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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6 K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
EDAP TMS S.A. Files
EDAP TMS S.A. Reports 2006 Third Quarter Results
November 8, 2006
EDAP TMS S.A.
Parc Activite La Poudrette Lamartine
4/6 Rue du Dauphine
69120 Vaulx-en-Velin - France
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [ ]
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [ ] No [X]
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EDAP TMS S.A. REPORTS 2006 THIRD QUARTER RESULTS;
EDAP AND HEALTHTRONICS IN DISCUSSIONS REALIGNING US MARKET ENTRY;
ABLATHERM RPP SUCCESS GROWING EUROPE;
LITHOTRIPSY RETURNS TO PROFITABILITY - SOLID CASH POSITION FOR CONTINUED GROWTH
LYON, France, Nov. 7 /PRNewswire-FirstCall/ -- EDAP TMS S.A. (Nasdaq: EDAP),
today reported results for the third quarter and first nine months ended
September 30, 2006.
Hugues de Bantel announced, "We are reporting two very different kinds of
news. In Europe, the major HIFU market today, EDAP continues to successfully
lead the growth and adoption of HIFU. Centers, treatments and RPP activity are
rising in response to our growth initiatives. Regarding additional markets for
future years, we have recently been informed by HealthTronics that they intend
to discontinue the partnership in the United States. This comes as a surprise to
us and is disappointing to us and to our shareholders. The US is clearly an
important future market in the coming years. EDAP will now aggressively take
action to address this change."
The Company immediately implemented a US action plan to manage the
transition process:
* The Company will hire a US consultant to review the US market entry
program and provide recommendations.
* EDAP is currently in discussions with HealthTronics regarding the
ongoing Ablatherm clinical trials in the United States and the
position of the parties under the Distribution Agreement dated
February 2004 between the Company and HealthTronics, including the
Company's legal remedies under that Agreement.
* Should the collaboration contemplated by the Distribution Agreement
terminate, EDAP intends to actively seek another partner to continue
toward the goal of obtaining regulatory approval for the Ablatherm in
the United States. Both EDAP and HealthTronics have expressed their
wish to create a smooth transition and clinical trials are expected to
progress in the interim. The trials are currently suspended for
software updates and are expected to resume shortly.
* While this represents a disruption to the anticipated schedule, EDAP's
business plan does not contemplate revenue from the marketing of the
Ablatherm in the United States in the immediate future as the trials
are a multiyear enterprise. EDAP remains firmly committed to entering
the U.S. market. In the event of a termination of the Distribution
Agreement, EDAP retains all rights, data and trial related property
associated with the program.
* The Company intends no change in the use of the proceeds obtained
through the PIPE transaction as they are dedicated to the development
of our Ablatherm RPP business in Europe.
"Today, EDAP is more committed than ever to focus its efforts on confirming
the growing RPP Ablatherm HIFU business in Europe," stated de Bantel. "We will
address the US program to ensure we enter this important market. In the interim,
we continue, as previously planned, to grow HIFU in markets where it is already
approved, most notably Europe where EDAP is achieving success."
The company's HIFU division continued to expand treatments in its
Revenue-Per-Procedure (RPP) business as well as grow the number of sites
offering therapy. Confirming the company's success transitioning to recurring
revenues from RPP treatments and services, total revenues in the first 9 months
increased in the HIFU division in spite of decreased revenues from device sales.
EDAP's marketing program showed early success driving increased HIFU awareness
and demand in European markets. Additional treatment growth is expected and
already visible as the company continues to transition to treatment sales in its
revenue focus. The company's lithotripsy business grew and returned to operating
profitability on strong sales.
The company added six new Ablatherm sites in the third quarter bringing the
total trained centers to 123 as compared to 80 a year ago. Since September 30,
already an additional six sites have launched or are launching with more
scheduled throughout the rest of 2006. In what is traditionally the company's
slowest quarter due to European procedure scheduling trends, the company
reported approximately 700 treatments, level to the second quarter as opposed to
the typical seasonal drop seen in prior years. Total Ablatherm treatments now
approach 11,000 as compared to the 10,000 mark passed in the spring of this
year.
"The third quarter demonstrates EDAP's marketing program is growing HIFU
demand and sustainable RPP revenue trends," said Hugues de Bantel, CEO of EDAP.
"The company has a number of initiatives still to launch, including the hiring
of several additional key sales and support positions, but we clearly see
success as we continue to address the growing market for HIFU in Europe.
Treatments in the third quarter were strong compared to prior years. This is an
acceleration from the success of our marketing efforts -- patients are
increasingly seeking Ablatherm-HIFU therapy. EDAP is the only major HIFU company
with the clinical credibility, installation base, broad distribution networks
and, most importantly, dedicated funds to rapidly build HIFU as a minimally
invasive prostate cancer treatment, preserving quality of life, in Europe. We
are taking full advantage of this opportunity as the market is ready for
growth."
EDAP: EUROPEAN HIFU GROWTH ADVANCING UNDER EDAP; RPP ACTIVITY RISES
For the first nine months of 2006, HIFU revenues increased 5% reflecting the
shift from device sales to recurring service and RPP revenues as well as growth
in total HIFU demand. Revenues related to RPP treatments were up 69% year to
date to EUR 2.0 million. Services increased 72% to EUR 1.0 million due to a
larger installed base of equipment, greater sales of disposable supplies at sold
sites and upgrade sales. The revenue increase comes despite a 42% drop in
equipment sales invoices, per the company's transition plan from equipment sales
to RPP business that will ultimately reduce its dependence on straight device
sales.
"We are pleased to report our RPP business is not only making up the
difference in equipment sales, but could also in the mid-term provide for
revenue growth according to the goals we shared in previous reports," said de
Bantel. "We are also seeing a strong increase in services and disposables as
many of our sold sites exit their initial warranty period. Together, this
represents solid activity in HIFU as the market begins to grow in response to
EDAP's marketing initiatives focused on Europe."
EDAP - HIFU Division: Euros 000's
Year Revenues Gross Margin % Operating Income (Loss)
- --------------- ------------ --------------- -------------------------
Q3 2006 1,351 54% (326)
Q3 2005 1,432 51% (146)
YTD 2006 5,262 55% (540)
YTD 2005 5,033 49% (333)
RPP activity increased for the quarterly comparison in Germany, France,
Italy and treatments increased in the UK. The company launched its third German
mobile Ablatherm in response to heightened market activity and demand. RPP
treatments accounted for 188 sessions in the third quarter and 705 year to date
compared to 128 and 437 respectively in the same periods of 2005. Gross margins
improved to 55% compared to 49% for the year ago first nine months. The
improvement included increased RPP and services revenues as well as ongoing cost
efficiency gains.
Total HIFU revenues in the third quarter were down 4% compared to the prior
year, related to the shift of selling one Ablatherm device as opposed to two,
while revenues in RPP services and disposables grew substantially in the
comparable periods as the company's mix shifted to favor these recurring revenue
streams. Clinical expenses increased year over year as the company increased
funding of clinical works and development programs to further establish HIFU as
a primary treatment therapy for localized primary indication and post-radiation
recurrent prostate cancers. This clearly correlates to increasing conversion of
urologists to HIFU users based on its strong clinical results and appeal to
patients concerned about lifestyle post treatment.
Year-to-date marketing expenses increased from EUR 432,000 to EUR 827,000
related to the company's dedicated marketing programs to drive doctor and
patient awareness as well as increased activity related to medical congresses
and marketing as HIFU visibility has grown significantly in the past year
causing a corresponding increase in medical community interest at these events.
"The shift in our financial reports clearly demonstrates the commitment to
rapidly accelerate our marketing and scientific activities using dedicated funds
in advance of expected market gains, especially in growth of RPP revenues," said
de Bantel. "We see signs of success in key markets where we first activated
these programs and expect more growth ahead. These early indications show we are
definitely making full use of our opportunities today to build markets for the
future."
TMS: RETURNS TO OPERATING PROFITABILITY
The UDS division reported strong sales returning the division to
profitability for both the quarter and first nine month periods. Year to date
the company sold 30 pieces of equipment; service revenues remain steady. Gross
margin increased slightly to 32% in line with the company's normal range. The
division results include a slight increase in expenses related to marketing and
research programs to ongoing development programs. Backlog entering the fourth
quarter stands at 4 lithotripters.
TMS - UDS Division : Euros 000's
Year Revenues Gross Margin % Operating Income (Loss)
- --------------- ------------ --------------- -------------------------
Q3 2006 4,335 35% 276
Q3 2005 3,964 30% 120
YTD 2006 12,178 32% 106
YTD 2005 11,686 30% 209
CORPORATE: CASH POSITION STRONG FOR CONTINUED GROWTH FUNDING
Consolidated group revenue increased 5% year to date to EUR 15.4 million
reflecting the increases in RPP and services revenues and improved lithotripsy
sales. Consolidated gross margins increased to 42% versus 41% in the prior year
nine month period. Group expenses increased 17%, primarily related to growth in
marketing program activity for HIFU. Total company losses increased to EUR 2.3
million year to date compared to EUR 1.1 million in the prior year period. Of
the EUR 1.2 million increase in the year to date loss, EUR 559,000 is primarily
related to a potential exchange loss in currency changes and the difference of
EUR 647,000 is primarily related to investment in marketing and operations.
Marketing expenses were up to EUR 1.2 million compared to EUR 653,000 with the
primary increase related to HIFU activity building larger recurring revenue
streams based on increased treatment activity. Cash balances stood at EUR 10.5
million at September 30, 2006. Total cash used in operations for the third
quarter was EUR 360,000. Working capital in accounts payable net of receivables
increased by EUR 890,000. Corporate expenses were up 16% to EUR 1.3 million
related to increases in regulatory, legal, audit including Sarbanes Oxley fees
and other expenses.
The company also reports Olivier Missoffe resigned from his position on the
Board for personal reasons. The Board will announce a replacement member at a
future date. The Company thanks Mr. Missoffe for his service and support of
EDAP-TMS since 2002.
OUTLOOK
Hugues de Bantel, CEO of EDAP TMS, commented: "EDAP made significant
progress in Europe during the third quarter and continues to announce advances
as they occur. EDAP is well funded to take advantage of this market opportunity
to recruit the best and most progressive centers in major European markets as
they seek to offer patients additional options with fewer side effects in
treating prostate cancer. Our efforts to date in building the most comprehensive
clinical background on HIFU and accelerating our marketing programs are having a
positive effect, much of which relates to recurring revenue lines in the RPP
business. We are excited to see these markets unfold creating growth
opportunities ahead.
"The latest developments in our relationship with HealthTronics will likely
result in a delay in the Ablatherm approval process, and we intend to take the
opportunity to reclaim the US market as well as evaluate all strategic and
partnership opportunities as HIFU is today more broadly regarded as an important
and innovative choice for primary and radiation failure treatment of prostate
cancer and beyond.
"This year already demonstrates significant advances in major European
markets such as France, Germany, Italy and the U.K., all of which have a major
EDAP presence as the global leader. Additionally, the appeal of HIFU is driving
advances for EDAP in new markets, especially European countries like Norway,
Spain, Portugal and others in the process of launching services. EDAP and the
Ablatherm continue to advance on proven scientific results using documented and
repeatable techniques at centers in each country prior to the formal launch. Our
dedication to clinical and education programs showing the highly repeatable
outcomes rivaling standard therapies with low side effects has been well
received and continues to open doors for EDAP in current and future markets."
Conference Call and Webcast
The company will host a conference call to discuss the results and answer
questions from investors on Wednesday, November 8, 2006, at 12:00 noon Eastern
Time, 6:00 p.m. Paris Time. Investors may join the call live by dialing (866)
200-5830 from the United States or +1 (212) 659-4210 from international
locations and entering PIN code 241092#. Investors may also listen to the live
call online at http://www.edap-tms.com .
A replay will be available by telephone or online. To access the replay,
dial (866) 206-0173 or +1 (646) 216-7204 and enter access code 190287# beginning
one hour after the end of the call until November 18, 2006, or visit the
company's Web site at http://www.edap-tms.com .
About EDAP TMS S.A.
EDAP TMS S.A. develops and markets Ablatherm, the most advanced and
clinically proven choice for High Intensity Focused Ultrasound (HIFU) treatment
of localized prostate cancer. HIFU treatment is shown to be a minimally invasive
and effective treatment option with a low occurrence of side effects.
Ablatherm-HIFU is generally recommended for patients with localized prostate
cancer (stages T1-T2) who are not candidates for surgery or who prefer an
alternative option, or for patients who failed radiotherapy treatment. The
company is also developing this technology for the potential treatment of
certain other types of tumors. EDAP TMS S.A. also produces and commercializes
medical equipment for treatment of urinary tract stones using Extra-corporeal
Shockwave Lithotripsy (ESWL).
For more information on the Company, contact Halliburton Investor Relations
at (972) 458-8000, the Corporate Investor Relations Dept at +33 (0)4 78 26 40 46
or see the Company's Web sites at http://www.edap-tms.com and
http://www.hifu-planet.com .
In addition to historical information, this press release contains
forward-looking statements that involve risks and uncertainties. These include
statements regarding the Company's growth and expansion plans. Such statements
are based on management's current expectations and are subject to a number of
uncertainties and risks that could cause actual results to differ materially
from those described in these forward-looking statements. Factors that may cause
such a difference include, but are not limited to, those described in the
Company's filings with the Securities and Exchange Commission. Ablatherm-HIFU
treatment is in clinical trials but not yet FDA approved or marketed in the
United States.
EDAP TMS S.A.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Amounts in thousands of Euros and U.S. Dollars, except per share data)
Three Months Ended: Three Months Ended:
------------------------------ ------------------------------
September 30, September 30, September 30, September 30,
2006 2005 2006 2005
------------- ------------- ------------- -------------
Euros Euros $US $US
Net sales of medical
equipment 2,193 2,062 2,795 2,510
Net sales of RPP 597 355 761 432
Net sales of spare
parts, supplies
and Services 2,186 2,109 2,787 2,567
NET SALES 4,976 4,526 6,343 5,509
Other revenues 37 --- 47 ---
TOTAL REVENUES 5,013 4,526 6,390 5,509
Cost of sales (2,978) (2,681) (3,795) (3,263)
GROSS PROFIT 2,035 1,845 2,595 2,246
Research &
development
expenses (646) (255) (823) (510)
S, G & A expenses (2,066) (2,084) (2,634) (2,337)
Non recurring
operating expenses (72) (92)
Total operating
expenses (2,784) (2,339) (3,549) (2,847)
OPERATING PROFIT
(LOSS) (749) (494) (954) (601)
Interest (expense)
income, net 53 8 67 9
Currency exchange
gains (loss), net (154) (79) (196) (96)
Other income
(loss), net (8) 20 (11) 24
INCOME (LOSS) BEFORE
TAXES AND MINORITY
INTEREST (858) (545) (1,094) (664)
Income tax (expense)
credit 15 (28) 19 (33)
NET INCOME (LOSS) (843) (573) (1,075) (697)
Earning per share
- Basic (0.10) (0.07) (0.12) (0.09)
Average number of
shares used in
computation of
EPS 8,802,507 7,781,731 8,802,507 7,781,731
Earning per share
- Diluted (0.10) (0.07) (0.12) (0.09)
Average number of
shares used in
computation of
EPS 9,525,669 8,344,368 9,525,669 8,344,368
NOTE: Translated for convenience of the reader to U.S. dollars at the 2006
average three months noon buying rate of 1 Euro = 1.2748 USD, and 2005 average
three months noon buying rate of 1 Euro = 1.2172 USD.
EDAP TMS S.A.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Amounts in thousands of Euros and U.S. Dollars, except per share data)
Nine Months Ended: Nine Months Ended:
------------------------------ ------------------------------
September 30, September 30, September 30, September 30,
2006 2005 2006 2005
------------- ------------- ------------- -------------
Euros Euros $US $US
Net sales of medical
equipment 6,651 6,997 8,329 8,795
Net sales of RPPs 2,022 1,197 2,532 1,505
Net sales of spare
parts, supplies
and Services 6,590 6,356 8,252 7,988
NET SALES 15,263 14,550 19,113 18,288
Other revenues 116 53 145 67
TOTAL REVENUES 15,379 14,603 19,258 18,355
Cost of sales (8,846) (8,688) (11,077) (10,920)
GROSS PROFIT 6,533 5,915 8,181 7,435
Research &
development
expenses (1,869) (788) (2,340) (1,696)
S, G & A expenses (6,616) (6,497) (8,285) (7,460)
Non recurring
operating
expenses (72) --- (91) ---
Total operating
expenses (8,557) (7,285) (10,716) (9,156)
OPERATING PROFIT
(LOSS) (2,024) (1,370) (2,535) (1,721)
Interest (expense)
income, net 88 35 110 44
Currency exchange
gains (loss), net (330) 229 (414) 287
Other income (loss),
net (8) 22 (10) 28
INCOME (LOSS) BEFORE
TAXES AND MINORITY
INTEREST (2,274) (1,084) (2,849) (1,362)
Income tax
(expense) credit (42) (27) (52) (34)
NET INCOME (LOSS) (2,316) (1,111) (2,901) (1,396)
Earning per share
- Basic (0.26) (0.14) (0.33) (0.18)
Average number of
shares used in
computation of
EPS 8,802,507 7,781,731 8,802,507 7,781,731
Earning per share
- Diluted (0.26) (0.14) (0.33) (0.18)
Average number of
shares used in
computation of
EPS 9,550,740 8,344,368 9,550,740 8,344,368
NOTE: Translated for convenience of the reader to U.S. dollars at the 2006
average nine months noon buying rate of 1 Euro = 1.2522 USD, and 2005 average
nine months noon buying rate of 1 Euro = 1.2569 USD.
EDAP TMS S.A.
CONSOLIDATED BALANCE SHEETS HIGHLIGHTS (UNAUDITED)
(Amounts in thousands of Euros and U.S. Dollars)
September 30, June 30, September 30, June 30,
2006 2006 2006 2006
------------- ------------- ------------- -------------
Euros Euros $US $US
Cash, cash equivalents
and short term
investments 10,540 6,635 13,372 8,479
Total current assets 27,542 22,216 34,942 28,390
Total current
liabilities 11,828 10,822 15,007 13,829
Shareholders' Equity 20,463 16,057 25,961 20,519
NOTE: Translated for convenience of the reader to U.S. dollars at the noon
buying rate of 1 Euro = 1.2687 USD, on September 30, 2006 and at the noon buying
rate of 1 Euro = 1.2779 USD, on June 30, 2006.
EDAP TMS S.A.
CONDENSED STATEMENTS OF OPERATIONS BY DIVISION
NINE MONTHS ENDED SEPTEMBER 30, 2006
(Amounts in thousands of Euros)
EDAP S.A. TMS S.A.
HIFU UDS EDAP TMS Consolidation Total After
Division Division HQ Impact Consolidation
------------ --------- --------- -------------- -------------
Net sales
of medical
devices 1,506 6,246 --- (1,101) 6,651
Net sales of
RPPs 2,022 2,022
Net sales of
spare parts,
supplies &
services 1,679 5,871 --- (960) 6,590
Other revenues 55 61 --- 116
TOTAL REVENUES 5,262 12,178 --- (2,061) 15,379
GROSS PROFIT
2,917 55% 3,866 32% --- (250) 6,533 42%
Research &
Development (1,027) (842) --- --- (1,869)
Selling and
Marketing (1,905) (1,628) (3,533)
Total G&A
plus
depreciation (525) (1,290) (1,268) --- (3,083)
Non recurring
op. expenses --- --- (72) --- (72)
OPERATING PROFIT
(LOSS) (540) 106 (1,340) (250) (2,024)
CONTACT: EDAP TMS S.A.
Hugues de Bantel - Philippe Chauveau
Blandine Confort
+33 4 78 26 40 46
Halliburton Investor Relations
Matt Kreps - Geralyn DeBusk
972 458 8000
SOURCE EDAP TMS S.A.
-0- 11/07/2006
/CONTACT: Hugues de Bantel, Philippe Chauveau, or Blandine Confort, all of
EDAP TMS S.A., +33-4-78-26-40-46; or Matt Kreps or Geralyn DeBusk, both of
Halliburton Investor Relations, +1-972-458-8000, for EDAP TMS S.A./
/Web site: http://www.edap-tms.com
http://www.hifu-planet.com /
(EDAP)
SIGNATURES
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, thereunto duly authorized.
Date : November 8, 2006 EDAP TMS S.A.
/s/ HUGUES DE BANTEL
-----------------------
HUGUES DE BANTEL
CHIEF EXECUTIVE OFFICER