8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (date of earliest event reported): April 26, 2012

Urologix, Inc.

(Exact name of Registrant as Specified in its Charter)

Minnesota

(State Or Other Jurisdiction Of Incorporation)

000-28414	41-1697237
(Commission File Number)	(I.R.S. Employer Identification No.)
14405 21st Avenue North Minneapolis, MN	55447
(Address Of Principal Executive Offices)	(Zip Code)

(763) 475-1400

Registrant’s Telephone Number, Including Area Code

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Items under Sections 1 and 3 through 8 are not applicable and therefore omitted.

ITEM 2.02     RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

Urologix, Inc. (the “Company”) hereby furnishes as Exhibit 99.1, a press release issued on April 26, 2012, disclosing material non-public information regarding its results of operations for the third fiscal quarter of fiscal year 2012 ended March 31, 2012.

The Company also hereby furnishes as Exhibit 99.2 statements by Stryker Warren, Jr., its Chief Executive Officer, and Gregory J. Fluet, its Chief Operating Officer, during the question-and-answer portion of a telephone conference held on April 26, 2012 relating to the third quarter ended March 31, 2012 results. Exhibit 99.2 also reflects clarification of certain responses by Mr. Warren to a question posed during the question-and-answer portion.

ITEM 9.01     FINANCIAL STATEMENTS AND EXHIBITS

Exhibit No.	Description
99.1	Press Release issued by Urologix, Inc. on April 26, 2012.
99.2	Statements of Stryker Warren, Jr., Chief Executive Officer, and Gregory J. Fluet, Chief Operating Officer, during a telephone conference held on April 26, 2012.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

UROLOGIX, INC.
By:	/s/ Brian J. Smrdel
	Brian J. Smrdel
	Chief Financial Officer

Date: April 27, 2012

EX-99.1

EXHIBIT 99.1

FOR IMMEDIATE RELEASE

Urologix Reports 59% Increase in Revenue Year-Over-Year for

Fiscal 2012 Third Quarter

• $4.7 million in total revenue, up 2% sequentially
• Positive cash flow in the quarter of $285 thousand
• Full year 2012 revenue guidance between $17.0 to $17.5 million

MINNEAPOLIS — April 26, 2012 — Urologix®, Inc. (NASDAQ:ULGX), the leading provider of in-office procedures for the safe, durable and effective treatment of BPH, today reported financial results for its fiscal third quarter ended March 31, 2012.

Third quarter fiscal year 2012 revenue totaled $4.7 million, up 58.8% year-over-year and up 1.8% sequentially. The year over year increase in revenue was primarily driven by the incremental contribution of Prostiva product revenue in the period, though the Company’s base CTT business also posted higher revenue versus the prior year with growth at 1.1%. The sequential increase in revenue was driven primarily by a 4.6% increase in sales of the Prostiva® Radio Frequency (RF) Therapy product line. The Company’s Cooled ThermoTherapy™ (CTT) base business was stable.

As of March 31, 2012, the Company’s cash balance was $1.9 million. The Company generated $285 thousand of cash in the third fiscal quarter ended March 31, 2012 compared to cash utilization of $498 thousand in the same period last year. The cash performance is a result, in part, of beneficial payment terms on Prostiva product inventory and the timing of royalty payments. Payments related to approximately $0.7 million of Prostiva product in the third quarter of fiscal year 2012, and $2.1 million for the first nine months of the fiscal year, were deferred as a result of 270 day terms negotiated as part of the license agreement.

“The third quarter marks the second full quarter of results for the ‘new Urologix’ combining two proven technologies - Cooled ThermoTherapy and Prostiva RF Therapy. Our results demonstrated strong year over year growth, sequential growth in what is historically a challenging quarter and increased operating leverage,” stated Stryker Warren Jr., CEO. “We continue to demonstrate early success with our patient education seminars and other market development initiatives and we plan to expand these efforts with more users of both product lines. While we have stabilized the Prostiva business and are working to drive growth, it is taking longer to turn this product line around than we had expected. As a result of this delay, we are reducing our full year guidance.”

Gross profit for the third quarter of fiscal year 2012 was $2.4 million, or 50.7% of revenue, compared to $1.6 million, or 54.1%, in the third quarter of fiscal year 2011. Gross margin for the third quarter of fiscal year 2012 was lower than the prior year quarter due to the 46% gross margin on the Prostiva product line, which included $62 thousand of non-cash charges, or 1.3% of revenue, primarily for the amortization of intangible assets. Gross margin for the third quarter of fiscal year 2012 improved 151 basis points sequentially due primarily to the impact of higher production volumes in the period to meet demand.

Total operating expense in the third quarter of fiscal year 2012 of $3.2 million increased 22% year-over-year driven primarily by the expansion of the direct sales force that occurred with the acquisition of the Prostiva product line. Total operating expenses declined 0.5% on a sequential basis due primarily to cost control in both general and administrative expense and R&D expense, which offset incremental investment in sales and marketing compared to the second quarter of fiscal 2012.

For the third quarter of fiscal year 2012, Urologix reported a net loss of $969 thousand, or $0.07 per diluted share, compared to a net loss of $983 thousand, or $0.07 per diluted share, in the third quarter of fiscal year 2011. The net loss in the third quarter of fiscal year 2012 was adversely affected by $169 thousand of non-cash imputed interest expense on deferred acquisition payments.

Outlook

The results in the third quarter were below expectations as a result of the inherent challenges of integrating the Prostiva business noted above. Based on these results, the Company is reducing its full year revenue guidance to $17 to $17.5 million.

Earnings Call Information

Urologix will host a conference call with the financial community to discuss fiscal 2012 third quarter results on Thursday, April 26, 2012 at 4:00 p.m. Central Daylight Time. To listen to the call, please dial 1-866-783-2137 and enter the Participant Passcode 31215645 at least 10 minutes prior to the call. A live webcast of the call will be available through the investor relations section of the Company’s website at www.urologix.com and available for replay approximately two hours after the completion of the call.

About Urologix

Urologix, Inc., based in Minneapolis, develops, manufactures, markets and distributes minimally invasive medical products for the treatment of obstruction and symptoms due to Benign Prostatic Hyperplasia (BPH).  Urologix’ Cooled ThermoTherapy™ produces targeted microwave energy combined with a unique cooling mechanism to protect healthy tissue and enhance patient comfort.  The Cooled ThermoTherapy™ product line includes the CoolWave® and Targis® Control Units and the CTC Advance® and Targis® catheter families.  The Prostiva® RF Therapy System distributed by Urologix delivers radio frequency energy directly into the prostate destroying prostate tissue, reducing constriction of the urethra, and thereby relieving BPH voiding symptoms.  Both of these products provide safe, effective and lasting relief of the symptoms and obstruction due to BPH. Prostiva® is a registered trademark of Medtronic, Inc., used under license.  All other trademarks are the property of Urologix.

Forward Looking Statements

This press release contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate” or “continue” or comparable terminology are intended to identify forward-looking statements. Such forward looking statements include, for example, statements about the effectiveness of the Company’s sales and marketing strategies, the Company’s future revenue and operating performance, or about the development and marketing of new products. The statements made by the Company are based upon management’s current expectations and are subject to certain risks and uncertainties that could cause the actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include market conditions and other factors beyond the Company’s control and the risk factors and other cautionary statements described in the Company’s Annual Report on Form 10-K for the year ended June 30, 2011 and other documents filed with the Securities and Exchange Commission.

Contact: Brian J. Smrdel, Chief Financial Officer, (763) 475-7696

Urologix, Inc.

Statements of Operations

(Unaudited, in thousands, except per share data)

	Three Months Ended March 31,						Nine Months Ended March 31,
	2012			2011			2012			2011
Sales	$	4,735		$	2,982		$	12,530		$	9,655
Cost of goods sold		2,334			1,370			6,425			4,366
Gross profit		2,401			1,612			6,105			5,289
Costs and expenses:
Sales and marketing		1,875			1,383			4,914			3,890
General and administrative		730			656			2,506			2,136
Research and development		543			553			1,612			1,655
Amortization of identifiable intangible assets		26			6			65			18
Total costs and expenses		3,174			2,598			9,097			7,699
Operating loss		(773	)		(986	)		(2,992	)		(2,410	)
Interest income/(expense)		(169	)		—			(438	)		1
Foreign currency exchange gain (loss)		—			—			(4	)		—
Loss before income taxes		(942	)		(986	)		(3,434	)		(2,409	)
Income tax expense (benefit)		27			(3	)		38			(6	)
Net loss	$	(969	)	$	(983	)	$	(3,472	)	$	(2,403	)
Net loss per common share--basic	$	(0.07	)	$	(0.07	)	$	(0.24	)	$	(0.17	)
Net loss per common share--diluted	$	(0.07	)	$	(0.07	)	$	(0.24	)	$	(0.17	)
Weighted average number of common shares outstanding--basic		14,778			14,575			14,723			14,546
Weighted average number of common shares outstanding--diluted		14,778			14,575			14,723			14,546

Urologix, Inc.

Balance Sheets

(Unaudited, in thousands)

	March 31, 2012			June 30, 2011
ASSETS
Current assets:
Cash and cash equivalents	$	1,857		$	3,061
Accounts receivable, net		2,375			1,358
Inventories		1,700			1,127
Prepaids and other current assets		255			249
Total current assets		6,187			5,795
Property and equipment:
Property and equipment		11,979			11,691
Less accumulated depreciation		(11,077	)		(10,830	)
Property and equipment, net		902			861
Other intangible assets, net		2,331			102
Goodwill		3,148			—
Inventories		469			—
Other assets		5			5
Total assets	$	13,042		$	6,763
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	2,740		$	741
Accrued compensation		832			454
Deferred income		12			21
Short-term deferred acquisition payment		2,224			—
Other accrued expenses		670			541
Total current liabilities		6,478			1,757
Deferred Tax Liability		25			—
Deferred income		—			9
Long-term deferred acquisition payment		4,665			—
Other accrued liabilities		122			151
Total liabilities		11,290			1,917
Shareholders’ equity:
Accumulated other comprehensive income		1			—
Common stock		147			145
Additional paid-in capital		115,107			114,732
Accumulated deficit		(113,503	)		(110,031	)
Total shareholders’ equity		1,752			4,846
Total liabilities and shareholders’ equity	$	13,042		$	6,763

Urologix, Inc.

Condensed Statements of Cash Flows

(Unaudited, in thousands)

	Nine Months Ended March 31,
	2012			2011
Operating Activities:
Net loss	$	(3,472	)	$	(2,403	)
Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation and amortization		518			443
Employee stock-based compensation expense		277			284
Provision for bad debts		26			(41	)
Loss on disposal of assets		15			12
Accretion expense on deferred acquisition payment		438			—
Deferred income taxes		25			—
Change in operating items, net of acquisition:
Accounts receivable		(1,043	)		71
Inventories		7			(212	)
Prepaid and other assets		(6	)		153
Accounts payable		1,999			214
Accrued expenses and deferred income		460			(221	)
Net cash used for operating activities		(756	)		(1,700	)
Investing Activities:
Purchase of property and equipment		(40	)		(213	)
Purchase of intellectual property		(8	)		(3	)
Acquisition of business		(500	)		—
Net cash used for investing activities		(548	)		(216	)
Financing Activities:
Proceeds from stock option exercises		100			4
Net cash provided by financing activities		100			4
Net decrease in cash and cash equivalents		(1,204	)		(1,912	)
Cash and cash equivalents:
Beginning of period		3,061			5,702
End of period	$	1,857		$	3,790
Supplemental cash-flow information
Income taxes paid during the period	$	12		$	6
Net amount of inventory transferred to property and equipment	$	242		$	128
Non-cash consideration for acquisition	$	6,465		$	—

EX-99.2

EXHIBIT 99.2

Question-and-Answer Portion of
Urologix, Inc. Earnings Conference Call
Relating to the Quarter Ended March 31, 2012

April 26, 2012

Q: My question is: your current ratio now is negative for the first time, although your cash flow is positive for this quarter just because of the deferred payments, what’s going to happen in six months when these bills are due if you continue to lose money each quarter?

A [S. Warren]: Thanks for the question. We, as we’ve shared in the past, are evaluating funding opportunities, as well as being very thoughtful about expense management, and are looking very carefully at the options. We have every intention of protecting this franchise and are acting accordingly.

[Clarification: The Company also has a revolving line of credit with Silicon Valley Bank for up to $2.0 million, subject to a defined borrowing base. The Company may borrow under this line of credit to fund future capital needs.]

_________________

Q: I just have a quick question on the Prostiva line business. Could you just detail what caused the slower than expected turn around, what’s causing I should say, and what are some of the things you’re doing to improve that business?

A [S. Warren]: Well, there are two things I think are most directly impacting where we are versus where we expected to be. One has been the disruption we mentioned in one region. But, there has also been a case of a fairly large book of business that has taken us longer to get reinvigorated than we’d originally anticipated in terms of our ability, through our field force, to accomplish that integration transition and to stimulate what we think is some very significant unmet need.

Q: So the Prostiva integration to the Urologix platform, is that not complete yet? When you say integration, can you just expand on that a little bit?

A [G. Fluet]: So there are really two primary phases with the integration. One is the integration of the sales and marketing team, through the initial transition of the distribution and sales of the product line – and that’s all been completed. We have Prostiva on our mobile vans, our sales representatives have been trained in the Prostiva technology, and likewise, the sales representatives from Medtronic that came over have been trained in our Cooled ThermoTherapy product. There is continuing integration work going on per the transition plan and the agreement to transition over both the manufacturing supply chain, as well as the regulatory registrations – and that’s all on track. So there’s an element to it from a sales and distribution standpoint that’s complete and then an ongoing operational transition that’s scheduled to occur over this first year of the agreement.

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And then regarding the turnaround in the Prostiva business: the business was a declining business and we knew it would take some effort to turn it around and return it to a growth path. That has taken a little longer than we expected. Some of that is because there were a number of customers that had ordered and due to the ordering pattern, they have not come back online to work through the inventory they have on-hand. And so that’s one where we’re expecting a number of those customers to come back on over the next couple of quarters. But that part of the turnaround has inhibited the rebound in the business.

Q: Thank you, that’s very helpful color and I appreciate that. So, if you just take a step back and look at a big picture view, looks like it is $500,000 lower guidance than you had anticipated. In the grand scheme of things, if your opportunities that you outline, Stryker, are real – it looks like there is a pretty good opportunity in front of you once you have both the Prostiva and the CTT business on the platform and the sales force is fully trained and fully productive.

A [S. Warren]: I agree with that and certainly in a variety of ways, we’re seeing evidence of that. It is just not apparent company-wide at this point.

Q: My last question would be on the CTT side. Is that business on its own growing? Or would that sort of follow the pattern of when you have both the products completely integrated?

A [G. Fluet]: The Cooled ThermoTherapy business, that was really stable from Q2 [FY2012] to Q3 [FY2012] – we grew very slightly in that. So that was encouraging as this quarter has typically been seasonally a more challenging quarter with a reset in patient co-pays and deductibles at the beginning of the year even within the Medicare program. So we saw relative strength in the Cooled ThermoTherapy business compared to prior years on a sequential basis and then year-over-year it slightly increased as well. So we view that as a measured improvement in the Cooled ThermoTherapy business.

_________________

Q: You mentioned that Boston [Scientific] is leaving the market. Do you have any sense of how that will impact you? Obviously, it’s positive. But do you expect that some people will want to replace their Boston product with yours? Or it will just be the ability to gain more market share over time as new customers come into the business?

A [S. Warren]: We know many of those customers and are pursuing them actively. As you may recall, two years ago because of the [Boston] recall, we had very good visibility into a number of those accounts and their utilization patterns. So we are actively pursuing those. I can’t tell you ultimately where we will land in terms of total market share as a result of that, but we are certainly seeing some encouraging activity in the field presently.

As you know, there are several alternatives that a urologist can turn to. There will be three microwave devices and the one RF therapy device. We happen to have the two devices we believe are the most efficacious and I think that urologists are certainly recognizing that high energy microwave is advantageous. When we talk about the “New Urologix,” much of changing the discussion with the urologist is aimed at taking advantage of the efficacy and durability data we published a year ago, which really dramatizes the capabilities of Cooled ThermoTherapy. All that to say that we are very actively pursuing that business, we’re familiar with a number of those customers and the early returns are encouraging. The effective end of life [for the Boston product] is June 30 of this year.

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