Update: RITA Medical Systems Announces Third Quarter, Nine-Month Results
MOUNTAIN VIEW, Calif., Oct. 22 /PRNewswire-FirstCall/ -- RITA Medical Systems, Inc. (Nasdaq: RITA) today announced that its recent reorganization has resulted in lower operating expense and improved bottom-line results for the Company's third quarter and nine months ended September 30, 2003. Sequentially, operating expenses were reduced 11 percent to $5.2 million for this year's third quarter from $5.8 million in the second quarter of 2003. The net use of cash and investments (which the Company's calls its "cash burn rate") for the third quarter of 2003 was $1.6 million, down significantly from $2.3 million in the year-earlier period and $5.5 million in the second quarter of 2003. The net use of cash and investments for the second quarter of 2003 includes $2.6 million in patent litigation settlement costs paid by the Company. The net use of cash and investments for the second quarter of 2003, excluding the $2.6 million patent litigation settlement, would have been $2.9 million. Sales for this year's third quarter were $3.9 million, down slightly from the $4.0 million in the second quarter of 2003 and down 13 percent from $4.5 million in the third quarter of 2002.
The net loss for the third quarter of 2003 was $2.5 million, or a $0.14 loss per share, compared to a net loss of $2.7 million, or $0.18 loss per share, for the year-earlier period and a net loss of $3.4 million, or a $0.19 loss per share, for the second quarter of 2003. Gross margins were 68 percent for the third quarter of 2003, up from 61 percent in the same period of last year and 58 percent for this year's second quarter.
U.S. sales for this year's third quarter were 86 percent of total sales compared to 77 percent for the prior year period. Disposable sales represented 91 percent of total sales in the third quarter of 2003, compared to 79 percent for the 2002 third quarter.
R&D expense in this year's third quarter declined when compared to the prior year period, due to a significant year-to-year reduction in legal expense as a result of the settlement of patent litigation.
President and Chief Executive Officer Joseph M. DeVivo commented, "Operational and organizational changes implemented since the last conference call have reduced our cost structure and have had a positive impact on bottom- line results. Today, we believe the RITA operation is leaner, more efficient and has the necessary talent in place to implement a number of new marketing programs designed to increase share in our target tumor-ablation markets.
"In addition," said Mr. DeVivo, "third quarter sales, while lower than last year's period, in the U.S., we believe we are starting to see a trend of existing customers ordering more disposables. Our goals are to drive top-line growth in the coming periods and to continue improving the quality of those revenues, focusing on procedures as a more accurate measure of core progress."
For the nine months ended September 30, 2003, total sales were $12.4 million with a net loss of $8.8 million, or a $0.50 loss per share, compared to total sales of $13.7 million with a net loss of $10.4 million, or $0.70 loss per share for the prior year period.
The balance sheet at September 30, 2003, showed cash, cash equivalents, and marketable securities of $10.6 million, a current ratio of 6.8:1, total assets of $23.3 million, stockholders' equity of $21.0 million and no debt.
The Company's reference to its net use of cash and investments excluding
$2.6 million in patent litigation settlement expense in the second quarter of
2003 is a non-GAAP financial measure. Management believes that a review of its
net use of cash and investments excluding this item provides an important
insight into the Company's ongoing operating results and trends. The
presentation of this additional information is not meant to be considered in
isolation or as a substitute for RITA's financial results prepared in
accordance with GAAP.
About RITA Medical Systems, Inc.
RITA Medical Systems develops, manufactures and markets innovative products for patients with solid cancerous or benign tumors. The proprietary RITA system uses radio frequency energy to heat tissue to a high enough temperature to ablate it or cause cell death. While the Company's current focus is on liver cancer and metastatic bone cancer, the Company believes that its minimally invasive technology may in the future be applied to other types of tumors, including tumors of the lung, breast, uterus, prostate and kidney. The Company has received regulatory clearance in major markets worldwide, including the United States. In March 2000, RITA became the first radiofrequency ablation company to receive specific FDA clearance for unresectable liver lesions in addition to its previous general FDA clearance for the ablation of soft tissue. In October 2002, RITA again became the first company to receive specific FDA clearance, this time, for the palliation of pain associated with metastatic lesions involving bone.
The statements in this news release related to the use of the Company's technology and the Company's future financial and operating performance are forward-looking statements involving risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. Information regarding these risks is included in the Company's filings with the Securities and Exchange Commission.
For further information, please contact: investors, Jill Bertotti, jill@allencaron.com, or media, Len Hall, len@allencaron.com, both of Allen & Caron Inc, +1-949-474-4300, for RITA Medical Systems; or Don Stewart, Chief Financial Officer, dstewart@ritamed.com, or Stephen Pedroff, VP Marketing Communications, spedroff@ritamed.com, both of RITA Medical Systems, Inc., +1-650-314-3400.
TABLES FOLLOW
RITA MEDICAL SYSTEMS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share data, unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
Sales $3,865 $4,454 $12,412 $ 13,679
Cost of goods sold 1,253 1,730 4,530 5,773
Gross profit 2,612 2,724 7,882 7,906
Operating expenses
Research and development 976 1,218 3,395 3,882
Selling, general
and administrative 4,182 4,311 13,482 14,837
Total operating
expenses 5,158 5,529 16,877 18,719
Loss from operations (2,546) (2,805) (8,995) (10,813)
Interest income and
other expense, net 32 85 157 368
Net loss $(2,514) $(2,720) $(8,838) $(10,445)
Net loss per share,
basic and diluted $(0.14) $(0.18) $(0.50) $(0.70)
Shares used in
computing basic and
diluted net loss
per share 17,807 14,996 17,538 14,816
RITA MEDICAL SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
September 30, December 31,
2003 2002
Assets
Current assets:
Cash and cash equivalents $3,327 $6,888
Marketable securities 6,132 5,427
Accounts and note receivable, net 2,565 2,798
Inventories, net 2,392 3,521
Prepaid assets and other current assets 1,097 995
Total current assets 15,513 19,629
Long term marketable securities 1,106 520
Long term note receivable, net 372 381
Property and equipment, net 1,268 1,565
Intangibles and other assets 5,001 2,071
Total assets $23,260 $24,166
Liabilities and stockholders' equity
Current liabilities $2,296 $3,563
Stockholders' equity 20,964 20,603
Total liabilities and stockholders' equity $23,260 $24,166
SOURCE RITA Medical Systems, Inc.