SenoRx Reports Record Gross Margin in First Quarter 2009 On Revenue Growth of 20.5 Percent
Press Release
Source: SenoRx, Inc.
On Wednesday May 6, 2009, 4:15 pm EDT
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Companies:SenoRx, Inc.
IRVINE, Calif., May 6, 2009 (GLOBE NEWSWIRE) -- SenoRx, Inc. (Nasdaq:SENO - News) today reported financial results for its first quarter ended March 31, 2009. Revenue for the quarter increased 20.5 percent to $12.9 million, compared with $10.7 million in the first quarter a year ago. Gross profit increased 36.6 percent to $9.1 million, or a record 70.3 percent of revenue, up from $6.6 million, or 62.1 percent of revenue, in the first quarter of 2008.
SenoRx reported a significantly reduced operating loss for the first quarter of $879,000, a decline of 60.6 percent compared with $2.2 million in the same period last year. The operating loss for the quarter included stock-based compensation expense of $675,000, compared with $554,000 in the first quarter of 2008. Also included in the results for the first quarter were attorney and related costs incurred as a result of ongoing patent litigation with Hologic of $264,000 compared with $765,000 in the first quarter last year.
Interest expense for the first quarter increased to $57,000, compared to $24,000 a year ago. Interest income decreased to $8,000 compared to $259,000 from the first quarter of 2008, due to lower average cash balances and lower interest rates. Cash balances were lower during the quarter compared with a year ago due to continued usage of our cash to fund operations and patent litigation.
Net loss for the first quarter of 2009 was $928,000 or 5 cents per share, compared with $2.0 million or 12 cents per share in the same period last year. Excluding patent litigation and non-cash charges for stock-based compensation, net income was $10,000 for the quarter compared to a net loss of $675,000 for the same period last year.
Lloyd Malchow, SenoRx President and Chief Executive Officer, said, "Despite the challenging global economic environment, our first quarter results continued to post encouraging growth in both revenues and gross margin. Therapuetic disposable revenues continued its strong growth trend, increasing to $2.9 million compared with $617,000 in the first quarter a year ago, when we began the full commercial launch of our Contura MLB, and increased 35.3 percent sequentially over the fourth quarter of 2008. Revenue from biopsy disposables increased 13.5 percent to $5.5 million, as the installed base of EnCor systems continued to grow to 814 from 594 in the first quarter a year ago and from 776 at the end of 2008. As we expected, biopsy capital equipment revenues softened, posting a 35.1 percent decrease to $825,000 from $1.3 million in the first quarter last year, largely reflecting global credit and currency issues that are impacting capital purchases both in the U.S. and around the world."
Malchow continued, "While revenues in total were impacted by global economic issues, this was offset by strong growth in our product gross margin which was ahead of our expectations. Gross margin in the first quarter was a record 70.3 percent, compared with 62.1 percent in the first quarter last year, and 69.1 percent in the fourth quarter of 2008. The increase primarily reflects improvement in the sales mix due to a growing contribution from higher-margined Contura MLB sales, along with increasing operating leverage on our manufacturing overhead, stemming from increased sales volume and inventory unit production."
SenoRx finished the quarter in a solid financial position with cash and cash equivalents of $15.0 million and minimal debt. SenoRx continues to maintain a credit facility that allows it to borrow up to $10.0 million tied to growth in receivables and inventories, of which $7.6 million was available for advance as of March 31, 2009. Cash flow during the quarter, including litigation expense, was essentially neutral, and the company did not draw upon this line of credit.
2009 Outlook
If economic conditions continue to impact capital equipment revenues, SenoRx expects it could be more challenging to achieve the top of its projected revenue range. However, the company believes that modestly lower revenues could be offset by encouraging trends in expected gross margin, resulting in no material change in gross profit. As a result, SenoRx is making no change at this time to its estimate that revenues for 2009 will be in a range of $56 to $59 million, with product gross margin expected to be at least 68 percent. SenoRx continues to believe it will be cash flow positive for the year, excluding patent litigation expenses.
In addition, SenoRx continues to estimate that deferred compensation and equity-based compensation expense will range between $2.4 million and $2.8 million for 2009. These ranges could be materially impacted based upon the number of options granted and fluctuation in the market price of the company's common stock.
With regard to the Hologic matter, a ruling was issued on February 18, 2009 relating to the Markman claims construction hearing. We are waiting for a response from the Court to a joint stipulation, which was filed by both parties on April 14, 2009, requesting the Court allow summary judgment briefing and argument as to certain validity and infringement issues. While it remains difficult to forecast patent litigation expense for the full year, SenoRx estimates that patent litigation costs in the second quarter of 2009 will range between $450,000 and $600,000.
