IRVINE, Calif., Nov. 14 CardiogenesisCorporation (Pink Sheets: CGCP), a leading developer of surgical products andaccessories used in angina-relieving procedures, today reported financialresults for its third quarter ended September 30, 2007.
Sales in the third quarter of 2007 totaled $3,486,000, a 43% sequentialincrease from the second quarter 2007. As compared to the prior year quarter,sales decreased 17%. The Company sold five lasers and 663 handpiece units ascompared to seven lasers and 771 handpieces during the third quarter of 2006.The lower revenue in the current year quarter is primarily attributable to a$527,000, or 19%, decline in disposable handpiece revenue, and a $251,000, or22%, decrease in capital sales as compared with the prior year quarter.
Sales in the first nine months of 2007 totaled $9,292,000, a decrease ofapproximately 31% from the $13,453,000 of sales in the first nine months of2006. The year to date decrease as compared with the prior year period isprimarily attributable to a $2,519,000, or 28%, decline in disposablehandpiece revenue and a $1,753,000, or 48%, decline in capital sales. Throughthe first nine months of 2007, the company sold 11 lasers and 1,831 handpiecesas compared to 18 lasers and 2,488 handpieces for the first nine months of2006.
Cardiogenesis reported third quarter 2007 operating income of $679,000 ascompared with an operating loss of $797,000 in the prior year quarter. Netincome for the quarter was $590,000, or $0.01 per diluted share, as comparedwith a net loss of $787,000, or $0.02 per diluted share, in the 2006 thirdquarter.
For the first nine months of 2007, Cardiogenesis reported operating incomeof $888,000 as compared with an operating loss of $531,000 for the same periodin the prior year. The net income for the first nine months of 2007 was$662,000, or $0.01 per diluted share, compared with a net loss of $1,486,000,or $0.03 per diluted share, for the first nine months of 2006.
"We are encouraged by the sequential growth during the third quarter interms of both revenue and handpiece volume. As we continue the process ofretooling our sales organization, we believe that the third quarter salesperformance reflects the positive impact of those efforts," commented RichardLanigan, Cardiogenesis' President. "While business challenges remain, theoperating income of $679,000 for the third quarter reflects the progress weare making overall."
Gross margin was 79% of sales for the quarter ended September 30, 2007 ascompared with a 76% gross margin in the third quarter of 2006. Gross profitin absolute dollars decreased by $458,000 to $2,747,000 for the current yearquarter as compared with $3,205,000 for the 2006 third quarter. The increasein gross margin resulted primarily from inventory impairment charges whichoccurred in the prior year quarter and did not recur in the current yearquarter. For the nine months ended September 30, 2007, gross profit was 79%of net revenues as compared to 80% of net revenues for the nine months endedSeptember 30, 2006. Gross profit in absolute dollars decreased by $3,346,000
to $7,379,000 for the nine months ended September 30, 2007, as compared to$10,725,000 for the nine months ended September 30, 2006.
Research and development costs ("R&D") were $103,000 in the third quarterof 2007 as compared with $461,000 in the 2006 third quarter. Year to date,R&D expenses of $612,000 were $488,000 below the prior year period.
Salaries and employee benefit expenditures of $1,183,000 in the quarterended September 30, 2007 decreased $1,082,000, or 48%, when compared to$2,265,000 for the quarter ended September 30, 2006. For the nine monthsended September 30, 2007, salaries and employee benefits expenditures of$3,601,000 decreased $2,713,000, or 43%, when compared to $6,314,000 for thenine months ended September 30, 2006.