IRVINE, Calif., Aug. 16, 2011 /PRNewswire/ -- Patient Safety Technologies, Inc. (the "Company", OTCBB: PSTX, OTCQB: PSTX) today announced financial results for its second quarter of 2011 ended June 30, 2011.
During the second quarter of 2011, the number of institutions using the Company's SurgiCount Safety-Sponge® System surpassed 70 and the Company lost no customers. This compares to approximately 52 institutions using the solution at the end of the second quarter of 2010. Although not necessarily proportional to reported revenue, the number of hospitals using the Company's products is a good indicator of our underlying business.
Total revenue for the quarter ended June 30, 2011 was $2.6 million, which included $0.5 million of revenue from the delivery to the Company's exclusive distributor as part of a $10.0 million inventory stocking order. Excluding the effect of this inventory stocking order, revenue for the quarter ended June 30, 2011 was $2.1 million. This compares with total revenue for the quarter ended June 30, 2010 of $3.8 million, which included $2.3 million of revenue from the delivery under the same $10 million inventory stocking order. Excluding the effect of this inventory stocking order, revenue for the second quarter of 2010 would have been $1.4 million. Accordingly, excluding the effects of this inventory stocking order, revenue for the three months ended June 30, 2011 of $2.1 million represents approximately 50% growth over the $1.4 million generated for the three months ended June 30, 2010. This growth in revenue excluding the effects of the stocking order is primarily the result of the significant growth in the number of hospitals using the Safety-Sponge® System at the end of the second quarter of 2011 as compared to the second quarter of 2010. Additionally, during the second quarter 2011, the Company successfully completed the delivery of the last of the $10.0 million stocking order.
As a result of a comprehensive restructuring program begun in the third quarter of 2010 focused on a number of initiatives including reducing cash operating expenses, our operating expenses in the second quarter of 2011 were reduced significantly as compared to the second quarter of 2010. Reported GAAP operating expenses were $1.7 million and $3.0 million for the second quarters of 2011 and 2010, respectively, a decrease of $1.3 million or 44%. Excluding non-cash expenses for stock compensation and depreciation, our operating expenses in the second quarter 2011 were 50% of what the comparable expenses were in second quarter 2010.
As a direct result of the continued growth of the Company's customer base and reported revenues excluding stocking orders, combined with the success of the restructuring program, the Company generated an Adjusted Operating Loss (defined as reported operating income adjusted to exclude certain non-cash expenses) of $23 thousand during the second quarter of 2011. This compares with an Adjusted Operating Loss of $332 thousand during the second quarter of 2010.
The Company ended the second quarter of 2011 with $5.7 million of cash and cash equivalents and no debt. Additionally, the Company anticipates that the $224 thousand of restricted cash reported at quarter end will be released during the third quarter of 2011. Including this restricted cash, total cash and cash equivalents at the end of the second quarter were $5.9 million.
Expanded customer base
Current users of the SurgiCount Safety-Sponge® System include over 70 hospitals, including six of the 17 hospitals named to the U.S. News and World Report 2011-12 Best Hospitals Honor Roll. Additionally, as previously disclosed, during the second quarter of 2011 use of the Safety-Sponge® System surpassed 50 million sponges successfully used in over 2.5 million procedures.
"During the second quarter we continued to add to the list of hospitals who are taking a proactive step to improve their patient outcomes and reduce their preventable costs through the use of the Safety-Sponge® System. With additional hospitals already under contract in the third quarter, we are well positioned to continue to grow our user base, revenues and profitability," said Brian E. Stewart, President and Chief Executive Officer of Patient Safety Technologies.
The Company's second quarter 2011 financial statements are included in its Quarterly Report on Form 10-Q filed by the company on August 15th, 2011 and available at the SEC's website at www.sec.gov
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To supplement the Company's presentation of operating income measured in accordance with GAAP, we also use a non-GAAP measure of operating income, herein defined as Adjusted Operating Income (in the event this amount is negative herein defined as Adjusted Operating Loss). Reconciliation to GAAP operating income from Adjusted Operating Income or Loss is included immediately above in this press release. The Adjusted Operating Losses shown above are not adjusted to include the effect of certain costs estimated to be non-recurring in nature of $134 thousand and $268 thousand during Q2 2011 and Q2 2010, respectively. These estimated non-recurring costs included a number of expenses estimated to be one-time in nature such as certain severance expenses and other non-recurring expenses that management estimates are not reflective of ongoing operating results.
Non-GAAP measures are provided to enhance investors' overall understanding of the Company's current financial performance, prospects for the future and as a means to evaluate period-to-period comparisons. The Company believes that the use of non-GAAP operating income provides meaningful supplemental information regarding financial performance by excluding certain expenses and benefits that may not be indicative of recurring core business operating results. The Company believes this non-GAAP measure, which excludes the non-cash expenses of depreciation, amortization and stock based compensation, when viewed with GAAP results and the accompanying reconciliation, enhances the comparability of results against prior periods and allows for greater transparency of financial results. The Company believes this non-GAAP measure facilitates management's internal comparison of the Company's financial performance to that of prior periods as well as trend analysis for budgeting and planning purposes. The presentation of this non-GAAP measure is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
About Patient Safety Technologies, Inc. and SurgiCount Medical
Patient Safety Technologies, Inc., through its wholly-owned operating subsidiary SurgiCount Medical, Inc., provides the Safety-Sponge® System, a solution proven to improve patient safety and reduce healthcare costs by preventing one of the most common errors in surgery, retained foreign objects. For more information, contact SurgiCount Medical, Inc. at (949) 387-2277 or visit www.surgicountmedical.com.
Forward Looking Statements
Statements in this press release regarding our business that are not historical facts are "forward-looking statements" (within the meaning of Section 21E of the Securities Exchange Act of 1934) that involve risks and uncertainties. Forward-looking statements reflect our management's current views with respect to future events and financial performance; however, you should not put undue reliance on these statements. When used, the words "anticipates," "believes," "expects," "intends," "future," and other similar expressions, without limitation, identify forward-looking statements. Forward-looking statements are not guarantees of future performance and are inherently subject to uncertainties and other factors which could cause actual results to differ materially from the forward-looking statements. These factors and uncertainties include but are not limited to: the early stage of adoption of our Safety-Sponge® System and the need to expand adoption of our Safety-Sponge® System; the impact on our future revenue and cash flows from the ordering patterns of our exclusive distributor Cardinal Health; our need for additional financing to support our business; our reliance on third-party manufacturers, some of whom are sole-source suppliers, and on our exclusive distributor; and any inability to successfully protect our intellectual property portfolio. In light of the risks and uncertainties, there can be no assurance that any forward-looking statement will in fact prove to be correct.
Forward-looking statements can be affected by many other factors, including, those described in the "Business", "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Factors Affecting Future Results" sections of our Annual Report on Form 10-K for 2010, our Quarterly Reports on Form 10-Q and in our other public filings. These documents are available online through the SEC's website, www.sec.gov. Forward-looking statements are based on information presently available to senior management, and we have not assumed any duty to update any forward-looking statements.
PATIENT SAFETY TECHNOLOGIES, INC.
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SOURCE Patient Safety Technologies, Inc.