This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

ArthroCare Reports Second Quarter 2012 Financial Results

CONFERENCE CALL

ArthroCare will hold a conference call with the financial community to present these results at 8:30 a.m. ET/5:30 a.m. PT on Thursday, August 2, 2012. To participate in the live conference call dial 855-724-2350. A live and on-demand webcast of the call will be available on ArthroCare’s Web site at www.arthrocare.com. A telephonic replay of the conference call can be accessed by dialing 800-633-8284 and entering pass code number 21600260. The replay will remain available through August 16, 2012.

ABOUT ARTHROCARE

ArthroCare develops and manufactures surgical devices, instruments, and implants that strive to enhance surgical techniques as well as improve patient outcomes. Its devices improve many existing surgical procedures and enable new minimally invasive procedures. Many of ArthroCare’s devices use its internationally patented Coblation ® technology. This technology precisely dissolves target tissue and limits damage to surrounding healthy tissue. ArthroCare also develops surgical devices utilizing other patented technology including its OPUS ® line of fixation products as well as re-usable surgical instruments. ArthroCare is leveraging these technologies in order to offer a comprehensive line of surgical devices to capitalize on a multi-billion dollar market opportunity across several surgical specialties, including its two core product areas consisting of Sports Medicine and Ear, Nose, and Throat as well as other areas such as spine, wound care, urology and gynecology.

FORWARD-LOOKING STATEMENTS

The information provided herein includes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Statements that are not historical facts are forward-looking statements. Forward-looking statements are based on beliefs and assumptions by management and on information currently available to management. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update any of them publicly in light of new information or future events. Additional factors that could cause actual results to differ materially from those contained in any forward-looking statement include, without limitation: the resolution of litigation pending against the Company; the impact upon the Company’s operations of legal compliance matters which may require improvement and remediation; the ability of the Company to control expenses relating to legal or compliance matters; the Company’s ability to remain current in its periodic reporting requirements under the Exchange Act and to file required reports with the Securities and Exchange Commission on a timely basis; the results of the investigation being conducted by the United States Department of Justice; the impact on the Company of additional civil and criminal investigations by state and federal agencies and civil suits by private third parties involving the Company’s financial reporting and its previously announced restatement and its insurance billing and healthcare fraud-and-abuse compliance practices; the results of the civil investigation by the Department of Justice related to the Civil Investigative Demand we received arising under the False Claims Act; the possibility that the Department of Justice could institute civil proceedings against us, based on the results of the investigation related to the Civil Investigative Demand; the risk that we could be subject to qui tam suits involving the False Claims Act; the possibility that the Department of Justice could institute a criminal enforcement action against us based on the results of the civil investigation related to the Civil Investigative Demand; the resolution of any litigation related to the civil investigation; the ability of the Company to attract and retain qualified senior management and to prepare and implement appropriate succession planning for its Chief Executive Officer; general business, economic and political conditions; competitive developments in the medical devices market; changes in applicable legislative or regulatory requirements; the Company’s ability to effectively and successfully implement its business strategies, and manage the risks in its business; and the reactions of the marketplace to the foregoing.

       
 
ARTHROCARE CORPORATION
Condensed Consolidated Balance Sheets - Unaudited
(in thousands, except par value data)
June 30, December 31,
  2012     2011  
 
ASSETS
Current assets:
Cash and cash equivalents $ 181,246 $ 219,605
Accounts receivable, net of allowances of $2,149 and $2,251 at June 30, 2012
and December 31, 2011, respectively 45,718 51,350

Inventories, net

42,849 35,761
Deferred tax assets 31,332 40,622
Prepaid expenses and other current assets   6,283     5,532  
Total current assets 307,428 352,870
 
Property and equipment, net 32,873 35,769
Intangible assets, net 4,007 5,457
Goodwill 119,398 119,159
Deferred tax assets 18,156 18,159
Other assets   1,634     1,587  
Total assets $ 483,496   $ 533,001  
 
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 14,077 $ 15,258
Accrued liabilities 34,691 112,586
Deferred Revenue 489 742
Deferred tax liabilities 74 -
Income tax payable   -     1,542  
Total current liabilities 49,331 130,128
 
Deferred tax liabilities 286 29
Other non-current liabilities   19,110     18,922  
Total liabilities 68,727 149,079
 
Commitments and contingencies (Notes 8 and 9)
 
Series A 3% Redeemable Convertible Preferred Stock, par value $0.001; Authorized: 100 shares;
Issued and outstanding: 75 shares at June 30, 2012 and December 31, 2011; Redemption
value: $87,089 78,951 77,184
 
Stockholders' equity:
Preferred stock, par value $0.001; Authorized: 4,900 shares; Issued and outstanding: none - -
Common stock, par value $0.001; Authorized: 75,000 shares; Issued: 31,678 and 31,523 shares
Outstanding: 27,720 and 27,562 shares at June 30, 2012 and December 31, 2011, respectively 28 28
Treasury stock: 3,955 and 3,968 shares at June 30, 2012 and December 31, 2011, respectively (106,781 ) (107,126 )
Additional paid-in capital 406,246 400,580
Accumulated other comprehensive income 4,229 4,615
Retained earnings   32,096     8,641  
Total stockholders' equity   335,818     306,738  
Total liabilities, redeemable convertible preferred stock and stockholders' equity $ 483,496   $ 533,001  
               
 
ARTHROCARE CORPORATION
Condensed Consolidated Statements of Operations - Unaudited
(in thousands, except per share data)

Three Months Ended

Six Months Ended

June 30, June 30,
  2012     2011     2012     2011  
 
Revenues:
Product sales $ 87,471 $ 86,925 $ 175,846 $ 170,432
Royalties, fees and other   4,235     4,349     8,732     8,774  
Total revenues 91,706 91,274 184,578 179,206
 
Cost of product sales   27,355     25,897     54,006     50,641  
 
Gross profit 64,351 65,377 130,572 128,565
Operating expenses:
Research and development 7,899 6,613 15,493 13,423
Sales and marketing 28,842 27,274 59,042 55,372
General and administrative 8,154 8,713 16,642 16,893
Amortization of intangible assets 1,316 1,323 2,637 2,634
Exit costs (938 ) 2,490 (778 ) 2,490
Investigation and restatement-related costs   1,131     3,970     2,224     6,182  
Total operating expenses   46,404     50,383     95,260     96,994  
 
Income from operations 17,947 14,994 35,312 31,571
 

Non-operating gains (losses)

  (1,147 )   (123 )   (761 )   367  
 
Income from continuing operations before income taxes 16,800 14,871 34,551 31,938
 
Income tax provision   4,536     4,171     9,329     8,779  
 
Net income from continuing operations 12,264 10,700 25,222 23,159
 
Income from discontinued operations, net of taxes   -     1,600     -     1,911  
 
Net income 12,264 12,300 25,222 25,070
 
Accrued dividend and accretion charges on Series A
3% Redeemable Convertible Preferred Stock   (887 )   (849 )   (1,766 )   (1,689 )
 
Net income available to common stockholders 11,377 11,451 23,456 23,381
 
Other comprehensive income
Foreign currency translation adjustments   (778 )   135     (386 )   1,034  
 
Total comprehensive income   11,486     12,435     24,836     26,104  
 

Weighted average shares outstanding:

Basic 27,639 27,338 27,648 27,267
Diluted 27,934 27,789 28,003 27,702
 

Earnings per share from continuing operations:

Basic $ 0.34   $ 0.30   $ 0.70   $ 0.65  
Diluted $ 0.34   $ 0.29   $ 0.69   $ 0.64  
 
Earnings per share applicable to common stockholders:
Basic $ 0.34   $ 0.35   $ 0.70   $ 0.71  
Diluted $ 0.34   $ 0.34   $ 0.69   $ 0.70  
 
 
ARTHROCARE CORPORATION
Supplemental Schedule of Product Sales - Unaudited
(in thousands)
                               
Three Months Ended Three Months Ended
June 30, 2012 June 30, 2011
Americas     International     Total Product Sales     % Net Product Sales Americas     International     Total Product Sales     % Net Product Sales
 
Sports medicine $ 38,051 $ 19,661 $ 57,712 66.0 % $ 36,348 $ 20,808 $ 57,156 65.7 %
ENT 21,532 5,390 26,922 30.8 % 22,650 4,785 27,435 31.6 %
Other   411   2,426   2,837 3.2 %   859   1,475   2,334 2.7 %
Total product sales $ 59,994 $ 27,477 $ 87,471 100.0 % $ 59,857 $ 27,068 $ 86,925 100.0 %
 
 
 
Six Months Ended Six Months Ended
June 30, 2012 June 30, 2011
Americas     International     Total Product Sales     % Net Product Sales Americas     International     Total Product Sales     % Net Product Sales
 
Sports medicine $ 77,081 $ 39,943 $ 117,024 66.5 % $ 73,729 $ 40,136 $ 113,865 66.8 %
ENT 43,308 10,783 54,091 30.8 % 42,687 9,052 51,739 30.4 %
Other   1,000   3,731   4,731 2.7 %   1,545   3,283   4,828 2.8 %
Total product sales $ 121,389 $ 54,457 $ 175,846 100.0 % $ 117,961 $ 52,471 $ 170,432 100.0 %




4 of 5

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,098.45 +18.88 0.11%
S&P 500 2,003.37 +6.63 0.33%
NASDAQ 4,580.2710 +22.5760 0.50%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs