Stellarex DCB Acquisition Closed and
Stellarex Launched in Europe
Updates 2015 Outlook
The Spectranetics Corporation (Nasdaq:SPNC) today reported
financial results for the three months and year ended December 31,
2014. Highlights of the quarter, all compared with the three months
ended December 31, 2013 include:
- Revenue of $63.0 million, up 50% (51% constant currency1)
- Vascular Intervention revenue of $39.1 million grew 90% (91%
constant currency)
- U.S. peripheral atherectomy revenue grew 30%
- AngioSculpt™ revenue of $14.7 million achieved
- Lead Management revenue of $18.5 million increased 14% (15%
constant currency)
- U.S. revenue grew 52% to $52.3 million; International revenue
grew 43% (49% constant currency) to $10.6 million
- Closed acquisition of Stellarex™ Drug Coated Balloon (DCB);
Launched Stellarex in Europe in January 2015
"The fourth quarter caps off a very productive year for our
company. Our tactical execution and performance combined with
strategic progress set us up well for future growth and operating
leverage. Notably, we have early traction with ISR, our mechanical
tools launch is ahead of schedule, the AngioScore integration is on
track and, following our acquisition of the Stellarex platform in
January, commercialization in Europe is underway. Our
competitive position is stronger than ever and we believe it will
continue to improve over time," said Scott Drake, President and
Chief Executive Officer.
_____________________
1Constant currency, non-GAAP net loss, and Adjusted EBITDA are
non-GAAP financial measures. See "Reconciliation of Non-GAAP
Financial Measures" later in this release.
Net loss for the three months ended December 31, 2014 was $14.7
million, or $0.35 per share, compared with net income of $883,000,
or $0.02 per share, for the three months ended December 31,
2013. Non-GAAP net loss1, which primarily excludes
acquisition-related items, for the three months ended December 31,
2014 was $1.7 million, or $0.04 per share, compared with non-GAAP
net income of $682,000, or $0.02 per share, for the three months
ended December 31, 2013. Adjusted EBITDA1 was $3.2 million for
the three months ended December 31, 2014 compared with $4.0 million
for the three months ended December 31, 2013.
Year-To-Date Financial Results
Revenue for the year ended December 31, 2014 rose 29% to $204.9
million, including $29.6 million of AngioSculpt revenue, from
$158.8 million for the year ended December 31, 2013. Vascular
Intervention revenue increased 56% to $118.1 million, Lead
Management revenue increased 7% (6% constant currency) to
$66.7 million, and laser system, service and other revenue
decreased 3% to $20.1 million.
On a geographic basis, revenue in the United States and Canada
was $167.4 million, an increase of 29% from the year ended December
31, 2013. International revenue totaled $37.5 million, an increase
of 31% (30% constant currency) from the year ended December 31,
2013.
Net loss for the year ended December 31, 2014 was $40.9 million,
or $0.98 per share, compared with net loss of $370,000, or $0.01
per share, for the year ended December 31, 2013. Non-GAAP net loss
for the year ended December 31, 2014 was $11.3 million, or
$0.27 per share, compared with non-GAAP net income of $723,000, or
$0.02 per share, for the year ended December 31,
2013. Adjusted EBITDA was $4.2 million for the year ended
December 31, 2014 compared with $11.2 million for the year ended
December 31, 2013.
2015 Financial Outlook
Spectranetics is updating its 2015 financial outlook to reflect
the projected impact of Stellarex and adjustments for the weakening
euro since the financial outlook provided in December 2014.
Spectranetics management continues to project revenue in the
range of $258 million to $265 million, an increase of 26% to
29% over 2014. Management estimates the negative impact of a
weakening euro at approximately $3 million. Projected sales
from the Stellarex DCB products are anticipated to largely offset
the foreign currency impact in 2015.
- Vascular Intervention revenue growth is anticipated to be in
the range of 41% to 46%. This includes projected AngioSculpt
revenue of $62 million to $66 million and projected ISR
revenue of approximately $15 million to $20 million.
- Lead Management revenue growth is estimated in the range of 8%
to 10%, which has been adjusted from the range of 11% to 12%
provided previously, entirely due to the weaker euro.
_____________________
1Constant currency, non-GAAP net loss, and Adjusted EBITDA are
non-GAAP financial measures. See "Reconciliation of Non-GAAP
Financial Measures" later in this release.
Net loss for 2015 is projected to be in the range of $58.0
million to $62.0 million, or $1.36 to $1.46 per
share. The net loss, excluding Stellarex, is projected to be
$28.0 million to $32.0 million, or $0.66 to $0.75 per
share. The net loss budgeted for Stellarex is approximately
$30.0 million, or $0.71 per share. The Stellarex acquisition
closed on January 27, 2015 and Spectranetics is in the early stages
of integration. As integration proceeds, the budget will
likely change. Also, the company has identified potential
further applications of the technology that may enhance revenue and
return metrics and entail additional investments.
Non-GAAP net loss for 2015 is projected to be in the range
of $31.9 million to $35.9 million, or $0.75 to
$0.84 per share. See "Reconciliation of non-GAAP Financial
Measures" later in this release. Additional details supporting
the 2015 outlook are provided below:
- Gross margin is expected to be in the range of 74.5% to
75.0%. This includes improvement of approximately 50
basis points within the current business, which is offset by the
dilutive impact of approximately 50 to 100 basis points associated
with establishing manufacturing operations for the Stellarex
product line.
- Research, development and other technology expenses are
expected to be approximately 25.5% to 26.0% of revenue, revised
from 15.5% to 16.0% provided previously. The increase is
entirely due to costs associated with the Stellarex program.
Conference Call
Management will host an investment community conference call
today beginning at 2:30 p.m. MT / 4:30 p.m. ET. Individuals
interested in listening to the conference call may dial (877)
561-2747 for domestic callers, or (973) 409-9689 for international
callers, conference ID 69679617, or access the webcast on the
investor relations section of the Company's Web site at:
www.spectranetics.com. The webcast will be available on the
Company's Web site for 14 days following the completion of the
call.
About Spectranetics
Spectranetics develops, manufactures, markets and distributes
single-use medical devices used in minimally invasive procedures
within the cardiovascular system. The Company's products are sold
in over 65 countries and are used to treat arterial blockages in
the heart and legs and in the removal of pacemaker and
defibrillator leads.
Spectranetics recently acquired AngioScore Inc., a leading
developer, manufacturer and marketer of cardiovascular, specialty
scoring balloons and the Stellarex drug-coated balloon platform
from Covidien.
The Company's Vascular Intervention (VI) products include a
range of laser catheters for ablation of blockages in arteries
above and below the knee as well as the AngioSculpt® scoring
balloon used in both peripheral and coronary procedures and the
Stellarex drug-coated balloon platform. The Company also markets
support catheters to facilitate crossing of peripheral and coronary
arterial blockages, and retrograde access and guidewire retrieval
devices used in the treatment of peripheral arterial blockages,
including chronic total occlusions. The Company markets aspiration
and cardiac laser catheters to treat blockages in the heart.
The Lead Management (LM) product line includes excimer laser
sheaths, dilator sheaths, mechanical sheaths and accessories for
the removal of pacemaker and defibrillator cardiac leads.
For more information, visit www.spectranetics.com
Safe Harbor Statement
This news release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934 and the Private
Securities Litigation Reform Act of 1995. You can identify these
statements because they do not relate strictly to historical or
current facts. Such statements may include words such as
"anticipate," "will," "estimate," "expect," "look forward,"
"strive," "project," "intend," "should," "plan," "believe," "hope,"
"enable," "potential," and other words and terms of similar meaning
in connection with any discussion of, among other things, future
operating or financial performance, strategic initiatives and
business strategies, clinical trials, regulatory or competitive
environments, our intellectual property and product development.
These forward-looking statements include, but are not limited to,
statements regarding our competitive position, product development
and commercialization schedule, expectation of continued growth and
the reasons for that growth, growth rates, strength, integration
and product launches, and 2015 outlook including projected revenue
and expenses, net loss and gross margin. Such statements are based
on current assumptions that involve risks and uncertainties that
could cause actual outcomes and results to differ materially. You
are cautioned not to place undue reliance on these forward-looking
statements and to note they speak only as of the date of this
release. These risks and uncertainties may include financial
results differing from guidance, inability to successfully
integrate AngioScore and Stellarex into our business, market
acceptance of excimer laser atherectomy technology and our vascular
intervention and lead removal products, lack of cash necessary to
satisfy our cash obligations under our outstanding 2.625%
Convertible Senior Notes due 2034, our debt adversely affecting our
financial health and prevent us from fulfilling our debt service
and other obligations, increasing price and product competition,
increased pressure on expense levels resulting from expanded sales,
marketing, product development and clinical activities, uncertain
success of our strategic direction, dependence on new product
development, loss of key personnel, uncertain success of or delays
in our clinical trials, adverse results in any ongoing legal
proceeding, or any legal proceeding in which we may become
involved, adverse impact to our business of the health care reform
and related legislation or regulations, including changes in
reimbursements, continued or worsening adverse conditions in the
general domestic and global economic markets and continued
volatility and disruption of the credit markets, which affects the
ability of hospitals and other health care systems to obtain credit
and may impede our access to capital, intellectual property claims
of third parties, availability of inventory from suppliers, adverse
outcome of FDA inspections, the receipt of FDA approval to market
new products or applications and the timeliness of any approvals,
market acceptance of new products or applications, product defects,
ability to manufacture sufficient volumes to fulfill customer
demand, availability of vendor-sourced components at reasonable
prices, unexpected delays or costs associated with any planned
improvements to our manufacturing processes, and share price
volatility due to the initiation or cessation of coverage, or
changes in ratings, by securities analysts. For a further list and
description of such risks and uncertainties that could cause our
actual results, performance or achievements to materially differ
from any anticipated results, performance or achievements, please
see our previously filed SEC reports, including those
risks set forth in our 2013 Annual Report on Form 10-K and our
Quarterly Report on Form 10-Q for the quarter ended June 30, 2014.
We disclaim any intention or obligation to update or revise any
financial or other projections or other forward-looking statements,
whether because of new information, future events or otherwise.
Use of Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements
prepared in accordance with U.S. generally accepted accounting
principles (GAAP), we use certain non-GAAP financial measures in
this release. Reconciliations of the non-GAAP financial measures
used in this release to the most directly comparable GAAP measures
for the respective periods, and an explanation of our use of these
non-GAAP measures, can be found in "Reconciliation of Non-GAAP
Financial Measures" immediately following the financial tables.
Non-GAAP financial measures have limitations as analytical tools
and should not be considered in isolation or as a substitute for
our financial results prepared in accordance with GAAP.
-Financial tables follow-
THE SPECTRANETICS
CORPORATION |
Condensed Consolidated
Statements of Operations |
(in thousands, except per share
data and percentages) |
(unaudited) |
|
|
|
|
|
|
Three Months Ended December
31, |
Twelve Months Ended December
31, |
|
2014 |
2013 |
2014 |
2013 |
Revenue |
$62,959 |
$41,920 |
$204,914 |
$158,811 |
Cost of products sold |
15,859 |
10,359 |
51,385 |
41,356 |
Amortization of inventory step-up |
1,060 |
— |
2,074 |
— |
Gross profit |
46,040 |
31,561 |
151,455 |
117,455 |
Operating expenses: |
|
|
|
|
Selling, general and
administrative |
36,447 |
23,661 |
128,129 |
91,750 |
Research, development and other
technology |
9,311 |
5,760 |
28,675 |
22,080 |
Acquisition transaction and
integration costs |
9,233 |
— |
17,288 |
— |
Medical device excise tax |
857 |
570 |
2,834 |
2,138 |
Acquisition-related intangible
asset amortization. |
3,007 |
245 |
6,335 |
901 |
Contingent consideration
expense |
955 |
229 |
2,070 |
867 |
Intangible asset impairment and
change in fair value of contingent consideration liability,
net |
— |
(675) |
3,074 |
(675) |
Total operating expenses |
59,810 |
29,790 |
188,405 |
117,061 |
Operating (loss) income |
(13,770) |
1,771 |
(36,950) |
394 |
Other (expense) income,
net |
(1,864) |
(3) |
(4,273) |
16 |
(Loss) income before taxes |
(15,634) |
1,768 |
(41,223) |
410 |
Income tax (benefit)
expense |
(903) |
885 |
(322) |
780 |
Net (loss) income |
$(14,731) |
$883 |
$(40,901) |
$(370) |
|
|
|
|
|
Net (loss) income per common share: |
|
|
|
|
Basic and diluted |
$(0.35) |
$0.02 |
$(0.98) |
$(0.01) |
Weighted average shares outstanding: |
|
|
|
|
Basic |
41,931 |
41,108 |
41,679 |
38,941 |
Diluted |
41,931 |
42,741 |
41,679 |
38,941 |
|
THE SPECTRANETICS
CORPORATION |
Condensed Consolidated Balance
Sheets |
(in thousands) |
(unaudited) |
|
|
|
|
December 31, 2014 |
December 31, 2013 |
ASSETS |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$95,505 |
$128,395 |
Accounts receivable, net |
41,090 |
26,766 |
Inventories, net |
25,446 |
9,476 |
Deferred income taxes, current
portion, net |
2,200 |
445 |
Other current assets |
8,093 |
2,748 |
Total current assets |
172,334 |
167,830 |
Property and equipment,
net |
33,819 |
28,281 |
Debt issuance costs, net |
6,912 |
— |
Goodwill and intangible
assets |
252,514 |
20,455 |
Other assets |
1,371 |
591 |
Total assets |
$466,950 |
$217,157 |
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
Current liabilities |
$41,343 |
$23,225 |
Convertible senior notes |
230,000 |
— |
Other non-current
liabilities |
33,450 |
3,932 |
Stockholders' equity |
162,157 |
190,000 |
Total liabilities and stockholders'
equity |
$466,950 |
$217,157 |
|
THE SPECTRANETICS
CORPORATION |
Supplemental Financial
Information |
(Unaudited) |
|
|
|
|
|
|
Financial Summary |
2013 |
2014 |
(000's, except laser sales
and installed base amounts) |
4th Qtr |
1st Qtr |
2nd Qtr |
3rd Qtr |
4th Qtr |
|
|
|
|
|
|
Disposable products revenue: |
|
|
|
|
|
Vascular Intervention revenue
(organic) |
$20,555 |
$20,021 |
$22,496 |
$21,634 |
$24,371 |
Vascular Intervention revenue
(AngioSculpt) |
— |
— |
— |
14,942 |
14,684 |
Total Vascular Intervention
revenue |
20,555 |
20,021 |
22,496 |
36,576 |
39,055 |
Lead Management revenue |
16,286 |
14,470 |
16,114 |
17,569 |
18,509 |
Total disposable products
revenue |
36,841 |
34,491 |
38,610 |
54,145 |
57,564 |
|
|
|
|
|
|
Laser, service, and other revenue |
5,079 |
5,123 |
4,945 |
4,641 |
5,395 |
|
|
|
|
|
|
Total revenue |
41,920 |
39,614 |
43,555 |
58,786 |
62,959 |
Non-GAAP gross margin percentage (excluding
amortization of inventory step up) (1) |
75% |
74% |
76% |
75% |
75% |
|
|
|
|
|
|
Net income (loss) |
883 |
(5,661) |
(6,565) |
(13,944) |
(14,731) |
Adjusted EBITDA (1) |
3,984 |
(2,610) |
777 |
2,742 |
3,249 |
|
|
|
|
|
|
Cash flow provided by (used in) operating
activities |
5,029 |
(8,359) |
(1,111) |
(3,403) |
(7,576) |
Total cash and cash equivalents at end of
quarter |
128,395 |
120,866 |
107,027 |
103,538 |
95,505 |
|
|
|
|
|
|
Laser sales summary: |
|
|
|
|
|
Laser sales from inventory |
5 |
9 |
8 |
7 |
11 |
Laser sales from
evaluation/rental units |
5 |
4 |
1 |
5 |
2 |
Total laser sales |
10 |
13 |
9 |
12 |
13 |
|
|
|
|
|
|
(1) Non-GAAP gross
margin percentage (excluding amortization of inventory step up) and
Adjusted EBITDA are non-GAAP financial measures. Please refer to
the non-GAAP reconciliation tables following this table for the
reconciliation to the most comparable GAAP measures. |
|
|
|
|
|
|
|
|
|
|
|
Worldwide Installed Base
Summary: |
|
|
|
|
|
Laser sales from inventory |
5 |
9 |
8 |
7 |
11 |
Rental placements |
29 |
20 |
32 |
34 |
26 |
Evaluation placements |
9 |
8 |
6 |
11 |
8 |
Laser placements during quarter |
43 |
37 |
46 |
52 |
45 |
Buy-backs/returns during quarter |
(18) |
(17) |
(15) |
(11) |
(10) |
Net laser placements during quarter |
25 |
20 |
31 |
41 |
35 |
Total lasers placed at end of quarter |
1,144 |
1,164 |
1,195 |
1,236 |
1,271 |
Reconciliation of Non-GAAP Financial
Measures
To supplement our condensed consolidated financial statements
prepared in accordance with GAAP, we use certain non-GAAP financial
measures in this release. Reconciliations of these non-GAAP
financial measures to the most directly comparable GAAP measures
for the respective periods can be found in the tables
below. An explanation of the manner in which our management
uses these non-GAAP measures to conduct and evaluate our business
and the reasons management believes these non-GAAP measures provide
useful information to investors are provided following the
reconciliation tables.
THE SPECTRANETICS
CORPORATION |
Reconciliation of revenue by
geography to non-GAAP revenue by geography |
on a constant currency
basis |
(in thousands, except
percentages) |
(unaudited) |
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
December 31, 2014 |
December 31, 2013 |
Change |
|
Revenue, as reported |
Foreign exchange impact as compared
to prior period |
Revenue on a constant currency
basis |
Revenue, as reported |
As reported |
Constant currency basis |
United States |
$52,310 |
$— |
$52,310 |
$34,493 |
52% |
52% |
International |
10,649 |
417 |
11,066 |
7,427 |
43% |
49% |
Total revenue |
$62,959 |
$417 |
$63,376 |
$41,920 |
50% |
51% |
|
|
|
|
|
|
|
|
Twelve Months Ended |
|
|
|
December 31, 2014 |
December 31, 2013 |
Change |
|
Revenue, as reported |
Foreign exchange impact as compared
to prior period |
Revenue on a constant currency
basis |
Revenue, as reported |
As reported |
Constant currency basis |
United States |
$167,399 |
$— |
$167,399 |
$130,126 |
29% |
29% |
International |
37,515 |
(204) |
37,311 |
28,685 |
31% |
30% |
Total revenue |
$204,914 |
$(204) |
$204,710 |
$158,811 |
29% |
29% |
THE SPECTRANETICS
CORPORATION |
Reconciliation of revenue by
product line to non-GAAP revenue by product line |
on a constant currency
basis |
(in thousands, except
percentages) |
(unaudited) |
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
December 31, 2014 |
December 31, 2013 |
Change |
|
Revenue, as reported |
Foreign exchange impact as compared
to prior period |
Revenue on a constant currency
basis |
Revenue, as reported |
As reported |
Constant currency basis |
Vascular Intervention |
$39,055 |
$108 |
$39,163 |
$20,555 |
90% |
91% |
Lead Management |
18,509 |
208 |
18,717 |
16,286 |
14% |
15% |
Laser System, Service & Other |
5,395 |
101 |
5,496 |
5,079 |
6% |
8% |
Total revenue |
$62,959 |
$417 |
$63,376 |
$41,920 |
50% |
51% |
|
|
|
|
|
|
|
|
Twelve Months Ended |
|
|
|
December 31, 2014 |
December 31, 2013 |
Change |
|
Revenue, as reported |
Foreign exchange impact as compared
to prior period |
Revenue on a constant currency
basis |
Revenue, as reported |
As reported |
Constant currency basis |
Vascular Intervention |
$118,148 |
$(88) |
$118,060 |
$75,601 |
56% |
56% |
Lead Management |
66,662 |
(106) |
66,556 |
62,518 |
7% |
6% |
Laser System, Service & Other |
20,104 |
(10) |
20,094 |
20,692 |
(3)% |
(3)% |
Total revenue |
$204,914 |
$(204) |
$204,710 |
$158,811 |
29% |
29% |
THE SPECTRANETICS
CORPORATION |
Reconciliation of gross margin
to non-GAAP gross margin |
excluding amortization of
inventory step-up |
(in thousands, except
percentages) |
(unaudited) |
|
|
|
|
|
|
Three Months Ended |
Twelve Months Ended |
|
December 31, 2014 |
December 31, 2013 |
December 31, 2014 |
December 31, 2013 |
Gross profit, as reported |
$46,040 |
$31,561 |
$151,455 |
$117,455 |
Amortization of inventory step-up (1) |
1,060 |
— |
2,074 |
— |
Adjusted gross profit, excluding amortization
of inventory step-up |
47,100 |
31,561 |
153,529 |
117,455 |
|
|
|
|
|
Gross margin percentage, as reported |
73% |
75% |
74% |
74% |
Non-GAAP gross margin percentage, excluding
amortization of inventory step-up |
75% |
75% |
75% |
74% |
|
Reconciliation of Net (Loss)
Income to Non-GAAP Net (Loss) Income |
(in thousands) |
(unaudited) |
|
|
|
|
|
|
Three Months Ended |
Twelve Months Ended |
|
December 31, 2014 |
December 31, 2013 |
December 31, 2014 |
December 31, 2013 |
Net (loss) income, as reported |
$(14,731) |
$883 |
$(40,901) |
$(370) |
Acquisition transaction and integration costs
(2) |
9,233 |
— |
17,288 |
— |
Amortization of inventory step-up (1) |
1,060 |
— |
2,074 |
— |
Acquisition-related intangible asset
amortization (3) |
3,007 |
245 |
6,335 |
901 |
Contingent consideration expense (4) |
955 |
229 |
2,070 |
867 |
Intangible asset impairment and change in
fair value of contingent consideration liability, net (5) |
— |
(675) |
3,074 |
(675) |
Release of valuation allowance related to
AngioScore acquisition (6) |
(1,266) |
— |
(1,266) |
— |
Non-GAAP net (loss) income |
$(1,742) |
$682 |
$(11,326) |
$723 |
|
|
|
|
|
Footnote explanations can be
found following the last non-GAAP tables. |
THE SPECTRANETICS
CORPORATION |
Reconciliation of Net (Loss)
Income Per Share to Non-GAAP Net (Loss) Income Per Share |
(unaudited) |
|
|
|
|
|
|
Three Months Ended |
Twelve Months Ended |
|
December 31, 2014 |
December 31, 2013 |
December 31, 2014 |
December 31, 2013 |
Net (loss) income per share, as reported |
$(0.35) |
$0.02 |
$(0.98) |
$(0.01) |
Acquisition transaction and integration costs
(2) |
0.22 |
— |
0.41 |
— |
Amortization of inventory step-up (1) |
0.03 |
— |
0.05 |
— |
Acquisition-related intangible asset
amortization (3) |
0.07 |
0.01 |
0.15 |
0.02 |
Contingent consideration expense (4) |
0.02 |
0.01 |
0.05 |
0.02 |
Intangible asset impairment and change in
fair value of contingent consideration liability, net (5) |
— |
(0.02) |
0.07 |
(0.02) |
Release of valuation allowance due to
AngioScore acquisition (6) |
(0.03) |
— |
(0.03) |
— |
Non-GAAP net (loss) income per share (7) |
$(0.04) |
$0.02 |
$(0.27) |
$0.02 |
|
Reconciliation of Net Income
(Loss) to Adjusted EBITDA |
(in thousands) |
(unaudited) |
|
|
|
|
|
|
|
Three Months Ended |
|
Dec 31, 2013 |
March 31, 2014 |
June 30, 2014 |
Sept 30, 2014 |
Dec 31, 2014 |
Net income (loss), as reported |
$883 |
$(5,661) |
$(6,565) |
$(13,944) |
$(14,731) |
Income tax expense (benefit) |
885 |
147 |
246 |
188 |
(903) |
Interest (income) expense, net |
(2) |
(1) |
489 |
1,801 |
1,773 |
Depreciation and amortization |
2,419 |
2,459 |
2,473 |
2,691 |
2,855 |
Acquisition transaction and integration costs
(2) |
— |
271 |
3,958 |
3,826 |
9,233 |
Amortization of inventory step-up (1) |
— |
— |
— |
1,014 |
1,060 |
Acquisition-related intangible asset
amortization (3) |
245 |
137 |
136 |
3,055 |
3,007 |
Contingent consideration expense (4) |
229 |
38 |
40 |
1,037 |
955 |
Intangible asset impairment and change in
fair value of contingent consideration liability, net (5) |
(675) |
— |
— |
3,074 |
— |
Adjusted EBITDA (8) |
$3,984 |
$(2,610) |
$777 |
$2,742 |
$3,249 |
THE SPECTRANETICS
CORPORATION |
Reconciliation of Net Loss to
Adjusted EBITDA |
(in thousands) |
(unaudited) |
|
|
|
|
Twelve Months Ended |
|
December 31, 2014 |
December 31, 2013 |
Net loss, as reported |
$(40,901) |
$(370) |
Income tax (benefit) expense |
(322) |
780 |
Interest expense (income), net |
4,062 |
(3) |
Depreciation and amortization |
10,478 |
9,705 |
Acquisition transaction and integration costs
(2) |
17,288 |
— |
Amortization of inventory step-up (1) |
2,074 |
— |
Acquisition-related intangible asset
amortization (3) |
6,335 |
901 |
Contingent consideration expense (4) |
2,070 |
867 |
Intangible asset impairment and change in
fair value of contingent consideration liability, net (5) |
3,074 |
(675) |
Adjusted EBITDA (8) |
$4,158 |
$11,205 |
|
Reconciliation of 2015
Projected Net Loss to Non-GAAP Projected Net Loss |
(in millions) |
(unaudited) |
|
|
|
|
Projected Range |
|
Twelve Months Ending |
|
December 31, 2015 |
December 31, 2015 |
Net loss, GAAP |
$(62.0) |
$(58.0) |
Acquisition-related transaction
and integration costs (9) |
9.0 |
9.0 |
Acquisition-related amortization
& contingent consideration expense (10) |
17.1 |
17.1 |
Non-GAAP net loss |
(35.9) |
(31.9) |
|
|
|
Reconciliation of 2015
Projected Net Loss Per Share to Non-GAAP Projected Net Loss Per
Share |
(unaudited) |
|
|
|
|
Projected Range |
|
Twelve Months Ending |
|
December 31, 2015 |
December 31, 2015 |
Net loss per share, GAAP |
$(1.46) |
$(1.36) |
Acquisition-related transaction
and integration costs (9) |
0.21 |
0.21 |
Acquisition-related amortization
& contingent consideration expense (10) |
0.40 |
0.40 |
Non-GAAP net loss per share
(7) |
(0.84) |
(0.75) |
|
|
|
|
|
__________________
1) Amortization of inventory
step-up relates to the inventory acquired in the AngioScore
acquisition.
2) Acquisition transaction and
integration costs in 2014 primarily relate to the AngioScore
acquisition, which closed on June 30, 2014, and include investment
banking fees, accounting, consulting, and legal fees. In the third
and fourth quarters of 2014, integration costs also included
severance and retention costs. In addition, these costs included
$1.2 million and $5.6 million during the third and fourth
quarters of 2014, respectively, for legal fees associated with a
patent-related matter in which AngioScore is the plaintiff. In the
fourth quarter of 2014, transaction and integration costs also
included $1.5 million, primarily legal fees, related to the
Stellarex™ acquisition, which closed on January 27, 2015.
3) Acquisition-related intangible
asset amortization relates to intangible assets acquired in the
AngioScore acquisition in June 2014 and intangible assets acquired
from Upstream Peripheral Technologies Ltd. ("Upstream") in
2013.
4) Contingent consideration
expense represents the accretion of the estimated contingent
consideration liability related to future amounts payable to former
AngioScore stockholders primarily based on sales of the AngioScore
products and achievement of product development milestones, and to
Upstream, primarily based on sales of the products acquired.
5) Intangible asset impairment
and change in fair value of contingent consideration liability,
net, relates to intangible assets and contingent consideration
liability acquired from Upstream. Due to factors associated with
the access and overall retrograde interventional market and other
relevant factors, in the third quarter of 2014, we recorded a net
charge of $3.1 million, consisting of an impairment charge of
approximately $4.1 million related to the intangible assets
acquired and a reduction to the contingent consideration liability
of $1.0 million. In the fourth quarter of 2013, we recorded a net
credit of $0.7 million, consisting of a reduction to the contingent
consideration liability of approximately $5.2 million and an
impairment charge of approximately $4.5 million related to the
intangible assets acquired.
6) Included in the $0.3 million
income tax benefit for the year ended December 31, 2014 is a $1.3
million tax benefit from the release of valuation allowance of our
deferred tax assets ("DTAs"). In connection with our acquisition of
AngioScore during the year ended December 31, 2014, deferred tax
liabilities ("DTLs") were established for the book-tax basis
differences related to the non-goodwill intangible assets. These
DTLs exceeded the acquired DTAs by $1.3 million.
7) Per share amounts may not add
due to rounding.
8) In 2014, we are not adding
back the medical device excise tax to Adjusted EBITDA, as the tax
was also included in the 2013 results. Therefore, 2013 Adjusted
EBITDA has been restated to include the medical device excise
tax.
9) Acquisition-related
transaction and integration costs include AngioScore severance and
retention costs of $2.1 million, legal fees associated with a
patent-related matter in which AngioScore is the plaintiff of $4.9
million and estimated transaction and integration costs for the
Stellarex acquisition of $2.0 million.
10) Acquisition-related
intangible asset amortization relates to intangible assets acquired
in the AngioScore acquisition in June 2014 and the Stellarex
acquisition in January 2015, intangible assets acquired from
Upstream, and amortization of acquired inventory step-up related to
the inventory acquired in the AngioScore acquisition. Contingent
consideration expense represents the accretion of the estimated
contingent consideration liability related to future amounts that
may be payable to former AngioScore stockholders primarily based on
sales of the AngioScore products and achievement of product
development milestones, and to Upstream, primarily based on sales
of the products acquired.
Management uses the non-GAAP financial measures as supplemental
measures to analyze the underlying trends in our business, assess
the performance of our core operations, establish operational goals
and forecasts that are used in allocating resources and evaluate
our performance period over period and in relation to our
competitors' operating results.
The impact of foreign exchange rates is highly variable and
difficult to predict. We use a constant currency basis to show the
impact from foreign exchange rates on current period revenue
compared to prior period revenue using the prior period's foreign
exchange rates. In order to properly understand the underlying
business trends and performance of our ongoing operations, we
believe that investors may find it useful to consider the impact of
excluding changes in foreign exchange rates from our revenue.
We believe presenting the non-GAAP financial measures used in
this release provides investors greater transparency to the
information used by our management for financial and operational
decision-making and allows investors to see our results "through
the eyes" of management. We also believe providing this information
better enables our investors to understand our operating
performance and evaluate the methodology used by management to
evaluate and measure such performance.
Non-GAAP financial measures have limitations as analytical tools
and should not be considered in isolation or as a substitute for
our financial results prepared in accordance with GAAP. Some
limitations associated with using these non-GAAP financial measures
are provided below:
- Management exercises judgment in determining which types of
charges or other items should be excluded from the non-GAAP
financial measures used.
- Depreciation and amortization expense, while not requiring cash
settlement, are ongoing and recurring expenses and have a material
impact on GAAP net income or loss and reflect costs to us not
reflected in Adjusted EBITDA. The intangible asset impairment,
while not requiring cash settlement, reflects an economic cost to
us not reflected in Adjusted EBITDA.
- Items such as the acquisition transaction and integration costs
and contingent consideration expense excluded from Adjusted EBITDA
and non-GAAP net (loss) income can have a material impact on cash
flows and GAAP net (loss) income and reflect economic costs to us
not reflected in Adjusted EBITDA or non-GAAP net (loss)
income.
- Revenue growth rates stated on a constant currency basis, by
their nature, exclude the impact of changes in foreign currency
exchange rates, which may have a material impact on GAAP
revenue.
- Non-GAAP financial measures are not based on any comprehensive
set of accounting rules or principles and therefore other companies
may calculate similarly titled non-GAAP financial measures
differently than we do, limiting the usefulness of those measures
for comparative purposes.
CONTACT: COMPANY CONTACT
The Spectranetics Corporation
Guy Childs, Chief Financial Officer
(719) 633-8333
INVESTOR CONTACT
Westwicke Partners
Lynn Pieper
(415) 202-5678
lynn.pieper@westwicke.com
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