TranS1 Inc. Reports Operating Results For The Second Quarter Of 2012, Issues Third Quarter 2012 Guidance

- Second Quarter Revenues Were $3.5 Million -

- Net Loss per Share Was $0.23 for the Quarter -

WILMINGTON, N.C., Aug. 9, 2012 (GLOBE NEWSWIRE) -- TranS1 Inc. (Nasdaq:TSON), a medical device company focused on designing, developing and marketing products to treat degenerative conditions of the spine affecting the lower lumbar region, today announced its financial results for the second quarter ended June 30, 2012.
Comparison of Selected Financial Results (in millions, except per share data)
  Three Months Ended June 30,
  2012   2011
       
 Total revenue $ 3.5   $ 5.3
 Net loss (6.3)   (4.3)
 Net loss per common share (0.23)   (0.21)

Revenues were $3.5 million in the second quarter of 2012, representing a 35% decrease from revenues of $5.3 million in the second quarter of 2011. Domestic revenues were $3.2 million in the second quarter of 2012, compared to $4.9 million in the second quarter of 2011. Gross margin was 73.6% in the second quarter of 2012 as compared to 78.0% in the second quarter of 2011.

Net loss was $6.3 million in the second quarter of 2012, compared to a net loss of $4.3 million in the second quarter of 2011.   Net loss per common share was $0.23 in the second quarter of 2012 compared to a net loss per share of $0.21 in the second quarter of 2011.

Cash and cash-equivalents were $33.4 million as of June 30, 2012.

"In the second quarter we continued to make good progress on our key operational goals and are building the foundation necessary to achieve market penetration and future revenue growth as we gain the AxiaLIF Category I code in 2013," said Ken Reali, President and Chief Executive Officer of TranS1. "I am encouraged by the improving reimbursement coverage for our AxiaLIF products, the early success of the VEO direct lateral system as well as the expanding body of peer-reviewed clinical evidence supporting our products."

TranS1 Outlook

For the third quarter ending September 30, 2012, the Company expects total revenues in the range of $3.3 - $3.7 million.

Conference Call

TranS1 will host a conference call today at 4:30 pm ET to discuss its second quarter financial results. To listen to the conference call on your telephone, please dial (877) 881-2183  for domestic callers and (970) 315-0453 for international callers approximately ten minutes prior to the start time. The call will be concurrently webcast. To access the live audio broadcast or the archived recording, use the following link at http://ir.trans1.com/events.cfm.

About TranS1 Inc.

TranS1 is a medical device company focused on designing, developing and marketing products to treat degenerative conditions of the spine affecting the lower lumbar region. TranS1 currently markets the AxiaLIF family of products for single and two level lumbar fusion, the VEO lateral access and interbody fusion system and the Vectre TM and Avatar TM posterior fixation systems for lumbar fixation supplemental to AxiaLIF fusion.  TranS1 was founded in May 2000 and is headquartered in Wilmington, North Carolina. For more information, visit www.trans1.com.

Forward Looking Statements

This press release includes statements relating to our efforts to gain favorable coverage decisions for our products that are based on our current beliefs and assumptions.  These statements constitute "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and are intended to qualify for the safe harbor from liability established by  the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that are often difficult to predict, are beyond our control, and which may cause results to differ materially from expectations.  Factors that could cause our results to differ materially from those described include, but are not limited to, the pace of adoption of our  product technology by spine surgeons, the outcome of coverage and reimbursement decisions by the government and third party payors, the success of our continuing product development efforts, the effect on our business of existing and new regulatory requirements, uncertainty surrounding the outcome of the matters relating to the subpoena issued to the Company by the Department of Health and Human Services, Office of Inspector General, stockholder class action lawsuits, and other economic and competitive factors. For a discussion of the most significant risks and uncertainties associated with TranS1's business, please review the Company's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2011.   You are cautioned not to place undue reliance on these forward looking statements, which are based on TranS1's expectations as of the date of this press release and speak only as of the date of this press release. We undertake no obligation to publicly update or revise any forward looking statement, whether as a result of new information, future events or otherwise.
TranS1 Inc.
Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except per share amounts)
(Unaudited)
         
  Three Months Ended June 30,  Six Months Ended June 30, 
  2012 2011 2012 2011
         
         
Revenue  $ 3,460  $ 5,337  $ 7,243  $ 10,467
Cost of revenue  912  1,173  1,909  2,469
Gross profit  2,548  4,164  5,334  7,998
Operating expenses: 73.6% 78.0% 73.6% 76.4%
Research and development  1,244  1,212  2,577  2,794
Sales and marketing  5,371  5,671  10,670  12,054
General and administrative  2,224  1,610  4,106  3,223
Total operating expenses  8,839  8,493  17,353  18,071
Operating loss (6,291) (4,329) (12,019) (10,073)
Other income (expense), net (2) 20 (32) 38
Net loss  $ (6,293)  $ (4,309)  $ (12,051)  $ (10,035)
Other comprehensive income (loss):        
Foreign currency translation adjustments -- 6 -- 14
Comprehensive loss  $ (6,293)  $ (4,303)  $ (12,051)  $ (10,021)
         
Net loss per common share - basic and diluted  $ (0.23)  $ (0.21)  $ (0.44)  $ (0.48)
         
Weighted average common shares outstanding - basic and diluted  27,255  20,915  27,250  20,901
 
TranS1 Inc.
Consolidated Balance Sheets
(in thousands)
 (Unaudited)
  June 30, December 31,
  2012 2011
Assets    
Current assets:    
Cash and cash equivalents $ 33,407 $ 38,724
Short-term investments  --   6,027
Accounts receivable, net  2,053  2,522
Inventory 5,143 4,525
Prepaid expenses and other assets 531 680
Total current assets 41,134 52,478
Property and equipment, net 2,407 1,554
Total assets $ 43,541 $ 54,032
     
Liabilities and Stockholders' Equity    
Current liabilities:    
Accounts payable $ 3,557 $ 3,303
Accrued expenses 1,626 1,203
Total current liabilities 5,183 4,506
Noncurrent liabilities 81 26
     
Stockholders' equity    
Common stock 3 3
Additional paid-in capital 159,231 158,403
Accumulated other comprehensive income (loss) 13 13
Accumulated deficit (120,970) (108,919)
Total stockholders' equity 38,277 49,500
Total liabilities and stockholders' equity $ 43,541 $ 54,032
 
TranS1 Inc.
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
         
  Three Months Ended June 30,  Six Months Ended June 30, 
  2012 2011 2012 2011
Cash flows from operating activities:        
Net loss $ (6,293) $ (4,309) $ (12,051) $ (10,035)
Adjustments to reconcile net loss to net cash used in operating activities        
Depreciation 267 162 474 309
Stock-based compensation 429 558 760 937
Allowance for excess and obsolete inventory 47 108 59 348
Provision for bad debts 3 16 (37) 40
Loss on sale of fixed assets   1 30 1
Changes in operating assets and liabilities:        
(Increase) decrease in accounts receivable 333 (214) 506 (157)
(Increase) decrease in inventory (515) (416) (677) (938)
(Increase) decrease in prepaid expenses (46) 119 149 30
Increase (decrease) in accounts payable 943 (94) 254 (104)
Increase (decrease) in accrued expenses 369 (218) 478 (697)
Net cash used in operating activities (4,463) (4,287) (10,055) (10,266)
Cash flows from investing activities:        
Purchases of property and equipment (660) (269) (1,357) (337)
Purchases of investments -- -- -- (16,102)
Sales and maturities of investments -- 4,045 6,027 8,054
Net cash provided by (used in) investing activities (660) 3,776 4,670 (8,385)
         
Cash flows from financing activities:        
Proceeds from exercise of stock options 63 127 68 139
Net cash provided by financing activities 63 127 68 139
         
Effect of exchange rate changes on cash and cash equivalents -- 6 -- 14
Net increase (decrease) in cash and cash equivalents (5,060) (378) (5,317) (18,498)
Cash and cash equivalents, beginning of period 38,467 6,341 38,724 24,461
Cash and cash equivalents, end of period $ 33,407 $ 5,963 $ 33,407 $ 5,963
         
CONTACT: Investors:         TranS1 Inc.         Joseph P. Slattery, 910-332-1700         Executive Vice-President and Chief Financial Officer         or         Westwicke Partners         Mark Klausner, 443-213-0501         trans1@westwicke.com

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