LOVERLY RPT! CYBX Cyberonics Reports Record Revenues and Profitability in Fiscal 2009
* On Wednesday June 3, 2009, 5:00 pm EDT
Company Achieves Record Quarterly Revenue of $38.6 million
HOUSTON, Texas, June 3 /PRNewswire-FirstCall/ -- Cyberonics, Inc. (Nasdaq: CYBX - News) today announced results for the fourth quarter and fiscal year ended April 24, 2009.
Annual highlights
Results for fiscal 2009 compared to fiscal 2008 included:
* Net sales of $143.6 million in fiscal 2009, a record for the company, and an annual increase of 18%;
* Net sales attributable to the epilepsy indication of $140.0 million compared to $115.3 million in fiscal year 2008, a 21% increase;
* Gross margin of 86.0%, compared with 82.6% in the prior year;
* Income from operations of $19.0 million compared with a loss of $8.2 million in the prior year;
* Operating cash flow of $24.6 million and debt reduction of $62.7 million during fiscal 2009.
Quarterly highlights
Results for the fourth quarter of fiscal 2009 compared to the fourth quarter of fiscal 2008 included:
* Net sales of $38.6 million, a 14% increase from $33.9 million, with foreign currency translations reducing fourth quarter sales in fiscal 2009 by an estimated $1.3 million. On a constant currency basis, the increase was an estimated 18%;
* Net US product sales attributable to the epilepsy indication increased by an estimated $5.2 million, or 20%, to $30.7 million in fiscal 2009;
* Income from operations of $6.7 million represented 17.4% of net sales, compared with $3.0 million in the fourth quarter of the prior year;
* International unit sales attributable to the epilepsy indication grew by 8%;
* Net income of $6.5 million (including a net gain of $0.6 million on early extinguishment of debt adjusted for tax impact), compared with net income of $2.9 million.
Sales
Worldwide net sales for fiscal 2009 were $143.6 million, compared to $121.2 million in fiscal 2008, an increase of 18%. On a constant currency basis, the year-over-year sales increase was an estimated 20%.
US net product sales attributable to the epilepsy indication in fiscal 2009 increased by an estimated $23.7 million, or 26%, to $113.4 million.
International net sales increased in fiscal 2009 to $27.2 million, up from the $26.3 million reported in fiscal 2008.
Gross profit
The gross profit for fiscal 2009 represented 86.0% of net sales compared to 82.6% in fiscal 2008, due to a combination of higher prices, increased production levels, and improved manufacturing efficiencies.
Operating expenses
Operating expenses for the fourth quarter of fiscal 2009 totaled $26.8 million, and for fiscal 2009 totaled $104.6 million; for the comparable periods of fiscal 2008 operating expenses were $25.0 million and $108.4 million, respectively. The fourth quarter of fiscal 2008 included credits of $1.3 million for insurance recoveries.
Equity compensation expense for the quarter and the fiscal year ended April 24, 2009 were $2.3 million and $9.7 million respectively. For the comparable periods of fiscal 2008, the amounts were $2.7 million and $11.7 million, respectively.
Operating income (loss)
The company reported operating income of $6.7 million in the recently completed quarter, and operating income for fiscal 2009 of $19.0 million, compared with operating income of $3.0 million, and an operating loss of $8.2 million, respectively, in the comparable periods of fiscal 2008.
Debt repurchase / other income
During the recently completed quarter, the company repurchased $2.5 million of its outstanding convertible debt for total cash consideration of $1.9 million, and recorded a net gain of approximately $0.6 million, including the impact of tax and the accelerated amortization of deferred issuance costs. Over the last six fiscal quarters, the Company has retired a total of $70.2 million of debt, including $62.7 million of convertible debt. Subsequent to the end of the fiscal year, the company repurchased an additional $3.6 million of convertible debt for total cash consideration of $3.1 million, and expects to report a net gain of approximately $0.5 million in its fiscal 2010 first quarter relating to this repurchase. Convertible debt outstanding as of the date of this release totals $58.7 million.
Net income (loss)
The company reported net income of $6.5 million, or $0.22 cents per diluted share, for the fourth quarter, and net income of $26.7 million, or $0.61 cents per diluted share, for fiscal 2009. For fiscal 2008, the company reported fourth quarter net income of $2.9 million, or $0.11 cents per share, and an annual net loss of $10.3 million, or $0.39 cents per share. Although the gain on early extinguishment of the convertible debt is included in the calculation of net income for fiscal 2009, it is excluded from the calculation of net income per diluted share as per the applicable accounting rules.
Balance sheet and cash flow
The company reported operating cash flow of $24.6 million for the year ended April 24, 2009. Cash balances were $66.2 million at year end, compared with total debt outstanding of $62.3 million.
Results and objectives
"The end of fiscal 2009 represents the successful completion of the financial and commercial phase of the turnaround at Cyberonics," stated Dan Moore, President and Chief Executive Officer. "During the last two years, the Cyberonics team accomplished a number of key objectives including:
* Returning the company to profitability and positive cash flow;
* Establishing consistent and growing operating profitability;
* Restoring growth to our core epilepsy business;
* Strongly improving our gross profit margins;
* Restructuring the organization, both domestically and internationally;
* Stabilizing the balance sheet and reducing debt;
* Launching several new products, including the Demipulse(TM) generator, two new Perenia(TM) leads and the Generator Field Upgrader;
* Significantly enhancing the R & D effort to bring new medical devices to patients with epilepsy, and;
* Making significant progress in resolving legal issues.
"Having achieved our short-term objectives, the team is fully committed to realizing our medium and long-term growth and profitability objectives. We see significant opportunities to grow our epilepsy business, both in the US and internationally, and our performance during the last two years provides evidence of the substantial growth prospects in our core epilepsy business. We have put in place or have underway the key elements to realize this market potential and thereby achieve our longer-term growth objectives. Our focus now is on increasing new patient adoption in the US market, as well as international growth and expansion. Additionally, we believe the increasing replacement activity is likely to make an important contribution to our future results.
"The restructuring of our international team is complete and we are pleased that all regions showed growth in the fourth quarter. We expect this growth to continue into fiscal 2010. Our strong commitment to making VNS available in Japan is evidenced by the recent announcement of a distribution agreement with Nihon Kohden Corporation, and efforts to obtain regulatory approval continue.
"Our long term commitment to leadership in the epilepsy device market is also apparent in our increased emphasis on R & D initiatives led by Dr. Milton Morris," Mr. Moore continued. "Our R & D spending on epilepsy increased in fiscal 2008 and 2009 and is budgeted to receive even greater resources in fiscal 2010. We have signed several collaboration agreements around seizure detection and improving the efficacy of our devices.
"Our goals for our epilepsy business remain unchanged, and include consistent global volume growth in the range of 10% to 20% and the achievement of an operating margin of 25% in fiscal 2011. The significant improvements to our balance sheet and operating cash flow provide the company with increased flexibility to accelerate its vision."
Mr. Moore concluded, "During fiscal 2009, the entire Cyberonics team contributed significantly to reinvigorating our growth, and we look forward to fiscal 2010 with confidence and enthusiasm."
Fiscal 2010 guidance
Net sales are anticipated to be in the range of $157 million to $161 million on a constant currency basis.
The company anticipates the gross profit margin to be materially unchanged from fiscal 2009 at 86%, and that operating income will be in the range of $24 million to $27 million.
Additional details will be provided during the upcoming conference call and in the accompanying presentation slides, as detailed below.
Updated fourth quarter and fiscal 2009 results conference call instructions
A conference call to discuss fiscal 2009 results will be held at 9:00 AM EDT on Thursday, June 4, 2009. To listen to the conference call live by telephone dial 877-313-8035 (if dialing from within the U.S.) or 706-679-4838 (if dialing from outside the U.S.). The conference ID is 99008476. Presentation slides will now be available on-line at www.cyberonics.com no later than 8:00 AM EDT on Thursday, June 4, 2009. A replay of the conference call will be available approximately two hours after the completion of the conference call by dialing 800-642-1687 (if dialing from within the U.S.) or 706-645-9291 (if dialing outside the U.S.). The replay conference ID access code is 99008476.
The replay will be available for one week on the above number, and subsequently on the Company's website for one year.
About VNS Therapy(TM) and Cyberonics
Cyberonics, Inc. (NASDAQ:CYBX - News) is a medical technology company with core expertise in neuromodulation. The company developed and markets the Vagus Nerve Stimulation (VNS) Therapy(TM) System, which is FDA-approved for the treatments of epilepsy and treatment-resistant depression. The VNS Therapy System uses a surgically implanted medical device that delivers electrical pulsed signals to the vagus nerve. Cyberonics markets the VNS Therapy System in selected markets worldwide.
Additional information on Cyberonics, Inc. and VNS Therapy(TM) is available at www.cyberonics.com and www.vnstherapy.com.
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