CAS Medical Systems, Inc. Reports Fourth Quarter and Full Year 2007 Results
- Company to Host Conference Call today at 10:00 a.m. ET -
FOR IMMEDIATE RELEASE:
Branford, Conn. February 28, 2008 CAS Medical Systems, Inc. (NASDAQ: CASM), a medical device company focused on innovative, non-invasive monitoring that is vital to patient care, today announced financial results for the fourth quarter and twelve months ended December 31, 2007.
“We are pleased to report record revenue for 2007, our eleventh consecutive year of revenue growth,” stated Andrew E. Kersey, President and CEO. “Our core business has remained strong and continued to grow in 2007. This is despite a shortfall of $1.5M of business to Medtronic Physio-Control due to its suspension of U.S. shipments in January of 2007. During the year, we complemented our vital signs monitoring product line with the signing of a co-branding agreement with Analogic Corporation, giving us exclusive worldwide sales and marketing rights to its LifeGard® patient monitors. Sales of our core products to the Department of Veterans Affairs, private label customers and to other Original Equipment Manufacturer (OEM) partners continued to be strong, providing us with a solid foundation on which to grow.
“A significant milestone for CASMED in 2007 was the successful launch of the FORE-SIGHT® Absolute Cerebral Oximeter. Utilizing innovative, proprietary optical technology, FORE-SIGHT measures absolute cerebral oxygen saturation. This clinically relevant information can signal the need for clinician intervention before brain damage occurs. Since the product’s commercial introduction, we have experienced sustained growth in FORE-SIGHT revenues with the installation of the 50th monitor reported earlier this month and repeat sales of single patient use sensors.
“As we enter 2008, we believe we are well positioned to continue to grow both our existing core business and to accelerate the FORE-SIGHT opportunity as market awareness and adoption of our unique absolute cerebral oximetry technology continues to widen. We are pleased to see not only increased awareness and demand for our product, but also continued industry acceptance for cerebral oximetry as evidenced by the recent addition of cerebral oximetry to the Society of Thoracic Surgeons Adult Cardiac Surgery Database. We have multiple clinical studies underway to help penetrate additional markets beyond the initial cardiovascular surgery market. In addition, CASMED intends to aggressively seek early market adoption in the infant/neonatal market where we already hold a leadership position with strong brand awareness of our premium Klear-Trace® electrodes.”
Financial Results for Q4
Revenues for the three months ended December 31, 2007 totaled $10.3 million, an increase of $127,000, or 1 percent, over the $10.2 million of revenues reported for three months ended December 31, 2006. This slight increase in revenues was led by OEM product sales including shipments to Medtronic, historically the Company’s largest customer, which rebounded during the fourth quarter of 2007 finishing nearly $100,000 over the fourth quarter of 2006. Revenues for the fourth quarter of 2007 include approximately $205,000 of FORE-SIGHT cerebral oximetry product sales.
For the three months ended December 31, 2007, the Company recorded a net loss of $12,000, or $0.00 per basic and diluted common share, compared to net income of $536,000 or $0.04 per diluted common share reported for the three months ended December 31, 2006. Pre-tax income was $54,000 for the three months ended December 31, 2007, a decrease of $704,000 from the $758,000 reported for the three months ended December 31, 2006 resulting from the following:
Stock compensation expense was $86,000 for the fourth quarter of 2007, compared to $91,000 for the same period of the prior year.
Financial Results for the Full Year of 2007
Revenues for 2007 totaled $38.2 million, an increase of $3.0 million, or 9 percent, over revenues of $35.2 million reported for 2006. Increases in sales of vital signs monitors of approximately $3.1 million, or 22 percent, primarily driven by sales to the Department of Veterans Affairs (“VA”) and sales of Analogic products marketed by the Company, were partially offset by reductions in OEM sales of $0.9 million, or 11 percent. Sales to Medtronic Physio-Control were down $1.5 million for the year, and were partially offset by increases in sales to other OEM partners. Sales of blood pressure cuffs and rapid-infusor products grew nearly 15 percent over 2006 and accounted for $1.2 million of the increase in revenues. 2007 revenues include approximately $0.3 million of FORE-SIGHT cerebral oximetry product sales.
The Company recorded 2007 net income of $306,000 or $0.03 per diluted common share, compared to net income of $1.7 million, or $0.14 per diluted common share, reported for 2006. Pre-tax income was $304,000 for 2007 a decrease of $2.4 million from the $2.7 million reported for 2006 and was affected by the following factors:
Stock compensation expense was $303,000 for 2007, compared to $390,000 for 2006.
The Company’s income tax benefit for 2007 of $3,000 assumes an effective tax rate for 2007 of 1 percent compared to an effective income tax rate of 36 percent for 2006. 2007 includes the $155,000 state tax benefit referred to above.
Liquidity and Capital Resources
FORE-SIGHT Business Overview
In the U.S., the Company has exclusive agreements with 18 Manufacturers Representative groups, representing approximately 50 sales people selling the product nationwide into the CVOR market. The Company has four Sales Managers dedicated to FORE-SIGHT sales and an additional six Clinical Support Specialists. The Company expects to add an additional four Clinical Support Specialists focused on the adult market during the year as sales continue to grow.
During the fourth quarter the Company began the European launch of the FORE-SIGHT system with initial sale of demo monitors. One of the Company’s Sales Managers is located in Europe, concentrating on establishing FORE-SIGHT distribution in key markets. Two clinical research / reference sites have been established in Europe to support the FORE-SIGHT product launch.
Three new abstracts were recently presented by Dr. T. M. Hemmerling M.D. DEAA of Intelligent Technology Anesthesia Group, Department of Anesthesia, Montreal General Hospital, McGill University, Montreal, Canada at Society for Technology in Anesthesia, in San Diego, CA in January 2008. These abstracts represent initial studies utilizing the FORE-SIGHT monitor in new applications outside of the CVOR setting.
The Company previously announced the publication of a cerebral oximetry review paper in Seminars in Cardiothoracic and Vascular Anesthesia in the March edition of the journal. The paper, entitled “Recent Advances in the Application of Cerebral Oximetry in Adult Cardiovascular Surgery”, was authored by Dr. Gregory W. Fischer, M.D., Co-Director of Cardiac Anesthesia at Mount Sinai Medical Center in New York, NY. In the paper, Dr. Fischer notes that “trend only cerebral oximetry may be inadequate” and that “because the FORE-SIGHT provides an absolute value of SctO2, it is possible to establish threshold values for SctO2 to guide clinical interventions,” avoiding catastrophic events causing brain injury.
In addition, new abstracts generated from data utilizing the FORE-SIGHT Absolute Cerebral Oximeter are to be presented at upcoming industry seminars. Initial results from the 60 patient CABG surgery study at Duke University Medical Center in Durham, NC will be presented as an abstract titled “FORE-SIGHT Cerebral Oximeter in Cardiac Patients” at the 14th World Congress of Anesthesiologists in Cape Town, South Africa March 2-7, 2008. Dr. David MacLeod, M.D. of Duke University Medical Center will also be presenting an abstract on the “Relationship of Cerebral Oximetry-Measured Hemoglobin Per Volume of Tissue to Arterial Blood Hemoglobin” at the 82nd International Anesthesia Research Society Clinical and Scientific Congress in San Francisco, CA on March 29-April 1, 2008.
Data and information on all of these studies can be found on the Company website at www.casmed.com/foresight
FORE-SIGHT Infant Sensor Launch
There are approximately four million births in the U.S. each year and, of these, approximately one in every 125 babies are born with a congenital heart defect. Congenital heart defects are the leading birth defect in the US, affecting almost 40,000 babies a year, 50% of whom will require at least one invasive surgery in their lifetime, many before age one. Early corrective surgery often prevents development of additional complications and allows the child to live a more normal life sooner. As with adults, it is critically important to be able to be aware of and respond immediately to cerebral oxygenation deficits before, during and after these surgeries.
Conference Call Information
The live call may be accessed by phone at (877) 681-3371 (domestic) or (719) 325-4929 (international). If you would like to participate, please call at least ten minutes prior to the start time of 10:00 a.m. Eastern Time.
A live audio webcast of the conference call will also be available on the Company's website located at www.casmed.com. Please allow extra time prior to the call to visit the site and download the streaming media software required to join the webcast. An online archive of the webcast will be available within two hours of the end of the live call and archived on the website until March 28, 2008.
About the FORE-SIGHT Absolute Cerebral Oximeter
For further information regarding CAS Medical Systems, Inc., visit the Company’s website at www.casmed.com.
Director of Corporate Communications