MTIX Micro Therapeutics (MM)

- Company Significantly Narrows Net Loss With Growth in Net Sales, Higher Gross Margins and Improved Cost Control - IRVINE, Calif., Oct. 27 /PRNewswire-FirstCall/ -- Micro Therapeutics, Inc. (MTI) (NASDAQ:MTIX), an endovascular medical device company focused on neurovascular disease and disorders, today reported financial results for its fiscal third quarter and nine months ended October 2, 2005. As reported on October 5, 2005, net sales in the 2005 third quarter increased 72% to $14.1 million versus net sales of $8.2 million in the third quarter of 2004, and increased 8% compared with net sales of $13.1 million in the second quarter of 2005. Contributing to net sales growth in the most recent quarter were the company's neuro embolic products, net sales of which increased by 112% to $6.2 million, and neuro access and delivery products, net sales of which increased 53% to $7.1 million. Geographically, third quarter net sales increased by 98% to $6.1 million in the United States, and international net sales increased by 57% to $8.0 million. ev3 Inc. (NASDAQ:EVVV), MTI's majority stockholder, distributes MTI's products internationally. For the nine months ended October 2, 2005, net sales totaled $38.5 million, an increase of 55% compared with net sales during the first nine months of 2004. Net loss for the 2005 third quarter was $1.7 million, or $0.04 per share, compared with a net loss of $15.5 million, or $0.34 per share, in the third quarter of 2004. Net loss for the first nine months of 2005 was $4.0 million, or $0.08 per share, compared with a net loss of $31.9 million, or $0.76 per share, in the first nine months of 2004. Weighted average shares outstanding for the 2005 and 2004 third quarters were 48.5 million and 45.0 million, respectively. "The significant increase in net sales reflects broad-based growth from both a product line and geographic perspective," said Tom Wilder, MTI President and Chief Executive Officer. "We are particularly pleased with the progress that we have made with the introduction of Onyx for the treatment of brain arteriovenous malformations in the United States, which commenced in late July. Importantly, the growth in net sales combined with higher gross margins and operating expense control, resulted in a much improved bottom line for the quarter." Gross margin in the 2005 third quarter grew to 71%, up from 62% in the year-ago third quarter. For the first nine months of 2005, gross margin increased to 68% compared with 59% in the first nine months of 2004. Operating expenses for the 2005 third quarter were $11.8 million, an increase of 5% from operating expenses of $11.3 million incurred in the third quarter of 2004. For the first nine months of 2005, operating expenses were $34.4 million compared with operating expenses of $32.9 million for the corresponding period in 2004, an increase of 4%. Expenses for the most recent quarter benefited from net reversals of previously established reserves totaling $836 thousand related to facility consolidation and distributor termination. For the third quarter of 2005, operating loss narrowed significantly to $1.8 million, representing a 71% reduction from the operating loss in the year-ago third quarter. For the first nine months of 2005, operating loss was $8.1 million versus $18.2 million in the first nine months of 2004. The financial results for the first nine months of 2005 include a first quarter gain from the receipt of $3.7 million as a result of the sale of certain assets of Genyx Medical, a company in which MTI held an equity interest, to C.R. Bard, and a second quarter gain of $878 thousand from the release to MTI of previously escrowed funds related to the sale of Enteric Medical Technologies, also a company in which MTI held an equity interest. The financial results for the first nine months of 2004 include non-cash charges of $6.2 million and $9.1 million in the first and third quarters, respectively, related to the value ascribed to the conversion features of an aggregate $38.0 million of notes exchanged for shares of MTI's common stock in such 2004 fiscal quarters, and a 2004 second quarter gain of $1.7 million related to the receipt of previously escrowed funds from the sale of Enteric Medical Technologies. As of October 2, 2005, MTI's cash and cash equivalents totaled $3.1 million. Outlook MTI tightened its financial guidance regarding net sales, forecasting total year 2005 net sales in the range of $53.0 to $54.0 million, compared to its previously communicated range of $51.0 to $54.0 million. The Company also indicated that it expects to narrow its operating loss in the fourth quarter of 2005 compared with its operating loss in the fourth quarter of 2004. About Micro Therapeutics, Inc. Micro Therapeutics develops, manufactures and markets minimally invasive medical devices for the diagnosis and treatment of vascular disease. The company is focused on catheter-based, or endovascular, technologies for the minimally invasive treatment of neurovascular disorders of the brain associated with stroke. MTI's products include: the NXT and Nexus lines of embolic coils; the Onyx(R) liquid embolic; and a range of access and delivery products that include micro delivery catheters, balloon catheters, and guidewires. Conference Call Information and Forward-Looking Statements The company will host a conference call tomorrow with its majority stockholder ev3 Inc. for interested parties beginning at 9:00 a.m. ET (6:00 a.m. PT) to review the results of operations for the third quarter of 2005 and other recent events. Discussions during the conference call may include forward-looking statements regarding such topics as, but not limited to, the company's net sales, margins, operating expenses, distribution arrangements, clinical studies, regulatory status, and financial position, and comments the company may make about its future in response to questions from participants on the conference call. Any interested party may listen to the conference call through a live audio Internet broadcast at http://www.1mti.com/. For those unable to listen to the live broadcast, a playback of the webcast will be available at http://www.1mti.com/ for approximately one year. Statements contained in this press release that are not historical information are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected or implied. Such potential risks and uncertainties relate, but are not limited, to, in no particular order: product demand and market acceptance, the impact of competitive products and pricing, and success of clinical testing. More detailed information on these and additional factors which could affect Micro Therapeutics, Inc.'s operating and financial results are described in the company's Forms 10-Q, 10-KSB, and other reports, filed or to be filed with the Securities and Exchange Commission. Micro Therapeutics, Inc. urges all interested parties to read these reports to gain a better understanding of the many business and other risks that the company faces. Additionally, Micro Therapeutics, Inc. undertakes no obligation to publicly release the results of any revisions to these forward-looking statements, which may be made to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. MICRO THERAPEUTICS, INC. Consolidated Statements of Operations For The Three and Nine Months Ended October 2, 2005 and October 3, 2004 (unaudited) For The Three Months Ended For The Nine Months Ended October 2, October 3, October 2, October 3, 2005 2004 2005 2004 Net sales $14,090,000 $8,171,000 $38,549,000 $24,847,000 Cost of Sales 4,067,000 3,144,000 12,284,000 10,125,000 Gross profit 10,023,000 5,027,000 26,265,000 14,722,000 Operating expenses Research and development, clinical and regulatory 4,170,000 3,607,000 11,465,000 10,962,000 Sales, general and admini- strative 8,481,000 7,117,000 23,400,000 21,125,000 Distributor termination (400,000) 554,000 (400,000) 823,000 Facility consolidation (425,000) -- (85,000) -- Total operating expenses 11,826,000 11,278,000 34,380,000 32,910,000 Loss from operations (1,803,000) (6,251,000) (8,115,000) (18,188,000) Other income (expense) Amortization of conversion feature of notes -- (9,148,000) -- (15,338,000) Gain on sale of investment -- -- 4,611,000 1,728,000 Other, net 82,000 (54,000) (464,000) (120,000) Total other income (expense) 82,000 (9,202,000) 4,147,000 (13,730,000) Loss before income taxes (1,721,000) (15,453,000) (3,968,000) (31,918,000) Income tax expense -- -- 2,000 2,000 Net loss $(1,721,000) $(15,453,000) $(3,970,000) $(31,920,000) Per share information Net loss available to common stockholders $(1,721,000) $(15,453,000) $(3,970,000) $(31,920,000) Net loss per share (basic and diluted) $(0.04) $(0.34) $(0.08) $(0.76) Weighted average common shares outstanding 48,507,000 45,045,000 48,455,000 41,958,000 MICRO THERAPEUTICS, INC. Consolidated Balance Sheets October 2, 2005 and December 31, 2004 (unaudited) October 2, December 31, 2005 2004 ASSETS Current assets Cash and cash equivalents $3,144,000 $11,647,000 Accounts receivable, net of allowance 9,200,000 7,712,000 Receivable from ev3 Inc. 2,610,000 2,419,000 Inventories, net 6,880,000 6,365,000 Prepaid expenses and other assets 1,377,000 633,000 Total current assets 23,211,000 28,776,000 Property and equipment, net 2,820,000 2,139,000 Intangible assets, net 6,162,000 7,893,000 Goodwill 20,982,000 20,982,000 Other assets 405,000 1,245,000 Total assets $53,580,000 $61,035,000 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $1,676,000 $924,000 Accrued salaries and benefits 2,881,000 1,972,000 Accrued liabilities 1,755,000 3,105,000 Accrued facility consolidation costs 143,000 1,296,000 Payable to sellers of Dendron GmbH -- 3,750,000 Deferred revenue and other liabilities 2,480,000 1,993,000 Total current liabilities 8,935,000 13,040,000 Stockholders' equity: Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued or outstanding -- -- Common stock, $0.001 par value; 70,000,000 shares authorized; 48,425,000 issued and outstanding at December 31, 2004 and 48,524,000 shares issued and outstanding at October 2, 2005 49,000 48,000 Additional paid in capital 194,871,000 194,551,000 Accumulated deficit (150,184,000) (146,214,000) Accumulated other comprehensive loss (91,000) (390,000) Total stockholders' equity 44,645,000 47,995,000 Total liabilities and stockholders' equity $53,580,000 $61,035,000 MICRO THERAPEUTICS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For The Nine Months Ended October 2, 2005 and October 3, 2004 (unaudited) For The Nine Months Ended October 2, October 3, 2005 2004 Cash flows from operating activities: Net loss $(3,970,000) $(31,920,000) Adjustments to reconcile net loss to net cash used in operating activities Amortization of exchange feature of notes payable -- 15,338,000 Non-cash interest expense -- 320,000 Abandonment of patents 179,000 -- Depreciation and amortization 2,415,000 2,487,000 Gain on sale of investment (4,611,000) (1,728,000) Loss on sale of fixed assets 13,000 2,000 Non-cash compensation 26,000 243,000 Provision for doubtful accounts 197,000 708,000 Provision for inventory obsolescence 536,000 633,000 Change in operating assets and liabilities: Accounts receivable (1,637,000) (935,000) Receivable from ev3, Inc. (191,000) (284,000) Inventories (1,051,000) (3,118,000) Prepaid expenses and other current assets (791,000) (226,000) Accounts payable 752,000 (788,000) Accrued salaries and benefits 909,000 (440,000) Accrued liabilities (2,503,000) 670,000 Deferred revenue and other liabilities 487,000 1,277,000 Net cash used in operating activities (9,240,000) (17,761,000) Cash flows from investing activities: Proceeds from sale of investment 4,611,000 1,728,000 Proceeds from sale of fixed assets 7,000 -- Acquisition of Dendron, GmbH (3,750,000) (3,750,000) Additions to property and equipment (1,430,000) (957,000) Additions to patents and licenses (134,000) (345,000) Change in other assets 841,000 (2,000) Net cash provided by (used in) investing activities 145,000 (3,326,000) Cash flows from financing activities: Proceeds from issuance of common stock under employee stock purchase plan 213,000 178,000 Proceeds from exercise of stock options 81,000 39,000 Proceeds from issuance of notes payable -- 21,008,000 Costs from issuance of notes payable and exchange of notes for common stock -- (1,164,000) Net cash provided by financing activities 294,000 20,061,000 Effect of exchange rate changes on cash 298,000 (5,000) Net decrease in cash and cash equivalents (8,503,000) (1,031,000) Cash and cash equivalents, beginning of period 11,647,000 16,551,000 Cash and cash equivalents, end of period $3,144,000 $15,520,000 Cash paid for income taxes $2,000 $2,000 Supplemental disclosure of non-cash items: Exchange of notes payable, net of discount, for issuance of common stock -- $22,859,000 MICRO THERAPEUTICS, INC. Net Sales By Product Line and Geographic Market (unaudited) For The Three Months Ended For The Nine Months Ended October 2, October 3, October 2, October 3, 2005 2004 2005 2004 Product Line Embolic products $6,173,000 $2,905,000 $14,267,000 $8,422,000 Neuro access and delivery products 7,130,000 4,651,000 21,953,000 14,269,000 Peripheral blood clot therapy and other products 787,000 615,000 2,329,000 2,156,000 Total net sales $14,090,000 $8,171,000 $38,549,000 $24,847,000 Geographic Market United States $6,080,000 $3,076,000 $14,527,000 $8,772,000 International 8,010,000 5,095,000 24,022,000 16,075,000 Total net sales $14,090,000 $8,171,000 $38,549,000 $24,847,000 DATASOURCE: Micro Therapeutics, Inc. CONTACT: Thomas C. Wilder of Micro Therapeutics, Inc., +1-949-837-3700; or Rob Whetstone or Robert Jaffe, both of PondelWilkinson Inc., +1-310-279-5963, for Micro Therapeutics, Inc. Web site: http://www.1mti.com/

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