ArthroCare Reports Third Quarter 2012 Financial Results

ArthroCare Corp. (NASDAQ: ARTC), a leader in developing state-of-the-art, minimally invasive surgical products, announced its financial results for the third quarter ended September 30, 2012.

THIRD QUARTER 2012 HIGHLIGHTS

• Total revenue of $86.9 million.
• Income from operations of $13.7 million, or operating margin of 15.7 percent.
• Net income available to common stockholders of $9.1 million, or $0.27 per diluted share.

REVENUE

Total revenue for the third quarter of 2012 was $86.9 million, compared to $83.3 million for the third quarter of 2011, an increase of 4.4 percent.

Product sales for the third quarter of 2012 were $82.6 million compared to $79.4 million in the third quarter of 2011, an increase of 4.0 percent. Product sales increased 5.8 percent in constant currency over the same quarter of the prior year.

Worldwide sales of Sports Medicine products increased $3.1 million, or 5.9 percent. In constant currency, Sports Medicine product sales increased 8.1 percent this quarter when compared to the same quarter in 2011. For the quarter ended September 30, 2012, contract manufacturing product sales under our supply agreement with Smith and Nephew increased $2.0 million, or 42.2 percent, and proprietary Sports Medicine product sales increased $1.4 million, or 5.5 percent. The increase in Americas proprietary Sports Medicine sales in the quarter was due to unit volume increases due to recent Coblation ^® and fixation new product introductions as well as increased sales of knee wands resulting from our knee initiative. International Sports Medicine product sales decreased $0.4 million, or 2.3 percent, in the third quarter of 2012 compared to the same period in 2011. The decrease was the result of the translation effect of a stronger U.S. dollar against the euro, British pound and Australian dollar, partially offset by higher sales volumes primarily in direct markets.

Worldwide ENT product sales increased $0.6 million, or 2.5 percent. In constant currency, ENT product sales increased 3.2 percent in the third quarter of 2012 as compared to the same quarter of 2011. Americas ENT product sales decreased $0.4 million or 1.8 percent as a decrease in Coblation sales volumes was partially offset by higher average selling prices and higher sales volumes of our Rapid Rhino ^® products. International ENT product sales increased $1.0 million, or 20.5 percent, as a result of higher product sales in direct and distributor markets, with the exception of southern European and Middle Eastern distributor markets.

Other product sales decreased $0.6 million in the third quarter of 2012 compared to the same quarter of 2011.

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