Inamed Reports 2002 Fourth Quarter and Full Year Results, Reaffirms Guidance for 2003.
Business Editors
SANTA BARBARA, Calif.--(BUSINESS WIRE)--Feb. 25, 2003
Inamed Corporation (Nasdaq:IMDC):
-- Fourth quarter sales $73.9 million, up 21% over fourth quarter 2001; full year sales $275.7 million, up 16% over 2001. -- Fourth quarter and full year grossprofit margin 72%. Excluding charges related to the previously announced manufacturing consolidation, gross profit margin was 73% for the fourth quarter. -- Fourth quarter GAAP diluted earnings per share $0.39, up 30% from $0.30 in fourth quarter 2001; full year GAAP diluted earnings per share $1.50, up 55% from $0.97 in 2001. -- Fourth quarter diluted cash earnings per share, $0.57, up 27% from $0.45 in fourth quarter 2001; full year diluted cash earnings per share, excluding special charges, $2.03, up 15% from $1.77 in 2001. Results for the fourth quarter and the full year also exclude charges related to the manufacturing consolidation.
Inamed Corporation (Nasdaq: IMDC), a global healthcare company, today announced its financial results for the fourth quarter and the full year ended December 31, 2002. In addition, the Company reaffirmed its guidance for 2003 and provided additional guidance for 2003 based on GAAP diluted earnings per share in addition to the diluted cash earnings per share guidance previously provided.
"In 2002 Inamed demonstrated strong performance through record sales from all three businesses and through solid earnings results," said Nick Teti, Chairman, President and Chief Executive Officer. "We achieved several strategic milestones in our product development pipeline and are in an excellent position to capitalize on the favorable emerging demographics in our aesthetics and obesity businesses in 2003 and beyond."
Total sales for the fourth quarter 2002 were $73.9 million, up 21% from the fourth quarter 2001. For the full year 2002, sales were $275.7 million, up 16% from 2001. Inamed reported that, for the first time, full year sales for each of its three businesses grew at a double-digit rate. The Company expects total sales to grow at a low double-digit rate in 2003.
For the fourth quarter 2002, diluted cash earnings per share were $0.57, up 27% from $0.45 in the fourth quarter 2001. Diluted cash earnings per share for the full year 2002 were $2.03, up 15% from $1.77 in 2001, excluding special charges. Fourth quarter and full year 2002 results exclude charges related to the Company's previously announced manufacturing consolidation. Inamed's effective tax rates for the fourth quarter and full year 2002 were 15% and 22%, respectively. The fourth quarter tax rate was favorably affected by U.S. expenses related to certain one-time charges and the manufacturing consolidation.
Inamed Health - Obesity Intervention
Worldwide sales of obesity intervention products in the fourth quarter 2002 were $11.3 million, an increase of more than 71% over sales in the fourth quarter 2001. Full year 2002 obesity intervention sales were $39 million, an increase of 63% over sales in 2001.
Sales of the Lap-Band(R) System in the United States were $6.4 million in the fourth quarter 2002, compared to $2.1 million in the fourth quarter 2001, and up 19% sequentially over the third quarter 2002. The improved sales performance resulted from the Company's continued execution of its business plan around training, reimbursement, scientific publications and consumer awareness.
International sales in the fourth quarter 2002 grew by 9% over fourth quarter 2001, with growth from both the BIB(R) System and the Lap-Band(R) System.
The Company expects obesity intervention sales in 2003 to increase by 30% to 40% over sales in 2002.
Inamed Aesthetics - Breast
Worldwide breast aesthetics product sales in the fourth quarter 2002 were $41 million, an increase of 17.5% over the fourth quarter 2001. For the full year 2002, sales were $156.3 million, an increase of 11% over sales in 2001. The Company reported that 2002 was the first year that breast aesthetics product sales in the United States and Canada exceeded $100 million.
In the United States and Canada, sales in the fourth quarter 2002 grew 17% over sales in the fourth quarter 2001, driven by the introduction and market acceptance of the new Style 68 smooth, round saline matrix implants, which were launched during the fourth quarter. The continued success of the launch of the Style 10 and Style 20 silicone gel-filled implants, evidenced by their increased use in conjunction with the Adjunct Clinical Study for breast reconstruction, also contributed to growth in the quarter.
In addition, during the fourth quarter 2002, Inamed submitted the fifth and final module of its PMA for silicone gel-filled breast implants with the U.S. Food and Drug Administration. The Company's PMA has been formally accepted for filing by the FDA and is under active review.
International sales in the fourth quarter 2002 grew by 18.5% over the fourth quarter 2001. The Company's leadership position internationally was strengthened during 2002 by the continued expanded offering of the Cohesive Silicone Gel Matrix product line and also by the launch in the second half of the year of the new "Soft Touch" Cohesive Silicone Gel Matrix.
Inamed expects sales of breast aesthetics products to grow at a low double-digit rate in 2003.
Inamed Aesthetics - Facial
Worldwide facial aesthetic product sales in the fourth quarter 2002 were $19.9 million, an increase of 10% over sales in the fourth quarter 2001. For the full year 2002, sales were $73.8 million, an increase of 10% over sales in 2001.
In the United States, Inamed's Zyderm(R) and Zyplast(R) remain the market-leading dermal fillers. In December 2002, the Company received regulatory approval from Health Canada to begin marketing CosmoDerm(TM) and CosmoPlast(TM), Inamed's human-based collagen dermal fillers, which do not require a skin test before administration. Inamed remains optimistic that it will soon receive a similar approval in the United States.
International sales decreased slightly in the fourth quarter 2002 and for the full year compared to prior year periods. Sales growth in Europe was positive but the Company's sales performance declined in Japan during the quarter, on a period over period basis. However, Inamed has seen its performance stabilize in Japan in the third and fourth quarters of 2002.
The Company expects that full year 2003 sales of its facial aesthetics product line will be approximately the same as in 2002 due to the possible introduction of competitive dermal filler products.
Gross Profit Margin
The gross profit margin for the fourth quarter of 2002 was 72% compared to 69% for the fourth quarter 2001. Excluding $0.6 million of accelerated depreciation charges related to the manufacturing consolidation, gross profit margin for the fourth quarter 2002 was 73%. The Company reported that the improved margin benefited from accelerating sales in the Company's higher margin products, the continued implementation of Inamed's pricing strategy and improvements in the Company's manufacturing operations. For the full year, the gross profit margin was 72%.
Inamed expects its gross profit margin in 2003 to be in the range of 71% to 73%, excluding $3 to $6 million of accelerated depreciation charges related to the manufacturing consolidation.
Product Development Pipeline
The Company provided the following update on key milestones reached in its product development pipeline:
Silicone Gel Breast Implants
In addition to the PMA for silicone gel-filled breast implants, which was filed in the fourth quarter of 2002, Inamed is now in the follow-up phase of the pivotal study for its next generation Cohesive Gel Matrix product, which is demonstrating significant market acceptance across international markets. The Company completed enrollment in this study in the first quarter of 2002 and is now almost one year into the two-year follow-up period for this important and innovative product.
Botulinum Toxin Type A
Inamed initiated its botulinum toxin type A clinical development program in December 2002. Over 300 patients have been enrolled to date and the Company expects enrollment to be completed shortly. Once this phase of the trial is completed, the Company plans to meet with the FDA to review the results and then to move forward to the Phase III program.
Hylaform(R) Dermal Filler
The Company also announced that enrollment in the pivotal study of the hyaluronic acid-based dermal filler, Hylaform(R), was completed in December and that the study is now in the follow-up phase.
Financial
Inamed provided the following comments on key financial metrics for the fourth quarter and full-year:
Sales, General & Administrative
For the fourth quarter 2002, the Company's sales, general and administrative expense was $32.2 million, or 44% of sales, compared to 39% for the fourth quarter 2001. The Company continues to make key investments in sales and marketing programs that support the promotion and expansion of the Lap-Band System in the United States, and drive the continued growth and expansion of the Company's breast aesthetics and facial aesthetics products. For the full year 2002, SG&A expense was 44% of sales. Inamed expects its SG&A expense in 2003 to be in the range of 41% to 43% of sales.
Research & Development
The research and development expense in the fourth quarter 2002 was $3.6 million compared to $3.2 million in the fourth quarter 2001. This investment in R&D was primarily due to key U.S. clinical development programs for silicone-gel filled breast implants, Hylaform dermal filler and botulinum toxin type A, all of which achieved significant milestones during the fourth quarter 2002. For the full year 2002, R&D expense was $12.5 million. Inamed expects to invest between $17 and $20 million in research and development expense in 2003 as the Company pursues these key clinical programs.
Manufacturing Consolidation Program
Inamed reported that its previously announced manufacturing consolidation program is progressing on schedule. The Company expects that this program, which began in the fourth quarter 2002 and is expected to be completed by the first quarter 2004, will result in a total charge of $9-$12 million, with savings of $2-4 million in 2003, and then $5-$8 million each year thereafter.
During the fourth quarter 2002, the Company recorded a charge of $5.7 million, or $0.16 per share, related to its manufacturing consolidation. This charge consisted of $5.1 million of restructuring costs and $0.6 million of accelerated depreciation, which is recorded in cost of goods sold. The Company expects to record an additional $3-$6 million of accelerated depreciation in 2003.
Earnings per Share
Inamed reaffirmed that it expects diluted cash earnings per share for 2003 to be in the range of $2.28 to $2.38, excluding costs related to the Company's manufacturing consolidation.
In addition to its cash earnings per share guidance for 2003, the Company provided guidance for GAAP diluted earnings per share. For 2003, the Company expects GAAP diluted earnings per share to be in the range of $1.85 to $1.95, as compared to GAAP diluted earnings per share of $1.50 in 2002.
Debt Reduction
During the fourth quarter 2002, Inamed retired $25 million in long-term debt ahead of its scheduled maturities and had approximately $80 million in term loans remaining at year-end.
Capital Expenditures
2002 capital expenditures totaled $14.8 million. The Company anticipates capital expenditures to be in the range of $10 to $12 million in 2003.
Conference Call
As previously announced, Inamed will host a conference call today to discuss its fourth quarter and year-end 2002 financial results and key product development milestones at 5:00 PM Eastern Standard Time. Live audio of the conference call will be simultaneously broadcast over the Internet and will be available to members of the news media, investors and the general public. The conference call is expected to last one hour. The event can be accessed via the internet by going to Inamed's website, www.inamed.com. The event will be archived and available for replay for seven days after the conference call.
About Inamed Corporation
Inamed (Nasdaq: IMDC) is a global healthcare company with over 25 years of experience developing, manufacturing and marketing innovative, high-quality, science-based products. Current products include breast implants for aesthetic augmentation and for reconstructive surgery; a range of dermal products to treat facial wrinkles; and minimally invasive devices for obesity intervention, including the LAP-BAND System for morbid obesity. The Company's website is www.inamed.com.
Forward-Looking Statements
This press release contains, in addition to historical information, forward-looking statements. Such statements are based on management's current estimates and expectations and are subject to a number of uncertainties and risks that could cause actual results to differ materially from those described in the forward-looking statements. Inamed is providing this information as of February 25, 2003 and expressly disclaims any duty to update information contained in this press release.
This press release contains projections and other forward-looking statements, including, without limitation, express and implied statements regarding Inamed's anticipated sales, operating results, expenses, capital expenditures, research and development, anticipated tax rates, manufacturing consolidation and product development and regulatory approval. These forward-looking statements involve risks and uncertainties which could cause actual results to differ materially from those expressed or implied here. Readers are referred to the documents filed by Inamed Corporation with the Securities and Exchange Commission, specifically the most recent reports which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements, including but not limited to: exposure to product liability and intellectual property claims; exposure to liabilities that may not be adequately covered by insurance or for which there is no insurance; potential negative publicity concerning product safety; potential fluctuations in quarterly and annual results; the effect of changing accounting and public reporting rules and regulations; volatility of Inamed's stock price; changes in the economy and consumer spending; competition from existing and/or new products; failure or delay of clinical trials; uncertainty in receiving timely regulatory approval or market acceptance for new products; dependence on a single supplier for each of Inamed's silicone raw materials and bovine and human collagen-based products; failure to protect Inamed's intellectual property; adverse changes in the regulatory or legislative environment (both in the U.S. and internationally) affecting our business; and failure of our collaborative partners to perform. The information contained in this press release is a statement of Inamed's present intention, belief or expectation and is based upon, among other things, the existing regulatory environment, industry conditions, market conditions and prices, the economy in general and Inamed's assumptions. Inamed may change its intention, belief or expectation, at any time and without notice, based upon any changes in such factors, in Inamed's assumptions or otherwise. Inamed undertakes no obligation to review or confirm analysts' expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
By including any information in this press release, Inamed does not necessarily acknowledge that disclosure of such information is required by applicable law or that the information is material.
Inamed Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(in millions)
December December
2002 2001
Assets
Current assets:
Cash & Marketable Securities 39.3 34.8
Accounts Receivable -- Trade & OEM 45.4 35.6
Inventory 43.0 44.1
Other Current Assets 25.7 21.6
Total Current Assets 153.4 136.1
Property, Plant and Equipment 48.4 39.4
Other Non-current Assets 219.7 224.7
Total Assets 421.5 400.2
Liabilities and Stockholders' Equity
Current Liabilities 74.5 72.7
Non-current Liabilities 114.3 153.0
Shareholders' Equity 232.7 174.5
Total liabilities and stockholders' equity 421.5 400.2
INAMED CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(millions, except per share data)
Three Months Three Months
Ended Ended
Dec. 31, 2002 Dec. 31, 2001
Net sales $73.9 $60.9
Cost of goods sold 20.6 19.0
Gross profit 53.3 41.9
Operating expenses:
Selling, general and administrative 32.2 23.9
Research and development 3.6 3.2
Restructuring charges 5.1 1.1
Special charges 0.1 -
Amortization of intangible assets and non-
cash compensation 0.9 3.1
Total operating expenses 41.9 31.3
Operating income 11.4 10.6
Other income (expense):
Net interest expense and debt costs (2.4) (3.4)
Foreign currency transaction gains
(losses) (0.2) 0.2
Royalty income and other 1.4 1.1
Total other expense (1.2) (2.1)
Income before income tax expense 10.2 8.5
Income tax expense (1.5) (2.1)
Net income $8.7 $6.4
Net income per share of common stock:
Basic EPS $0.40 $0.32
Diluted EPS $0.39 $0.30
Cash EPS $0.57 $0.45
Weighted average shares outstanding:
Basic 21.9 20.0
Diluted 22.2 21.4
EPS Reconciliation:
Diluted EPS $0.39 $0.30
Amortization and non-cash compensation,
net of tax 0.02 0.12
Restructuring charges, net of tax 0.16 0.03
Cash EPS $0.57 $0.45
INAMED CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(millions, except per share data)
Twelve Months Twelve Months
Ended Ended
Dec. 31, 2002 Dec. 31, 2001
Net sales $275.7 $238.1
Cost of goods sold 77.6 67.2
Gross profit 198.1 170.9
Operating expenses:
Selling, general and administrative 120.6 96.5
Research and development 12.5 12.2
Restructuring charges 5.1 12.0
Special charges 8.5 -
Amortization of intangible assets and non-
cash compensation 4.9 11.3
Total operating expenses 151.6 132.0
Operating income 46.5 38.9
Other income (expense):
Net interest expense and debt costs (9.9) (11.8)
Foreign currency transaction gains
(losses) 0.3 (0.5)
Royalty income and other 5.3 5.1
Total other expense (4.3) (7.2)
Income before income tax expense 42.2 31.7
Income tax expense (9.3) (10.7)
Net income $32.9 $21.0
Net income per share of common stock:
Basic EPS $1.57 $1.04
Diluted EPS $1.50 $0.97
Cash EPS $1.79 $1.77
Weighted average shares outstanding:
Basic 21.0 20.2
Diluted 21.9 21.7
EPS Reconciliation:
Diluted EPS $1.50 $0.97
Amortization and non-cash compensation,
net of tax 0.13 0.43
Restructuring charges, net of tax 0.16 0.37
Cash EPS $1.79 $1.77
INAMED CORPORATION AND SUBSIDIARIES
EARNINGS PER SHARE RECONCILIATION
(millions, except per share data)
Three Months Three Months
Ended Ended
Dec. 31, 2002 Dec. 31, 2001
Earnings for Per Share Calculations
Net income $8.7 $6.4
Non-deductible amortization - 1.4
Deductible amortization and non-cash
compensation 0.9 1.7
Tax effect (0.4) (0.6)
Restructuring charges(a) 5.7 1.1
Tax effect (2.3) (0.4)
Cash earnings $12.6 $9.6
Special charges 0.1 -
Tax effect (0.0) -
Cash earnings excluding special
charges $12.7 $9.6
Earnings Per Share
Diluted EPS $0.39 $0.30
Amortization and non-cash
compensation, net of tax 0.02 0.12
Restructuring charges, net of tax 0.16 0.03
Cash EPS $0.57 $0.45
Special charges, net of tax -
Cash EPS excluding special charges $0.57
NOTE: Tax effects in 2002 and 2001 were computed at 40% and 34%,
respectively. In 2002, the cash EPS items were US related.
Twelve Months Twelve Months
Ended Ended
Dec. 31, 2002 Dec. 31, 2001
Earnings for Per Share Calculations
Net income $32.9 $21.0
Non-deductible amortization - 5.7
Deductible amortization and non-cash
compensation 4.9 5.6
Tax effect (2.0) (1.9)
Restructuring charges(a) 5.7 12.0
Tax effect (2.3) (4.0)
Cash earnings $39.2 $38.4
Special charges 8.5 -
Tax effect (3.2) -
Cash earnings excluding special
charges $44.5 $38.4
Earnings Per Share
Diluted EPS $1.50 $0.97
Amortization and non-cash
compensation, net of tax 0.13 0.43
Restructuring charges, net of tax 0.16 0.37
Cash EPS $1.79 $1.77
Special charges, net of tax 0.24 -
Cash EPS excluding special charges $2.03 $1.77
NOTE: Tax effects in 2002 and 2001 were computed at 40% and 34%,
respectively. In 2002, the cash EPS items were US related.
(a) Restructuring charges includes $0.6 accelerated depreciation which
is recorded in cost of goods sold.
INAMED CORPORATION AND SUBSIDIARIES
SALES BY PRODUCT LINE
(millions)
Three Months Three Months
Ended Ended Growth
Dec. 31, 2002 Dec. 31, 2001 Rates
Sales by Product Line
Breast Aesthetics $41.0 $34.9 17%
Facial Aesthetics (excluding
discontinued products) 19.9 18.1 10%
Health 11.3 6.6 71%
Other(a) 1.7 1.4 21%
Total $73.9 $61.0 21%
(a) Other includes ongoing sales to other medical manufacturers
(principally sales of Contigen) and sales of discontinued facial
aesthetics products.
INAMED CORPORATION AND SUBSIDIARIES
SALES BY PRODUCT LINE
(millions)
Twelve Months Twelve Months
Ended Ended Growth
Dec. 31, 2002 Dec. 31, 2001 Rates
Sales by Product Line
Breast Aesthetics $156.3 $140.7 11%
Facial Aesthetics (excluding
discontinued products) 73.8 67.2 10%
Health 39.4 24.1 63%
Other(a) 6.2 6.1 2%
Total $275.7 $238.1 16%
(a) Other includes ongoing sales to other medical manufacturers
(principally sales of Contigen) and sales of discontinued facial
aesthetics products.
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