Uroplasty Reports Fiscal Second Quarter 2013 Financial Results ~Sales to U.S. customers grow 23% driven by a 38% increase in Urgent® PC

~648 Active Urgent PC customers in the U.S. establishes new quarterly record

ontinued expansion of reimbursement coverage for Urgent PC

~~Enrollment for U.S. pilot trial begins

onference call today at 4:30 p.m. ET

MINNEAPOLIS, Oct. 25, 2012 /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 second quarter of fiscal 2013 ended September 30, 2012.

Global sales grew 15% to $5.7 million for the second quarter of fiscal 2013, compared with $5.0 million in the fiscal second quarter a year ago. Sales in the U.S. increased 23%, driven by a 38% increase in sales of the Urgent® PC Neuromodulation System. U.S. sales of Macroplastique were up 4% from the prior year.

"The fiscal second quarter results continued to demonstrate the success of our efforts with Urgent PC sales in the U.S.," said David Kaysen, President and CEO of Uroplasty. "The number of active Urgent PC customers in the U.S. increased sequentially in the second quarter to a record 648 from 577 in the fiscal first quarter. Additionally, we sold 3,576 lead set boxes in the fiscal second quarter compared with 3,283 in the fiscal first quarter." 

U.S. Urgent PC Sales in the fiscal second quarter totaled $2.7 million, up from $2.5 million in the fiscal first quarter of 2013.  Just as the quarter ended, Noridian, one of the Regional Medicare carriers, expanded coverage of Urgent PC treatments from twelve months to two years for the 3.6 million covered Medicare lives in its jurisdiction. This change in policy was the result of a review of published data, showing the positive results of using Urgent PC over a 24-month period. Noridian provides Medicare services in Alaska, Arizona, Idaho, Montana, North Dakota, Oregon, South Dakota, Utah, Washington, and Wyoming. Uroplasty also benefited from published reimbursement coverage policies for percutaneous tibial nerve stimulation (PTNS) treatments by private insurance carriers EmblemHealth, covering approximately 2.1 million lives in New York and New Jersey, and ConnectiCare, covering approximately 228,000 lives in Connecticut.

"In addition to continued expansion of reimbursement, we have had further positive clinical data released on Urgent PC.  The 3-year STEP Study data was presented for the first time at the Western Section American Urological Association conference in Hawaii earlier this month. This multi-center study demonstrated that patients who respond to the initial 12 weeks of Urgent PC therapy sustained their symptom improvement over 3 years," said Mr. Kaysen.

Macroplastique sales in the U.S. totaled $1.4 million in the fiscal second quarter, up 4% over the same quarter last year. "Over the past year, we have successfully built our share in the bulking market and during fiscal 2013 we anticipate steady sales from Macroplastique," Mr. Kaysen commented.

Net sales to customers outside of the U.S. for the fiscal second quarter totaled $1.5 million, a decrease of 3% from the prior fiscal year's second quarter.  Excluding the impact of fluctuations in foreign currency exchange rates, total sales outside the U.S. were up 6%.  Urgent PC sales outside of the U.S. of $510,000 increased 31% from $389,000 in the prior fiscal year's second quarter. Excluding the impact of fluctuations in foreign currency exchange rates, Urgent PC sales increased 40%.

The Company reported an operating loss of $642,000 in the fiscal second quarter, compared with a $1.3 million 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 $163,000 in the second quarter of fiscal 2013, compared with an $837,000 non-GAAP operating loss in the second quarter a year ago.  The decrease in operating loss was primarily attributable to the increase in sales and improved gross margin, which more than offset the increase in operating expenses.

For the six-month period ended September 30, 2012, sales grew 17% to $11.3 million, reflecting a 31% increase in U.S. sales and a 9% decrease in sales outside the U.S.  In the U.S., sales of Urgent PC increased 49% to $5.3 million and Macroplastique sales grew 10% to $2.9 million.  At September 30, 2012, cash, cash equivalents and cash investments totaled $15.4 million

"We are pleased to report that we have initiated our pilot study in the U.S. to evaluate the efficacy of Urgent PC for the treatment of bowel incontinence," continued Mr. Kaysen. "We are currently enrolling patients at one of the two study sites. We are also moving forward with our efforts to secure a CE Mark in Europe for an implantable tibial nerve stimulator for the treatment of over active bladder. At the recent International Continence Society meeting in Beijing, China, the results of a nine-year study were presented that demonstrated the durability and safety of an implantable tibial nerve neuromodulation device." 

"As we look ahead, we expect continued sequential growth of Urgent PC sales. To that end, we added three sales reps during the quarter to end with a total of 41. We plan to add three more reps by the end of the fiscal year. We are optimistic about the outlook for our financial performance for fiscal 2013. Reimbursement coverage is expanding, clinical data continue to be positive, and we have an experienced sales organization and solid infrastructure in place to support our growth. Our team is focused on our plan to drive Urgent PC sales and increase utilization," Mr. Kaysen concluded.

Conference Call

Uroplasty will host an audio conference call today at 3:30 pm Central, 4:30 pm Eastern, to review the financial results for the fiscal second quarter of 2013.  David Kaysen, President and Chief Executive Officer, and Medi Jiwani, Vice President, Chief Financial Officer and Treasurer, will host the call. Individuals wishing to participate in the conference call should dial 877-941-0843. An audio replay will be available for 30 days following the call at 800-406-7325 with the passcode 4568214#.

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.

David Kaysen, President and CEO, or

Medi Jiwani, Vice President, CFO, and

Treasurer

952.426.6140

EVC Group

Jenifer Kirtland/Jamar Ismail (Investors)

415.568.4887

Chris Gale (Media)

646.201.5431

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



Three Months Ended


Six Months Ended


September 30,


September 30,


2012


2011


2012


2011

















Net sales

$5,709,840


$4,967,621


$11,286,963


$9,620,743

Cost of goods sold 

774,963


759,336


1,530,550


1,468,901









Gross profit

4,934,877


4,208,285


9,756,413


8,151,842









Operating expenses








General and administrative

1,027,835


942,557


2,119,681


1,964,415

Research and development

598,933


456,871


1,161,974


912,631

Selling and marketing

3,734,042


3,869,875


7,698,877


7,464,017

Amortization

215,681


214,056


431,290


426,371


5,576,491


5,483,359


11,411,822


10,767,434









Operating loss

(641,614)


(1,275,074)


(1,655,409)


(2,615,592)









Other income (expense)








Interest income

10,931


13,716


23,509


31,550

Interest expense

-


(57)


-


(57)

Foreign currency exchange gain (loss)

5,794


(8,587)


(3,877)


(3,279)


16,725


5,072


19,632


28,214









Loss before income taxes

(624,889)


(1,270,002)


(1,635,777)


(2,587,378)









Income tax expense 

14,637


8,485


23,104


22,416









Net loss

$(639,526)


$(1,278,487)


$(1,658,881)


$(2,609,794)









Basic and diluted loss per common share

$(0.03)


$(0.06)


$(0.08)


$(0.13)









Weighted average common shares outstanding:








Basic and diluted

20,763,345


20,688,919


20,753,368


20,659,017

    

UROPLASTY, INC. AND SUBSIDIARIES


CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)



September 30, 2012


March 31, 2012





Assets




Current assets:




    Cash and cash equivalents & short-term investments

$15,175,304


$11,854,127

    Accounts receivable, net

2,577,134


2,704,434

    Inventories

869,554


698,742

    Other

465,568


363,639

Total current assets

19,087,560


15,620,942





Property, plant, and equipment, net

1,087,182


1,171,979

Intangible assets, net 

519,030


945,880

Long-term investments

240,000


4,429,140

Deferred tax assets

117,456


122,872

Total assets

$21,051,228


$22,290,813





Liabilities and Shareholders' Equity




Current liabilities:




    Accounts payable

$614,919


$593,585

    Current portion – deferred rent

35,000


35,000

    Income tax payable

6,480


17,892

    Accrued liabilities:




        Compensation

1,501,995


1,576,147

        Other

407,074


316,995





Total current liabilities

2,565,468


2,539,619





Deferred rent – less current portion

23,669


42,043

Accrued pension liability

424,481


474,396





Total liabilities

3,013,618


3,056,058





Total shareholders' equity

18,037,610


19,234,755





Total liabilities and shareholders' equity

$21,051,228


$22,290,813





 

      

UROPLASTY, INC. AND SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 (Unaudited)


Six Months Ended

September 30


2012


2011

Cash flows from operating activities:




Net loss

$(1,658,881)


$(2,609,794)

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




 Depreciation and amortization

576,665


552,275

 Loss on disposal of  equipment

2,797


6,475

 Amortization of premium on marketable securities

26,716


17,039

 Share-based consulting expense

1,623


2,787

 Share-based compensation expense

353,060


288,754

 Deferred income tax expense (benefit)

2,860


(3,040)

 Deferred rent credit

(18,374)


(17,614)

 Changes in operating assets and liabilities:




Accounts receivable, net

100,537


(196,435)

Inventories

(175,833)


(65,281)

Other current assets

(102,998)


(143,370)

Accounts payable

26,516


(27,130)

Accrued liabilities

10,040


(20,515)

Accrued pension liability, net

(36,401)


(65,303)

Net cash used in operating activities

(891,673)


(2,281,152)





Cash flows from investing activities:




 Proceeds from maturity of held-to-maturity investments

3,800,000


3,500,016

 Proceeds from maturity of available-for-sale investments

2,000,000


7,518,252

 Purchases of held-to-maturity investments

(1,780,000)


(5,280,042)

 Purchases of available-for-sale investments

(3,218,286)


-

 Purchases of property, plant and equipment

(93,981)


(106,325)

 Proceeds from sale of property, plant and equipment

7,276


-

 Purchase of intangible assets

(4,440)


(67,198)

Net cash provided by investing activities

710,569


5,564,703





Cash flows from financing activities:




 Net proceeds from exercise of options

150,000


207,050

Net cash provided by financing activities

150,000


207,050





Effect of exchange rate changes on cash and cash equivalents

(10,580)


(15,824)





Net (decrease) increase  in cash and cash equivalents

(41,684)


3,474,777





Cash and cash equivalents at beginning of period

4,653,226


6,063,573





Cash and cash equivalents at end of period

$4,611,542


$9,538,350





Cash paid during the period for interest

$-


$57

Cash paid during the period for income taxes

35,507


24,074

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 during the three months ended September 30, 2012 and 2011 was approximately $163,000 and $837,000, respectively.  Our non-GAAP operating loss during the six months ended September 30, 2012 and 2011 was approximately $724,000 and $1.8 million, respectively.  The decrease in non-GAAP operating loss for the three and six months ended September 30, 2012 over the corresponding period a year ago is attributed to the increase in net sales and gross profit percent, which more than offset the increase in operating spending.



Expense Adjustments


Three Months Ended

GAAP

Share-based  Expense

Depreciation

Amortization of Intangibles

Non-GAAP

September 30, 2012






Gross Profit

$4,935,000

$8,000

$9,000


$4,952,000

% of net sales

86.4%




86.7%

Operating Expenses






    General and administrative

1,028,000

(108,000)

(50,000)


870,000

    Research and development

599,000

(14,000)

(1,000)


584,000

    Selling and marketing

3,734,000

(60,000)

(13,000)


3,661,000

    Amortization

216,000



$(216,000)

-


5,577,000

(182,000)

(64,000)

(216,000)

5,115,000







Operating Loss

$(642,000)

$190,000

$73,000

$216,000

$(163,000)







September 30, 2011






Gross Profit

$4,208,000

$6,000

$8,000


$4,222,000

% of net sales

84.7%




85.0%

Operating Expenses






    General and administrative

942,000

(90,000)

(40,000)


812,000

    Research and development

457,000

(11,000)

(3,000)


443,000

    Selling and marketing

3,870,000

(53,000)

(13,000)


3,804,000

    Amortization

214,000



$(214,000)

-


5,483,000

(154,000)

(56,000)

(214,000)

5,059,000







Operating Loss

$(1,275,000)

$160,000

$64,000

$214,000

$(837,000)







    



Expense Adjustments


Six Months Ended

GAAP

Share-based  Expense

Depreciation

Amortization of Intangibles

Non-GAAP

September 30, 2012






Gross Profit

$9,756,000

$15,000

$18,000


$9,789,000

% of net sales

86.4%




86.7%

Operating Expenses






    General and administrative

2,120,000

(194,000)

(96,000)


1,830,000

    Research and development

1,162,000

(26,000)

(2,000)


1,134,000

    Selling and marketing

7,699,000

(120,000)

(30,000)


7,549,000

    Amortization

431,000



$(431,000)

-


11,412,000

(340,000)

(128,000)

(431,000)

10,513,000







Operating Loss

$(1,656,000)

$355,000

$146,000

$431,000

$(724,000)







September 30, 2011






Gross Profit

$8,152,000

$11,000

$15,000


$8,178,000

% of net sales

84.7%




85.0%

Operating Expenses






    General and administrative

1,965,000

(164,000)

(80,000)


1,721,000

    Research and development

913,000

(19,000)

(6,000)


888,000

    Selling and marketing

7,464,000

(98,000)

(25,000)


7,341,000

    Amortization

426,000



$(426,000)

-


10,768,000

(281,000)

(111,000)

(426,000)

9,950,000







Operating Loss

$(2,616,000)

$292,000

$126,000

$426,000

$(1,772,000)







 

SOURCE Uroplasty, Inc.



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