Biosensors Reports Financial Results for the Second Quarter and First Half of Fiscal Year 2014
SINGAPORE, Nov. 12, 2013 /PRNewswire/ -- Biosensors International Group, Ltd. ("Biosensors" or the "Company", Bloomberg: BIG SP; Reuters: BIOS.SI; SGX: B20), a developer, manufacturer and marketer of innovative medical devices, today announced financial results for the second quarter of its Fiscal Year 2014 (Q2 FY14) and first half ended 30 September 2013 (H1 FY14).
Second Quarter Highlights and Recent Developments:
- Growth in total revenue and product revenue both improved compared to the first quarter of Fiscal Year 2014 (Q1 FY14). Total revenue grew 4% year-over-year and 8% sequentially, while total product revenue increased 10% and 11%, respectively.
- The EMEA and APAC regions continued to lead drug-eluting stent (DES) sales growth with double digit sales volume growth
- China sales improved following inventory reduction in the first quarter
- Obtained various significant regulatory approvals, including:
- Therapeutic Goods Administration (TGA) approval for BioMatrix Flex™ in Australia
- CE Mark for expanded size of Axxess™ (4.0 x 9 mm extension)
- CE Mark for drug-eluting balloons (DEBs) – BioPath™ 014 and BioPath™ 035 for the treatment of peripheral arterial disease and BioStream™ for the treatment of coronary artery disease
- China Food and Drug Administration (CFDA) approval for Spectrum Dynamics' ("SD") D-SPECT Cardiac Imaging System
- Final results from landmark LEADERS trial published in JACC Cardiovascular Interventions
"In the second quarter, we achieved better results than the first quarter. Our total revenue growth increased sequentially, as the decline in our royalty income began to moderate. We continued to achieve double digit sales volume growth in EMEA and APAC, although this was partially offset by the impact of lower average selling prices. In China, our performance improved but the weak market sentiment in the healthcare industry has caused some pressure on our China revenues. Outside of DES sales, Spectrum Dynamics delivered good results. We are pleased with its business performance as well as the integration progress," said Biosensors' CEO Dr. Jack Wang. "We are very excited about the various regulatory approvals recently, in particular those involving BioMatrix Flex™ in Australia and Spectrum Dynamics' D-SPECT system in China. These are major markets for Biosensors and represent new growth avenues for us."
Performance Summary for Q2 FY14
For Q2 FY14, Biosensors reported total revenue of US$83.0 million, a 4% increase from US$79.8 million in Q2 FY13, which resulted from growth in product revenue offset by lower licensing revenue. Product revenue of US$72.2 million represented a 10% year-on-year increase over US$65.4 million in Q2 FY13, which was the result of a 7% increase in the Company's Interventional Cardiology Products ("IVP") revenue and the contribution from the Company's newly acquired Cardiac Diagnostic business, while partially offset by a 4% decrease in Critical Care Products ("CCP") revenue.
Licensing and royalty revenue for Q2 FY14 was US$10.8 million. This was a 25% drop from US$14.3 million in Q2 FY13 and 7% drop from Q1 FY14.
Gross margin on total product sales was 73% for the quarter, down from 80% in Q2 FY13, mainly due to lower gross margin for the Company's IVP product line as a result of the Company's distribution activities in Japan for the Nobori stents, coupled with the consolidation of the Company's newly acquired Cardiac Diagnostic business, which has a lower gross margin, and the reduction in China's DES pricing.
Total operating expense as a percentage of product revenue for the quarter was 61%, compared to 50% in Q2 FY13.
In detail, the quarter's sales and marketing ("S&M") expense was US$24.1 million; general and administrative ("G&A") expense was US$12.2 million; research and development ("R&D") expense, which included costs for new product development and testing, clinical trials, patent registration and regulatory approval, was US$7.2 million.
Net profit for Q2 FY14 was US$11.3 million, or basic earnings per share ("basic EPS") of 0.66 US cents and diluted earnings per share ("diluted EPS") of 0.65 US cents. This compares to a net profit of US$28.2 million, or basic EPS of 1.63 US cents and diluted EPS of 1.61 US cents, for Q2 FY13.
Performance Summary for the First Half of FY14
For H1 FY14, Biosensors reported total revenue of US$159.7 million, a 4% decline from US$166.1 million in H1 FY13, which was largely a result of lower licensing and royalty revenue. Product revenue of US$137.3 million represented a 2% year-on-year increase over US$134.5 million in H1 FY13, which was the result of contribution from the Company's newly acquired Cardiac Diagnostic business.
Licensing and royalty revenue for H1 FY14 was US$22.4 million, down US$9.2 million or 29% from US$31.6 million in H1 FY13.
Gross margin on total product sales was 74% for H1 FY14, down from 81% in the same period last year, mainly due to lower gross margin for the Company's IVP product line as a result of the Company's distribution activities in Japan for the Nobori DES, coupled with the consolidation of the Company's newly acquired Cardiac Diagnostic business which has a lower gross margin, and the overall reduction in China's DES pricing.
Total operating expense as a percentage of product revenue for H1 FY14 was 63%, compared to 54% in the same period last year.
In detail, sales and marketing ("S&M") expense in H1 FY14 was US$50.6 million; general and administrative ("G&A") expense was US$21.5 million; research and development ("R&D") expense, which included costs for new product development and testing, clinical trials, patent registration and regulatory approval, was US$13.3 million.
Net profit before exceptional items for H1 FY14 was US$23.6 million, or basic EPS of 1.38 US cents and diluted EPS of 1.36 US cents. This compares to a net profit of US$57.5 million, or basic EPS of 3.34 US cents and diluted EPS of 3.29 US cents, for H1 FY13 after excluding the exceptional items of fair value adjustments for warrants and provisions for restructuring expenses. Including exceptional items, net profit for H1 FY14 was US$23.4 million, or basic EPS of 1.36 US cents and diluted EPS of 1.35 US cents, compared to net profit of US$60.8 million, or basic EPS of 3.53 US cents and diluted EPS of 3.47 US cents, for H1 FY13.
Financial Guidance for FY14
For the fiscal year ending 31 March 2014 (FY14), in view of the overall weak market conditions in the short run, lower ASP in the various markets, and delays of royalty improvement in Japan, management anticipates the sales growth for this fiscal year could be weak despite the double digit sales volume growth in the Group's DES product lines. Thus, management has revised its previous guidance and now expects total revenue growth to be moderately positive over FY13. These challenges are mitigated by product revenue growth in the EMEA and APAC regions, revenues from the commercialization of various new products, as well as the recently acquired business of SD. In addition, the Company will initiate a limited launch of BioFreedom™ in December 2013.
The Company's practice is to provide guidance on a full year basis only. This forecast reflects Biosensors' current and preliminary views, which are subject to change. It also excludes the potential impact from foreign exchange fluctuations, or any exceptional events and unforeseen circumstances that may occur.
"Although we have adjusted our full-year financial guidance, we remain confident about our company's growth prospects over the long run. In our core DES franchise, we expect key regions such as EMEA and APAC to continue to lead growth. In China, the industry slowdown is expected to persist in the near-term but we will focus on executing our sales strategy. Our partnership with Terumo in Japan to co-promote Nobori is on track. We will actively help Terumo improve Nobori sales going forward," said Dr. Wang. "Based on our recent approvals, we are working on multiple product launch plans to generate new revenues for the company. With the changing market conditions, management is implementing measures to enhance efficiency and improve profitability by restructuring its cost and operational compositions. We believe that the reorganization is necessary for us to better position ourselves to deliver our long-term goals."
Media/Investor Relations Contact
Wong Teck Yenn
Director, Investor Relations
Tel: (65) 6213 5777
About Biosensors International Group, Ltd
Biosensors International Group, Ltd. develops, manufactures and markets innovative medical devices, aiming to improve patients' lives through pioneering medical technology that pushes forward the boundaries of innovation. Founded in 1990, we were listed on the Mainboard of the Singapore Stock Exchange in 2005.
The Group currently operates through three business units ("BU"): cardiovascular BU, which includes the BioMatrix™ family of drug-eluting stents and the licensing of its proprietary drug-eluting stent technology; cardiac diagnostic BU, which includes the newly acquired assets of Spectrum Dynamics, offering advanced medical imaging and clinical solutions to help interventional cardiologists determine the most appropriate treatment for patients; and peripheral intervention BU, which includes drug-eluting balloons for the treatment of patients with peripheral arterial disease.
The Group has operations worldwide and is headquartered in Singapore.
For more information, please visit www.biosensors.com.
Certain statements herein include forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the use of forward-looking terminology, such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe," "project" or "continue" or the negative thereof or other similar words. All forward looking statements involve risks and uncertainties, including, but not limited to, customer acceptance and market share gains, competition from companies that have greater financial resources; introduction of new products into the marketplace by competitors; successful product development; dependence on significant customers; the ability to recruit and retain quality employees as Biosensors grows; and economic and political conditions globally. Actual results may differ materially from those discussed in, or implied by, the forward-looking statements. The forward-looking statements speak only as of the date of this release and Biosensors assumes no duty to update them to reflect new, changing or unanticipated events or circumstances.
SOURCE Biosensors International Group, Ltd.