EX-99.1 2 v091198_ex99-1.htm
Abaxis Reports Financial Performance for
the Second Quarter of Fiscal 2008

UNION CITY, Calif., Oct. 24 /PRNewswire-FirstCall/ -- ABAXIS, Inc. (Nasdaq: ABAX), a medical products company manufacturing point-of-care blood analysis systems, today reported financial results for the fiscal quarter ended September 30, 2007.

Highlights for the second quarter of fiscal 2008 include:
 
-- Revenues of $25.2 million, up 20% over last year's comparable quarter.
-- Medical market sales of $5.6 million, up 37% over last year's comparable quarter.
-- Medical reagent disc sales of 338,000 units, up 43% over last year's comparable quarter.
-- Total medical and veterinary reagent disc sales of 1,244,000 units, compared to 1,007,000 units in the same period last year, up 24% over last year's comparable quarter.
-- Introduction of the new VetScan HM5 analyzer in the final 2 weeks of the quarter with sales of 134 units.
-- Operating income of $4.1 million, up 32% over last year's comparable quarter.
-- Net income of $2.9 million, up 37% over last year's comparable quarter.
-- Diluted EPS: $0.13 versus $0.10 in the same period last year.
-- Cash, cash equivalents and short-term investments as of September 30, 2007 of $51.7 million, up 29% compared to September 30, 2006.
 
Quarterly Results: For the fiscal quarter ended September 30, 2007, Abaxis reported revenues of $25.2 million, as compared with revenues of $21.0 million for the comparable period last year, an increase of 20 percent. Instrument, reagent disc and hematology reagent revenues increased by $4.3 million, or 23 percent over the same period last year. The company reported net income of $2.9 million, compared to $2.1 million for the same period last year. The company's effective tax rate in the quarter ended September 30, 2007 was 38 percent, compared to 39 percent for the same period last year. The company reported diluted net income per share of $0.13 (calculated based on 22,110,000 shares) in the second quarter of fiscal 2008, compared to $0.10 per share (calculated based on 21,968,000 shares) for the same period last year.

Six Month Results: For the six-month period ended September 30, 2007, Abaxis reported revenues of $48.1 million, as compared with revenues of $41.4 million for the comparable period last year, an increase of 16 percent. Instrument revenues and reagent disc and hematology reagent revenues increased by $6.2 million, or 16 percent over the same period last year. The company reported net income of $6.0 million, compared to $4.5 million for the same period last year. The company's effective tax rate in the six months ended September 30, 2007 was 38 percent, compared to 40 percent for the same period last year. The company reported diluted net income per share of $0.27 (calculated based on 22,103,000 shares), compared to $0.21 per share (calculated based on 21,890,000 shares) for the same period last year.
 
 
Other Reported Information: Reagent disc and hematology reagent revenues for the second quarter of fiscal 2008 were $15.7 million, up 28 percent over the $12.3 million reported in the same period last year. During the quarter, the company sold a total of 1,244,000 medical and veterinary reagent discs, an increase of 24 percent compared to 1,007,000 medical and veterinary reagent discs sold during the same period last year. Total medical sales for the second quarter of fiscal 2008 were $5.6 million, an increase of 37 percent over last year's comparable quarter. Medical sales in North America, excluding sales to the U.S. government, during the second quarter of fiscal 2008 were $4.1 million, an increase of 42 percent over last year's comparable quarter. Total veterinary sales for the second quarter of fiscal 2008 were $18.0 million, up 19 percent over last year's comparable quarter. Additionally, veterinary reagent disc sales for the second quarter of fiscal 2008 were $11.6 million, an increase of 25 percent compared to the same period last year. The company ended the quarter with $51.7 million in cash, cash equivalents and short-term investments.
 
Clint Severson, Chairman and Chief Executive Officer of Abaxis, commented, "During the quarter, we sold 771 total instruments in both the medical and veterinary segments of the business resulting in strong double digit revenue growth rates. As it relates to manufacturing, we have made a number of adjustments to our manufacturing operations to improve efficiencies with an eye toward enhancing operating margins in fiscal 2009 and beyond."
 
Mr. Severson continued, "We also introduced the new VetScan HM5 hematology instrument during the final two weeks of the quarter. I would like to recognize our sales and marketing team for an outstanding job in selling 134 of these units during those final two weeks. We are pleased with this strong indication of market acceptance of our five-part hematology analyzers, and we look to introduce this leading-edge product throughout our veterinary client base. All in all, we are pleased with the results of the quarter and we look forward to the rest of fiscal year 2008."

Conference Call
 
Abaxis has scheduled a conference call to discuss its results at 4:15 p.m. ET on October 24, 2007. Participants can dial (877) 356-5706 or (706) 643-0580 to access the conference call, or can listen via a live Internet web cast, which is available in the Investor Relations section of the company's website at http://www.abaxis.com. A replay of the call is available by visiting http://www.abaxis.com for the next 30 days or by calling (800) 642-1687 or (706) 645-9291, access code 19672265, through October 27, 2007. This press release is also available prior to and after the call via Abaxis' website or the Securities and Exchange Commission's website at http://www.sec.gov.

About Abaxis
 
Abaxis develops, manufactures and markets portable blood analysis systems for use in any veterinary or human patient-care setting to provide clinicians with rapid blood constituent measurements. The system consists of a compact, 5.1 kilogram (11.2 pounds), portable analyzer and a series of single-use plastic discs, called reagent discs that contain all the chemicals required to perform a panel of up to 13 tests on veterinary patients and 14 tests on human patients. The system can be operated with minimal training and performs multiple routine tests on whole blood, serum or plasma samples. The system provides test results in less than 12 minutes with the precision and accuracy equivalent to a clinical laboratory analyzer.

Use of Non-GAAP Financial Measures
 
To supplement the financial statements presented in accordance with United States generally accepted accounting principles (GAAP), Abaxis uses operating income per share. This non-GAAP financial presentation is not a measurement of performance under generally accepted accounting principles in the United States of America. Management uses this measure in comparing Abaxis' operating results with historical performance and believes it provides meaningful and comparable information to management and investors to assist in their review of Abaxis' performance relative to prior periods and its competitors.

This press release and our conference call will include statements that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Abaxis claims the protection of the safe-harbor for forward-looking statements contained in the Reform Act. These forward-looking statements are often characterized by the terms "may," "believes," "projects," "expects," "anticipates," or words of similar import, and do not reflect historical facts. Specific forward-looking statements contained in this press release or in our conference call may be affected by risks and uncertainties, including, but not limited to, those related to the market acceptance of the company's products and the continuing development of its products, required United States Food and Drug Administration clearance and other government approvals, risks associated with manufacturing and distributing its products on a commercial scale free of defects, risks related to the introduction of new instruments manufactured by third parties, risks associated with entering the human diagnostic market on a larger scale, risks related to the protection of the company's intellectual property or claims of infringement of intellectual property asserted by third parties, risks involved in carrying of inventory, risks associated with the ability to attract, train and retain competent sales personnel, competition and other risks detailed from time to time in Abaxis' periodic reports filed with the United States Securities and Exchange Commission. Forward-looking statements speak only as of the date the statement was made. Abaxis does not undertake and specifically disclaims any obligation to update any forward-looking statements.


ABAXIS, INC.
Condensed Statements of Operations
(In thousands, except per share data)
(Unaudited)
 
 
  
Three Months Ended
 
Six Months Ended
 
 
 
September 30,
 
September 30,
 
 
 
2007
 
2006
 
2007
 
2006
  
 
                  
Revenues
 
$
25,192
  
$
21,037
  
$
48,123
  
$
41,395
  
Cost of revenues
   
11,335
   
9,479
   
21,250
    
18,400
  
Gross profit
   
13,857
   
11,558
   
26,873
   
22,995
  
 
                          
Operating expenses:
                          
Research and development
   
1,822
   
1,519
   
3,475
   
3,236
  
Sales and marketing
   
6,381
   
5,533
   
11,610
   
10,004
  
General and administrative
   
1,538
   
1,386
   
3,189
   
2,970
  
Total operating expenses
   
9,741
   
8,438
   
18,274
   
16,210
  
 
                          
Income from operations
   
4,116
   
3,120
   
8,599
   
6,785
  
Interest and other income (expense), net
   
529
   
367
   
1,028
   
703
  
Income before income taxes
   
4,645
   
3,487
   
9,627
   
7,488
  
Income tax provision
   
1,757
   
1,373
   
3,641
   
2,973
  
Net income
 
$
2,888
  
$
2,114
  
$
5,986
  
$
4,515
  
 
                          
Net income per share:
                          
Basic net income per share
 
$
0.13
  
$
0.10
  
$
0.28
  
$
0.22
  
Diluted net income per share
 
$
0.13
  
$
0.10
  
$
0.27
  
$
0.21
  
 
                          
Shares used in the calculation of net
                         
income per share:
                         
Weighted average common shares
                         
outstanding - basic
   
21,448
   
20,605
   
21,380
   
20,437
  
Weighted average common shares
                         
outstanding - diluted
   
22,110
   
21,968
    
22,103
   
21,890
  
 
ABAXIS, INC.
Condensed Balance Sheets
(Unaudited and in thousands)
 
 
  
September 30,
 
March 31,
  
 
  
2007
 
2007
  
           
Current assets:
              
Cash and cash equivalents
 
$
10,820
  
$
10,183
  
Short-term investments
   
40,911
   
35,028
  
Trade receivables, net
   
19,346
   
16,929
  
Inventories, net
   
15,912
   
14,813
  
Prepaid expenses
   
958
   
1,321
  
Net deferred tax asset - current
   
5,851
   
8,979
  
Total current assets
   
93,798
   
87,253
  
Property and equipment, net
   
13,603
   
12,662
  
Intangible assets, net
   
412
   
450
  
Other assets
   
24
   
38
  
Net deferred tax asset - non-current
   
2,312
   
2,312
  
Total assets
 
$
110,149
  
$
102,715
  
 
              
Current liabilities:
              
Accounts payable
 
$
5,251
  
$
6,505
  
Accrued payroll and related expenses
   
4,162
   
3,830
  
Other accrued liabilities
   
1,096
   
1,169
  
Deferred revenue
   
811
   
917
  
Warranty reserve
   
948
   
315
  
Total current liabilities
   
12,268
   
12,736
  
 
              
Non-current liabilities:
              
Deferred rent
   
344
   
391
  
Deferred revenue
   
1,184
   
1,244
  
Warranty reserve
   
346
   
532
  
Total non-current liabilities
   
1,874
   
2,167
  
 
              
Shareholders' equity:
              
Common stock
   
105,491
   
103,282
  
Accumulated deficit
   
(9,484
)
  
(15,470
)
Total shareholders' equity
   
96,007
   
87,812
  
Total liabilities and shareholders' equity
 
$
110,149
  
$
102,715
  
 

Non-GAAP Operating Income Per Share
(In thousands, except per share data)

 
  
Three Months Ended
September 30,
 
Six Months Ended
September 30,
  
 
  
2007
 
2006
 
2007
 
2006
  
Shares used in the calculation of
                         
operating income per share (non-GAAP):
                          
Weighted average common shares
                         
outstanding - basic
   
21,448
   
20,605
   
21,380
   
20,437
  
Weighted average common shares
                         
outstanding - diluted
   
22,110
   
21,968
   
22,103
    
21,890
  
 
                          
Non-GAAP operating income per share -
                          
basic
  
$
0.19
  
$
0.15
  
$
0.40
  
$
0.33
  
Non-GAAP operating income per share -
                          
diluted
 
$
0.19
  
$
0.14
  
$
0.39
  
$
0.31
  
 
Revenues by Geographic Region
(In thousands)
 
 
  
Three Months Ended
September 30,
 
Six Months Ended
September 30,
  
 
    
2007
 
 
2006
 
 
2007
 
 
2006
  
North America
 
$
21,071
  
$
17,668
  
$
40,240
  
$
34,431
  
International
   
4,121
   
3,369
   
7,883
   
6,964
  
Total revenues
 
$
25,192
  
$
21,037
  
$
48,123
  
$
41,395
  
 
Revenues by Customer Group
(In thousands)
 
   
Three Months Ended
September 30,
 
Six Months Ended
September 30,
  
 
  
2007
  
2006
  
2007
  
2006
  
Medical Market
 
$
5,643
  
$
4,120
  
$
10,450
  
$
7,850
  
Veterinary Market
   
17,989
   
15,160
   
34,425
   
30,701
  
Other
   
1,560
   
1,757
   
3,248
   
2,844
  
Total revenues
 
$
25,192
  
$
21,037
  
$
48,123
  
$
41,395
  
 
SOURCE ABAXIS, Inc.
-0- 10/24/2007
/CONTACT: Clint Severson, Chief Executive Officer of ABAXIS, Inc.,
+1-510-675-6500; or Joe Dorame, Robert Blum and Joe Diaz, all of Lytham Partners, LLC, +1-602-889-9700, for ABAXIS, Inc./
/First Call Analyst: /
/FCMN Contact: alsantaines@abaxis.com /
/Web site: http://www.abaxis.com /
(ABAX)