Revenue Per Procedure Business Up 86% From Growing Demand for
Therapy LYON, France, May 10 /PRNewswire-FirstCall/ -- EDAP TMS
S.A. (NASDAQ:EDAP), today reported financial results for the first
quarter ended March 31, 2006. For the first quarter of 2006, the
Company reported total revenues of EUR 5.2 million compared to EUR
5.1 million in the same quarter of 2005. First quarter revenue
included the sale of ten lithotripsy and two Ablatherm-HIFU units
and a dramatic increase in RPP "revenue-per-procedure" business.
This is in line with the Company anticipation of future growth
derived primarily from the HIFU division and its per procedure
sales activity while unit sales will remain steady. Financial
Highlights: * The Company's gross margin as a percentage of total
revenue increased from 40 percent to 44 percent due to significant
margins on two Ablatherm units sold and increasing contributions
from higher margin per procedure and services revenues. * The
Company's operating expenses increased 16 percent from the prior
year, in line with the company's strategy to focus on marketing and
education, to enhance its Ablatherm-HIFU positioning and to
strengthen its clinical leadership. * Net loss for the first
quarter was EUR 623,000 compared to a loss of EUR 140,000 for the
first quarter of 2005 due to the increased spending on marketing
and clinical and education for future growth and increased market
penetration. * The net loss includes EUR 317,000 attributable to
negative changes in currency and tax in the comparable periods. *
As of March 31, 2006, the Company had EUR 7.6 million in cash
compared to EUR 8.3 million at December 2005 end. Uses of cash
included EUR 0.7 million for operating activities. Hugues de
Bantel, CEO of EDAP TMS, commented, "Our first quarter results give
clear indications of the HIFU RPP growth opportunity we are
successfully addressing with the launch of our strong and focused
marketing and education programs. Expenses increased from these
efforts as has market response demonstrated by a 20 percent
increase in treatments and dramatic growth in the RPP business. We
will address a HIFU treatment acceleration plan over the course of
2006 to increase this growth further." EDAP: ABLATHERM-HIFU GROWTH
DRIVEN BY RPP BUSINESS For the first quarter of 2006, the HIFU
division recorded a 11 percent growth in its revenue driven by a 86
percent increase in its RPP business. RPP as a percent of HIFU
revenues increased from 22 percent in 2005 to 35 percent in 2006.
While the Company sold the same number of Ablatherm units, the
revenue from equipment sales declined due to the sale of an
Ablatherm unit that was converted from a lease to an equipment sale
at a reduced price. Expenses increased 25 percent from EUR 871,000
in first quarter 2005 to EUR 1.1 million in first quarter 2006, in
line with the Company's strategy to further strengthen its clinical
credibility and expand its marketing and sales reach. Operating
income remained positive. Gross margin as a percentage of revenue
strengthened from 50 percent up to 56 percent on a quarterly
comparison, thanks to significant margins on the two equipment sold
and to an increasing contribution from margins on RPP and service
revenues. EDAP - HIFU Division: Euros 000's Year Revenues Gross
Margin % Operating Income (Loss) --------- ----------
-------------- ------------------------- Q1 2005 1,761 50% 4 Q1
2006 1,949 56% 1 Total Ablatherm-HIFU treatments in the quarter
were approximately 720 driven by RPP activity as compared to
approximately 600 in the fourth quarter 2005. In total, 106 user
sites were trained on Ablatherm-HIFU as of March 31, 2006. The
increase was clearly correlated to countries where the therapy is
being reimbursed, and the company continues to lead efforts aimed
at securing additional reimbursements. The company is seeing
increasing interest following the EAU meeting held in Paris during
April. The company's clearly confirmed clinical success coupled
with the attractive side effect and recovery benefits to the
patient have positioned Ablatherm-HIFU as an emerging treatment of
choice, offering both patients and doctors significant benefits in
the treatment of localized prostate cancer. Global consensus from
the urology community is that Ablatherm-HIFU specifically is an
important therapeutic offering for non- surgical patients diagnosed
with prostate cancer for the first time and an emerging gold
standard in the treatment of locally recurrent prostate cancer
following radiation failure. This was confirmed in April 2006 by a
clinical article appearing in the peer reviewed European
Association of Urology Update from Prs. H. Azzouz and J. de la
Rosette, Academic Medical Center, Amsterdam, The Netherlands,
comparing HIFU options in prostate cancer to traditional therapies.
The article also highlighted the technical and clinical advances of
Ablatherm-HIFU as compared to less advanced HIFU devices also
marketed. Building on its recent success at the EAU Congress in
Paris, the Company is aggressively marketing Ablatherm-HIFU to both
doctors and patients to increase awareness of the efficacy, low
side effects, high quality of life and rapid recovery available to
patients who pursue Ablatherm-HIFU for both first indication and
locally recurrent prostate cancer treatment. The Company's
successful launch in the U.K. as well as strong growth in markets
providing reimbursement helped increase awareness and is driving
greater demand from the medical community. In addressing the
growing interest for Ablatherm-HIFU, the Company anticipates
placing additional Ablatherm-HIFU devices on a fixed RPP basis at
major urology centers in Europe. This is the first part of the
Company strategy to reach out to a maximum of patients by making
the technology available to a greater number of hospitals and
furthering use at high-traffic centers. In May the company received
confirmation that the first patient has been treated under the US
clinical trials program with partner HealthTronics. EDAP will
report on these events in greater detail at a future date. TMS:
STEADY SALES, CASH FLOWS The UDS division net sales for the quarter
remained stable at EUR 3.9 million. The company sold ten
lithotripsy units versus nine for the previous year quarter. The
level revenues related primarily to competitive pricing pressures
as well as unit mix between mid-range and high-range models.
Service fees were up from the larger installation base built over
the past years and as more units entered servicing phases of their
lifecycle. As of today, TMS has a strong backlog of seven
lithotripters. TMS - UDS Division : Euros 000's Year Revenues Gross
Margin % Operating Income (Loss) --------- ----------
-------------- -------------------------- Q1 2005 3,920 30% 34 Q1
2006 3,863 31% (66) CORPORATE OUTLOOK Hugues de Bantel, CEO of EDAP
TMS, commented, "We are pleased to report the strong growth in our
RPP business, which represents the key growth engine for
Ablatherm-HIFU as it allows rapid access to technology which is
becoming a new standard of care for localized prostate cancer
addressing non-surgical patients and radiation failures. We intend
to continue advancing our clinical credibility through clear,
detailed clinical publication of the results obtained by our users
and accurately marketing these outcomes to both the medical
community and the patients seeking a less invasive therapeutic
option for localized prostate cancer. Ablatherm-HIFU stands alone
in the quantity and quality of our clinical data confirming the
strongest outcomes and most attractive opportunities to offer the
patient a high quality of life after treatment by pursuing
Ablatherm-HIFU therapy. "To make treatments grow faster, we will
also be using our resources to advance the placement of RPP units
at fixed centers with a minimum required utilization level as a
means of quickly addressing and growing the market demand for
Ablatherm-HIFU technology. This model allows us to ensure
Ablatherm-HIFU is available to patients seeking treatment as well
as build grass-roots demand for this therapy as patients learn
about its significant advantages available as compared to existing
offerings. This program will secure a larger base of long-term
steady and recurring revenues through the investment of our capital
resources in the near term. We intend to aggressively expand this
program and others to meet the growing interest in offering
Ablatherm-HIFU. Since the EAU meeting in Paris, we continue to
receive ever more inquiries about Ablatherm from prospects at the
Congress and the recent German Symposium hosted by EDAP in
Frankfurt. "We also anticipate increasing returns from our efforts
in marketing, which include media, online, workshop and patient
education components. These efforts are clearly already driving
greater awareness of Ablatherm-HIFU as a therapeutic option.
Patients are also creating more demand as traffic on our
HIFU-Planet Web site continues to grow more than seven-fold in
April alone. We believe many of these rewards will be recognized in
the coming quarters through increased demand for Ablatherm-HIFU
treatment and the establishment of Ablatherm-HIFU as a mainstream
therapy choice required by the patient of his care provider."
Conference Call and Webcast The company will host a conference call
to discuss the results and answer questions from investors on
Thursday, May 11, 2006, at 12:00 noon Eastern Time, 6:00 p.m. Paris
Time. Investors may join the call live by dialing 866-200-5830 with
passcode 558429# within the United States or +1-732-694-1588 from
international locations and requesting the EDAP TMS 2006 First
Quarter Conference Call. Investors may also listen to the live call
online at http://www.edap-tms.com/ . Investors unable to join the
call can access a playback of the conference call. To access the
replay, please dial 866-206-0173 or +1-732-694-1571 and passcode
173563# beginning two hours after the end of the call until
Saturday, May 18, 2005, or visit the company's Web site at
http://www.edap-tms.com/ . Participation in Congresses EDAP will
present at the American Urology Association (AUA) conference to be
held in Atlanta, Georgia, May 20-23, 2006 (Booth #2445, Hall B3).
EDAP will also be participating in the next British Association of
Urological Surgeons (BAUS) conference to be held in Manchester,
United Kingdom, June 27-29, 2006. Investors and others who will be
attending the AUA meeting are invited to contact Investor Relations
if they would like to schedule an appointment during the
conference. Stock Compensation charge related to Performance Stock
Plan The Company adopted FASB Statement 123(R) "Share-based
payment" as of January 1, 2006. Statement 123(R) requires all
share-based payments to employees of the Company, including grants
of employee stock options, to be recognized in the income statement
based on their fair values. As permitted by this new statement, the
Company adopted the "modified prospective" method, in which
compensation cost is recognized beginning January 1, 2006 based on
the requirements of Statement 123(R) for all share-based payments
granted after January 1, 2006 and based on the requirements of
Statement 123 for all awards granted to employees prior to January
1, 2006 that remain unvested on the effective date. On February 17,
2005, the shareholders of EDAP TMS authorized the Board of
Directors to grant up to 625,000 free shares to be issued to
certain employees of the Company, subject to compliance with
conditions and performance criteria fixed by the Board of Directors
of the Company. On January 6, 2006, in accordance with the
Performance Stock Plan authorized by the shareholders, the Board of
Directors granted 564,100 rights to subscribe to new shares based
on performance criteria to be achieved in 2006 and 2007. This plan
is to be accounted for in accordance with FASB 123(R). The Fair
Value of the award was determined at the grant date. Expense will
be recognized only for the number of awards earned through
attainment of the performance targets. As of March 31, 2006, the
Company did not recognize any compensation expense related to the
above Performance Stock Plan, as no objective for year 2006 has
been yet achieved. Recognition of compensation expense will begin
when it is the company's best estimate that the award will be
earned. About EDAP TMS S.A. EDAP TMS S.A. develops and markets
Ablatherm, the most advanced and clinically proven choice for High
Intensity Focused Ultrasound (HIFU) treatment of localized prostate
cancer. HIFU treatment is shown to be a minimally invasive and
effective treatment option with a low occurrence of side effects.
Ablatherm-HIFU is generally recommended for patients with localized
prostate cancer (stages T1-T2) who are not candidates for surgery
or who prefer an alternative option or patients who failed
radiotherapy treatment. The company is also developing this
technology for the treatment of certain other types of tumors. EDAP
TMS S.A. also produces and commercializes medical equipment for
treatment of urinary tract stones using Extra-corporeal Shockwave
Lithotripsy (ESWL). For more information on the Company, contact
Halliburton Investor Relations at (972) 458-8000, the Corporate
Investor Relations Dept at +33 (0)4 78 26 40 46 or see the
Company's Web sites at http://www.edap-tms.com/ and
http://www.hifu-planet.com/ . This press release contains, in
addition to historical information, forward-looking statements that
involve risks and uncertainties. These include statements regarding
the Company's growth and expansion plans. Such statements are based
on management's current expectations and are subject to a number of
uncertainties and risks that could cause actual results to differ
materially from those described in the forward-looking statements.
Factors that may cause such a difference include, but are not
limited to, those described in the Company's filings with the
Securities and Exchange Commission. Ablatherm-HIFU treatment is in
clinical trials but not yet FDA approved or marketed in the United
States. CONTACT: EDAP TMS S.A. Hugues de Bantel - Philippe Chauveau
Blandine Confort +33 4 78 26 40 46 Halliburton Investor Relations
Matt Kreps - Geralyn DeBusk 972 458 8000 (Tables follow) EDAP TMS
S.A. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Amounts in thousands of Euros and U.S. Dollars, except per share
data) Three Months Ended: Three Months Ended: March 31, March 31,
March 31, March 31, 2006 2005 2006 2005 Euros Euros $US $US Net
sales of medical equipment 2,314 2,699 2,795 3,530 Net sales of
spare parts, supplies and Services 2,870 2,377 3,465 3,109 TOTAL
NET SALES 5,184 5,076 6,260 6,639 Other revenues 15 50 18 65 TOTAL
REVENUES 5,199 5,126 6,278 6,704 Cost of sales (2,913) (3,062)
(3,517) (4,004) GROSS PROFIT 2,286 2,064 2,761 2,700 Research &
development expenses (595) (450) (718) (589) S, G & A expenses
(2,175) (1,937) (2,626) (2,533) Total operating expenses (2,770)
(2,387) (3,344) (3,122) OPERATING PROFIT (LOSS) (484) (323) (583)
(422) Interest (expense) income, net 14 7 17 9 Currency exchange
gains (loss), net (73) 168 (89) 220 Other income (loss), net (3) 9
(4) 12 INCOME (LOSS) BEFORE TAXES AND MINORITY INTEREST (546) (139)
(659) (181) Income tax (expense) credit (77) (1) (93) (1) NET
INCOME (LOSS) (623) (140) (752) (182) Earning per share - Basic
(0.08) (0.02) (0.10) (0.02) Average number of shares used in
computation of EPS 7,823,331 7,781,731 7,823,331 7,781,731 Earning
per share - Diluted (0.08) (0.02) (0.10) (0.02) Average number of
shares used in computation of EPS 8,608,255 8,344,368 8,608,255
3,344,368 NOTE: Translated for convenience of the reader to U.S.
dollars at the 2006 average three months noon buying rate of 1 Euro
= 1.2074 USD, and 2005 average three months noon buying rate of 1
Euro = 1.3079 USD. EDAP TMS S.A. CONSOLIDATED BALANCE SHEETS
HIGHLIGHTS (UNAUDITED) (Amounts in thousands of Euros and U.S.
Dollars) March 31, Dec. 31, March 31, Dec. 31, 2006 2005 2006 2005
Euros Euros $US $US Cash, cash equivalents and short term
investments 7,591 8,317 9,214 9,849 Total current assets 21,846
22,034 26,519 26,092 Total current liabilities 9,675 9,557 11,744
11,318 Shareholders' Equity 16,871 17,372 20,480 20,572 NOTE:
Translated for convenience of the reader to U.S. dollars at the
noon buying rate of 1 Euro = 1.2139 USD, on March 31, 2006 and at
the noon buying rate of 1 Euro = 1.1842 USD, on December 31, 2005.
EDAP TMS S.A. CONDENSED STATEMENTS OF OPERATIONS BY DIVISION THREE
MONTHS ENDED MARCH 31, 2006 (Amounts in thousands of Euros ) EDAP
S.A. TMS S.A. EDAP Total HIFU UDS TMS Consolidation After Division
Division HQ Impact Consolidation Net sales of medical devices 702
1,767 (155) 2,314 Net sales of spare parts, supplies & services
1,240 2,088 (458) 2,870 TOTAL NET SALES 1,942 3,855 (613) 5,184
Other revenues 7 8 --- 15 TOTAL REVENUES 1,949 3,863 (613) 5,199
GROSS PROFIT 1,094 56% 1,192 31% 2,286 44% Research &
Development (353) (242) (595) Total SG&A plus depreciation
(740) (1,016) (419) (2,175) OPERATING PROFIT (LOSS) 1 (66) (419)
(484) DATASOURCE: EDAP TMS S.A. CONTACT: Hugues de Bantel, Philippe
Chauveau, or Blandine Confort, all of EDAP TMS S.A.,
+33-4-78-26-40-46; or Matt Kreps, or Geralyn DeBusk, both of
Halliburton Investor Relations, +1-972-458-8000, for EDAP TMS S.A.
Web site: http://www.edap-tms.com/ http://www.hifu-planet.com/
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