Endocare Reports 2008 First Quarter Financial Results
For the first quarter of 2008, total revenues were $8.1 million, up 7.9percent from $7.5 million in the first quarter of 2007 and up sequentially17.8 percent from the $6.9 million in the fourth quarter of 2007. Cryoprobesales in the 2008 first quarter totaled 12,203, an 8.8 percent increase fromthe 11,211 sold in the first quarter of 2007. The estimated number ofdomestic cryoablation procedures performed was 2,568, up from 2,315 in theprior-year period.
Endocare Chairman, CEO and President Craig T. Davenport said, "We werepleased with the solid growth we achieved in the first quarter of 2008 overwhat was a strong first quarter last year. Our sales force continues toreport steady progress in its sales activities with prospective physiciancustomers. We believe this is due in part to the continuing publication ofclinical research, media coverage of cryoablation and increased physicianattention on focal cryoablation at numerous focal cryoablation conferencesheld around the United States by prestigious medical institutions during thefirst quarter." Davenport continued, "The launch of our variable cryoprobe,or V-Probe, technology has been received enthusiastically by existing andprospective physicians due in part to the potentially significant advantagesthat the V-Probe offers. Providing one probe that can create fivedifferent-sized isotherms offers the ability to individualize the treatment ona patient-by-patient basis."
Gross margin for the first quarter of 2008 increased to 69.2 percent,compared to 65.3 percent in last year's first quarter and from 67.1 in thefourth quarter of 2007. Gross margin continues to benefit from productionefficiencies and manufacturing cost reductions, but these were somewhat offsetin the 2008 first quarter by adjustments to inventory reserves which reducedgross margin by 1.5 percentage points.
Net loss for the 2008 first quarter was $1.7 million, or $0.14 loss pershare. For the first quarter of 2007, the net loss was $3.3 million, or $0.32loss per share.
Adjusted earnings before interest, taxes, depreciation and amortization(adjusted EBITDA), which excludes non-cash stock compensation expense, was aloss of $681,000 for the first quarter of 2008, compared to an adjusted EBITDAloss of $2.1 million for the 2007 corresponding period. A reconciliation ofthe differences between the GAAP net losses and the adjusted EBITDA losses isincluded in an accompanying table.
Chief Financial Officer Michael R. Rodriguez said, "Growth and cost-controls continue to propel the company towards adjusted EBITDA and cash flowpositive territory. In addition, our access to working capital via cash onhand, our asset-based line of credit and our stock purchase agreementannounced in October 2006 remains strong as we look forward into 2008."
New Business Metrics
As announced on the 2007 third quarter conference call, the Company isaugmenting and will soon be replacing procedure estimates as a business metricwith probe sales data. Probe sales are reported in two categories: straightprobes, which are typically, although not always, used in prostate proceduresand right-angle probes, which are typically used in procedures other thanprostate procedures. Given the Company's migration to a disposable salesmodel, the increased variability in the way physicians use the Company'sprobes and the fact that customers are more often maintaining inventories ofthe Company's products, it has become more diff
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