CASMED Reports Second-Quarter 2017 Financial Results
Revises Full-year Financial Guidance
Conference Call Begins at 10:00 a.m. Eastern Time Today
BRANFORD, Conn. (August 8, 2017) – CAS Medical Systems, Inc. (NASDAQ: CASM) (CASMED), a leader in non-invasive cerebral oximetry technology, today reported financial results for the three and six months ended June 30, 2017.
Net sales from continuing operations for the second quarter of 2017 were $4.6 million, unchanged from the second quarter of 2016. The Company incurred a net loss applicable to common stockholders for the second quarter of 2017 of $2.5 million, or $0.09 per share, compared with a net loss applicable to common stockholders for the second quarter of 2016 of $2.1 million, or $0.08 per share.
In July 2017 the Company sold its non-invasive blood pressure monitoring (OEM) product line and has reclassified those results to discontinued operations for the second quarter and six months ended June 30, 2017 and 2016.
- Worldwide FORE-SIGHT® disposable sensor sales increased 2% and represented 90% of total sales.
- Net 49 FORE-SIGHT cerebral oximeters were shipped worldwide.
- Net cumulative FORE-SIGHT cerebral oximeters shipped worldwide as of June 30, 2017 increased 18% to 2,206, and the U.S. installed base of monitors increased 17% to 1,190.
- In July 2017 the Company sold its OEM product line for $4.5 million in cash, a payment for inventory following a short transition period and an earn-out of up to $2 million.
- As of June 30, 2017 CASMED had cash, cash equivalents and borrowings available under its line-of- credit of $4.8 million. Had the Company closed on the sale of the OEM product line on June 30, 2017, the Company’s pro-forma cash balance and available borrowings would have been approximately $9.2 million.
“Several years ago we made the strategic decision to focus CASMED on our high-margin FORE-SIGHT product line to capitalize on the expanding market for cerebral oximetry, and since then we have been selling our lower-margin, non-core legacy assets. With the recent sale of our OEM product line, we divested the last of our non-core assets. We can now direct full attention to our FORE-SIGHT tissue oximetry products while using the proceeds from this most recent transaction to support our growth initiatives,” said Thomas M. Patton, President and Chief Executive Officer of CASMED.
“Consistent with that FORE-SIGHT focus, among our highest priorities over the past 18 months has been the upgrade and expansion of our U.S. sales organization. We have hired eight new sales representatives since the beginning of this year, adding to the six reps hired in 2016 and resulting in 18 sales territories now fully staffed. Although it requires time for these new hires to gain tenure and build business, we are pleased with the overall performance of our sales organization and are encouraged by their expanding pipeline of new business opportunities.
“However, for the quarter, U.S. oximetry sales to new customers were offset by a few customer losses. As a result, U.S. FORE-SIGHT revenue declined by 3% from the prior year, including a 2% decline in sensor revenue.
“Given the superior clinical performance of our product, our customer’s decision to purchase FORE-SIGHT is almost exclusively clinician-driven. Some competitors have responded to this success by negotiating contracts at the administrative level of group purchasing organizations (GPOs) or integrated delivery networks (IDNs), causing us some recent customer turnover. While we have been successful in keeping the vast majority of the affected business and are working hard to regain lost accounts where we can, we have placed a greater sales force emphasis on maintaining accounts while also working to expand our customer base and build their pipelines. Given these factors, we are revising our outlook for our FORE-SIGHT business.”
CASMED revises its financial outlook for 2017 compared with 2016, and now expects the following:
- Total FORE-SIGHT oximetry sales to be flat to down slightly;
- Total FORE-SIGHT sensor sales to increase in the low single-digit percentages;
- U.S. FORE-SIGHT sensor sales to increase in the low single-digit percentages; and
- U.S. net monitor installed base to increase in the low double-digit percentages.
Second-Quarter Financial Results
Net sales from continuing operations for the second quarters of 2017 and 2016 were unchanged at $4.6 million for both periods. Total FORE-SIGHT oximetry sales for the second quarter of 2017 were $4.4 million, down 2% compared with $4.5 million for the second quarter of 2016. Total FORE-SIGHT sensor sales for the second quarter of 2017 were $4.1 million, up 2% compared with $4.0 million for the second quarter of 2016. U.S. FORE-SIGHT oximetry product sales were $3.7 million for the second quarter of 2017, a 3% decline compared with $3.8 million in the prior-year period. U.S. FORE-SIGHT sensor sales for the second quarter of 2017 were $3.5 million, down 2% compared with $3.5 million for the second quarter of 2016.
The loss from continuing operations for the second quarter of 2017 was $2.2 million, compared with the loss from continuing operations of $1.9 million for the second quarter of 2016. Operating expenses for the second quarter of 2017 increased 1% to $4.4 million over the prioryear period, reflecting slight increases in both S,G&A expenses and R&D spending. Gross profit margin for the second quarter of 2017 was 52.0%, compared with 55.9% for the prior-year period.
Six-Month Financial Results
Net sales from continuing operations for the first six months of 2017 and 2016 were unchanged at $9.1 million. Total FORE-SIGHT oximetry sales for the first six months of 2017 were $8.7 million, essentially flat compared with $8.8 million for the first six months of 2016. Total FORESIGHT sensor sales for the first six months of 2017 were $8.1 million, up 5% compared with $7.8 million for the first six months of 2016. U.S. FORE-SIGHT oximetry product sales were $7.4 million for the first six months of 2017, up 1% compared with $7.3 million in the prior-year period. U.S. FORE-SIGHT sensor sales for the first six months of 2017 were $7.0 million, up 3% compared with $6.8 million for the first six months of 2016.
The loss from continuing operations before income taxes for the first six months of 2017 was $4.4 million, compared with $4.1 million for the first six months of 2016. Operating expenses for the first half of 2017 were $8.7 million, compared with $8.6 million for the first half of 2016, with the increase due to higher S,G&A expenses partially offset by lower R&D spending. Gross profit margin for the first six months of 2016 was 53.3%, compared with 54.5% for the prior-year period.
Cash, cash equivalents and available borrowings under the line-of-credit were $4.8 million as of June 30, 2017. Subsequent to the quarter close, in July 2017 the Company sold its OEM product line for $4.5 million in cash.
Conference Call Information
CASMED will host a conference call beginning at 10:00 a.m. Eastern time today to discuss these results and answer questions. Conference call dial-in information is as follows:
- U.S. callers: (866) 239-5859
- International callers: (702) 495-1913
Individuals interested in listening to the live conference call via the Internet may do so by logging on to the Company's website at http://corporate.casmed.com/.
A telephone replay will be available from 1:00 p.m. Eastern time on August 8, 2017, through 11:59 p.m. Eastern Time on August 22, 2017. Replay dial-in information is as follows:
- U.S. callers: (855) 859-2056
- International callers: (404) 537-3406
- Conference ID number (U.S. and international callers): 62473177
- The replay will also be available at http://corporate.casmed.com/.
About CASMED® – Monitoring What's Vital
CASMED FORE-SIGHT® Cerebral Oximeters provide a highly accurate, non-invasive measurement of tissue oxygenation in the brain. Direct monitoring of tissue oxygenation can provide a superior and powerful tool to alert clinicians to otherwise unrecognized and dangerously low levels of oxygen in the brain and empower them to improve patient care. For further information regarding CASMED, visit the Company's website at www.casmed.com.
Statements included in this press release, which are not historical in nature, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements relating to the future performance of the Company are subject to many factors including, but not limited to, the customer acceptance of the products in the market, the introduction of competitive products and product development, the impact of any product liability or other adverse litigation, working capital and availability of capital, commercialization and technological difficulties, the impact of actions and events involving key customers, vendors, lenders, competitors, and other risks detailed in the Company’s Form 10-K for the year ended December 31, 2016, and other subsequent Securities and Exchange Commission filings.
Such statements are based upon the current beliefs and expectations of the Company’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. When used in this press release, the terms "anticipate," "believe," "estimate," "expect," "may," "objective," "plan," "possible," "potential," "project," "will,” and similar expressions identify forward-looking statements. The forward-looking statements contained in this press release are made as of the date hereof, and we do not undertake any obligation to update any forward-looking statements, whether as a result of future events, new information, or otherwise.
CAS Medical Systems, Inc.
Jeffery A. Baird
Chief Financial Officer
LHA Investor Relations
Bruce Voss / Jody Cain
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