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Spectranetics Reports First Quarter 2017 Revenue of $69.7 million

COLORADO SPRINGS, Colo., April 27, 2017 (GLOBE NEWSWIRE) -- The Spectranetics Corporation (NASDAQ:SPNC) (“the Company”) today reported financial results for the three months ended March 31, 2017. Highlights of the quarter, all compared with the three months ended March 31, 2016, include:

  • Revenue of $69.7 million increased 11%
  • Vascular Intervention revenue of $46.4 million increased 11%
  • Lead Management revenue of $19.0 million increased 11% (12% constant currency1)

Net loss for the three months ended March 31, 2017 was $18.5 million, or $0.43 per share, compared with net loss of $17.3 million, or $0.40 per share, for the three months ended March 31, 2016.

“Q1 was another strong quarter for Spectranetics, evidenced by double-digit revenue growth in both of our business units,” said Scott Drake, President and CEO. “We are driving growth globally in our effort to improve patients’ lives. In addition to the solid top-line performance, we continue to make progress on our innovation pipeline and are focused on the opportunities that lie ahead.”

2017 Financial Outlook
The Company reiterates its previously given, full year 2017 financial outlook:

  • Revenue is projected to be within a range of $293 million to $306 million, an increase of 8% to 13% over 2016
  • Gross margin is projected to be within the range of 73.8% to 74.4% of sales
  • Research and Development expense is expected to be in the range of 25% to 26% of sales
  • Selling, General, and Administrative expense is projected to be in the range of 60% to 62% of sales
  • Net loss is projected to be within a range of $57 million to $63 million
  • Loss per share is projected to be within a range of $1.31 to $1.43, based on an outstanding share count of 43.9 million

__________________________
1Constant currency is a non-GAAP financial measure. See “Reconciliation of Non-GAAP Financial Measures” later in this release.

Conference Call
Management will host an investment community conference call today beginning at 2:30 pm MTN / 4:30 pm EDT. Individuals interested in listening to the conference call may dial (877) 561-2747 for domestic callers, or (973) 409-9689 for international callers. The conference ID is 3440087. The call may also be accessed on the webcast in the investor relations section of the Company’s website at: www.spectranetics.com. The webcast will be available on the Company’s website for 14 days following the completion of the call.

About Spectranetics

The Spectranetics Corporation develops, manufactures, markets and distributes medical devices used in minimally invasive procedures within the cardiovascular system. The Company's products are available in over 65 countries and are used to treat arterial blockages in the heart and legs and to remove and support the removal of pacemaker and defibrillator leads.

The Company's Vascular Intervention (VI) products include a range of laser catheters for ablation of blockages in arteries above and below the knee, the AngioSculpt scoring balloon used in both peripheral and coronary procedures, and the Stellarex drug-coated balloon peripheral angioplasty platform, which received European CE mark approval in December 2014. 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, including the Bridge™ Occlusion Balloon.

For more information, visit www.spectranetics.com.

Safe Harbor Statement

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, 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,” “see,” “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 and regulatory approvals, regulatory or competitive environments, outcome of litigation, our intellectual property and product development. These forward-looking statements include, but are not limited to, statements regarding our competitive position, product innovation and development, and commercialization schedule, expectation of continued growth and the reasons for that growth, growth rates, strength, integration and product launches, regulatory approvals, and 2017 outlook and projected results including projected revenue and expenses, gross margin, net loss and loss per share. 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; our need to comply with complex and evolving laws and regulations; intense and increasing competition and consolidation in our industry; the impact of rapid technological change; slower revenue growth and continued losses; the inaccuracy of our assumptions regarding AngioScore and Stellarex; market acceptance of our technology and products; our inability to manage growth; 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 and successful commercialization of new products; loss of key personnel; uncertain success of or delays in our clinical trials; costs of and adverse results in any ongoing or future legal proceedings; adverse impact to our business from healthcare reform and related legislation and regulations, including changes in reimbursements and the impact of fraud and abuse and information privacy laws and regulations; adverse conditions in the general domestic and global economic markets and volatility and disruption of the credit markets or other factors that prevent us from obtaining funding; our inability to protect our intellectual property and intellectual property claims of third parties; availability of inventory and components from suppliers, including sole source suppliers; adverse outcome of FDA inspections, including FDA warning letters and any remediation efforts; the receipt of FDA clearance and other regulatory approvals to market new products or applications and the timeliness of any clearance and approvals; product defects or recalls and product liability claims; cybersecurity breaches; interruptions of our manufacturing operations and other events that affect our ability to manufacture sufficient volumes to fulfill customer demand; our dependence on third party vendors, suppliers, consultants and physicians; risks associated with international operations, including international sales using distributors and the impact of “Brexit” on our European sales and operations; risks associated with any future acquisitions; our ability to use net operating loss carryovers and potential impairment charges; lack of cash necessary to satisfy our cash obligations under our outstanding 2.625% Convertible Senior Notes due 2034 and our term loan and revolving loan facilities; our debt adversely affecting our financial health and preventing us from fulfilling our debt service and other obligations; 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 2016 Annual Report on Form 10-K. 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 a non-GAAP financial measure regarding constant currency in this release. Reconciliations of the non-GAAP financial measure used in this release to the most directly comparable GAAP measure for the respective periods, and an explanation of our use of this non-GAAP measure, 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)
(unaudited)
 
    Three Months Ended March 31,
    2017   2016
Revenue   $ 69,680     $ 62,884  
Cost of products sold   18,051     16,082  
Gross profit   51,629     46,802  
Operating expenses:        
Selling, general and administrative   45,656     40,789  
Research, development and other technology   17,850     16,337  
Acquisition transaction, integration and legal costs   187     292  
Acquisition-related intangible asset amortization   2,919     3,203  
Contingent consideration expense       100  
Total operating expense   66,612     60,721  
Operating loss   (14,983 )   (13,919 )
Other expense   (3,292 )   (3,167 )
Loss before income tax expense   (18,275 )   (17,086 )
Income tax expense   249     205  
Net loss   $ (18,524 )   $ (17,291 )
         
Net loss per common share:        
Basic and diluted   $ (0.43 )   $ (0.40 )
Weighted average shares outstanding:        
Basic and diluted   43,491     42,697  



THE SPECTRANETICS CORPORATION
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
 
    March 31, 2017   December 31, 2016
ASSETS        
Current assets:        
Cash and cash equivalents   $ 43,942     $ 57,237  
Accounts receivable, net   43,869     43,565  
Inventories, net   28,864     27,642  
Other current assets   6,658     7,088  
Total current assets   123,333     135,532  
Property and equipment, net   45,461     44,827  
Goodwill and intangible assets   244,274     247,040  
Other assets   2,667     2,679  
Total assets   $ 415,735     $ 430,078  
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
Borrowings under revolving line of credit   $ 27,103     $ 24,712  
Other current liabilities   38,964     42,230  
Total current liabilities   66,067     66,942  
Convertible debt, net of debt issuance costs   225,355     225,095  
Term loan, net of debt issuance costs   59,682     59,664  
Other non-current liabilities   4,178     4,054  
Stockholders’ equity   60,453     74,323  
Total liabilities and stockholders’ equity   $ 415,735     $ 430,078  



THE SPECTRANETICS CORPORATION
Supplemental Financial Information
(in thousands, except laser placement and percentages)
(Unaudited)
 
Financial Summary   2016   2017
    1st Qtr   2nd Qtr   3rd Qtr   4th Qtr   1st Qtr
Disposable products revenue:                    
Vascular Intervention   $ 41,912     $ 46,218     $ 45,906     $ 47,566     $ 46,448  
Lead Management   17,096     17,767     18,616     19,786     19,033  
  Total disposable products   59,008     63,985     64,522     67,352     65,481  
Laser, service, and other   3,876     3,763     3,743     4,574     4,199  
Total revenue   $ 62,884     $ 67,748     $ 68,265     $ 71,926     $ 69,680  
Gross margin percentage   74 %   75 %   75 %   74 %   74 %
                     
Net loss   $ (17,291 )   $ (14,906 )   $ (13,312 )   $ (12,611 )   $ (18,524 )
                     
Cash flow used in operating activities   $ (12,444 )   $ (1,873 )   $ (5,878 )   $ (4,238 )   $ (14,086 )
Total cash and cash equivalents at end of quarter   $ 67,494     $ 64,343     $ 58,895     $ 57,237     $ 43,942  
                     
Worldwide Installed Laser Base Summary:                    
Laser placements during quarter   44     45     52     53     43  
Buy-backs/returns during quarter   (18 )   (21 )   (16 )   (20 )   (14 )
Net laser placements during quarter   26     24     36     33     29  
Total lasers placed at end of quarter   1,418     1,442     1,478     1,511     1,540  

Reconciliation of Non-GAAP Financial Measures

To supplement our condensed consolidated financial statements prepared in accordance with GAAP, we use a certain non-GAAP financial measure in this release regarding revenue on a constant currency basis. Reconciliations of this non-GAAP financial measure to the most directly comparable GAAP measure for the respective periods can be found in the tables below. An explanation of the manner in which our management uses this non-GAAP measure to conduct and evaluate our business and the reasons management believes this non-GAAP measure provides useful information to investors are provided following the reconciliation tables.

Reconciliation of revenue by geography to non-GAAP revenue by geography
on a constant currency basis
(in thousands, except percentages)
(unaudited)



    Three Months Ended March 31,      
    2017   2016   % 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   $ 58,413     $     $ 58,413     $ 52,982     10 %   10 %
International   11,267     254     11,521     9,902     14 %   16 %
Total revenue   $ 69,680     $ 254     $ 69,934     $ 62,884     11 %   11 %


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 March 31,      
    2017   2016   % 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   $ 46,448     $ 109     $ 46,557     $ 41,912     11 %   11 %
Lead Management   19,033     122     19,155     17,096     11 %   12 %
Laser, service, and other   4,199     23     4,222     3,876     8 %   9 %
Total revenue   $ 69,680     $ 254     $ 69,934     $ 62,884     11 %   11 %

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 measure 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:

  • 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.
Investor Relations Contacts

Zach Stassen
Investor.relations@spnc.com
(719) 447-2292

Michaella Gallina
Investor.relations@spnc.com
(719) 447-2417

Spectranetics Corporation