VNUS MEDICAL TECHNOLOGIES, INC. 
By
Net revenues for the third quarter of 2008 increased 32% to
Net product revenues for the third quarter of 2008 increased 25% to
Royalty revenues in the third quarter of 2008 were
Gross margins in the third quarter of 2008 were 69.6% compared to 61.5% in
the third quarter of 2007 and 76.7% in the second quarter of 2008. For
comparison, after excluding
Third quarter net income was
Adjusted EBITDA for the third quarter of 2008 was earnings of
VNUS' balance sheet at
"We are especially pleased that our third quarter results show sequential
growth during a normally slower summer quarter," said VNUS President and Chief
Executive Officer
VNUS also announced today its business outlook for the fourth quarter and
fiscal year end of 2008.
Business Outlook
Fourth Quarter 2008 Full Year 2008
Millions except EPS
Total revenues $24.0 - $25.3 $97.9 - $99.3
Net product revenues $23.1 - $24.2 $85.4 - $86.5
Royalty revenue $0.9 - $1.1 $12.5 - $12.8
Gross margin 68% - 69% 70% - 72%
Operating expenses $14.8 - $15.1 $58.2 - $58.5
Effective tax rate 9.0% 8.0%
Net income $1.4 - $2.2 $11.5 - $12.2
GAAP EPS $0.09 - $0.13 $0.69 - $0.73
Average shares outstanding 16.7 - 17.0 16.7 - 16.9
Adjusted EBITDA $3.1 - $4.0 $17.4 - $18.3
Fully Taxed EPS (1) $0.06 - $0.09 $0.14 - $0.17
(1) For Full Year 2008, excludes $8.7 million of one time royalties
associated with pre-2008 sales
VNUS expects international growth volume to continue but with the current
strengthening foreign exchange rate trend in
VNUS estimates that full-year 2008 operating expenses will include patent
litigation expenses of
Today's Teleconference
VNUS plans to host its regular quarterly teleconference today at
Non-GAAP Financial Information:
VNUS' management evaluates and makes operating decisions using various operating measures, including adjusted earnings before interest, taxes, depreciation and amortization, and non-cash charges for stock-based compensation (Adjusted EBITDA), and Fully Taxed EPS calculated by using income after excluding one-time events, assuming no use of net operating loss carryforwards and fully diluted weighted average number of shares (Fully Taxed EPS). The Company believes that these non-GAAP measures, when presented in conjunction with the comparable GAAP measures, are useful to both management and investors in analyzing the Company's ongoing business and operating performance. The Company believes that providing the non-GAAP information to investors, in addition to the GAAP presentation, allows investors to view the Company's financial results in the way management views the Company's operating results. Management believes Adjusted EBITDA is useful as a supplemental measure of the performance of the Company's operations because it isolates the Company's operating performance from the accounting impact of the Company's financing strategies, tax provisions, and depreciation and amortization. The Company believes that Fully Taxed EPS is useful as a supplemental disclosure because the Company expects to be in a Fully Taxed EPS position on a GAAP basis during 2010 or 2011. Accordingly, the Company has decided to provide supplemental disclosure of Fully Taxed EPS as a long term measure of growth in earnings on a comparable constant per share basis absent the utilization of net operating loss carryforwards and one-time events, such as the payment of royalties in the second quarter of 2008 related to periods prior to 2008. VNUS believes Adjusted EBITDA and Fully Taxed EPS should be considered in addition to, but not as a substitute for, items prepared in accordance with GAAP, as the items excluded in the presentation of Adjusted EBITDA and Fully Taxed EPS are significant components in understanding and assessing financial performance. The reconciliation between GAAP and non-GAAP financial information is provided in the financial statements portion of this release.
About VNUS Medical Technologies, Inc.
VNUS is a leading provider of medical devices for the minimally invasive treatment of venous reflux, a progressive condition caused by incompetent vein valves in the leg. VNUS sells the Closure system, which consists of a proprietary radiofrequency (RF) generator and proprietary disposable endovenous catheters and devices to treat diseased veins through the application of temperature-controlled RF energy. For more information, please visit the corporate website at http://www.vnus.com.
Forward-Looking Statements
In addition to statements of historical facts or statements of current conditions, VNUS has made forward-looking statements in this press release. Words such as "expects," "estimates," "believes," "assumes" and "plans" or variations of such words and similar expressions, are intended to identify such forward-looking statements in this press release, including the statements regarding the outlook for VNUS' business and revenue and net income forecasts. Actual results may differ materially from current expectations based on a number of factors affecting VNUS' business, including, among other things, overall economic and market conditions; fluctuating foreign exchange rates; changes in reimbursement levels established by governmental and third-party payors; commercial success of VNUS' licensees; changing competitive market, clinical trial data and regulatory conditions; changes in the credit markets impacting the fair value of our investment securities; continued market acceptance of the ClosureFAST catheter; customer and physician preferences; the ability of VNUS to protect its patent position; and the effectiveness of advertising and other promotional campaigns. The reader is cautioned not to unduly rely on these forward-looking statements. The statements in this press release are made as of the date of this press release, even if subsequently made available by VNUS on its web site or otherwise. VNUS expressly disclaims any intent or obligation to update these forward-looking statements except as required by law.
Additional information concerning these and other risk factors can be
found in press releases issued by VNUS and VNUS' periodic public filings with
the Securities and Exchange Commission (SEC), including its Annual Report on
Form 10-K filed with the SEC on
--Financial Statements Attached--
VNUS MEDICAL TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
September 30, 2008 December 31, 2007
ASSETS
Current assets:
Cash and cash equivalents $48,532 $39,269
Short-term investments 29,637 24,067
Accounts receivable, net 11,797 11,456
Inventories 5,662 5,485
Prepaid expenses and other current
assets 2,091 1,421
Total current assets 97,719 81,698
Property and equipment, net 4,266 4,354
Other assets 130 130
Total assets $102,115 $86,182
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $3,166 $2,366
Accrued compensation and benefits 6,431 6,040
Other accrued liabilities 1,585 1,571
Deferred revenue, net 829 720
Total current liabilities 12,011 10,697
Other long term liabilities 1,904 1,996
Total liabilities 13,915 12,693
Stockholders' equity:
Common stock 16 15
Additional paid-in capital 126,719 122,009
Deferred stock compensation (3) (23)
Accumulated other comprehensive
income (18) 21
Accumulated deficit (38,514) (48,533)
Total stockholders' equity 88,200 73,489
Total liabilities and stockholders'
equity $102,115 $86,182
VNUS MEDICAL TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three months ended Nine months ended
September 30, September 30,
2008 2007 2008 2007
Net product revenues $21,910 $17,495 $62,302 $50,333
Royalty revenues 1,226 - 11,628 -
Net revenues 23,136 17,495 73,930 50,333
Cost of revenues 7,026 6,741 20,865 18,665
Gross profit 16,110 10,754 53,065 31,668
Operating Expenses:
Sales and marketing 6,779 5,460 21,195 18,435
Research and development 2,554 2,258 7,596 7,168
General and administrative 4,860 6,128 14,654 15,029
Total operating expenses 14,193 13,846 43,445 40,632
Income (loss) from operations 1,917 (3,092) 9,620 (8,964)
Interest and other income, net 24 945 1,241 2,569
Income (loss) before provision for
taxes 1,941 (2,147) 10,861 (6,395)
Provision for income taxes 349 19 842 37
Net income (loss) $1,592 $(2,166) $10,019 $(6,432)
Basic net income (loss) per share $0.10 $(0.14) $0.63 $(0.42)
Diluted net income (loss) per share $0.10 $(0.14) $0.60 $(0.42)
Basic weighted average number of
shares 15,941 15,466 15,844 15,364
Diluted weighted average number of
shares 16,751 15,466 16,588 15,364
Reconciliation of Income (Loss) from
operations to Adjusted EBITDA:
Income (loss) from operations $1,917 $(3,092) $9,620 $(8,964)
Stock-based compensation 1,309 588 3,560 1,610
Depreciation and amortization 376 326 1,114 890
Adjusted EBITDA $3,602 $(2,178) $14,294 $(6,464)
Calculation of Fully Taxed EPS for
periods with net income:
Income before provision for taxes $1,941 $10,861
Less one time events:
Royalty revenue related to periods
before 2008 - (8,699)
Income before taxes 1,941 2,162
Less taxes at an assumed 38% rate (738) (822)
Fully taxed income $1,203 $1,340
Divided by diluted weighted average
number of shares 16,751 16,588
Fully Taxed EPS for periods with net
income $0.07 $0.08
SOURCE VNUS Medical Technologies, Inc.
