TomoTherapy Incorporated (NASDAQ:TOMO), producer of the Hi·Art® treatment system for advanced radiation therapy, today released financial results for the first quarter ended March 31, 2008. The company’s performance is in line with preliminary results released on April 17, 2008.
For the first quarter of 2008, the company reported revenue of $38.9 million, versus $51.2 million in the first quarter of 2007. The net loss was $6.2 million, or negative $0.12 per share, compared to pro forma net income of $3.9 million, or $0.09 per diluted share, for the first quarter of 2007. The 2007 pro forma results do not include the accretion of redeemable convertible preferred stock of $134.9 million. Including the accretion, the net loss attributable to common shareholders was $131.1 million, or negative $12.13 per share, for the three months ended March 31, 2007.
First quarter operating expenses rose 28% to $20.2 million, as the company continued to build infrastructure for future growth. Because of the fixed nature of much of TomoTherapy’s customer service-related expenses, the lower revenue had a significant impact on margins, which declined to 21.1%.
The value of new sales orders received during the 2008 first quarter totaled $54.6 million, a 23% gain over the first quarter of 2007. The U.S. orders were especially strong, more than doubling year over year. As of March 31, 2008, TomoTherapy had a record revenue backlog of $260 million, a 60% increase from the backlog at March 31, 2007. The backlog represents firm customer orders for systems and does not include any revenue from service contracts, which are a growing portion of the company’s business. TomoTherapy generally recognizes revenue upon customer acceptance. This only happens after the system is installed and fully operational. Acceptance usually occurs three to four weeks after delivery.
“We believe the fundamentals of our business remain very strong,” said Fred Robertson, TomoTherapy’s CEO. “However, the first quarter was somewhat challenging from a financial performance standpoint due to the back-end loaded nature of our current backlog. We were pleased that the value of new orders increased year over year at a rate more than double the growth rate of the overall radiation oncology market. Orders were especially strong in the United States, where we saw a 118% rise from the first quarter of last year. The result was a record revenue backlog, and further affirmed our belief in the superiority of the Hi·Art system to provide the best quality treatments to cancer patients.”
Outlook
For fiscal 2008, management anticipates revenue of $255 million to $290 million and net income per share in the range of $0.14 to $0.33 per diluted share.
Most of the company’s revenue is recognized based on the customer’s acceptance of the Hi·Art system. Thus, quarter-to-quarter fluctuations in revenue are normal and should be expected. Management continues to believe that the strength of its business should be measured by annual revenues and growth in backlog.
Consistent with prior guidance, the company expects 30% to 40% of its revenue to be generated in the first half of 2008. Based on an analysis of TomoTherapy’s growing backlog and the anticipated timing of customers’ construction projects that must be completed prior to system delivery, management continues to expect 60% to 70% of its revenue to be generated in the second half of the year, building somewhat incrementally each quarter.
Concluded Robertson, “We are confident that TomoTherapy’s technology leadership will allow us to continue to increase our market share in 2008. While we have implemented certain controls over discretionary spending, we intend to continue to invest in strategies to deliver future profitable growth. These include initiatives to drive innovation, expand our global market presence, deliver best-in-class customer service, and enhance quality and reliability. We believe that these programs will drive current and future revenue growth.”
Investor Conference Call
TomoTherapy will conduct a conference call on its first quarter 2008 results at 5:00 p.m. EDT today (4:00 p.m. CDT). To hear a live Webcast or replay of the call, visit the Investor Relations page at TomoTherapy.com, where it will be archived for two weeks. To access the call via telephone, dial 1-866-271-5140 from inside the United States or 1-617-213-8893 from outside the United States, and enter passcode 51195234. The replay can be accessed by dialing 1-888-286-8010 from inside the United States or 1-617-801-6888 from outside the United States and entering passcode 44715707. The telephone replay will be available through 11:59 p.m. CDT on Wednesday, April 30, 2008.
About TomoTherapy Incorporated
TomoTherapy Incorporated has developed, manufactures and sells the TomoTherapy® Hi·Art® treatment system, an advanced radiation therapy system for the treatment of a wide variety of cancers. The Hi·Art treatment system combines integrated CT imaging with radiation therapy to deliver radiation treatment with speed and precision while reducing radiation exposure to surrounding healthy tissue, which can lead to improved patient outcomes. The company’s stock is traded on the NASDAQ Global Market under the symbol TOMO. To learn more about TomoTherapy, please visit TomoTherapy.com.
Forward-Looking Statements
Except for historical information, this news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements concerning market acceptance of our technology; growth drivers; the company’s orders, revenue, backlog or earnings growth; future financial results and any statements using the terms “should,”“believe,” “outlook,”“expect” or similar statements are forward-looking statements that involve risks and uncertainties that could cause the company’s actual results to differ materially from those anticipated. Such risks and uncertainties include: demand for the company’s products; impact of sales cycles and competitive products and pricing; the effect of economic conditions and currency exchange rates; the company’s ability to develop and commercialize new products; its reliance on sole or limited-source suppliers; its ability to increase gross margins; the company’s ability to meet U.S. Food and Drug Administration (FDA) and other regulatory agency product clearance and compliance requirements; the possibility that material product liability claims could harm future revenue or require the company to pay uninsured claims; the company’s ability to protect intellectual property; the impact of managed care initiatives, other health care reforms and/or third-party reimbursement levels for cancer care; potential loss of key distributors or key personnel; risk of interruptions to its operations due to terrorism, disease or other events beyond the company’s control; and the other risks listed from time to time in the company’s filings with the U.S. Securities and Exchange Commission, which by this reference are incorporated herein. TomoTherapy assumes no obligation to update or revise the forward-looking statements in this release because of new information, future events or otherwise.
| TOMOTHERAPY INCORPORATED AND SUBSIDIARIES | |||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||
| (In thousands, except per share amounts) | |||||
| (unaudited) | |||||
| Three months ended | |||||
March 31, | March 31, | ||||
| Revenue | $ 38,900 | $ 51,163 | |||
| Cost of revenue | 30,682 | 29,352 | |||
| Gross profit | 8,218 | 21,811 | |||
| Operating expenses: | |||||
| Research and development | 9,525 | 7,155 | |||
| Selling, general and administrative | 10,668 | 8,625 | |||
| Total operating expenses | 20,193 | 15,780 | |||
| Income (loss) from operations | (11,975 | ) | 6,031 | ||
| Other income (expense): | |||||
| Interest income | 1,774 | 132 | |||
| Interest expense | (11 | ) | (38 | ) | |
| Other income (expense), net | (74 | ) | 7 | ||
| Total other income | 1,689 | 101 | |||
| Income (loss) before income tax | (10,286 | ) | 6,132 | ||
| Income tax expense (benefit) | (4,114 | ) | 2,246 | ||
| Net income (loss) | (6,172 | ) | 3,886 | ||
| Accretion of redeemable convertible preferred stock | - | (134,948 | ) | ||
| Net loss attributable to common shareholders | $ (6,172 | ) | $ (131,062 | ) | |
| Net loss per share attributable to common shareholders | |||||
| Basic and diluted | $ (0.12 | ) | $ (12.13 | ) | |
Weighted average common shares outstanding | |||||
| Basic and diluted | 50,024 | 10,804 | |||
| Proforma net income (loss) per share | |||||
| Basic | - | $ 0.10 | |||
| Diluted | - | $ 0.09 | |||
Weighted average common shares outstanding | |||||
| Basic | - | 37,591 | |||
| Diluted | - | 42,168 | |||
| TOMOTHERAPY INCORPORATED AND SUBSIDIARIES | |||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||
(In thousands) | |||
| (Unaudited) | |||
| March 31, | December 31, | ||
| 2008 | 2007 | ||
| ASSETS | |||
| Cash and cash equivalents | $ 165,827 | $ 191,780 | |
| Accounts receivable | 37,543 | 44,596 | |
| Inventories | 68,558 | 53,171 | |
| Deferred tax assets | 6,832 | 3,433 | |
| Prepaid expenses and other current assets | 2,615 | 1,622 | |
| Total current assets | 281,375 | 294,602 | |
| Property and equipment, net | 21,218 | 19,894 | |
| Deferred tax assets | 6,082 | 6,027 | |
| Other non-current assets, net | 7,523 | 6,642 | |
| TOTAL ASSETS | $ 316,198 | $ 327,165 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||
| Accounts payable | $ 16,593 | $ 17,655 | |
| Accrued expenses | 14,493 | 21,699 | |
| Accrued warranties | 7,268 | 7,973 | |
| Deferred revenue | 16,088 | 15,517 | |
| Customer deposits | 20,731 | 20,309 | |
| Total current liabilities | 75,173 | 83,153 | |
| Other non-current liabilities | 5,366 | 5,318 | |
| TOTAL LIABILITIES | 80,539 | 88,471 | |
| TOTAL SHAREHOLDERS' EQUITY | 235,659 | 238,694 | |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 316,198 | $ 327,165 | |
Contacts:
Stephen C. Hathaway, CFO
608-824-2800
