Enter Your Email Address to Receive a
Copy of MedicExhange Member Demograhpics

SenoRx reported revenue growth in first quarter 2010 & and will host a conference call on Thursday, May 6, 2010.

SenoRx , Inc. reported financial results for its first quarter ended March 31, 2010. Revenue for the quarter increased 4.3 percent to $13.4 million, compared with $12.9 million in the first quarter a year ago. Gross profit increased 4.1 percent to $9.4 million, or 70.2 percent of revenue, up from $9.1 million in the first quarter of 2009. SenoRx reported a net loss for the first quarter of $1.1 million, or 6 cents per share, compared with a net loss of $928,000 or 5 cents per share in the first quarter of 2009.

In addition, as announced earlier, SenoRx has entered into a definitive merger agreement to be acquired by C. R. Bard at a price of $11 per share, or approximately $213 million in the aggregate. The SenoRx board of directors unanimously approved the agreement and will recommend that the Company's shareholders approve the transaction.

John Buhler, SenoRx President and Chief Executive Officer, said "Our first quarter performance was encouraging on several fronts. The strength of our international markets was a key factor in the strong growth of our EnCor placements for the quarter, which increased by a record 88 units, up from 38 system placements in the first quarter last year and sequentially up from the strong fourth quarter rate in 2009. This brings the total installed base of EnCor systems worldwide to 1079. Additionally, we were able to maintain our gross margin at over 70 percent, while increasing our investment in R&D and business development activities, as well as experiencing a higher percentage of capital equipment sales in our revenue mix."

Stock-based compensation expense in the first quarter was $819,000, which included $229,000 due to accelerated vesting of options and restricted stock units related to the death during the quarter of SenoRx's former Chairman and Chief Executive Officer, Lloyd H. Malchow. This compares with $675,000 in the first quarter a year ago. Also included in the quarterly results was $66,000 in attorney and associated costs related to the appeal process for patent litigation with Hologic, which compares with $264,000 patent litigation expense in the first quarter of 2009. Excluding patent litigation expense and non-cash charges for stock-based compensation, SenoRx generated a non-GAAP pre-tax loss for the quarter of $190,000, compared with non-GAAP pre-tax income of $10,000 for the same period last year.

Increasing strength in SenoRx 's international markets drove strong growth in biopsy capital revenues, which increased 127 percent to $1.9 million, up from $825,000 in the first quarter a year ago, reflecting the strong EnCor placements during the period, while biopsy disposables increased 4.3 percent to $5.8 million compared with $5.5 million last year. Diagnostic adjunct revenues declined 3.5 percent to $3.5 million compared with $3.6 million a year ago. In the U.S., the biopsy business has been impacted by reduced procedural volume due to economic conditions, and specifically the loss of health insurance for many patients due to a difficult job market.

Therapeutic disposable revenues, which reflect sales of Contura MLB, currently sold primarily in the U.S., declined 20.8 percent in the first quarter to $2.3 million compared with $2.9 million a year ago. "Sales of Contura, as well as the Accelerated Partial Breast Irradiation (APBI) market at large, have been impacted by the new guidelines issued by the American Society for Radiation Oncology (ASTRO) last fall," said Buhler. "The new guidelines raised the age recommendation for patient selection criteria, effectively limiting the pool of participants eligible for APBI treatment. While we have seen strong reception for APBI utilizing our Contura MLB catheter by early adopters, the balance of the medical community is waiting for the interim five-year clinical study data, which will further validate the clinical efficacy of this technology and drive market expansion. We believe that the interim report providing this clinical data will be issued later this year and will show that APBI achieves equal or better results than whole breast radiation when compared for purposes of recurrence rates and cosmetic outcomes. We would expect that such data would provide support for reconsideration of the ASTRO guidelines to be harmonized with those of the American Society of Breast Surgeons (ASBS) or the American Brachytherapy Society (ABS), and we plan to lobby industry groups and work with others in the market segment to this end."

Buhler continued, "As we indicated last quarter, we took steps during the first quarter to accelerate the flow of new products in our R&D pipeline. This includes plans such as a next generation design of EnCor, featuring touch screen pc technology and other new and enhanced functional features, which we expect to introduce in the second half of 2010."

"In addition to increasing investment in R&D, we are also investing in a variety of business development activities, such as our distribution infrastructure, which we believe will enhance growth in the second half of 2010 and beyond. For example, in April, the company completed the transition of manufacturing of its EnCor probes to our current contract manufacturer in Thailand, which we believe will contribute to continuing growth of our gross margin in the future."

SenoRx finished the quarter in a solid financial position with cash and cash equivalents of $17.2 million and minimal debt. SenoRx continues to maintain a credit facility that allows it to borrow up to $10.0 million tied to growth in receivables and inventories, of which $7.1 million was available for advance as of March 31, 2010.

2010 Outlook

SenoRx management continues to anticipate revenue growth and gross margin improvement as the company moves to profitability in 2010, while continuing to generate strong cash flow. As previously indicated, the company is making investments in R&D as well as in its distribution infrastructure to drive future growth. The company expects continued EnCor system placement growth, including continued growth in international market penetration, and for the reasons discussed above, that Contura MLB adoption in the U.S will reaccelerate later this year. Additionally, SenoRx has begun to actively evaluate Contura MLB opportunities in select international markets.

At this time, SenoRx management continues to expect 2010 revenue to be in a range of $64 million to $67 million, but will reevaluate if necessary based on procedural volumes in the second quarter. The company expects to be cash flow positive for the full year and to post net earnings of at least 14 cents per share. SenoRx expects patent litigation expense of approximately $1.0 million to $1.5 million in 2010 related to the appeal filed by Hologic.

We also estimate that deferred compensation and equity-based compensation expense will range between $2.4 million and $2.8 million for 2010. This range could be materially impacted based upon the number of options granted and fluctuations in the market price of our common stock.

Conference Call

SenoRx will host a conference call at 8:00 a.m. Pacific Time (11:00 a.m. Eastern Time) on Thursday, May 6, 2010. The conference call can be accessed by calling 877-369-1866 (678-894-3966 for international callers) or via the company's website. http://investor.senorx.com/events.cfm

Use of Non-GAAP Financial Measures

To supplement certain GAAP financial information, SenoRx has provided non-GAAP adjusted net income/loss information that excludes the impact of expenses for stock-based compensation and patent litigation expenses. SenoRx management believes that in order to properly understand SenoRx's short-term and long-term financial trends, investors may wish to consider the impact of certain charges. These result from facts and circumstances that vary in frequency and/or impact on continuing operations. In addition, SenoRx management uses the adjusted net loss before certain charges to evaluate the operational performance of the company and as a basis for strategic planning. A table reconciling the GAAP financial information to the non-GAAP information is included in our earnings release. Investors should consider these non-GAAP measures in addition to, and not as a substitute for, financial performance measures in accordance with GAAP.

Source: SenoRx

You can discuss about SenoRx and its products & services in the SenoRx Company User Group