Given Imaging Reports Third Quarter 2012 Results
Given Imaging (NASDAQ:GIVN)
Today : Tuesday 6 November 2012
Given Imaging Ltd. (NASDAQ: GIVN) today announced financial results for the third quarter ended September 30, 2012.
Revenues were $45.4 million in the third quarter of 2012, compared to $44.7 million in the third quarter of 2011. Excluding the negative impact of foreign currency translation, third quarter 2012 revenues were $46.3 million, a four percent increase compared to the same period last year.
Gross margin on a GAAP basis in the third quarter of 2012 was 77.5 percent, compared to 77.1 percent in the third quarter of 2011. Gross margin on a non-GAAP basis in the third quarter of 2012 was 78.3 percent, compared to 77.6 percent in the third quarter of 2011. The increase in non-GAAP gross margin is attributable mainly to improved gross margins of the functional diagnostic products.
On a GAAP basis, operating profit was $6.5 million, compared to $4.1 million in the third quarter of 2011. Non-GAAP operating profit was $8.5 million, compared to $5.8 million in the third quarter of 2011. On a GAAP basis, net income for the third quarter of 2012 increased 58 percent to $6.0 million, or $0.19 per share, compared to $3.8 million, or $0.12 per share, in the same quarter of last year. On a non-GAAP basis, net income for the third quarter of 2012 increased 47 percent to $7.9 million, or $0.25 per share on a fully diluted basis, compared to $5.3 million, or $0.17 per share on a fully diluted basis, in the third quarter of 2011.
A reconciliation of GAAP results to non-GAAP results is attached.
Cash and cash equivalents, short-term investments and marketable securities on September 30, 2012 totaled $119.1 million.
"We are pleased that our focus on increasing profitability resulted in a significant increase in third quarter net income. On the top line we achieved, a solid six percent increase in revenues in the Americas region which was driven by sales of our functional GI diagnostics products. This is the third consecutive quarter of revenue growth in the region, which represents our largest market," said Homi Shamir, president and CEO, Given Imaging. "We remain committed to enhance the growth of our company as evidenced by our recent acquisition of the assets of the SmartPill Corporation. We continue to explore additional strategic alternatives that will help make Given Imaging an even stronger company for the benefit of our customers and shareholders."
Recent Developments
PillCam® COLON 2 U.S. Regulatory Update
The Company recently had a positive meeting with the U.S. Food and Drug Administration (FDA) to discuss the process for market clearance of the PillCam COLON 2 capsule for the visualization of the colon. Based on the meeting, the company plans to submit this product for FDA clearance in the next few weeks under the direct de novo route.
PillCam COLON 2 Regulatory Submission in Japan
In September, the Company announced that it filed for PillCam COLON 2 regulatory approval in Japan. The submission to the Japanese Pharmaceuticals and Medical Devices Agency (PMDA) includes the results of the PillCam COLON 2 pivotal clinical trial which was designed to evaluate the PillCam COLON 2 as a tool to visualize the mucosal layer of the colon for pathologies including colorectal cancer.
SmartPill Acquisition
In October, Given Imaging announced the acquisition of the assets related to the SmartPill® GI Monitoring System from The SmartPill Corporation, a U.S.-based company, for $6 million and an earn-out component, based on sales of the SmartPill product between 2013 and 2016. The SmartPill System measures gastric emptying and total GI (stomach, small bowel and colon) transit times and is used to evaluate motility disorders like gastroparesis and constipation. A Category 1 CPT code with a value of $873.25 becomes effective on January 1, 2013 for the SmartPill Wireless Motility Capsule Procedure.
Strategic Alternatives Evaluation
Given Imaging recently announced that it is evaluating a range of strategic options, including preliminary non-binding indications of interest received from a number of parties relating to a possible merger or sale of the Company. The Company intends to continue to actively explore these and other alternatives, including a strategic alliance or additional acquisitions. The Board of Directors has appointed an executive committee consisting of the Chairman and two independent directors to oversee the process. The investment banking firm Barclays is assisting the Company in this process.
Third Quarter 2012 Revenue Analysis
Revenues in the Americas region in the third quarter of 2012 increased by six percent to $28.6 million from $26.9 million in the same period last year. Revenues in the EMEA region decreased by six percent to $10.1 million compared to $10.7 million in the same period last year due to lower PillCam sales in the southern European countries and the weakness of the Euro. Excluding the negative impact of foreign currency translation, revenues in the EMEA region increased by $0.3 million, or three percent compared to the same period last year. APAC revenues decreased by six percent to $6.6 million, compared to $7.1 million in the same period in 2011.
Worldwide PillCam SB sales were 58,200 capsules in the third quarter of 2012, compared to 58,900 capsules in the same period last year. PillCam SB sales in the Americas region were 35,000 capsules, compared to 34,800 capsules in the third quarter last year. PillCam SB sales in the EMEA region increased by two percent to 14,100 capsules, compared to 13,800 capsules in the third quarter of 2011, while PillCam SB sales in the APAC region decreased by 10 percent to 9,200 capsules, compared to 10,200 capsules in the same period in 2011, due to lower PillCam sales in China.
Worldwide sales of functional GI diagnostics products including the Bravo pH Monitoring System, Digitrapper pH-Z and ManoScan increased by five percent to $13.2 million in the third quarter of 2012 compared to $12.6 million in the same period last year. In the Americas region, functional diagnostics products revenue increased by 15% in the third quarter of 2012 to $10.8 million compared to $9.4 million in the same period last year. Functional GI diagnostics revenue in the EMEA region increased by four percent to $1.8 million, while revenue in the APAC region was $0.6 million.
Supplemental third quarter data can be found at www.givenimaging.com in the Investor Relations section.
Nine Month Financial Results
For the nine month period ended September 30, 2012, revenues increased by two percent to $131.8 million compared to $129.5 million in the same period last year. Revenues in the Americas region in the first nine months of 2012 increased by eight percent to $83.9 million from $78 million in the same period last year. Revenues in the EMEA region decreased by seven percent to $31.6 million compared to $33.8 million in the same period last year due to lower PillCam sales in the southern European countries and the weakness of the Euro. Excluding the negative impact of foreign currency translation, revenues in the EMEA region increased by $0.6 million, or two percent compared to the same period last year. EMEA revenues in the first nine months of 2012 denominated in local currencies increased by two percent compared to the same period last year. APAC revenues decreased by eight percent to $16.3 million, compared to $17.7 million in the same period in 2011. The decrease is attributable to weakness in sale of functional GI diagnostics products in the Far East and to lower capsule sales in the first half of 2012 in Australia and Japan.
Worldwide PillCam SB sales increased by one percent to 173,900 capsules in the first nine months of 2012, compared to 171,800 capsules in the same period last year. PillCam SB sales in the Americas region were approximately 105,200 capsules, compared to the 104,400 capsules that were sold in the first nine months of 2011. PillCam SB sales in the EMEA region increased by two percent to 44,700 capsules, compared to 44,000 capsules in the first nine months of 2011, while PillCam SB sales in the APAC region increased by three percent to 24,000 capsules, compared to 23,400 capsules in the same period in 2011.
Worldwide sales of Given Imaging's functional GI diagnostics products increased by 13 percent to $38.2 million in the first nine months of 2012 compared to $33.8 million in the same period last year. In the Americas region, functional GI diagnostics product revenue increased by 20% in the first nine months of 2012 to $30.7 million compared to $25.5 million in the same period last year due to higher sales of Sierra Scientific products. Functional diagnostics revenue in the EMEA region were $5.2 million, slightly lower than the first nine months of 2011, while revenue in the APAC region was $2.2 million compared to $2.7 million in the same period in 2011.
Gross margin on a GAAP basis in the first nine months of 2012 was 76.8 percent, compared to 76.4 percent in the same period in 2011. Gross margin on a non-GAAP basis in the first nine months of 2012 was 77.6 percent, compared to 77.0 percent in the same period in 2011.
On a GAAP basis, operating profit was $10.2 million in the first nine months of 2012, compared to $8.1 million in the same period in 2011. Non-GAAP operating profit was $16.1 million, compared to $14.5 million in the same period in 2011. On a GAAP basis, net income for the first nine months of 2012 increased 46 percent to $9.2 million, or $0.30 per share, compared to $6.4 million, or $0.20 per share, in the same period last year. On a non-GAAP basis, net income for the first nine months of 2012 increased 20 percent to $14.9 million, or $0.48 per share on a fully diluted basis, compared to $12.4 million, or $0.40 per share on a fully diluted basis, in the same period in 2011.
2012 Guidance
The Company is reaffirming its revenue guidance for fiscal year 2012. The Company expects its 2012 revenues to be between $185 million and $190 million. The Company expects that its 2012 earnings per share to be between $0.45 and $0.55 on a GAAP basis, and between $0.70 and $0.80 on a non-GAAP basis.
Conference Call / Webcast Information
Given Imaging will host a conference call on Wednesday, November 7, 2012 at 9:00am ET, 4:00pm Israel time to discuss third quarter 2012 financial results. To participate in the teleconference, please dial the following numbers fifteen minutes before the call is scheduled to begin: U.S. and Canada, 1-888-297-0339; Israel, 1-80-924-5905. Callers in other countries should dial 719-325-2492. The call will also be webcast live at www.givenimaging.com.
