IRVINE, Calif., May 14, 2013 /PRNewswire/ -- Patient Safety Technologies, Inc. (the "Company", OTCBB: PSTX, OTCQB: PSTX) today announced results for its first quarter ended March 31st, 2013.
Expanded Customer Base and Financial Highlights
During the first quarter of 2013 the Company grew its installed customer base of facilities using its SurgiCount Safety-Sponge® System to 282. This compares to 149 facilities as of the end of the first quarter of 2012 and represents year over year growth in the Company's installed customer base of 53%. Additionally, as of the date of this release the Company has implemented or signed contracts and scheduled implementations for additional facilities, collectively growing the number of facilities currently installed and those with signed agreements and scheduled implementations to over 300. Although not necessarily proportional to reported revenues, the number of facilities using the Company's products is a good indicator of our underlying business.
Total revenue for the first quarter of 2013 was $4.8 million, representing year over year growth of 53% as compared to total revenue of $3.1 million for the first quarter of 2012. The higher revenue for the first quarter of 2013 as compared to the same period in 2012 was primarily related to the larger customer installed base during the first quarter of 2013. Despite a continually growing customer base using the Company's products, revenue for the first quarter of 2013 was lower on a quarter over quarter basis as compared to the fourth quarter of 2012 as a result of lower orders from the Company's exclusive distributor, which was the result of a number of factors including the inventory management practices of our exclusive distributor, along with the switching of distributors selected by several larger existing users of the Company's products and the timing of the orders placed by those newly selected distributors.
Reported GAAP gross margins were 39% for the first quarter of 2013 as compared to 40% for the same period in 2012. Because the Company's reported GAAP cost of revenues includes certain non-cash depreciation expense, there can be a significant difference between reported gross margins and the actual cash gross margins realized by the Company. Excluding non-cash depreciation expense included in reported cost of revenues, Cash Gross Margins were 50% for the first quarter of 2013 as compared to 48% for the same period in 2012. Reported GAAP gross margins were lower during the first quarter of 2013 as compared to the prior year period primarily as the result of higher non-cash depreciation expense associated with the greater amount of newly installed hardware during that time period to support the growth in the Company's customer base. Cash Gross Margins were higher during the first quarter of 2013 as compared to the prior year period primarily as a result of the Company's efforts to further improve cost inputs and manufacturing efficiencies of its disposable products.
Reported operating expenses for the first quarter of 2013 were $2.5 million, in-line with reported operating expenses of $2.5 million for the first quarter of 2012. The primary reasons for the relatively unchanged level of operating expenses during the first quarter of 2013 as compared to the same period in 2012 despite the larger customer installed base and reported revenues were lower one-time implementation expenses offset by higher employment related expenses.
During the first quarter of 2013 the Company generated a GAAP Operating Loss of $0.6 million and Adjusted Operating Income (as defined below) of $0.2 million. This compares with a GAAP Operating Loss of $1.3 million and an Adjusted Operating Loss of $0.7 million during the first quarter of 2012.
The primary reasons for the lower reported GAAP Operating Loss and the positive Adjusted Operating Income during the first quarter of 2013 was the higher reported revenues from a larger installed customer base and substantially flat operating expenses.
"We are pleased to have continued to grow our installed base during the first quarter and to have surpassed the 300 customer milestone," stated Brian E. Stewart, President and Chief Executive Officer of Patient Safety Technologies, Inc. "With the ever growing awareness by patients, healthcare providers and payers of healthcare services of the occurrence rate, and ramifications from retained surgical sponges, we believe we are well positioned to continue to accelerate our adoption momentum," continued Mr. Stewart.The Company's first quarter of 2013 financial statements are included in its Quarterly Report on Form 10-Q filed by the Company on May 14th, 2013 and available at the SEC's website at www.sec.gov.Reconciliation of GAAP to Non-GAAP Results (Unaudited)Non-GAAP Measures:For the Three Months
EndedMarch 31,in thousands20132012Reported Revenue$
3,102.2Reported Operating Loss$
Stock based compensation189.7
Depreciation and amortization636.8
367.1Adjusted Operating Income/(Loss)$
(735.2)Reported Gross Profit$
1,236.6Reported Gross Margin39%
Depreciation recorded in cost of
257.5Cash Gross Profit$
1,494.1Cash Gross Margin50%
48%To supplement the Company's presentation of operating income and (loss) measured in accordance with GAAP, we also use a non-GAAP measure of operating income, herein defined as Adjusted Operating Income (in the event this amount is negative it is herein defined as Adjusted Operating Loss). Reconciliation of GAAP operating loss to Adjusted Operating Income or Loss for the first quarters of 2013 and 2012 are shown above. How we define Adjusted Operating Income or Loss herein may not be consistent with how we have defined this non-GAAP measure historically. Non-GAAP measures are provided to enhance investors' overall understanding of the Company's current financial performance, prospects for the future and as a means to evaluate period-to-period comparisons. The Company believes that the use of non-GAAP operating income provides meaningful supplemental information regarding financial performance by excluding certain expenses and benefits that may not be indicative of recurring core business operating results. The Company believes this non-GAAP measure, which excludes the effects of the non-cash expenses of depreciation, amortization and stock based compensation (and occasionally along with certain events believed to be one time in nature) when viewed with GAAP results and the accompanying reconciliation, enhances the comparability of results against prior periods and allows for greater transparency of financial results. The Company believes this non-GAAP measure facilitates management's internal comparison of the Company's financial performance to that of prior periods as well as trend analysis for budgeting and planning purposes. The presentation of this non-GAAP measure is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
Surgical Adverse Events and Retained Surgical Sponges
Surgical never events are costly to the health care system and are associated with serious harm to patients1. Retained foreign bodies are estimated to represent up to 49.8% of all reported surgical never events1 with surgical sponges representing the vast majority of items unintentionally retained2. Estimated to occur as often as 1 in every 1,000 to 1,500 abdominal operations to 1 in every 8,000 in patient operations2, with an estimated 32 million surgical procedures annually in the U.S. this implies approximately 4,000 retained sponge incidents each year, 11 every day. The negative impact to patient outcomes from retained foreign objects varies and can be significant, with permanent injuries in an estimated 16% of incidents and patient mortality in 5%1. Cost ramifications can be considerable and include legal expenses and awards, non-reimbursable healthcare services, loss of time, loss of reputation for involved individuals and facilities and the negative impact on pay for performance metrics.
About Patient Safety Technologies, Inc. and SurgiCount Medical
Patient Safety Technologies, Inc., through its wholly-owned operating subsidiary SurgiCount Medical, Inc., provides the Safety-Sponge® System, a solution clinically proven to improve patient safety and reduce healthcare costs by helping eliminate retained surgical sponges. The market leading retained sponge prevention solution, the Safety-Sponge® System is used in more than 300 government, teaching and community hospitals across the U.S., including 7 of the U.S. News and World Report Best Hospital Honor Roll recipients, representing more total users and more Honor Roll users than all retained sponge prevention solutions combined. For more information, contact SurgiCount Medical, Inc. at (949) 387-2277 or visit www.surgicountmedical.com.
Forward Looking Statements
Statements in this press release regarding our business that are not historical facts are "forward-looking statements" (within the meaning of Section 21E of the Securities Exchange Act of 1934) that involve risks and uncertainties. Forward-looking statements reflect our management's current views with respect to future events and financial performance; however, you should not put undue reliance on these statements. When used, the words "anticipates," "believes," "expects," "intends," "future," and other similar expressions, without limitation, identify forward-looking statements. Forward-looking statements are not guarantees of future performance and are inherently subject to uncertainties and other factors which could cause actual results to differ materially from the forward-looking statements. These factors and uncertainties include but are not limited to: our ability to implement in all hospitals within the larger hospitals organizations with which we have agreements, our ability to implement in those hospitals with which we have scheduled implementations, the early stage of adoption of our Safety-Sponge® System and the need to expand adoption of our Safety-Sponge® System; the impact on our future revenue and cash flows from the ordering patterns of our exclusive distributor Cardinal Health; our need for additional financing to support our business; our reliance on third-party manufacturers, some of whom are sole-source suppliers, and on our exclusive distributor; and any inability to successfully protect our intellectual property portfolio. In light of the risks and uncertainties, there can be no assurance that any forward-looking statement will in fact prove to be correct.
Forward-looking statements can be affected by many other factors, including, those described in the "Business", "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Factors Affecting Future Results" sections of our Annual Report on Form 10-K for 2012, our Quarterly Reports on Form 10-Q and in our other public filings. These documents are available online through the SEC's website, www.sec.gov. Forward-looking statements are based on information presently available to senior management, and we have not assumed any duty to update any forward-looking statements.
PATIENT SAFETY TECHNOLOGIES, INC.Condensed Consolidated Statements of Operations(Unaudited)For the Three Months EndedMarch 31,20132012Revenues$
3,102,258Cost of revenue2,918,9151,865,631Gross profit1,838,8191,236,627Operating expenses:Research and development133,411147,643Sales and marketing1,067,9291,299,096General and administrative1,250,5571,091,865Total operating expenses2,451,8972,538,604Operating loss(613,078)(1,301,977)Other income (expense):Interest income, net2,1223,878Interest expense – related party(68,717)—Total other income(66,595)3,878Loss before income taxes(679,673)(1,298,099)Income tax expense—(3,712)Net loss(679,673)(1,301,811)Preferred dividends(142,406)(130,523)Net loss applicable to common stockholders$
(1,432,334)Loss per common shareBasic and Diluted$
(0.04)Weighted average common shares outstanding:Basic and Diluted37,283,87934,021,788 PATIENT SAFETY TECHNOLOGIES, INC.Condensed Consolidated Balance SheetsMarch 31, 2013December 31,2012(Unaudited)AssetsCurrent assets:Cash and cash equivalents$
5,177,082Accounts receivable1,991,3851,415,634Inventories, net3,580,6893,968,436Prepaid expenses116,051308,285Total current assets10,034,39110,869,437Property and equipment, net4,590,8474,833,754Goodwill1,832,0271,832,027Patents, net2,057,9672,139,202Other assets37,46237,462Total assets$
19,711,882Liabilities and Stockholders' EquityCurrent liabilities:Accounts payable$
4,499,002Accrued liabilities343,480960,062Deferred revenue – current portion822,849846,395Total current liabilities5,589,6726,305,459Deferred revenue793,327969,395Total liabilities6,382,9997,274,854Total stockholders' equity12,169,69512,437,028Total liabilities and stockholders' equity$
1 Mehtsun, et al. Surgical never events in the United States, J Surg 2012;10.005
2 Cima RR, Kollengode A, Garnatz J, et al. Incidence and characteristics of potential and actual retained foreign object events in surgical patients. J Am Coll Surg 2008;207:80-87
|SOURCE Patient Safety Technologies, Inc.|
Copyright©2012 PR Newswire.
All rights reserved