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Uroplasty Reports Fiscal Fourth Quarter And Full Year 2013 Financial Results

May 30, 2013

~U.S. Sales of Urgent® PC increase 11% in Fourth Quarter and 35% for Full Fiscal Year

MINNEAPOLIS, May 30, 2013 /PRNewswire/ — Uroplasty, Inc. (NASDAQ: UPI), a medical device company that develops, manufactures and markets innovative proprietary products to treat voiding dysfunctions, today reported financial results for the fourth quarter and fiscal year 2013 ended March 31, 2013.

Fiscal Fourth Quarter 2013 Financial Results

Fiscal fourth quarter 2013 sales in the U.S. increased 2%, driven by an 11% increase in sales of the Urgent(®) PC Neuromodulation System, compared with fiscal fourth quarter a year ago. Global sales declined 1% to $5.5 million in the fourth quarter of fiscal 2013, compared with $5.6 million in the fiscal fourth quarter a year ago.

U.S. Urgent PC Sales in the fiscal fourth quarter of 2013 were $2.6 million. Macroplastique sales in the U.S. totaled $1.4 million in the recent fiscal fourth quarter, a decrease of 13% over the same quarter last year.

The Company sold 3,365 lead set boxes to 581 active Urgent PC customers in the U.S. in the fiscal fourth quarter compared with 3,501 lead set boxes to 620 active customers during the fiscal third quarter.

“While sales of Urgent PC in the U.S. increased year over year, we were disappointed with our progress,” said Rob Kill, Interim Chief Executive Officer of Uroplasty. “We are executing our strategy to reinvigorate and regain the momentum of Urgent PC sales, especially in the U.S. By mid-May, under our new sales leadership, we had replaced sales representatives in six territories. We are focused on finding sales representatives with experience in medical device sales, a solid understanding of their regional markets and strong relationships with physician groups in their territories. By end of June we expect to have 45 total sales representatives in place.”

Net sales to customers outside the U.S. for the fiscal fourth quarter totaled $1.5 million, compared to $1.6 million in the fiscal fourth quarter last year. Excluding the impact of fluctuations in foreign currency exchange rates, sales outside the U.S. were down 7%.

The Company reported a gross margin of 86.5% in the recent fiscal fourth quarter compared with 85.9% in the same quarter a year ago. The operating loss of $968,000 in the fiscal fourth quarter compares with a $589,000 operating loss in the same quarter last year. Excluding non-cash charges for share-based compensation and depreciation and amortization expense, the non-GAAP operating loss was $477,000 in the fourth quarter of fiscal 2013, compared with a $122,000 non-GAAP operating loss in the fourth quarter a year ago. The increase in operating loss was primarily attributable to the decrease in sales and an increase in operating expenses.

Full Year Fiscal 2013 Financial Results

For the full year ended March 31, 2013, sales grew $1.9 million to $22.4 million, reflecting an 18% increase in U.S. sales and a 10% decrease in sales outside the U.S. In the U.S., sales of Urgent PC increased 35% to $10.5 million, and Macroplastique sales decreased 2% to $5.7 million. At March 31, 2013, cash, cash equivalents and investments totaled $14.9 million compared to $15.6 million at December 31, 2012.

R&D Initiatives

The Company continues to make progress on two R&D initiatives – an implantable tibial nerve stimulator for in-home treatments for OAB for the markets outside of the U.S. and an indication for use of Urgent PC to treat bowel incontinence for the U.S. market. Both products have the potential to expand Uroplasty’s addressable market.

The implantable tibial nerve stimulator will allow patients to receive the benefits of PTNS treatments at home with the patient controlling the treatment interval. The Company continues to make progress on prototypes for this new product.

The Company has identified two U.S. centers to conduct a pilot clinical trial for the treatment of bowel incontinence using the Urgent PC Neuromodulation System. The investigators at those centers are currently in the screening process for potential candidates for treatment. The pilot trial, for the initial treatments, is scheduled for completion late next year. Urgent PC has CE Mark approval for the treatment of bowel incontinence and has been used in Europe for this indication for several years.

Outlook

“Our focus in the near term will be on driving sales of Urgent PC through additional investments in sales and marketing. We made progress in the quarter in hiring experienced sales reps with strong relationships in their markets and have also revised our sales incentives to be better aligned with our financial objectives. We are also adding clinical representatives to the team who will focus on working with our customers to expand patient access to Urgent PC. We anticipate it will take a few months for our new reps to become productive.

“In addition, we have commenced a search for a new CEO. Working with an outside search firm, we are seeking a senior executive with experience in leading the commercial expansion of new medical device therapies and scaling an organization in the $25 to $200 million range of revenue for sustained top and bottom line growth. We remain optimistic about the opportunities ahead for Uroplasty through this transition and our ability to return to sales growth and improved operating results during the second half of the fiscal year,” concluded Mr. Kill.

Conference Call

Uroplasty will host a conference call and webcast today at 3:30 pm Central, 4:30 pm Eastern, to review the financial results for the fiscal fourth quarter and full year of 2013. Rob Kill, Interim Chief Executive Officer, and Medi Jiwani, Vice President, Chief Financial Officer and Treasurer, will host. Individuals wishing to participate in the conference call should dial 888-549-7750. An audio replay will be available for 30 days following the call at 800-406-7325 with the passcode 4618943#.

To access the live webcast of the call, go to Uroplasty’s website at www.uroplasty.com and click on the Investor Relations section. An archived webcast will also be available at http://investor.uroplasty.com.

About Uroplasty, Inc.

Uroplasty, Inc., headquartered in Minnetonka, Minnesota, with wholly-owned subsidiaries in The Netherlands and the United Kingdom, is a global medical company committed to offering transformative treatment options to specialty physicians. Our products are designed to help providers change the lives of their voiding dysfunction patients and strengthen the efficiency of their practices. Our focus is the continued commercialization of our Urgent® PC Neuromodulation System, the only FDA-cleared system that delivers percutaneous tibial nerve stimulation (PTNS) for the office-based treatment of overactive bladder and associated symptoms of urgency, frequency and urge incontinence. We also offer Macroplastique®, an injectable urethral bulking agent for the treatment of adult female stress urinary incontinence primarily due to intrinsic sphincter deficiency. For more information on the company and its products, please visit Uroplasty, Inc. at www.uroplasty.com.

Forward-Looking Information

This press release contains forward-looking statements that reflect our best estimates regarding future events and financial performance. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from our anticipated results. We discuss in detail the factors that may affect the achievement of our forward-looking statements in our Annual Report on Form 10-K filed with the SEC. In particular, we cannot be certain that we will ever achieve sustained profitability, that the rate of reimbursement for PTNS treatments will be adequate to justify the cost of our product, that other Medicare carriers or private payers will provide coverage for this treatment or that existing carriers and payers will not change their coverage decisions, that the rate of adoption of our products by new customers will continue, or that any of the other risks identified in our 10-K will not adversely affect our expectations as described in these forward-looking statements.

    For Further Information:

    Uroplasty, Inc.                 EVC Group

    Medi Jiwani, Vice President,
     CFO,                           Jenifer Kirtland (Investors)

    and Treasurer                   415.568.9349

    952.426.6140                    Amy Phillips (Media)

                                    412.327.9499
    ---                             ------------

                       UROPLASTY, INC. AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                    Three Months Ended                Year Ended

                                         March 31,                   March 31,

                                         (unaudited)
                                         ----------

                                        2013            2012           2013             2012

     Net
     sales                        $5,540,586      $5,596,782    $22,417,980      $20,561,714

     Cost
     of
     goods
     sold                            750,165         791,527      3,014,886        3,036,967
                                     -------         -------      ---------        ---------

     Gross
     profit                        4,790,421       4,805,255     19,403,094       17,524,747
                                   ---------       ---------     ----------       ----------

    Operating expenses

       General
       and
       administrative              1,009,580         843,684      4,187,819        3,732,623

       Research
       and
       development                   719,282         406,296      2,415,123        1,905,366

       Selling
       and
       marketing                   3,814,194       3,929,248     15,238,600       15,296,217

      Amortization                   215,862         215,460        862,833          856,995
                                     -------         -------        -------          -------

                                   5,758,918       5,394,688     22,704,375       21,791,201
                                   ---------       ---------     ----------       ----------

     Operating
     loss                           (968,497)       (589,433)    (3,301,281)      (4,266,454)
                                    --------        --------     ----------       ----------

    Other income
     (expense)

       Interest
       income                         10,203          14,254         46,039           60,072

       Interest
       expense                          (695)              -           (707)             (57)

       Foreign
       currency
       exchange
       gain                            5,005          18,084          1,573            3,780
                                       -----          ------          -----            -----

                                      14,513          32,338         46,905           63,795
                                      ------          ------         ------           ------

     Loss
     before
     income
     taxes                          (953,984)       (557,095)    (3,254,376)      (4,202,659)

     Income
     tax
     expense                          14,958          15,944         50,770           47,712
                                      ------          ------         ------           ------

     Net
     loss                          $(968,942)      $(573,039)   $(3,305,146)     $(4,250,371)
                                   =========       =========    ===========      ===========

     Basic
     and
     diluted
     loss
     per
     common
     share                            $(0.05)         $(0.03)        $(0.16)          $(0.21)

    Weighted average
     common shares
     outstanding:

     Basic
     and
     diluted                      20,803,530      20,722,910     20,777,238       20,689,819
                                  ==========      ==========     ==========       ==========

                                  UROPLASTY, INC. AND SUBSIDIARIES

                               CONDENSED CONSOLIDATED BALANCE SHEETS

                                          March 31, 2013             March 31, 2012
                                          --------------             --------------

    Assets

    Current assets:

    Cash and cash
     equivalents
     & short-
     term
     investments                                   $11,470,469                $11,854,127

    Accounts
     receivable,
     net                                             2,553,447                  2,704,434

    Inventories                                        718,933                    698,742

    Other                                              566,536                    363,639
                                                       -------                    -------

    Total current
     assets                                         15,309,385                 15,620,942

    Property,
     plant, and
     equipment,
     net                                             1,033,085                  1,171,979

    Intangible
     assets, net                                       100,502                    945,880

    Long-term
     investments                                     3,451,711                  4,429,140

    Deferred tax
     assets                                            146,052                    122,872
                                                       -------                    -------

    Total assets                                   $20,040,735                $22,290,813
                                                   ===========                ===========

    Liabilities and Shareholders' Equity

      Current liabilities:

     Accounts
      payable                                         $618,916                   $593,585

     Current
      portion -
      deferred
      rent                                              35,000                     35,000

     Income tax
      payable                                            7,729                     17,892

     Accrued liabilities:

    Compensation                                     1,550,846                  1,576,147

    Other                                              476,287                    316,995
                                                       -------                    -------

    Total current
     liabilities                                     2,688,778                  2,539,619

    Deferred rent
     - less
     current
     portion                                             5,141                     42,043

    Accrued
     pension
     liability                                         660,580                    474,396
                                                       -------                    -------

    Total
     liabilities                                     3,354,499                  3,056,058
                                                     ---------                  ---------

    Total
     shareholders'
     equity                                         16,686,236                 19,234,755
                                                    ----------                 ----------

    Total
     liabilities
     and
     shareholders'
     equity                                        $20,040,735                $22,290,813
                                                   ===========                ===========
                UROPLASTY, INC. AND SUBSIDIARIES

        CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                       Year Ended

                           March 31,
                           ---------

                                                      2013             2012
                                                      ----             ----

    Cash flows from operating activities:

    Net loss                                   $(3,305,146)     $(4,250,371)

    Adjustments to reconcile net loss to net
     cash used in operating activities:

      Depreciation
       and
       amortization                              1,152,929        1,118,243

      Loss on
       disposal of
        equipment                                    7,617            8,447

      Amortization
       of premium
       on
       marketable
       securities                                   47,559           35,277

      Share-based
       consulting
       expense                                       1,623            5,448

      Share-based
       compensation
       expense                                     810,016          679,471

      Deferred
       income
       taxes                                       (29,053)         (40,116)

      Deferred
       rent credit                                 (36,902)         (35,228)

      Changes in operating assets and
       liabilities:

      Accounts
       receivable,
       net                                         108,495         (653,110)

      Inventories                                  (25,370)         (29,719)

      Other
       current
       assets                                     (205,778)         (17,510)

      Accounts
       payable                                      30,925          (59,025)

      Accrued
       liabilities                                 138,875           63,981

      Accrued
       pension
       liability,
       net                                          79,598           45,843

    Net cash
     used in
     operating
     activities                                 (1,224,612)      (3,128,369)
                                                ----------       ----------

    Cash flows from investing activities:

    Proceeds
     from
     maturity of
     available-
     for-sale
     marketable
     securities                                  4,200,000       10,018,252

    Proceeds
     from
     maturity of
     held-to-
     maturity
     marketable
     securities                                  6,920,000        3,740,000

    Purchases of
     available-
     for-sale
     marketable
     securities                                 (8,425,034)      (3,046,270)

    Purchases of
     held-to-
     maturity
     marketable
     securities                                 (2,500,000)      (8,840,000)

    Purchases of
     property,
     plant and
     equipment                                    (189,929)        (267,944)

    Proceeds
     from sale
     of
     property,
     plant and
     equipment                                       5,591                -

    Payments for
     intangible
     assets                                        (17,455)         (77,738)

    Net cash
     provided by
     (used in)
     investing
     activities                                     (6,827)       1,526,300
                                                    ------        ---------

    Cash flows from financing activities:

       Net proceeds
        from
        exercise of
        options                                    150,000          208,825

    Net cash
     provided by
     financing
     activities                                    150,000          208,825
                                                   -------          -------

    Effect of
     exchange
     rate
     changes on
     cash and
     cash
     equivalents                                   (37,923)         (17,103)
                                                   -------          -------

    Net decrease
     in cash and
     cash
     equivalents                                (1,119,362)      (1,410,347)

    Cash and
     cash
     equivalents
     at
     beginning
     of period                                   4,653,226        6,063,573
                                                 ---------        ---------

    Cash and
     cash
     equivalents
     at end of
     period                                     $3,533,864       $4,653,226
                                                ==========       ==========

    Cash paid
     during the
     period for
     interest                                         $707              $57

    Cash paid
     during the
     period for
     income
     taxes                                          57,288           39,005

Non-GAAP Financial Measures: The following table reconciles our operating loss calculated in accordance with accounting principles generally accepted in the U.S. (GAAP) to non-GAAP financial measures that exclude non-cash charges for share-based compensation, and depreciation and amortization expenses from gross profit, operating expenses and operating loss. The non-GAAP financial measures used by management and disclosed by us are not a substitute for, or superior to, financial measures and consolidated financial results calculated in accordance with GAAP, and you should carefully evaluate our reconciliations to non-GAAP. We may calculate our non-GAAP financial measures differently from similarly titled measures used by other companies. Therefore, our non-GAAP financial measures may not be comparable to those used by other companies. We have described the reconciliations of each of our non-GAAP financial measures described above to the most directly comparable GAAP financial measures.

We use these non-GAAP financial measures, and in particular non-GAAP operating loss, for internal managerial purposes and incentive compensation for senior management because we believe such measures are one important indicator of the strength and the operating performance of our business. Analysts and investors frequently ask us for this information. We believe that they use these measures to evaluate the overall operating performance of companies in our industry, including as a means of comparing period-to-period results and as a means of evaluating our results with those of other companies.

Our non-GAAP operating loss for the three months ended March 31, 2013 and 2012 was approximately $477,000 and $122,000, respectively. Our non-GAAP operating loss for fiscal 2013 and 2012 was approximately $1.3 million and $2.5 million, respectively. The fiscal 2013 decrease in non-GAAP operating loss is attributed primarily to an increase in Net sales which more than offset the increase in non-GAAP spending.

                                                          Expense Adjustments
                                                          -------------------

                                      GAAP                  Share-based           Depreciation           Amortization            Non-GAAP
                                                                Expense                                   of Intangibles
                                                                                                  ---                                         ---

    Three Months Ended March 31, 2013

    Gross Profit                            $4,790,000                    $8,000                $8,000                                  $4,806,000

    % of net
     sales                                        86.5%                                                                                       86.8%

    Operating Expenses

         General and
          administrative                     1,009,000                  (133,000)              (50,000)                                    826,000

         Research and
          development                          719,000                   (14,000)               (1,000)                                    704,000

         Selling and
          marketing                          3,814,000                   (47,000)              (14,000)                                  3,753,000

         Amortization                          216,000                         0                     0                $(216,000)                 0
                                               -------                       ---                   ---                ---------                ---

                                             5,758,000                  (194,000)              (65,000)                (216,000)         5,283,000

    Operating
     Loss                                    $(968,000)                 $202,000               $73,000                 $216,000          $(477,000)
                                             ---------                  --------               -------                 --------          ---------

    Three Months Ended March 31, 2012

    Gross Profit                            $4,805,000                    $6,000                $9,000                                  $4,820,000

    % of net
     sales                                        85.9%                                                                                       86.1%

    Operating Expenses

         General and
          administrative                       844,000                  (116,000)              (44,000)                                    684,000

         Research and
          development                          406,000                    (9,000)               (1,000)                                    396,000

         Selling and
          marketing                          3,929,000                   (51,000)              (16,000)                                  3,862,000

         Amortization                          215,000                                                                $(215,000)                 -
                                               -------                                                                ---------                ---

                                             5,394,000                  (176,000)              (61,000)                (215,000)         4,942,000

    Operating
     Loss                                    $(589,000)                 $182,000               $70,000                 $215,000          $(122,000)
                                             ---------                  --------               -------                 --------          ---------

                                                        Expense Adjustments
                                                        -------------------

                                      GAAP                  Share-based           Depreciation           Amortization            Non-GAAP
                                                              Expense                                   of Intangibles
                                                                                                  ---                                         ---

    Year Ended March 31, 2013

    Gross Profit                           $19,403,000                   $31,000               $34,000                                 $19,468,000

    % of net
     sales                                        86.6%                                                                                       86.8%

    Operating Expenses

         General and
          administrative                     4,188,000                  (473,000)             (196,000)                                  3,519,000

         Research and
          development                        2,415,000                   (54,000)               (3,000)                                  2,358,000

         Selling and
          marketing                         15,238,000                  (254,000)              (57,000)                                 14,927,000

         Amortization                          863,000                                                                $(863,000)                 -
                                               -------                                                                ---------                ---

                                            22,704,000                  (781,000)             (256,000)                (863,000)        20,804,000

    Operating
     Loss                                  $(3,301,000)                 $812,000              $290,000                 $863,000        $(1,336,000)
                                           -----------                  --------              --------                 --------        -----------

    Year Ended March 31, 2012

    Gross Profit                           $17,525,000                   $22,000               $34,000                                 $17,581,000

    % of net
     sales                                        85.2%                                                                                       85.5%

         Operating Expenses

         General and
          administrative                     3,733,000                  (412,000)             (163,000)                                  3,158,000

         Research and
          development                        1,905,000                   (39,000)               (9,000)                                  1,857,000

         Selling and
          marketing                         15,296,000                  (212,000)              (55,000)                                 15,029,000

         Amortization                          857,000                                                                $(857,000)                 -
                                               -------                                                                ---------                ---

                                            21,791,000                  (663,000)             (227,000)                (857,000)        20,044,000

    Operating
     Loss                                  $(4,266,000)                 $685,000              $261,000                 $857,000        $(2,463,000)
                                           -----------                  --------              --------                 --------        -----------

SOURCE Uroplasty, Inc.


Source: PR Newswire