EDAP TMS S.A. Reports 2005 First Quarter Performance Opening of
Canadian and U.K. Markets for Ablatherm(R)-HIFU; Strong Revenue
Growth in Reimbursed Countries; Strengthening of EDAP TMS Gross
Margin LYON, France, May 11 /PRNewswire-FirstCall/ -- EDAP TMS S.A.
(NASDAQ:EDAP), today reported financial results for the 2005 first
quarter ended March 31, 2005. For the first quarter of 2005, the
Company reported total revenues of EUR 5.1 million compared to EUR
5.8 million in the same quarter of 2004. First quarter revenue
included the sale of nine lithotripsy and two Ablatherm-HIFU units
compared to nine lithotripsy and three Ablatherm(R)-HIFU units in
2004. The Company's gross margin as a percentage of total revenue
increased from 36 percent to 40 percent due to an increase in
average product selling price for both lithotripsy and
Ablatherm-HIFU units, and therefore remained stable in absolute
value at EUR 2.1 million, level with same quarter of 2004. The
Company's operating expenses increased by 6 percent from the prior
year, in line with the Company's strategy to further increase
education and awareness for Ablatherm-HIFU, to further enhance
technological leadership in HIFU and to accelerate the
reimbursement process in key countries, while continuing to control
UDS division expenses. Both EDAP TMS operating divisions reported a
profitable quarter, confirming the repositioning of the Company
executed in 2004. The Company's net loss was EUR 140,000 in Q1 2005
versus EUR 13,000 in Q1 2004. As of March 31, 2005, the Company had
EUR 8.2 million in cash and recorded a net book value of EUR 17.9
million, level with December 2004 shareholders' equity. Hugues de
Bantel, CEO of EDAP TMS, commented: "This quarter is in line with
our corporate plan, particularly with regard to a sensible shift
from equipment purchase to procedure purchase in countries where we
are reimbursed for Ablatherm-HIFU, as well as continued and
sustainable growth patterns in our total number of treatments
performed. As awareness of Ablatherm-HIFU continues to grow, we
will be addressing a broader geography of patients providing access
to the procedure to our doctors and clinics though our mobile
services. Once the treatment is established in the doctor and
patient community, a permanent installation will become more
attractive, leading to the equipment sale in many of the large
locations. In the interim, both our machine sale and mobile
procedure models remain healthy and are making meaningful
contributions to operating income." EDAP: ABLATHERM-HIFU EXPANDS
ITS RECOGNITION WORLDWIDE For the first quarter of 2005, the HIFU
division recorded continued Ablatherm growth through the sale of
two treatment units as well as continued growth in the mobile
treatment business. Net sales amounted to EUR 1.7 million compared
to EUR 1.8 million for the same quarter of 2004. While the Company
sold one fewer unit compared to the prior year quarter, continued
market penetration and growth in the mobile and permanent treatment
rates made significant contributions to the division's total
revenues. Expenses increased from EUR 658,000 in Q1 2004 to EUR
871,000 in Q1 2005, in line with the Company's strategy to
strengthen its marketing, sales and R&D and to further
penetrate the market. Operating income remained positive at EUR
4,000 versus EUR 72,000 the prior year. Gross margin as a
percentage of revenue strengthened from 40 percent up to 50 percent
on a quarterly comparison, thanks to the implementation of major
cost reduction programs on the device and an increase in the
Company's average selling price for these two units. EDAP - HIFU
Division: Euros 000's Year Revenues Gross Margin % Operating Income
(Loss) Q1 2004 1,840 40 % 72 Q1 2005 1,761 50 % 4 Performance
achieved in countries where Ablatherm-HIFU has already secured
reimbursement demonstrates continued development in the Company's
operating model for both fixed and mobile treatment centers. In
Germany and Italy, where the Company has received approval for
reimbursement of approximately half the total treatment cost,
mobile HIFU-related revenues increased three- fold. This is in line
with the Company's mobile strategy to provide access to HIFU
treatment without initial investment from the hospital or clinic.
The Company is continuing to seek additional reimbursement
approvals as well as increases to obtain appropriate levels in
countries with partial reimbursement. Additionally, the EDAP HIFU
division launched its initial presence in the North American market
and strengthened its distribution channel with the placement of
EDAP's first Ablatherm-HIFU unit in Toronto. The Company's Canadian
partner Maple Leaf HIFU Company, now fully operational, treated its
first patients in late April. "We are pleased to report that
patient treatments at the Toronto clinic have started following the
official launch this spring," said de Bantel. "To date, our partner
Maple Leaf HIFU has successfully treated a number of patients from
North America and plans to continue doing so at an aggressive pace
in the months to come. We see significant interest in and demand
for an alternative prostate cancer treatment for men in North
America who are not good candidates for more traditional, but
potentially difficult, treatments such as surgery or radiation.
HIFU offers these patients a proven, safe and effective treatment
with lower side effects and faster recovery -- all critical
elements in a successful treatment program." The Company also made
significant progress in Great Britain. After reviewing all
available data on HIFU, the U.K. National Institute of Clinical
Excellence (NICE) issued guidance mentioning that "current evidence
on the safety and efficacy of HIFU, as measured by reduction in PSA
levels and biopsy findings, appears adequate to support the use of
HIFU for the treatment of prostate cancer, provided that normal
arrangements are in place ..." Following that review and its
recommendations, the largest U.K. private insurance company is now
reviewing the Company's application for reimbursement. "Our first
U.K. center, Stepping Hill Hospital in Stockport, has now performed
approximately 30 treatments and, based on this guidance, is now
planning to increase the pace of its Ablatherm treatments in the
future. Furthermore, over the last few months, we strengthened our
presence in the U.K. with the selection of a local distributor with
very strong credibility and network connections in Great Britain.
We plan to rapidly increase the number of operating sites over the
months to come," added de Bantel. The Company continues to work
with its U.S. partner, HealthTronics, in pursuit of clinical trials
for the Ablatherm device in the United States. American clinical
trials are expected to begin in the second half of 2005. On the
clinical side, a recent review article published in the April
edition of Nature Clinical Practice highlighted comparable results
in four different Ablatherm-HIFU centers in Europe and outlined
excellent outcome reports for patients with prostate cancer who
chose Ablatherm-HIFU treatment. These results confirm that
Ablatherm-HIFU, with its sustained outcomes at five years combined
with a good preservation of quality of life, is now considered as a
routine treatment for the management of prostate cancer. TMS:
CONTINUED DEMAND FOR OUR LITHOTRIPTERS The UDS division continued
its predictable revenue and net income delivery with another
quarter of operating income profit. The UDS division delivered
another strong quarter with 9 lithotripsy units sold. Over the
quarter, the Company's mix of new unit sales was weighted toward
the mid-range Sonolith Praktis, rather than the more advanced and
higher priced Sonolith Vision, which accounts for the difference in
revenue. Nevertheless, the division succeeded in increasing its
gross margin through stronger pricing per unit in both equipment
lines. TMS - UDS Division: Euros 000's Year Revenues Gross Margin %
Operating Income (Loss) Q1 2004 4,556 29 % 92 Q1 2005 3,920 30 % 34
The Company continued to maintain strict controls on internal
expenses, which decreased by 6% within the UDS division. The
Company also participated significantly in the 93rd Annual Meeting
of the Japanese Urological Association (JUA) in April. More than
6,000 doctors attended the proceedings in Tokyo, including Dr.
Osamu Muraki of Fujita General Hospital and Dr. Kenichi Tajima of
Tokyo Teishin Hospital, both of whom presented clinical results
unique to the EDAP lithotripsy platforms. TMS entered the second
quarter with a strong backlog of five lithotripters. CORPORATE
OUTLOOK Hugues de Bantel concluded: "This 2005 first quarter
further demonstrates the importance for the HIFU division of
accelerating the reimbursement process in key countries and
securing a satisfactory level of reimbursement, as this is tied to
significant increases in procedure utilization and acceptance by
patients. Many of the patients rely on reimbursement to afford the
total cost of their care. Results obtained in Q1 also confirm the
stability of our lithotripsy business. "With the turnaround
executed throughout 2004, we envisioned having enough resources to
implement our strategy despite potential quarter-to-quarter changes
in the total number and mix of treatment units sold. Our continued
forward progress on total treatments and penetration of key markets
remains steady on multiple fronts utilizing both the mobile
pay-per-procedure and fixed installation models as the local
population dictates. We continue to be well capitalized for growth,
are investing in additional marketing and education initiatives to
grow market demand, and gain strength as more urologists and
patients are turning to Ablatherm-HIFU as a desirable alternative
to the risks and uncertainties that can make more traditional
treatments difficult for patients." The Company will participate in
the upcoming American Urological Association Annual Meeting to be
held in San Antonio, Texas, May 21-26, 2005. CONFERENCE CALL AND
WEBCAST The Company will host a conference call to discuss the
results and answer questions from investors on Thursday, May 12,
2005, at 12:00 noon Eastern Time, 6:00 p.m. Paris Time.
Representing the Company on the call will be Philippe Chauveau,
Chairman of the Board; Hugues de Bantel, Chief Executive Officer;
and Thierry Turbant, Chief Financial Officer. Investors may join
the call live by dialing 877-707-9628 within the United States or
+1-785-832-0301 from international locations and requesting the
EDAP TMS 2005 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 800-839-5490 or
+1-402-220-2550 beginning two hours after the end of the call until
Saturday, May 21, 2005, or visit the Company's Web site at
http://www.edap-tms.com/ . ABOUT EDAP TMS S.A. EDAP TMS S.A.
develops and markets the 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. 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 the Investor Relations Dept by phone at +33
(0)4 78 26 40 46 or see the Company's Web site at:
http://www.edap-tms.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. (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, 2005 2004 2005 2004 Euros Euros $US $US Net
sales of medical equipment 2,699 3,190 3,530 3,954 Net sales of
spare parts, supplies and Services 2,377 2,431 3,109 3,014 TOTAL
NET SALES 5,076 5,621 6,639 6,968 Other revenues 50 152 65 188
TOTAL REVENUES 5,126 5,773 6,704 7,156 Cost of sales (3,062)
(3,719) (4,004) (4,610) GROSS PROFIT 2,064 2,054 2,700 2,546
Research & development expenses (450) (391) (589) (484) S, G
& A expenses (1,936) (1,854) (2,533) (2,299) Total operating
expenses (2,386) (2,245) (3,122) (2,783) OPERATING PROFIT (LOSS)
(323) (191) (422) (237) Interest (expense) income, net 7 (28) 9
(34) Currency exchange gains (loss), net 168 272 220 337 Other
income (loss), net 9 (3) 12 (4) INCOME (LOSS) BEFORE TAXES AND
MINORITY INTEREST (139) 50 (181) 62 Income tax (expense) credit (1)
(63) (1) (78) NET INCOME (LOSS) (140) (13) (182) (16) Earning per
share - Basic (0.02) (0.00) (0.02) (0.00) Average number of shares
used in computation of EPS 7,781,731 7,781,731 7,781,731 7,781,731
Earning per share - Diluted (0.02) (0.00) (0.02) (0.00) Average
number of shares used in computation of EPS 8,344,368 7,822,842
3,344,368 7,822,368 NOTE: Translated for convenience of the reader
to U.S. dollars at the 2005 average three months noon buying rate
of 1 Euro = 1.3079 USD, and 2004 average three months noon buying
rate of 1 Euro = 1.2395 USD. EDAP TMS S.A. CONSOLIDATED BALANCE
SHEETS HIGHLIGHTS (UNAUDITED) (Amounts in thousands of Euros and
U.S. Dollars) March 31, December 31, March 31, December 31, 2005
2004 2005 2004 Euros Euros $US $US Cash, cash equivalents and short
term investments 8,183 9,398 10,567 12,723 Total current assets
22,954 22,025 29,641 29,818 Total current liabilities 9,553 8,038
12,335 10,881 Shareholders' Equity 17,872 17,964 23,079 24,320
NOTE: Translated for convenience of the reader to U.S. dollars at
the noon buying rate of 1 Euro = 1.2913 USD, on March 31, 2005 and
at the noon buying rate of 1 Euro = 1.3538 USD, on December 31,
2004. EDAP TMS S.A. CONDENSED STATEMENTS OF OPERATIONS BY DIVISION
THREE MONTHS ENDED MARCH 31, 2005 (Amounts in thousands of Euros)
EDAP S.A. TMS S.A. EDAP Consolidation Total HIFU UDS TMS HQ Impact
After Division Division Consolidation Net sales of medical devices
1,010 2,002 (313) 2,699 Net sales of spare parts, supplies &
services 703 1,871 (197) 2,377 TOTAL NET SALES 1,713 3,873 ---
(510) 5,076 Other revenues 48 47 --- (45) 50 TOTAL REVENUES 1,761
3,920 --- (555) 5,126 GROSS PROFIT 875 50% 1,189 30% --- 2,064 40%
Research & Development (276) (175) --- (451) Total SG&A
plus depreciation (595) (980) (361) (1,936) OPERATING PROFIT (LOSS)
4 34 (361) (323) 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 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/
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