Urologix's CEO Discusses F1Q2012 Results - Earnings Call Transcript

Urologix, Inc. ( ULGX)

F1Q2012 (Qtr End 09/30/2011) Earnings Call

November 07, 2011 05:00 pm ET

Executives

Stryker Warren, Jr. - CEO

Brian Smrdel - CFO

Analysts

Presentation

Operator

Good day ladies and gentlemen, and welcome to the Urologix Incorporated fiscal year 2012 first quarter conference call. My name is Shinal and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of the conference. As a reminder, this conference is being recorded for replay purposes. Certain information discussed during this conference call, including answers to your questions, may contain forward-looking statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those stated or implied in any forward-looking statements due to risks and uncertainties. A detailed discussion of risks and uncertainties may be found in Urologix’s recent Annual Report and Form 10-K for the year ending June 30, 2011 and other documents filed with the Securities and Exchange Commission. Urologix disclaims any obligation to update any forward-looking statements made during the course of this call.

At this time I would turn the call over to Mr. Stryker Warren, Jr. Chief Executive Officer. Please proceed, sir.

Stryker Warren, Jr.

Thank you Shinal and good afternoon to all those joining us today to discuss the company's results for the first quarter of fiscal year 2012. With me are Brian Smrdel, the company's Chief Financial Officer and Greg Fluet, Executive Vice President and Chief Operating Officer of Urologix. Today's call will begin with a review of the recently completed Prostiva transaction. Brian will then review the financial results for the first quarter and I will share an update on the progress we are making on the integration of Prostiva, review our near-term priorities and then offer some thoughts in perspective on the trends in the broader market before opening up the call for questions.

The first quarter of this fiscal year was transformative for Urologix. The combination of the Prostiva RF therapy system with our Cooled ThermoTherapy technology has made Urologix to clear leader for the in office treatment of BPH.

The detailed more fully in our September 6th conference call, Urologix has signed an exclusive worldwide license for the Prostiva Radio Frequency Therapy System for BPH for Medtronic. This transaction significantly expands our position as the leading provider of in-office treatment solutions for symptomatic and obstructive urinary conditions attributable to BPH.

The combination of Prostiva RF therapy with Urologix’s Cooled ThermoTherapy allows us to offer urologists the broadest in-office solutions set and importantly we’ll expand our addressable patient population. Prostiva RF therapy is a transurethral needle ablation device that is 510(k) cleared for the treatment of BPH. Similar to the Urologix’s Cooled ThermoTherapy product, Prostiva is most commonly used in the urologist’s office.

Prostiva used radio frequency technology to treat symptoms of the obstruction due to BPH and can precisely target and treat areas within the prostrate while allowing the urologist direct visualization of the treatment area. Similar to CTT, the Prostiva technology is safe, effective, durable, preserves to the urethra has minimal post op complications, has minimal sexual side effects and is cost effective for both the patient and payer when compare to drugs and surgeries.

Despite that both CTT and Prostiva are in-office treatments, this transaction expands our addressable market as each technology can treat uniquely different types of disease prostates most effectively. With the breadth of these two technologies indications, urologists are able to treat nearly all of their patients presenting with clinical BPH in their office with products from one trusted partner, Urologix.

We expect this transaction to accelerate our top line growth rate and create operating leverage that will improve our bottom line results attributable to substantial additional revenue accompanied by only a modest increase in anticipated expenses principally related to the addition of Prostiva sales force. I would now like to turn the call over to Brian to review the first quarter’s financial results. Brian?

Brian Smrdel

Thank you, Stryker. Our revenue for the first quarter of fiscal year 2012 was $3.1 million or 8% more sequentially than the $2.9 million reported in the fourth quarter of the last fiscal year, but 6% less than the $3.4 million reported in the same period of fiscal year 2011. The increase in revenue compared to the fourth quarter is the result of the contribution of Prostiva revenue into our product mix following the announcement of the transaction on September 6. The year-over-year revenue decline results from an overall reduced order volume for our Cooled ThermoTherapy products across direct to mobile and third party mobile distribution channels.

A further breakdown on the sources of our revenue on a sequential basis, revenue from sales to direct accounts contributed 44% of overall revenue in the first quarter of fiscal year 2012 compared to 40% in the previous quarter.

Urologix’s mobile service treatment revenue contributed 42% of overall revenue and third party mobile revenue contributed 13% of overall revenue in the first quarter of fiscal year 2012 compared to 46% and 12% respectively for the fourth quarter of fiscal year 2011.

The increase in the share of direct accounts as a percentage of total revenue is the result of the incremental direct sales from the Prostiva product line in September.

Gross profit for the first quarter of fiscal year 2012 was $1.4 million or 45% of revenue compared to $1.3 million or 43% of revenue for the prior quarter and $1.8 million or 55% of revenue when compared to the prior year first quarter.

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