Retractable Technologies, Inc. (“Retractable”) (NYSE AMEX: RVP), a leading maker of safety needle devices, announced an increase in revenues of 39.7% for the year 2009 over 2008.
Revenues increased due principally to sales under the Department of Health and Human Services (“DHHS”) contract which was announced in the third quarter of 2009. The DHHS program, which was estimated to run from August 2009 through March 2010, ended in December 2009. Our revenue increased 142.1% in the fourth quarter principally due to the DHHS contract. We do not know if there will be a similar program in 2010. Domestic sales were 88.4% of revenues with international sales comprising the remainder. Without the DHHS contract, our revenues would have increased 5.6%, with domestic revenues increasing 7.3% and international revenues declining 3.0%. Unit sales of the 1mL syringe increased 17.1% and 3mL unit sales increased 54.3%. Unit sales of all products increased 27.3%. Domestic unit sales as well as average sales prices increased. International unit sales decreased slightly and average selling prices increased.
Cost of sales increased due to greater volumes. Royalty expenses were higher due to higher gross sales.
As a result, gross profit margins increased from 29.5% in 2008 to 34.7% in 2009.
Operating expenses increased from the prior year due to litigation costs and stock option expense mitigated by the cost cutting measures implemented in the third quarter of 2009.
Sales and marketing expenses decreased primarily due to lower compensation attributable to staff reduction and reduction in pay, lower advertising expenses and reduced travel costs. Stock option expense and consulting costs increased.
General and administrative costs increased due principally to litigation costs and stock option expense. Compensation costs decreased due to staff reductions and reductions in pay.
In the fourth quarter of 2009, we recognized an impairment charge of $2,594,602 associated with catheter production equipment.