AGA Medical Holdings, Inc. (AGA Medical) (NASDAQ: AGAM), a
leading developer of interventional medical devices for the
minimally invasive treatment of structural heart defects and
vascular abnormalities, today reported financial results for the
third quarter ended September 30, 2010.
Highlights of the Third Quarter of 2010 include:
- The addition of left atrial appendage
closure to an existing G-DRG (German Diagnosis Related Group)
reimbursement code in the 2011 G-DRG Catalog which will be
applicable to the company’s Amplatzer® Cardiac Plug; and
- Continued enrollment in its U.S.
RESPECT clinical trial, designed to evaluate the link between a
patent foramen ovale (PFO) and cryptogenic stroke, with 807
patients enrolled in the study and 1,639 patient follow-up years as
of October 31, 2010.
Financial Results for Third Quarter 2010 vs. Third Quarter
2009
Net sales for the third quarter of 2010 were $50.5 million, a
0.6% increase over $50.2 million for the third quarter of 2009. On
a constant currency basis, net sales grew 4.3% year over year.
Sales growth from the prior year quarter was negatively impacted by
several items including the significant impact of currency, the
delay in receiving FDA clearance for our Amplatzer Vascular Plug 4
and the temporary inability to import and sell products into India.
This was resolved in early October and the company has since
resumed shipments. The company also experienced a continued delay
in the issuance of a significant government tender in a Latin
American country.
Gross margins for the third quarter of 2010 were 86.6% (86.9% on
a constant currency basis) compared to 86.8% in the prior year
period.
Total operating expenses for the third quarter of 2010 were
$39.6 million as compared to $38.6 million in the third quarter of
2009. Total operating expenses for the third quarter of 2010 were
lower than in the second quarter of 2010, at $39.6 million versus
$40.6 million, respectively.
Selling, general and administrative expenses totaled $23.5
million in the third quarter of 2010 versus $25.4 million in the
prior year period, a decrease of $1.9 million, primarily as a
result of lower legal expenses and the effects of the appreciation
of the U.S. dollar against foreign currencies, partially offset by
an expansion of the company’s direct sales force in Europe and
North America. Research and development spending totaled $12.0
million in the third quarter of 2010, an increase of $3.6 million
from the third quarter of 2009, primarily due to increased spending
as a result of strong patient enrollment in the company’s clinical
trials.
Operating income for the third quarter of 2010 was $4.1 million
versus $5.0 million in the prior year period.
EBITDA (net income/(loss) before interest income, interest
expense, provision/(benefit) for income tax, depreciation and
amortization) was $10.1 million in the third quarter 2010 versus
$11.8 million in the prior year period. EBITDA margin was 20.1% for
the third quarter 2010, compared to 23.4% for the third quarter
2009.
Net income for the third quarter was $1.5 million versus $2.2
million in the prior year period. Including dividends for Series A
and Series B preferred and Class A common stock accrued in the
third quarter of 2009, the company reported net income/(loss)
applicable to common stockholders of $1.5 million, or $0.03 per
fully diluted and basic share, for the quarter ended September 30,
2010, compared to ($2.4) million, or ($0.11) per fully diluted and
basic share, for the prior year period. The accrued dividends on
these securities and the securities associated with these dividends
were converted into common stock in connection with the company’s
initial public offering in the fourth quarter of 2009.
Non-GAAP adjusted net income for the quarter ended September 30,
2010 was $4.5 million versus $7.9 million in the prior year period.
Non-GAAP adjusted net income per fully diluted share was $0.09 for
the quarter ended September 30, 2010 versus $0.19 for the prior
year period calculated using fully diluted shares outstanding of
approximately 51.2 million and 41.0 million respectively. The
significant increase in fully diluted weighted average shares
outstanding was primarily due to the company’s initial public
offering in the fourth quarter of 2009.
Cash and cash equivalents were $19.3 million as of September 30,
2010, representing a $4.6 million increase from cash and cash
equivalents of $14.7 million as of June 30, 2010. This increase is
net of a $5.0 million voluntary prepayment made on the company’s
10% senior subordinated note, reducing the outstanding principal
balance to $10.0 million. In conjunction with the voluntary
prepayment, the company recorded a non-cash charge of $0.4 million
representing the related portion of the unamortized debt
discount.
Proposed Transaction with St. Jude Medical
On October 15, 2010, St. Jude Medical, Inc. (St. Jude Medical)
(NYSE: STJ) and AGA Medical entered into a definitive agreement
calling for the acquisition by St. Jude Medical of all of the
outstanding shares of AGA Medical for $20.80 per share in a cash
and stock transaction valued at approximately $1.3 billion,
including the assumption of approximately $225 million in
outstanding debt. In connection with the proposed transaction, St.
Jude Medical commenced an exchange offer on October 20, 2010, which
is expected to be followed by a merger and to close by the end of
the year.
In connection with the exchange offer, St. Jude Medical has
filed with the SEC a Registration Statement on Form S-4 and a
Tender Offer Statement on Schedule TO, and AGA Medical has filed a
Solicitation/Recommendation Statement on Schedule 14D-9.
INVESTORS AND STOCKHOLDERS ARE URGED TO READ THESE DOCUMENTS
CAREFULLY BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT ST. JUDE
MEDICAL, AGA MEDICAL AND THE PROPOSED TRANSACTION. This news
release is for informational purposes only and does not constitute
an offer to purchase, or a solicitation of an offer to sell shares
of common stock of AGA Medical in any jurisdiction where such
activities would be unlawful under the relevant laws in that
jurisdiction, nor is it a substitute for the Registration
Statement, Schedule TO, and Schedule 14D-9.
Investors and stockholders may obtain free copies of the
Registration Statement on Form S-4, the Schedule TO and Schedule
14D-9 as well as other filings containing information about St.
Jude Medical and AGA Medical without charge at the SEC’s website
(www.sec.gov).
A free copy of the exchange offer materials are also available
on St. Jude Medical’s website at www.sjm.com and a copy of the
Schedule 14D-9 is available on AGA Medical’s website at
www.amplatzer.com. Copies of the exchange offer materials may also
be obtained free of charge from Georgeson, Inc., the information
agent for the exchange offer, by calling toll-free at (877)
278-4774 (brokers and bankers call, (212) 440-9800).
Statement regarding Non-GAAP Financial Measures
The following provides information regarding non-GAAP financial
measures used in this earnings release:
To supplement the company’s consolidated statement of operations
presented in accordance with accounting principles generally
accepted in the United States, or GAAP, the company has disclosed
EBITDA, adjusted EBITDA, EBITDA margin, adjusted EBITDA margin,
non-GAAP adjusted net income and non-GAAP adjusted earnings per
share, which are non-GAAP measures. EBITDA represents net income
(loss) before interest income, interest expense, provision
(benefit) for income tax, and depreciation and amortization. EBITDA
margin represents EBITDA divided by total net sales. Adjusted
EBITDA and adjusted EBITDA margin represent EBITDA and EBITDA
margin excluding the impact of the one-time litigation settlement
expense. The company presents EBITDA and EBITDA margin because it
believes these measures are useful indicators of its operating
performance and adjusted EBITDA and adjusted EBITDA margin to
present this operating performance measure without the impact of
the one-time litigation settlement expense. Non-GAAP adjusted net
income and adjusted earnings per share reflects certain non-cash
and non-recurring items that are itemized in the “Reconciliation of
Reported Results to Non-GAAP Financial Measures”. While the company
believes that these financial measures are useful in evaluating the
company’s business, this information should be considered as
supplemental in nature and is not meant to be considered in
isolation or as a substitute for the related financial information
prepared in accordance with GAAP. In addition, this non-GAAP
financial measure may not be the same as similarly entitled
measures reported by other companies. See “Consolidated Statements
of Operations” for the quarters ended September 30, 2010 and 2009
included with this release for a reconciliation of EBITDA to net
income and for a presentation of net income to non-GAAP adjusted
net income and non-GAAP adjusted net income per diluted share.
Use of Constant Currency
As exchange rates are an important factor in understanding
period-to-period comparisons, the company believes the presentation
of results on a constant currency basis in addition to reported
results helps improve investors’ ability to understand the
company’s operating results and evaluate its performance in
comparison to prior periods. Constant currency information compares
results between periods as if exchange rates had remained constant
period-over-period. The company uses results on a constant currency
basis as one measure to evaluate its performance. In this release,
the company calculates constant currency by calculating
current-year results using prior year foreign currency exchange
rates. The company generally refers to such amounts calculated on a
constant currency basis as excluding or adjusting for the impact of
foreign currency. These results should be considered in addition
to, not as a substitute for, results reported in accordance with
GAAP. Results on a constant currency basis, as presented by the
company, may not be comparable to similarly titled measures used by
other companies and are not measures of performance presented in
accordance with GAAP.
About AGA Medical
AGA Medical, based in Plymouth, Minnesota, is a leading
innovator and manufacturer of medical devices for the treatment of
structural heart defects and vascular abnormalities. AGA Medical’s
AMPLATZER® occlusion devices offer minimally invasive,
transcatheter treatments that have been clinically shown to be safe
and highly effective in defect closure. AGA Medical is the only
manufacturer with occlusion devices approved to close seven
different structural heart defects, with leading market positions
for each of its devices. More than 1,650 articles supporting the
benefits of AMPLATZER products have been published in medical
literature. AGA Medical markets its AMPLATZER products in 112
countries worldwide to interventional cardiologists,
electrophysiologists, interventional radiologists and vascular
surgeons. More information about the company and its products can
be found at http://www.amplatzer.com.
Forward-Looking Statements
This news release and any attachments may include
“forward-looking statements,” within the meaning of
Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as
amended, or the Exchange Act, including, in particular, earnings
guidance, statements regarding enrollment rates in our clinical
trials, statements regarding operating performance, and any
statements about the company’s plans, strategies and prospects.
These statements are based on the beliefs of our management as well
as assumptions made by, and information currently available to, the
company. These statements reflect the company's current views with
respect to future events, are not guarantees of future performance
and involve risks and uncertainties that could cause actual
performance or results to differ materially from those expressed in
or suggested by the forward-looking statements. These factors
include, among other things: failure to implement the company’s
business strategy; failure to capitalize on the company’s expected
market opportunities; lack of regulatory approval and market
acceptance of the company’s new products, product enhancements or
new applications for existing products; regulatory developments in
key markets for the company’s AMPLATZER occlusion devices; failure
to complete the company’s clinical trials or failure to achieve the
desired results in our clinical trials; inability to successfully
commercialize the company’s existing and future research and
development programs; failure to protect the company’s intellectual
property; decreased demand for the company’s products; product
liability claims exposure; failure to otherwise comply with laws
and regulations; changes in general economic and business
conditions; changes in currency exchange rates and interest rates;
costs and diversion of management’s attention relating to our
proposed transaction with St. Jude Medical and unexpected delays or
obstacles to completing the proposed transaction within the
contemplated timeframe or at all; and other risks and
uncertainties, including those detailed in the company’s most
recent Annual Report on Form 10-K, as may be updated from time to
time in the company’s periodic reports filed with the Securities
and Exchange Commission. You should not put undue reliance on any
forward-looking statements. You should understand that many
important factors, including those discussed herein, could cause
the company’s results to differ materially from those expressed or
suggested in any forward-looking statement. Except as required by
law, the company does not undertake any obligation to update or
revise these forward-looking statements to reflect new information
or events or circumstances that occur after the date of this news
release or to reflect the occurrence of unanticipated events or
otherwise. Readers are advised to review the company's filings with
the Securities and Exchange Commission (which are available from
the SEC's EDGAR database at www.sec.gov, at various SEC reference
facilities in the United States and via the company's website at
www.amplatzer.com).
For more information, visit www.amplatzer.com.
AGA Medical Holdings, Inc. Consolidated Statements of
Operations (in thousands, except per share amounts) (Unaudited)
Three Months Ended
Nine Months Ended September 30, September 30,
September 30, September 30, 2010 2009
2010 2009 Net sales $50,481 $50,158
$155,507 $144,540 Cost of goods sold 6,776 6,599
21,763 23,603 Gross profit 43,705 43,559 133,744
120,937 Operating expenses: Selling, general, and
administrative 23,527 25,441 73,370 71,897 Research and development
12,028 8,428 33,648 24,905 Litigation settlement – – 31,859 –
Amortization of intangible assets 4,954 5,077 14,925 14,972 Change
in purchase consideration (937 ) (353 ) (1,090 ) (1,051 ) Loss on
disposal of property and equipment 1 2 - (23 )
Total operating expenses 39,573 38,595 152,712 110,700 Operating
income (loss) 4,132 4,964 (18,968 ) 10,237 Investment loss –
– – (2,352 ) Interest income 17 20 77 80 Interest expense (2,768 )
(3,994 ) (7,219 ) (12,143 ) Other income (expense), net (450 ) 320
(713 ) 1,595 Income (loss) before income taxes 931
1,310 (26,823 ) (2,583 ) Income tax benefit (571 ) (879 )
(10,739 ) (573 ) Net income (loss) 1,502 2,189 (16,084 )
(2,010 ) Less Series A and B preferred stock and Class A
common stock dividends - (4,569 ) - (13,040 )
Net Income (loss) applicable to common stockholders $1,502
($2,380 ) ($16,084 ) ($15,050 ) Net income (loss) per common
share-basic $0.03 ($0.11 ) ($0.32 ) ($0.70 ) Net
income (loss) per common share-diluted $0.03 ($0.11 ) ($0.32
) ($0.70 ) Weighted average common shares-basic 50,244
21,483 50,168 21,483 Weighted
average common shares- diluted 51,189 21,483 50,168
21,483 Operating Statistics: EBITDA $10,126
$11,747 ($401 ) $28,165 EBITDA Margin 20.1 % 23.4 % -0.3 % 19.5 %
Adjusted EBITDA $10,126 $11,747 $31,458 $28,165 Adjusted
EBITDA Margin 20.1 % 23.4 % 20.2 % 19.5 %
The following is a reconciliation of EBITDA to net income (loss)
for the periods represented (in thousands):
Three Months Ended Nine Months
Ended September 30, September 30,
September 30, September 30, 2010
2009 2010 2009 Net income (loss) $1,502 $2,189
($16,084 ) ($2,010 ) Interest income (17 ) (20 ) (77 ) (80 )
Interest expense 2,768 3,994 7,219 12,143 Depreciation/amortization
6,444 6,463 19,280 18,685 Income taxes (571 ) (879 ) (10,739 ) (573
) EBITDA 10,126 11,747 (401 ) 28,165 Litigation
settlement - - 31,859 - Adjusted EBITDA $10,126 $11,747
$31,458 $28,165 AGA Medical
Holdings, Inc. Consolidated Balance Sheets (in thousands, except
per share amounts)
September 30,
December 31, 2010 2009 Assets
(Unaudited) Current assets: Cash and cash equivalents $19,338
$24,470 Accounts receivable, less allowance for doubtful accounts
of $809 and $481 and discounts of $225 and $395 at September 30,
2010 and December 31, 2009, respectively 48,888 48,730 Inventory
11,893 12,408 Prepaid expenses 1,806 1,408 Income tax receivable
7,815 2,762 Other tax receivable - 799 Deferred tax assets, net
7,670 8,339 Total current assets 97,410 98,916
Property and equipment, net 36,581 38,669 Goodwill 84,246 85,381
Intangible assets, net 95,237 111,655 Restricted cash 8,278 3,304
Other assets, net 403 379 Deferred tax assets, net 504 - Deferred
financing costs, net 2,167 2,276 Total assets
$324,826 $340,580
Liabilities and
stockholders’ equity Current liabilities: Reserve for customer
returns $8,814 $9,335 Trade accounts payable 8,625 8,643 Accrued
royalties 2,292 2,299 Accrued interest 1,137 1,462 Accrued wages
11,789 10,549 Short-term obligations to former distributors, less
discount 3,341 7,880 Accrued expenses 4,481 5,391 Income taxes
payable 297 2,913 Total current liabilities 40,776
48,472 Long-term debt, less current portion 196,963 196,963 Senior
subordinated note payable, less discount of $663 and $1,383 at
September 30, 2010 and December 31, 2009, respectively 9,337 13,617
Long-term obligations to former distributors, less discount 4,738
9,382 Deferred gain contingency 2,879 - Long-term litigation
settlement, less discount 24,914 - Deferred tax liabilities 19,152
32,984 Accrued income taxes 2,915 2,705 Stockholders’ equity:
Common stock, $0.01 par value: Authorized shares—400,000 Issued and
outstanding shares—50,268 at September 30, 2010 and 50,094 at
December 31, 2009 503 501 Additional paid-in capital 278,654
273,309 Excess purchase price over Predecessor basis (63,500 )
(63,500 ) Accumulated other comprehensive income (3,057 ) (489 )
Accumulated deficit (189,448 ) (173,364 ) Total stockholders’
equity 23,152 36,457 Total liabilities and
stockholders’ equity $324,826 $340,580
AGA Medical Holdings, Inc. Reconciliation of Net Sales to
Net Sales Excluding the Impact of Foreign Currency (dollars in
thousands - unaudited)
Three
Months Ended Nine Months Ended September 30,
September 30, September 30, September 30,
2010 2009 2010 2009 Net sales, as
reported $50,481 $50,158 $155,507 $144,540 Currency impact as
compared to prior period 1,825 - 1,427 - Net sales, excluding the
impact of foreign currency $52,306 $50,158 $156,934 $144,540
AGA Medical Holdings, Inc. Reconciliation of
Reported Results to Non-GAAP Financial Measures (dollars in
thousands - unaudited)
Three
Months Ended Nine Months Ended September 30,
September 30, September 30, September 30,
2010 2009 2010 2009 Net
income (loss), as reported
$1,502
$2,189
($16,084
) ($2,010 ) Pre-tax impact of reconciling items: Amortization 4,954
5,077 14,925 14,972 Distributor inventory conversion costs -- -- --
3,744 Litigation settlement -- -- 31,859 -- Interest accretion for
litigation settlement 263 -- 555 -- Litigation/non-recurring legal
costs -- 4,038 -- 10,514 Change in purchase consideration (937 )
(353 ) (1,177 ) (1,051 ) Investment loss/write-off of early stage
investment -- -- -- 2,352 Write-off of discount on sub-debt 356
-- 356 -- Total 4,636 8,762 46,518
30,531 Total tax effect on non-GAAP
adjustments1 (1,623 ) (3,067 ) (14,897 ) (9,862 )
Net
income, as adjusted $4,515 $7,884 $15,537
$18,659
Net income, as adjusted, per
diluted share $0.09 $0.19 $0.30 $0.46
Weighted average common shares-diluted2 51,189
40,956 51,171 40,963
Notes:(1) The total tax effect on non-GAAP adjustments for the
quarter ended September 30, 2010 was calculated using a 35%
effective tax rate for all items.(2) Weighted average common shares
on a fully diluted basis for the three and nine months ended
September 30, 2009 and for the nine months ended September 30, 2010
were recalculated to reflect what they would have been had the
company been in a net income position.
Aga Medical Holdings Com (MM) (NASDAQ:AGAM)
Historical Stock Chart
From Jun 2024 to Jul 2024
Aga Medical Holdings Com (MM) (NASDAQ:AGAM)
Historical Stock Chart
From Jul 2023 to Jul 2024