition transaction, integration and legal costs (1) | 0.05 | 0.05 | ||||||
Acquisition-related amortization and contingent consideration expense (2,3) | 0.29 | 0.29 | ||||||
Non-GAAP net loss per share (5) | $ | (1.13 | ) | $ | (1.06 | ) |
1) | 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 $0.8 million and $1.5 million for the three and nine months ended September 30, 2016, for legal fees, including legal fees associated with patent and breach of fiduciary duty matters. During the three and nine months ended September 30, 2015, these costs included $2.5 million and $18.9 million for legal fees, including legal fees associated with patent and breach of fiduciary duty matters, and costs advanced associated with the breach of fiduciary duty matter. |
2) | 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. |
3) | Contingent consideration expense primarily represents the accretion of the estimated contingent consideration liability related to future amounts payable to former AngioScore stockholders, based on sales of the AngioScore products and achievement of regulatory milestones. |
4) | During the three months ended September 30, 2015, we remeasured the contingent consideration liability related to the AngioScore regulatory milestones to its fair value and reduced it by approximately $4.3 million. The intangible asset impairment of $2.5 million was to record a partial impairment of the in-process research and development intangible assets acquired as part of the AngioScore acquisition. |
5) | Per share amounts may not add due to rounding. |
• | 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 loss and reflects costs to us not reflected in non-GAAP net loss. |
• | Items such as the acquisition transaction and integration costs and contingent consideration expense 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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