EDAP TMS S.A. Reports 2007 First Quarter Results; Ablatherm-HIFU Treatments Grow
EDAP TMS S.A. Reports 2007 First Quarter Results; Ablatherm-HIFU Treatments Grow
Key highlights include:
- First quarter RPP Revenues increased 45 percent year over year early in the company's marketing and growth strategy designed to achieve European profitability by the end of 2008 on significant treatment growth.
- Ablatherm-HIFU is now available at more than 150 centers worldwide with accelerating center launches and treatment growth, including 11 new sites in the first quarter and an additional seven in the first five weeks of the second quarter.
- The company reports clear progress on the US trial with the resumption of active therapy sessions under EDAP sponsorship, the only treating HIFU for localized prostate cancer trial as primary care in the United States.
- Gross margins continue to increase as RPP treatment grows and the company achieves greater efficiency.
- EDAP continued to add to its clinical lead as the HIFU therapy of choice among doctors based on proven repeatable success and low side effects. EDAP, as the gold standard in HIFU, reported 10 year experience results including statistical success at 8 years affirming Ablatherm-HIFU is competitive to all nonsurgical therapies -- its primary patient audience.
- The company signed a four-year exclusive agreement with China Medical Technologies to distribute its products through the European Union and Russia following CE approval, uniting the top HIFU companies in Europe and Asia.
EXECUTIVE COMMENTS
Marc Oczachowski, EDAP TMS Chief Executive Officer commented: "EDAP continues its role as the dominant HIFU company in
"We engaged in a new marketing strategy late last year with full launch in 2007. These initiatives are bringing HIFU to the broad European medical community with a strong and positive early response. We are seeing solid participation and interest in marketing events such as our HIFU tours in
"We are also very excited and enthusiastic to again start USA clinical sessions toward a future FDA approval of the Ablatherm-HIFU. This is the only current HIFU trial in the US with excellent response from the clinical sites affirming the ease of treatment, patient comfort, low side effects and expected efficacy. We look forward to reporting additional success as more sites resume treatment, and we add more leading clinical centers now asking us to join the trial."
FINANCIAL RESULTS
First Quarter 2007 results showed strong increases in RPP revenue while machine sales in the HIFU division were deferred to later periods. As anticipated, the company's business plan expects a number of machine sales in the calendar year, but does not require they be evenly distributed through the quarters as the company's focus has shifted to the sale of recurring treatments under its highly successful and growing RPP program. First quarter revenue was Euro 4.7 million, down 10.3 percent from the same period in 2006 due to this change in revenue mix. The primary difference was a 702,000 decrease in HIFU equipment sales as compared to the prior year quarter, while RPP revenues increased 45 percent to Euro 1.0 million. The company has already booked one Ablatherm sale in the second quarter and has a strong pipeline of expected and potential sales in its most active markets to meet its goal for the full year. The company's movement away from dependence on equipment sales continues as RPP revenues increase, but EDAP expects to continue selling Ablatherm , although not necessarily in equivalent quarterly increments.
Group gross margins continued to improve to 43 percent as compared to 36.5 percent in the last quarter 2006 and 41 percent for the full year 2006. HIFU gross margins increased still further to 57 percent compared to 53 percent for the year 2006 as RPP revenue comprises a larger portion of margin and the accompanying scale efficiency becomes evident.
The Lithotripsy business remains strong with nine units sold as opposed to 10 in the prior year and a backlog of 7 units already at the start of the second quarter. The pace of lithotripsy sales increased from the fourth quarter 2006 and the company sees steady demand in the quarters ahead.
Cash remains strong at Euro 9.3 million, down from Euro 10.9 million at year end. Uses of cash include approximately 800,000 in corporate spending for marketing and growth initiatives ahead of returns on these efforts, including 300,000 for marketing increases, 200,000 on product development for launch, 200,000 on FDA costs, and 100,000 in leasing activities for the RPP business. The remaining 800,000 is tied to Ablatherm and lithotripsy device inventory ahead of sales later in the year. EDAP has historically generated positive cash flows during each calendar year as early year investments were recouped in sales. The company remains on plan for cash balances suitable for its marketing needs for the next two years. Total 2007 cash use is estimated at less than Euro 4 million.
Eric Soyer, EDAP TMS Chief Financial Officer, commented: "The first quarter shows a higher than usual cash use due to spending ahead of events that will recapture these balances. Our company spending remains on track for our targeted programs for both investing and recouping cash as the HIFU business accelerates from our marketing spending. Further, the cash balance does not reflect the at least
HIFU DIVISION: CLEAR GROWTH FOLLOWING MARKETING LAUNCH
The HIFU division continued to accelerate its growth programs with strong early indications of success in the multi-quarter process of educating, recruiting, training and launching new Ablatherm sites. The current growth rate at 45 percent on the RPP business affirms the company's program methods with clear upside as the scale of the program has steadily increased since early test phases last winter. The company's recent German HIFU tour, EAU Congress participation, Italian HIFU tour recently started and activities at local and regional urology events continues to forward the interest of a growing list of centers at various stages of participation.
"We are seeing nice growth in the RPP programs already from our early efforts, but have even higher expectations of growth in the periods ahead as the full programs roll into major European markets," said Oczachowski. "Doctors who were initially introduced in the German HIFU tour visited EDAP at the EAU. Many are now taking the next steps to secure approval at their local centers and enroll in training sessions on Ablatherm-HIFU. This is a process that unfolds over a few months, but is certainly succeeding. We will add equipment, on both a mobile and fixed RPP basis, as the demand for therapy continues to accelerate in the quarters ahead.
"The company's RPP program is accelerating in markets where marketing efforts have been deployed in concert with strong clinical support for Ablatherm-HIFU's established long-term standards. By way of example, EDAP is the only established provider in the German market, the most advanced prostate cancer HIFU market globally. The company conducted 222 mobile RPP sessions in the first four months, with 60 sessions in April alone and clear growth ahead. On an annual run rate this puts EDAP's three mobile units near projected capacity, the last of which was launched last fall in light of rapidly growing demand."
2007 RPP Ablatherm-HIFU: Numbers and Revenues:
Q1 2007 April 2007 4 Months
--------- -------- -------- --------
Number of RPP treatments 325 112 437
RPP revenue % vs year ago +45% +64% +49%
Close to 900 treatments have been performed in Q1, bringing to approximately 12,500 cumulative treatments performed as of end of
US PROGRAMS: EDAP IN FULL CONTROL, TRIAL DRIVING AHEAD WITH SUCCESS
EDAP restarted US clinical sessions in pursuit of future FDA approval for Ablatherm-HIFU, the only active US trial treating patients for localized prostate cancer. EDAP has full rights to all revenue and profit earned in the future and is presently self sponsoring the trials in order to accommodate immediate and ongoing treatment demand from centers participating in the EDAP study. The company intends to retain control of this important program and is in the final stages of positioning its US strategy. Response to the trial is growing as knowledge of its activity spreads based on the existing clinical base for Ablatherm-HIFU. The company reported recently the results of treatments at two centers, with additional centers recruiting and scheduling patients. Both patients and doctors report early success with the Ablatherm-HIFU activities under EDAP's direction with high expectations for the trial.
The company reported an exclusive marketing and sales agreement with
"We are pleased and excited to begin this relationship with
Participation in Congresses
EDAP will participate strongly in the upcoming American Urology Association (AUA) meeting to be held in
Conference Call and Webcast
The company will host a conference call to discuss the results and answer questions from investors on
Investors unable to join the call can access a playback of the conference call by telephone or online. To access the replay, please dial (866) 439-4729 or +1 (212) 457-9846 and using access code 327569# beginning one hour after the end of the call until
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 Magnolia Investor Relations at (972) 801-4900, 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 .
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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
CONTACT: EDAP TMS S.A. Magnolia Investor Relations
Blandine Confort Matt Kreps
+33 4 78 26 40 46 972 801 4900
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:
March 31, March 31, March 31, March 31,
2007 2006 2007 2006
Euros Euros $US $US
Sales of goods 1,902 2,789 2,508 3,367
Net Sales of RPP and
Leases 1,308 971 1,725 1,172
Sales of spare parts
and Services 1,420 1,424 1,872 1,719
TOTAL NET SALES 4,630 5,184 6,105 6,259
Other revenues 36 15 47 18
TOTAL REVENUES 4,666 5,199 6,152 6,277
Cost of goods (1,273) (1,667) (1,679) (2,013)
Cost of RPP and Leases (568) (431) (750) (520)
Cost of spare parts &
services (831) (815) (1,095) (984)
Cost of sales (2,672) (2,913) (3,524) (3,517)
GROSS PROFIT 1,994 2,286 2,629 2,760
Research & development
expenses (616) (595) (813) (718)
Marketing & Sales
expenses (1,341) (1,091) (1,768) (1,317)
G & A expenses (1,183) (1,084) (1,560) (1,309)
Total operating
expenses (3,140) (2,770) (4,141) (3,344)
OPERATING PROFIT (LOSS) (1,147) (484) (1,512) (584)
Interest (expense)
income, net 3 14 4 17
Currency exchange gains
(loss), net (48) (73) (63) (89)
Other income (loss),
net 3 (3) 4 (4)
INCOME (LOSS) BEFORE
TAXES AND MINORITY
INTEREST (1,188) (546) (1,567) (659)
Income tax (expense)
credit (21) (77) (27) (93)
NET INCOME (LOSS) (1,209) (623) (1,594) (753)
Earning per share -
Basic (0.14) (0.08) (0.18) (0.010)
Average number of
shares used
incomputation of
EPS 8,942,007 7,823,331 8,942,007 7,823,331
Earning per share -
Diluted (0.14) (0.08) (0.18) (0.010)
Average number of
shares used
incomputation of
EPS for positive net
income 9,606,863 8,608,255 9,606,863 8,608,255
NOTE: Translated for convenience of the reader to U.S. dollars at the
2007 average three months noon buying rate of 1 Euro =
average three months noon buying rate of 1 Euro =
EDAP TMS S.A.
CONSOLIDATED BALANCE SHEETS HIGHLIGHTS (UNAUDITED)
(Amounts in thousands of Euros and U.S. Dollars)
March 31, Dec. 31, March 31, Dec. 31,
2007 2006 2007 2006
Euros Euros $US $US
Cash, cash equivalents
and short term investments 9,291 10,924 12,426 14,417
Total current assets 25,699 26,393 34,370 34,831
Total current liabilities 11,368 10,926 15,204 14,419
Shareholders' Equity 18,247 19,300 24,404 25,471
NOTE: Translated for convenience of the reader to U.S. dollars at the
noon buying rate of 1 Euro =
buying rate of 1 Euro =
EDAP TMS S.A.
CONDENSED STATEMENTS OF OPERATIONS BY DIVISION
THREE MONTHS ENDED MARCH 31, 2007
(Amounts in thousands of Euros)
EDAP S.A. TMS S.A.
HIFU UDS EDAP TMS EDAP TMS Total After
Division Division FDA Corporate Consolidation
Sales of goods 180 1,722 1,902
Sales of RPPs &
Leases 1,045 264 1,308
Sales of spare
parts & services 385 1,035 1,420
TOTAL NET SALES 1,609 3,021 4,630
Other revenues 7 29 36
TOTAL REVENUES 1,616 3,050 4,666
GROSS PROFIT 920 57% 1,074 35% 1,994 43%
Research &
Development (235) (288) (92) (616)
Total SG&A plus
depreciation (1,019) (905) (105) (495) (2,524)
OPERATING PROFIT
(LOSS) (335) (120) (197) (495) (1,147)
SOURCE EDAP TMS S.A.