Theragenics Corporation (Theragenics), a medical device developer for the cancer treatment and surgical markets, has reported total revenues of $67.3 million for the full year of 2008, compared with the total revenues of $62.2 million in the previous year-end. It has also reported net loss of $58.5 million, or $1.77 per share, for the full year of 2008, compared with the net earnings of $5.6 million, or $0.17 per share, in the previous year-end.
Revenue of $67.4 million is the highest annual revenue in the company’s history.
Completed acquisition of NeedleTech in July.
Amended credit agreement in July supporting the acquisition of NeedleTech in a difficult credit environment.
Completed the year with cash and marketable securities of $40.6 million and outstanding borrowings under credit agreement of $32.0 million, for a net positive cash position of $8.6 million.
Recorded non-cash impairment charges of $62.9 million, net of tax. Primarily triggered by decline in share price. Impairment charge does not affect liquidity, cash flows or future operations, and has no effect on the company’s credit agreement or the company’s compliance with the financial covenants under the credit agreement. This impairment charge was previously announced by the company on February 11, 2009.
Implemented research and development program in third quarter to support growth and diversification within surgical products segment.
Introduced four new product extensions in the surgical products segment in the fourth quarter.
Led the effort resulting in the extension of Medicare’s “pass through” reimbursement for brachytherapy seeds, avoiding the imposition of a more negative reimbursement environment in 2008 and 2009.
Completed the sale of the Oak Ridge building. Will result in current tax savings of $4.7 million and eliminate $500,000 of annual carrying costs.
Generated EBITDA excluding special items of $13.9 million.
Generated cash flows from operations of $12.2 million.
Consolidated revenue for the quarter was $18.1 million, an increase of 19% from the 2007 period. For the year, consolidated revenue was $67.4 million, an increase of 8% over 2007.
Net loss for the fourth quarter was $62.5 million, or a loss of $1.89 per share, which included non-recurring and non-cash impairment charges primarily for goodwill of $62.9 million, net of tax. Excluding impairment charges, net earnings were $401,000, or $0.01 per share in the fourth quarter. Net earnings were $1.2 million, or $0.03 per share in the fourth quarter of 2007. Net loss for the year was $58.5 million, or a loss of $1.77 per share, including non-cash impairment charges of $62.9 million, net of tax. Excluding impairment charges, net earnings were $4.3 million, or $0.13 per share, in 2008. Net earnings were $5.6 million, or $0.17 per share in 2007.
The acquisition of NeedleTech reduced earnings per share excluding impairment charges in 2008 by $0.01 in the quarter and by $0.02 in the year. As previously announced, the company expected this acquisition to be dilutive to EPS in 2008.
The impairment charges were primarily triggered by the decline in the company’s stock price during the fourth quarter and through the present date, and were related to the recorded value of goodwill and trade names. The recorded amounts of goodwill and trade names had indefinite lives and were not previously subject to amortization. The company announced these expected impairment charges on February 11, 2009. While the impairment charges reduced reported results under US Generally Accepted Accounting Principles (“U.S. GAAP”), such charges were non-cash in nature and do not affect Theragenics’ liquidity, cash flows from operating activities, or future operations. These impairment charges have no effect on Theragenics’ $40 million credit facility or the company’s compliance with the financial covenants under the credit agreement.
Revenue in the company’s surgical products segment increased 56% in the quarter and 34% in the year compared to 2007. On a pro forma basis, as if NeedleTech was included in the pre-acquisition periods, surgical products revenue decreased 3% in the quarter and increased 7% in the year compared to 2007. The fourth quarter of 2008 was affected by the general economic slowdown in the macroeconomy, which included healthcare related industries. Operating income excluding non-cash impairment charges and adjustments to the carrying value of asset held for sale (referred to as “operating income excluding special items”) in the surgical products segment was $49,000 in the fourth quarter of 2008 compared to $1.2 million in 2007. For the year, operating income excluding special items was $4.3 million compared to $4.0 million in 2007. Operating income and operating income excluding special items in the 2008 periods was affected by $295,000 of non-cash NeedleTech acquisition related charges in the quarter and $885,000 in the year that will not recur in 2009, and by the continuing investment in research and development programs implemented in the third quarter of 2008.
Revenue in the brachytherapy segment decreased 16% in the quarter and 14% in the year as compared to 2007. The company believes this was due to a decline in the number of brachytherapy procedures industry-wide in 2008. Operating income excluding special items in the brachytherapy segment was $980,000 for the quarter compared to $568,000 in 2007, and $2.6 million for the year compared $3.9 million in 2007. The 2008 periods included a reduction in depreciation expense due to a change in the estimated service lives of the cyclotron equipment. Compared to depreciation based on estimated service lives used in 2007, this change reduced depreciation expense by $243,000 in the quarter and $1.4 million in 2008.
“Our accomplishments in 2008 have been significant,” stated M. Christine Jacobs, chairman and chief executive officer. “In particular, the acquisition of NeedleTech furthers our diversification strategy and provides access to new markets and applications across our entire asset base. The implementation of our research and development program should support continued growth.”
Jacobs continued, “Macroeconomic uncertainties have affected us in 2008, most notably as evidenced by our share price in the fourth quarter which led to our non-cash impairment charges. We, like others in healthcare related industries, expect to continue to face macroeconomic challenges in 2009. We are confident in our businesses and have strategic plans that should enable us to endure these uncertainties. In 2009 you can expect us to continue to operate our businesses for cash flow, invest in R&D and invest in infrastructure improvements. While we will take advantage of compelling strategic opportunities that may present themselves, we expect to concentrate on organic growth rather than pursuing an acquisition during 2009.”