EDAP TMS S.A. Reports 2005 Second Quarter Results Continued Growth
in Mobile Demand Increased Marketing in Preparation for Future
Reimbursement LYON, France, July 27 /PRNewswire-FirstCall/ -- EDAP
TMS S.A. (NASDAQ:EDAP), today reported financial results for the
2005 second quarter ended June 30, 2005. For the second quarter of
2005, the company reported total revenues of EUR 5.0 million
compared to EUR 5.2 million in the same quarter of 2004. Year to
date revenue includes the sale of 16 lithotripsy and four
Ablatherm-HIFU units. Revenues for the first six months of 2005
were EUR 10.1 million compared to EUR 11.0 million in 2004. Year to
date, the company's gross margin as a percentage of total revenue
increased from 37 percent in 2004 to 40 percent presently due to
continued focus on cost reductions. The company's operating
expenses increased by 5 percent year to date compared to 2004,
primarily in relation to the company's continued focus on marketing
in the Ablatherm-HIFU division. Progress toward reimbursement is
ongoing, and the company is advancing its marketing and pipeline
development activities in anticipation of future approvals. The
company's net loss for the second quarter 2005 was EUR 398,000
compared to EUR 507,000 in the second quarter 2004. Net loss for
the first six months was EUR 538,000 compared to EUR 519,000 in
2004. The net loss is largely attributable to the company's
investment in sales and marketing expenses ahead of revenues, as
previously planned and announced. As of June 30, 2005, the company
had EUR 8.2 million in cash, level with the first quarter of 2005.
The company continues to invest operating cash flows into
marketing, product enhancement and market expansion to grow the
total eligible user base for its Ablatherm-HIFU product line. The
company plans to continue using cash in the third quarter to
advance the Ablatherm-HIFU business. Hugues de Bantel, CEO of EDAP
TMS, commented, "The second quarter results reflect the company's
current strategic initiatives -- to continue a steady increase in
our shift to mobile per-procedure treatment sales. This model
benefits the growth of Ablatherm-HIFU availability in European
markets while steadily investing in sales, marketing and education
initiatives in countries where we believe reimbursement will open
the market opportunity for both mobile and equipment sales." EDAP:
GROWTH IN ABLATHERM-HIFU MOBILE BUSINESS, POSITIONED FOR
REIMBURSEMENT APPROVALS For the first half of 2005, the HIFU
division continued to experience steady unit sales while the
majority of growth was in the mobile per-procedure and service
business. Revenues were up slightly for the first six months of
2005 to EUR 3.6 million, and gross margins improved to 48 percent
of sales as compared to 43 percent in the prior year six months.
Maintenance and service contract sales increased as older
Ablatherm-HIFU machines exited their warranty period, fueling a 44
percent increase year to date. Year-to-date margin improvement was
driven by efficiencies within the manufacturing and production
process. Sales and marketing expenses increased in the EDAP
division according to the company's planned expansion of education
programs for doctors and patients and to grow the pipeline in
anticipation of future reimbursement approvals. Additionally,
research and development expenses were up associated with the
launch of the company's integrated imaging system allowing
physicians to image while treating and reduce total treatment time.
During the quarter, the company added one additional sales position
to support growth in the mobile business across Europe. EDAP - HIFU
Division: Euros 000's Year Revenues Gross Margin Operating Income
(Loss) Q2 2004 1,708 47% 91 Q2 2005 1,841 47% (192) YTD 2004 3,548
43% 163 YTD 2005 3,601 48% (187) Ablatherm-HIFU continued to build
on its strong clinical foundation with now up to 8 years of patient
data and total treatments of more than 7,800 worldwide.
Additionally, the company now reports 75 sites using Ablatherm-HIFU
on a fixed or mobile basis, as compared to 67 sites at the end of
the first quarter of 2005 and 53 sites at the end of the second
quarter 2004, a 42% increase over the twelve months. In Germany,
where Ablatherm-HIFU is partially reimbursed, the mobile
per-procedure business increased 71 percent compared to the same
period last year. The company ended the quarter with 12 sites in
Germany, nine of which are served with the mobile model. In June
the company added an additional mobile Ablatherm-HIFU unit to meet
continuing growth in treatment demand and inquiries from additional
sites. The company is continuing to train new physicians regularly
at its Centers of Excellence. The Italian mobile market continues
to grow, benefiting from strong enthusiasm from doctors, patients
and key opinion leaders selecting the procedure as an alternative
for patients not able to cope with the rigors or restrictions of
current treatments. Additionally, the reduced side effects and
long-term success rate of Ablatherm-HIFU treatment are increasing
interest among the broader urological community. The United Kingdom
market continues to develop following the introduction of
Ablatherm-HIFU in June 2004. The company is currently working to
secure private reimbursement approvals following positive reviews
and acceptance by the National Institute for Clinical Excellence
announced in April 2005. The company has strong leads and expects
to place additional Ablatherm units by year end in response to
demand from local doctors to gain access to the Ablatherm-HIFU
technology. "Total Ablatherm-HIFU treatments are now more than
7,800 to date, which is the most extensive body of experience on
HIFU for localized prostate cancer in the world," said de Bantel.
"In addition to our strong existing clinical evidence, we continue
to work with the urological community to refine and improve this
procedure to further lower patient side effects beyond the success
we have already enjoyed. We introduced our new imaging head
allowing doctors to better visualize the prostate while treatment
is occurring. This accelerates treatment efficiencies and allows
for even finer application of the HIFU technology. "The HIFU
business continues its strong growth in the mobile model giving
clinics easier access by lowering their initial expenses to begin
treating patients with Ablatherm-HIFU," continued de Bantel.
"Doctors are very pleased with the successful patient outcomes
while offering their patients a better quality of life and shorter
recovery period following treatment of localized prostate cancer.
We continue to receive new inquiries daily about Ablatherm-HIFU,
and our experienced clinical practitioners are an excellent
resource in demonstrating the benefits of Ablatherm-HIFU to new
contacts as well as conducting training to grow our population of
practicing physicians." TMS: CONTINUED DEMAND FOR OUR LITHOTRIPTERS
The UDS Division continued steady sales with 16 lithotripters sold
in the first half of 2005, stable with the prior year same period.
The company's mix of new unit sales year to date 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. Cost of sales continued to decline as a
result of manufacturing efficiencies while gross margins held
steady at 30 percent for the division. Operating profit for the
quarter declined 15 percent from the change in unit sales mix and
corresponding change in service contract mix. TMS - UDS Division:
Euros 000's Year Revenues Gross Margin Operating Income (Loss) Q2
2004 4,058 30% 12 Q2 2005 3,802 30% 54 YTD 2004 8,614 30% 104 YTD
2005 7,722 30% 86 The company continued to maintain strict controls
on internal expenses, which decreased by 8% within the UDS division
year to date. TMS ended the second quarter with a strong backlog of
5 lithotripters. CONFERENCE ACTIVITY During the second quarter the
company actively participated in three worldwide conferences: the
American Urological Association Conference held in San Antonio,
Texas, the 6th International Consultation on New Developments in
Prostate Cancer and Prostate Diseases, co-sponsored by the
International Union Against Cancer, in Paris and the British
Association of Urology Surgeons meeting held in Glasgow, Scotland.
On Sept 21-24, 2005, EDAP will participate in the Deutsche
Gesellschaft fur Urologie (Congress of the German Society for
Urology), in Dusseldorf, with events for urologists to meet
practitioners using Ablatherm-HIFU, as well as present a number of
abstracts on successful Ablatherm studies and outcomes. CORPORATE
OUTLOOK "EDAP management continues to see our move toward the
mobile model as the larger and growing portion of the
Ablatherm-HIFU business," said de Bantel. "We continue to gain
strength in key markets such as Italy and Germany where we are
seeing strong growth through the spread of enthusiastic support
from many key opinion leaders in the urological community of both
countries. Our commitment to making the Ablatherm unit available
without a substantial initial expense allows these doctors to offer
care to their patients while working toward future approvals in the
clinical budgets to purchase a unit or develop a robust per
procedure business, whichever is most suitable to their needs. This
commitment to supporting their needs has helped to forge strong
cooperative relationships benefiting EDAP, the urologist and the
patient. Additionally, our launch in the U.K. continues to offer a
significant market with ever increasing interest among physicians
following the positive recommendation from N.I.C.E. and expanding
interest among the private insurance community toward the
possibility of using Ablatherm-HIFU as a means to treat patients at
moderate cost and without the expense and difficulty of side
effects. "We continue to focus on building the base of
Ablatherm-HIFU users through a blend of fixed and mobile
installations in multiple markets," de Bantel continued. "In the
short term, our revenue mix can vary between unit sales and
procedure sales, but the overall model continues to build our
corporate strength by working closely with members of the
urological community to strengthen our reputation as the leading
provider of HIFU for localized prostate cancer. We are executing
our plan to invest in sales and marketing efforts in proportion to
the growing opportunity we see ahead. We are placing resources into
the market to manage the increasing interest we are seeing as well
as in anticipation of reimbursement approvals and opportunities to
continue expanding the markets we are serving in Europe and around
the world." Conference Call and Webcast The company will host a
conference call to discuss the results and answer questions from
investors on Thursday, July 28, 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 888-343-7144 within the
United States or +1-415-537-1933 from international locations and
requesting the EDAP TMS 2005 Second 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 800-633-8284 or +1-402-977-9140 and using access code
21253116 beginning two hours after the end of the call until August
7, 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 Euro's and U.S. Dollars, except per share
data) Three Months Ended : Three Months Ended : June 30, June 30,
June 30, June 30, 2005 2004 2005 2004 Euros Euros $US $US Net sales
of medical equipment 2,236 2,439 2,786 2,957 Net sales of spare
parts, supplies and Services 2,712 2,701 3,377 3,275 NET SALES
4,948 5,140 6,193 6,232 Other revenues 4 80 5 97 TOTAL REVENUES
4,952 5,220 6,168 6,329 Cost of sales (2,946) (3,183) (3,670)
(3,859) GROSS PROFIT 2,006 2,037 2,498 2,470 Research &
development expenses (479) (386) (597) (468) S, G & A expenses
(2,079) (1,889) (2,589) (2,290) Non recurring operating expenses
--- (207) --- (252) Total operating expenses (2,558) (2,482)
(3,186) (3,010) OPERATING PROFIT (LOSS) (552) (445) (688) (540)
Interest (expense) income, net 21 (3) 26 (4) Currency exchange
gains (loss), net 139 (81) 174 (98) Other income (loss), net (7) 7
(9) 9 INCOME (LOSS) BEFORE TAXES AND MINORITY INTEREST (399) (522)
(497) (633) Income tax (expense) credit 1 15 2 19 NET INCOME (LOSS)
(398) (507) (495) (614) Earning per share - Basic (0.05) (0.07)
(0.06) (0.08) Average number of shares used incomputation of EPS
7,781,731 7,781,731 7,781,731 7,781,731 Earning per share - Diluted
(0.05) (0.07) (0.06) (0.08) Average number of shares used in
computation of EPS 8,344,368 8,102,979 8,344,368 8,102,979 NOTE:
Translated for convenience of the reader to U.S. dollars at the
2005 average three months noon buying rate of 1 Euro = 1.2455 USD,
and 2004 average three months noon buying rate of 1 Euro = 1.2124
USD. EDAP TMS S.A. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED) (Amounts in thousands of Euro's and U.S. Dollars,
except per share data) Six Months Ended : Six Months Ended : June
30, June 30, June 30, June 30, 2005 2004 2005 2004 Euros Euros $US
$US Net sales of medical equipment 4,935 5,629 6,301 6,900 Net
sales of spare parts, supplies and Services 5,089 5,132 6,497 6,292
NET SALES 10,024 10,761 12,798 13,192 Other revenues 54 232 68 284
TOTAL REVENUES 10,078 10,993 12,866 13,476 Cost of sales (6,008)
(6,902) (7,670) (8,461) GROSS PROFIT 4,070 4,091 5,196 5,015
Research & development expenses (930) (777) (1,187) (953) S, G
& A expenses (4,015) (3,743) (5,127) (4,588) Non recurring
operating expenses --- (207) --- (255) Total operating expenses
(4,945) (4,727) (6,314) (5,796) OPERATING PROFIT (LOSS) (875) (636)
(1,118) (781) Interest (expense) income, net 28 (31) 36 (37)
Currency exchange gains (loss), net 307 192 392 235 Other income
(loss), net 2 4 3 5 INCOME (LOSS) BEFORE TAXES AND MINORITY
INTEREST (538) (471) (687) (578) Income tax (expense) credit ---
(48) --- (58) NET INCOME (LOSS) (538) (519) (687) (636) Earning per
share - Basic (0.07) (0.07) (0.09) (0.08) Average number of shares
used incomputation of EPS 7,781,731 7,781,731 7,781,731 7,781,731
Earning per share - Diluted (0.07) (0.07) (0.09) (0.08) Average
number of shares used in computation of EPS 8,344,368 8,051,689
8,344,368 8,051,689 NOTE: Translated for convenience of the reader
to U.S. dollars at the 2005 average six months noon buying rate of
1 Euro = 1.2767 USD, and 2004 average six months noon buying rate
of 1 Euro = 1.2259 USD. EDAP TMS S.A. CONSOLIDATED BALANCE SHEETS
HIGHLIGHTS (UNAUDITED) (Amounts in thousands of Euro's and U.S.
Dollars) June 30, March 31, June 30, March 31, 2005 2005 2005 2005
Euros Euros $US $US Cash, cash equivalents and short term
investments 8,222 8,183 9,947 10,567 Total current assets 23,254
22,954 28,133 29,641 Total current liabilities 10,089 9,553 12,205
12,335 Shareholders' Equity 17,543 17,872 21,224 23,079 NOTE:
Translated for convenience of the reader to U.S. dollars at the
noon buying rate of 1 Euro = 1.2098 USD, on June 30, 2005 and at
the noon buying rate of 1 Euro = 1.2913 USD, on March 31, 2005.
EDAP TMS S.A. CONDENSED STATEMENTS OF OPERATIONS BY DIVISION SIX
MONTHS ENDED JUNE 30, 2005 (Amounts in thousands of Euro's ) EDAP
S.A TMS S.A. Consolid Total HIFU UDS EDAP TMS -ation After Division
Division HQ Impact Consolidation Net sales of medical devices 1,883
3,837 --- (785) 4,935 Net sales of spare parts, supplies &
services 1,665 3,838 --- (414) 5,089 Other revenues 53 47 --- (47)
53 TOTAL REVENUES 3,601 7,722 --- (1,246) 10,077 GROSS PROFIT 1,740
48% 2,330 30% --- --- 4,070 40% Research & Development (556)
(374) --- --- (930) Total SG&A plus depreciation (1,371)
(1,870) (774) --- (4,015) Non recurring op. expenses --- --- ---
--- --- OPERATING PROFIT (LOSS) (187) 86 (774) --- (875) 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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