IRVINE, Calif., March 31 /PRNewswire-FirstCall/ -- Cardiogenesis
Corporation (Pink Sheets: CGCP) the "Company", a leading developer
of surgical products used in the treatment of patients suffering
from severe angina, today reported financial results for its fourth
quarter and fiscal year ended December 31, 2008. Fourth Quarter and
Fiscal Year 2008 Financial Results Net revenues in the fourth
quarter of 2008 totaled $2,431,000, a 12% decrease from the prior
year fourth quarter net revenues of $2,767,000. During the fourth
quarter of 2008, the Company sold two lasers and 463 handpiece
units as compared to three lasers and 462 handpieces during the
fourth quarter of 2007. The lower revenue in the current year
quarter is primarily attributable to the decrease in sales of our
laser product. Net revenues for the year ended December 31, 2008
totaled $12,150,000, an increase of approximately 1% from the
$12,059,000 of net revenues for the year ended December 31, 2007.
The increase in net revenues was due to an increase in laser
revenue of $388,000 which was partially offset by decreases in
handpiece revenue of $284,000 and service and other revenues of
$13,000. During the year ended December 31, 2008 the Company sold
13 lasers and 2,063 handpieces as compared to 14 lasers and 2,293
handpieces in the prior year period. Richard Lanigan, Cardiogenesis
President, stated, "During 2008 we have added essential sales and
marketing resources to continue supporting TMR as an adjunctive
therapy while implementing new initiatives to gain further adoption
of TMR as a 'stand alone' therapy. At the same time we have renewed
our efforts on the product development front while generating
positive cash flow for the year. We continue to experience
excellent gross margins and believe we are well positioned for
sales growth going forward." The Company reported a fourth quarter
2008 operating loss of $555,000 as compared with an operating loss
of $32,000 in the prior year quarter. The net loss for the quarter
was $573,000 or $0.01 per basic and diluted share, as compared with
a net loss of $84,000, or $0.00 per basic and diluted share in the
2007 fourth quarter. For the year ended December 31, 2008 the
Company reported an operating loss of $320,000 as compared with an
operating income of $856,000 for the prior year period. The net
loss for the year ended December 31, 2008 was $315,000, or $0.01
per diluted share, compared with net income of $578,000, or $0.01
per diluted share, for the year ended December 31, 2007. The gross
margin percentage was 73% of net revenues for the quarter ended
December 31, 2008 as compared with a 63% gross margin percentage in
the fourth quarter of 2007. Gross profit increased by $50,000 to
$1,781,000 for the current year quarter as compared with $1,731,000
for the 2007 fourth quarter. For the year ended December 31, 2008,
the gross margin percentage was 82% of net revenues as compared to
76% of net revenues for the year ended December 31, 2007. Gross
profit increased by $801,000 to $9,911,000 for the year ended
December 31, 2008, as compared to $9,110,000 for the prior year
period. The increase in the gross margin percentage and gross
profit for the year ended December 31, 2008 resulted from a
combination of higher laser and handpiece average sales prices, a
decrease in inventory obsolescence charges of $346,000, and
recognition of $234,000 of deferred revenue for which there is no
associated cost of goods sold. Inventory obsolescence charges for
the years ended December 31, 2008 and 2007 were $187,000 and
$533,000, respectively. Approximately $155,000 of the obsolescence
charges in 2008 were related to PMC inventory. The remaining
$32,000 was related to the TMR 2000 System product line. In the
fourth quarter of 2007, the Company announced that, since TMR 2000
System component inventory was limited and those components were
are no longer manufactured, it could not guarantee future component
availability to service and support the TMR 2000 System.
Accordingly, the Company recorded an impairment charge for the TMR
2000 System finished goods and excess parts used to maintain and
service the TMR 2000 System. Also in 2007, an inventory
obsolescence charge of $221,000 related to expired product
associated with the Company's PMC product line was incurred.
Research and development expenses were $271,000 in the fourth
quarter of 2008 as compared with $69,000 in the 2007 fourth
quarter. Full year 2008 research and development expenses of
$904,000 were $223,000 or 33% higher than the prior year period of
$681,000. Sales and marketing expenses of $1,629,000 in the quarter
ended December 31, 2008 increased $456,000, or 39%, compared with
$1,173,000 for the quarter ended December 31, 2007. For the year
ended December 31, 2008, sales and marketing expenses totaled
$6,487,000, an increase of $2,046,000, or 46%, compared with
$4,441,000 for the year ended December 31, 2007. The dollar and
percentage increase in sales and marketing expenditures resulted
primarily from higher compensation expense of approximately
$1,240,000 related to investments made to strengthen the sales and
marketing organization and an increase in employee benefits expense
of $119,000 associated with a higher average headcount in 2008 as
compared to 2007. Travel and entertainment expenses also increased
in 2008 by $329,000 due to higher headcount and increased sales
activity. General and administrative expenses for the quarter ended
December 31, 2008 totaled $436,000 as compared to $521,000 during
the quarter ended December 31, 2007. For the year ended December
31, 2008, general and administrative expenses totaled $2,840,000 as
compared to $3,132,000 for the year ended December 31, 2007. This
reduction of $292,000, or 9% resulted primarily from a $176,000
reduction in incentive compensation, an $87,000 reduction in
insurance expense, and a $20,000 reduction in general and
administrative related depreciation. Lanigan further noted, "In the
latter part of 2008 we expanded our marketing focus to include the
cardiologists who manage the patients with refractory angina.
Although CT surgeons perform the procedure, usually as an adjunct
to coronary bypass, we believe we must also focus on the
significant number of angina patients who are not candidates for
coronary bypass or intervention that can benefit from stand-alone
TMR. These individuals are being medically managed by thousands of
cardiologists. Since the beginning of the fourth quarter of 2008,
13 new sites performed their first stand-alone TMR cases, five of
them utilizing a surgical robot." Mr. Lanigan added, "We believe
successful stand-alone TMR cases also help validate the therapy for
adjunctive use in the eyes of CT surgeons and our strategy of
educating the cardiologists is important to the long term growth of
the utilization of the therapy." About Cardiogenesis Corporation
Cardiogenesis is a medical device company specializing in the
treatment of cardiovascular disease and is a leader in devices that
treat severe angina. The Company's market leading holmium:YAG laser
system and single use fiber-optic delivery systems are used to
perform a FDA-cleared surgical procedure known as Transmyocardial
Revascularization (TMR). For more information on Cardiogenesis and
its products, please visit the Company's website at
http://www.cardiogenesis.com/ or the direct to patient website at
http://www.heartofnewlife.com/. Safe Harbor Statement With the
exception of historical information, the statements set forth above
include forward-looking statements. Any forward-looking statements
in this news release are subject to numerous risks and
uncertainties, many of which are outside the Company's control,
that could cause actual results to differ materially. Factors that
could affect the accuracy of these forward-looking statements
include, but are not limited to: any inability by the Company to
sustain profitable operations or obtain additional financing on
favorable terms if and when needed; any failure to obtain required
regulatory approvals; failure of the medical community to expand
its acceptance of TMR procedures; possible adverse governmental
rulings or regulations, including any FDA regulations or rulings;
the Company's ability to comply with international and domestic
regulatory requirements; possible adverse Medicare or other
third-party reimbursement policies or adverse changes in those
policies; any inability by the Company to ship product on a timely
basis; the Company's ability to manage its growth; the effects of
recent disruptions in global credit and equity markets and other
adverse economic developments that could adversely affect the
market for our products or our ability to raise needed financing;
actions by our competitors; and the Company's ability to protect
its intellectual property. Other factors that could cause
Cardiogenesis' actual results to differ materially are discussed in
the "Risk Factors" section of the Company's Annual Report on Form
10-K for the year ended December 31, 2008 and the Company's other
filings with the Securities and Exchange Commission. The Company
disclaims any obligation to update any forward-looking statements
as a result of developments occurring after the date of this press
release. CARDIOGENESIS CORPORATION CONSOLIDATED STATEMENTS OF
OPERATIONS (in thousands, except per share amounts) Three months
ended Year ended December 31, December 31, 2008 2007 2008 2007 ----
---- ---- ---- (unaudited) (audited) Net revenues $2,431 $2,767
$12,150 $12,059 Cost of revenues 650 1,036 2,239 2,949 --- -----
----- ----- Gross profit 1,781 1,731 9,911 9,110 ----- ----- -----
----- Operating expenses: Research and development 271 69 904 681
Sales and marketing 1,629 1,173 6,487 4,441 General and
administrative 436 521 2,840 3,132 --- --- ----- ----- Total
operating expenses 2,336 1,763 10,231 8,254 ----- ----- ------
----- Operating (loss) income (555) (32) (320) 856 Other income
(expense): Interest expense (1) (10) (23) (69) Interest income 4 26
59 120 Loss on disposal of fixed assets - (2) - (2) Non-cash
interest expense - (53) - (89) Change in fair value of derivatives
and warrants - - - (225) - - - ----- Total other income (expense),
net 3 (39) 36 (265) --- ---- --- ----- (Loss) income before income
taxes (552) (71) (284) 591 Provision for income taxes 21 13 31 13
--- --- --- --- Net (loss) income $(573) $(84) $(315) $578 ======
===== ====== ==== Net (loss) earnings per share: Basic $(0.01)
$0.00 $(0.01) $0.01 ======= ===== ======= ===== Diluted $(0.01)
$0.00 $(0.01) $0.01 ======= ===== ======= ===== Weighted average
shares outstanding: Basic 45,402 45,274 45,320 45,274 ------ ------
------ ------ Diluted 45,402 45,274 45,320 45,274 ------ ------
------ ------ CARDIOGENESIS CORPORATION CONSOLIDATED BALANCE SHEETS
(in thousands) December December 31, 31, 2008 2007 (audited) ASSETS
Current assets: Cash and cash equivalents $2,907 $2,824 Accounts
receivable, net of allowance for doubtful accounts of $20 and $28,
respectively 1,330 1,763 Inventories 1,164 1,602 Short-term
investments in marketable securities 75 - Prepaids and other
current assets 395 486 --- --- Total current assets 5,871 6,675
Property and equipment, net 382 457 Other assets 18 27 -- -- Total
assets $6,271 $7,159 ====== ====== LIABILITIES AND SHAREHOLDERS'
EQUITY Current liabilities: Accounts payable $200 $169 Accrued
liabilities 1,103 1,458 Deferred revenue 800 1,210 Current portion
of capital lease obligation 6 12 ----- ----- Total current
liabilities 2,109 2,849 Capital lease obligation, less current
portion 13 19 ----- ----- Total liabilities 2,122 2,868 ----- -----
Commitments and contingencies Shareholders' equity: Preferred
stock: no par value; 5,000 shares authorized; none issued and
outstanding - - Common stock: no par value; 75,000 shares
authorized; 45,487 and 45,274 shares issued and outstanding,
respectively 173,999 173,826 Accumulated deficit (169,850)
(169,535) --------- --------- Total shareholders' equity 4,149
4,291 ----- ----- Total liabilities and shareholders' equity $6,271
$7,159 ====== ====== DATASOURCE: Cardiogenesis Corporation CONTACT:
William R. Abbott, Senior Vice President and Chief Financial
Officer of Cardiogenesis Corporation, +1-949-420-1800 Web Site:
http://www.cardiogenesis.com/
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