Cardiac Science Announces Preliminary 2005 First Quarter Results
27 Aprile 2005 - 3:00PM
PR Newswire (US)
Cardiac Science Announces Preliminary 2005 First Quarter Results
Final Results Pending Completion of Goodwill Impairment Analysis
IRVINE, Calif., April 27 /PRNewswire-FirstCall/ -- Cardiac Science,
Inc. (NASDAQ:DFIB), a leading manufacturer of life-saving automatic
public-access defibrillators (AEDs) and provider of comprehensive
AED/CPR training services, today announced its results for the
three months ended March 31, 2005. Revenue from the sale of AEDs
and related services for the 2005 first quarter totaled $14.6
million, a 6 percent increase over the $13.8 million in the same
period last year. This increase was a result of higher levels of
international AED revenue, partially offset by lower sales to
distributors in the U.S. Total revenue for the first quarter was
$15.0 million compared to $15.6 million in the prior year. Revenue
for the first quarter of last year included $1.4 million in sales
of CPR Prompt and patient monitoring product lines, which were
divested and discontinued in the second half of 2004 The gross
profit margin for the 2005 first quarter was 58.3 percent which was
consistent with the prior year period and up sequentially from the
54.5 percent in the fourth quarter of 2004. The increase was
primarily a result of changes in product mix reflecting lower sales
of OEM products. Operating expenses for the three months ended
March 31, 2005 were $12.0 million, compared to $12.3 million in the
same quarter in 2004, representing a decrease of $377,000 or 3
percent. Included in operating expenses for the 2005 first quarter
was approximately $630,000 in expenses related to the pending
merger with Quinton Cardiology Systems, as well as approximately
$887,000 in legal expenses, primarily attributable to patent
litigation against Phillips. Excluding merger related costs during
the 2005 period and legal expenses for both periods, operating
expenses for the quarter decreased $1.3 million or 11 percent from
the same period last year, primarily as a result of a series of
expense reductions implemented throughout 2004. Under generally
accepted accounting principles, the Company is required to test
goodwill for impairment on an annual basis, or whenever events or
circumstances indicate that there may be an impairment. Based on
the recent decline in the Company's stock price relative to its
book value per share, it has prepared a goodwill impairment
analysis, which is currently being reviewed by its independent
registered public accounting firm, PricewaterhouseCoopers LLP. The
Company believes that PricewaterhouseCoopers LLP will complete its
review in advance of the May 10, 2005 Form 10-Q filing deadline. A
goodwill impairment charge is non-cash, and is presented as a
separate line item in the statement of operations before
income/(loss) from operations. Excluding the impact of any
potential goodwill impairment charge, the operating loss for the
first quarter ended March 31, 2005 was $3.2 million, which was
consistent with the operating loss for the same period in 2004.
Excluding the impact of any potential goodwill impairment charge,
the net loss for the 2005 first quarter was $6.6 million, or $0.08
loss per share, including a previously disclosed $1.4 million
charge for cash and stock issued as consideration for delays in
filing a contractually required registration statement. The net
loss for the first quarter of 2004 was $4.8 million, or $0.06 loss
per share. The March 31, 2005 balance sheet showed cash and cash
equivalents of $9.6 million. Cardiac Science Chairman and CEO
Raymond W. Cohen said, "During the quarter we were encouraged that
our gross profit margin exceeded 58 percent which was the high end
of our guidance range. The first quarter is traditionally a slower
quarter in terms of revenue growth for Cardiac Science while
potential buyers in the U.S. markets, particularly those in the
corporate workplace segment, organize their budgets and spending
priorities for the year. Accordingly, given our weighting of sales
in the U.S. workplace segment, we expect overall AED sales and
programs to grow at a faster rate for the balance of 2005." Cohen
added, "We continue to feel pressure from our larger competitors
who point to our size and financial position as a reason not to do
business with Cardiac Science. We believe that the pending merger
with Quinton helps address this competitive issue." With respect to
sales in Japan, Cohen stated, "After very strong sales growth in
2004, we are now awaiting news from Nihon Kohden Corp, our Japanese
OEM partner, regarding the pending approval by the Japanese
Ministry of Health ("MOH") for our biphasic version AED. As demand
for AEDs in Japan has grown, so has the desire to purchase a
biphasic version AED. Our submission has been pending for some time
and we are hopeful that this regulatory clearance can be received
by the end of the second quarter and therefore shipments of our
Nihon Kohden-branded biphasic version AED can begin." With respect
to the new traditional in-hospital external defibrillator which has
been under development for sale by GE Healthcare, Cohen commented,
"In the quarter, we filed a 510(k) submission with the Food and
Drug Administration, which is currently pending. We anticipate that
the GE product will be released at the end of June." Financial
Outlook Excluding the impact of, or costs associated with, the
pending merger with Quinton Cardiology Systems, and the impact of
any potential goodwill impairment charge, the Company is
maintaining its previously provided guidance for the full year of
2005, adjusted to reflect the postponement of mandatory expensing
of stock options. The Company anticipates its core AED product line
will grow between 15 percent and 22 percent over the 2004 level of
$56.7 million and as a result, expects total revenue for 2005 to
range from $75 million to $80 million. Revenue from AED products
and the AED/CPR training business is expected to account for
approximately 95 percent of total sales. The Company estimates that
its gross profit margin will range between 55 percent and 58
percent of revenue, with quarterly variability driven by sales mix,
manufacturing volumes and market conditions which could affect
average selling prices. The Company expects its operating expenses
to range between $45 million and $48 million, with additional
variability possible as a result of higher than expected legal fees
associated with the Phillips litigation. The Company anticipates
that its operating results will range from an operating profit of
$1.4 million to an operating loss of $6.7 million and its net loss
to range from $7.6 million to $15.7 million, or $0.09 loss to $0.18
loss per share. It should be noted that this guidance assumes
receipt of Japanese MOH approval of the biphasic AED in the second
quarter of 2005, as well as receipt of regulatory clearances for
the GE defibrillator in the second quarter of 2005. Should these
approvals be delayed or not materialize, the company's expected
revenue range could be reduced by $5 million to $10 million for
2005, which in turn would materially impact the balance of the
company's results from operations. Conference Call Information
Management will host a conference call regarding its preliminary
results for the first quarter ended March 31, 2005 which will be
broadcast live on the Internet at 12:00 noon EDT today. Management
encourages shareholders and other interested parties to listen to
the live webcast by going to the Company's website at
http://www.cardiacscience.com/. Web participants should go to the
company's website at least 15 minutes prior to the start of the
call to register, download, and install any necessary audio
software. The online archive of the call will be available
immediately following the conference call. About Cardiac Science
Cardiac Science develops, manufactures and markets a complete line
of Powerheart(R) brand, automatic public access defibrillators
(AEDs), and offers comprehensive AED/CPR training and AED program
management services that facilitate successful deployments. The
company makes the Powerheart(R) CRM(R), the only FDA-cleared
therapeutic bedside patient monitor that instantly and
automatically treats hospitalized cardiac patients who suffer
life-threatening heart rhythms. Cardiac Science also manufactures
its AED products on a private label basis for other leading medical
companies such as Nihon Kohden (Japan), Quinton Cardiology Systems
and GE Healthcare. For more information please visit
http://www.cardiacscience.com/ or call (949) 797-3800. This news
release contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. In addition,
from time to time Cardiac Science, or its representatives, have
made or may make forward-looking statements orally or in writing.
The words "estimate," "potential," "intended," "expect,"
"anticipate," "believe," and other similar expressions or words are
intended to identify forward looking statements. . Cardiac Science
has based these forward-looking statements on current expectations,
assumptions, estimates and projections. While Cardiac Science
believes these expectations, assumptions, estimates and projections
are reasonable, such forward-looking statements are only
predictions and involve known and unknown risks and uncertainties,
many of which are beyond our control. Such forward-looking
statements include, but are not limited to any potential goodwill
impairment charge, to the achievement of future revenue growth and
other expected financial results. Cardiac Science cautions that
these statements are subject to substantial risks and uncertainties
and are qualified by important factors that could cause actual
results to differ materially from those reflected by the
forward-looking statements and should not be relied upon by
investors when making an investment decision. . Such risks and
uncertainties include, but are not limited to, in no particular
order: slower than anticipated growth of the worldwide AED market,
failure to successfully compete against new or existing
competitors, erosion in the price of Cardiac Science's AED
products, pending entry into hospital marketplace, uncertain
customer decision processes and long sales cycles, and supply
shortages. Information on these and other factors is detailed in
Cardiac Science's Form 10-K for the year ended December 31, 2004,
subsequent quarterly filings, and other documents filed by Cardiac
Science with the Securities and Exchange Commission. Given these
risks and uncertainties, you are cautioned not to place undue
reliance on such forward-looking statements. Cardiac Science does
not undertake any obligation to update any such statements or to
publicly announce the results of any revisions to any such
statements to reflect future events or developments. Contact: Matt
Clawson (Investors), or Roderick de Greef Len Hall (Media) EVP
& Chief Financial Officer Allen & Caron Inc Cardiac
Science, Inc. (949) 474-4300 (949) 797-3800 DATASOURCE: Cardiac
Science, Inc. CONTACT: Matt Clawson (Investors), , or Len Hall
(Media), , both of Allen & Caron Inc, +1-949-474-4300, for
Cardiac Science, Inc.; or Roderick de Greef, EVP & Chief
Financial Officer of Cardiac Science, Inc., +1-949-797-3800, Web
site: http://www.cardiacscience.com/
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