Uroplasty Inc (890846) SEC Filing 10-K Annual report for the fiscal year ending Monday, March 31, 2014

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Exhibit 99

Uroplasty Reports Fiscal Fourth Quarter and Full Year Results

~ Global Urgent PC Revenue Up 34% in Q4 ~

~ Total Revenue Up 15% in Q4 ~

MINNEAPOLIS, May 15, 2014 -- Uroplasty, Inc. (NASDAQ: UPI), a medical device company that develops, manufactures and markets innovative proprietary products to treat voiding dysfunctions, today reported financial results for the fiscal 2014 fourth quarter and full year ended March 31, 2014.

Global revenue from the Company’s Urgent^® PC Neuromodulation System grew 34% to $4.1 million, as compared to $3.1 million in the fourth quarter of the prior year.  Sales of Urgent PC in the U.S. were up 27% in the fourth quarter while sales of Urgent PC in international markets were up 74%.

Total global revenue for the fiscal fourth quarter 2014 was $6.4 million, up 15% from the same quarter in the prior year. Total domestic net revenue grew 13% to $4.5 million, as compared with $4.0 million during the year ago period while net international revenue grew 20% to $1.8 million, as compared with $1.5 million the fiscal fourth quarter of the prior fiscal quarter.

“Urgent PC continues to gain traction in both the U.S. and international markets, which led to the first quarter ever with revenue in excess of $4.0 million for this product line,” said Rob Kill, President and Chief Executive Officer of Uroplasty.  “While our execution improved throughout the year, we still have work to do in order to maximize our opportunities.  We will continue to invest in sales and marketing to support continued growth in Urgent PC.  Additionally, we will invest in R&D initiatives to expand our product offerings.  We are excited about the potential of Urgent PC to treat fecal incontinence, and based on the encouraging early results in our pilot study, we expect to begin enrollment later this fiscal year for a pivotal trial on the use of Urgent PC to treat this debilitating condition impacting nearly 30 million Americans.”

The Company generated a gross margin of 87.7% in the fiscal fourth quarter compared with 86.5% in the same quarter a year ago.  Operating expenses for the period totaled $6.7 million compared to $5.8 million in the same quarter last year and were up $0.4 million as compared to the fiscal third quarter of 2014.  The increased operating expenses resulted from the expansion and full staffing of the sales team.

The operating loss of $1.1 million in the fiscal fourth quarter compares with a $1.0 million operating loss in the same quarter last year.  Excluding non-cash charges for share-based compensation and depreciation and amortization expense, the non-GAAP operating loss was $0.8 million in the fourth quarter of fiscal 2014, compared with a $0.5 million non-GAAP operating loss in the fourth quarter a year ago.

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For the year ended March 31, 2014, total revenue grew 10% to $24.6 million, reflecting a 10% increase in U.S. revenue and a 9% increase in international revenue. Revenue from Urgent PC increased 17% to $12.3 million in the United States and increased 29% to $2.7 million in international markets.  At March 31, 2014, cash, cash equivalents and cash investments totaled $12.1 million.

Reimbursement Update

Three new payers have recently written positive coverage policies for Percutaneous Tibial Nerve Stimulation (PTNS) delivered via Urgent PC for treatment of overactive bladder (OAB) and associated symptoms of urinary urgency, urinary frequency and urge incontinence.

Blue Cross Blue Shield of Michigan, Premera Blue Cross and UPMC Health Plan each now have positive coverage policies for PTNS.   Blue Cross Blue Shield of Michigan is the largest provider in the state of Michigan and covers 5.6 million members.  Premera Blue Cross provides coverage in Washington and Alaska and covers 1.6 million members.  UPMC Health Plan is a leading network in Western Pennsylvania and the surrounding area and covers 2.2 million members.

"These positive coverage decisions continue to demonstrate the growing appreciation for the clinical benefits and cost effectiveness of Urgent PC in treating patients with OAB," said Dan Merz, Vice President of Healthcare Affairs.  "We now have approximately 119 million lives covered by private payers and over 40 million Medicare beneficiaries with access to Urgent PC therapy."

Fiscal 2015 Expectations

Management expects total revenue growth in Fiscal 2015 to range from 9% to 12%, or revenue of $26.8 million to $27.6 million.  Total Urgent PC revenue is expected to grow approximately 15% in fiscal 2015 while total Macroplastique revenue is expected to be similar to fiscal 2014.

Excluding non-cash charges for share-based compensation and depreciation and amortization expense, the fiscal 2015 non-GAAP operating loss is projected to range from $3 million to $4 million. This guidance assumes ongoing base business investments in the U.S. sales force and marketing programs, research and development, as well as clinical initiatives.

Conference Call

Uroplasty will host a conference call and webcast today at 4:30 p.m. Eastern Time (3:30 p.m. Central Time) to discuss these results. Rob Kill, President and Chief Executive Officer, and Brett Reynolds, Chief Financial Officer, will host the call. Individuals wishing to participate in the conference call should dial 877-941-8609. No passcode is necessary.  To access a live webcast of the call, go to Uroplasty’s website at www.uroplasty.com and click on the Investor Relations section.

An audio replay will be available for 30 days following the call at 800-406-7325 with the passcode 4682013#.  An archived webcast will also be available at investor.uroplasty.com.

About Uroplasty, Inc.

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Forward-Looking Information

This press release contains forward-looking statements that reflect our best estimates regarding future events and financial performance. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from our anticipated results. We discuss in detail the factors that may affect the achievement of our forward-looking statements in our Annual Report on Form 10-K filed with the SEC.  In particular, we cannot be certain that we will ever achieve sustained profitability, that the rate of reimbursement for PTNS treatments will be adequate to justify the cost of our product, that other Medicare carriers or private payers will provide coverage for this treatment or that existing carriers and payers will not change their coverage decisions, that the rate of adoption of our products by new customers will continue, or that any of the other risks identified in our 10-K will not adversely affect our expectations as described in these forward-looking statements.

For Further Information:

Brett Reynolds, SVP and CFO

952.426.6152

Leigh Salvo (Investors)

415.568.9348 or

Doug Sherk

415.652.9100

Janine McCargo (Media)

646.688.0425

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UROPLASTY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

		Three Months Ended								Year Ended
		March 31								March 31
		2014				2013				2014				2013
Net sales		$	6,360,735			$	5,540,586			$	24,577,126			$	22,417,980
Cost of goods sold			781,655				750,165				3,049,811				3,014,886
Gross profit			5,579,080				4,790,421				21,527,315				19,403,094
Operating expenses
General and administrative			1,356,133				1,009,580				6,522,388				4,187,819
Research and development			716,610				719,282				2,151,257				2,415,123
Selling and marketing			4,625,140				3,814,194				18,121,732				15,238,600
Amortization			8,115				215,862				30,462				862,833
			6,705,998				5,758,918				26,825,839				22,704,375
Operating loss			(1,126,918	)			(968,497	)			(5,298,524	)			(3,301,281	)
Other income (expense)
Interest income			3,520				10,203				22,095				46,039
Interest expense			-				(695	)			-				(707	)
Foreign currency exchange gain (loss)			(222	)			5,005				(4,762	)			1,573
			3,298				14,513				17,333				46,905
Loss before income taxes			(1,123,620	)			(953,984	)			(5,281,191	)			(3,254,376	)
Income tax expense			21,866				14,958				71,899				50,770
Net loss		$	(1,145,486	)		$	(968,942	)		$	(5,353,090	)		$	(3,305,146	)
Basic and diluted net loss per common share		$	(0.05	)		$	(0.05	)		$	(0.25	)		$	(0.16	)
Weighted average common shares outstanding:
Basic and diluted			21,366,881				20,803,530				21,118,258				20,777,238

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UROPLASTY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

		March 31, 2014				March 31, 2013
Assets
Current assets:
Cash and cash equivalents		$	8,681,609			$	3,533,864
Short-term investments			3,451,086				7,936,605
Accounts receivable, net			2,875,275				2,553,447
Inventories			517,217				718,933
Other			507,299				566,536
Total current assets			16,032,486				15,309,385
Property, plant and equipment, net			997,609				1,033,085
Intangible assets, net			119,980				100,502
Long-term investments			-				3,451,711
Deferred tax assets			150,971				146,052
Total assets		$	17,301,046			$	20,040,735

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable		$	904,879			$	618,916
Current portion – deferred rent			2,917				35,000
Income tax payable			21,922				7,729
Accrued liabilities:
Compensation			1,999,966				1,550,846
Other			479,373				476,287
Total current liabilities			3,409,057				2,688,778
Deferred rent – less current portion			171				5,141
Accrued pension liability			678,118				660,580
Total liabilities			4,087,346				3,354,499
Total shareholders’ equity			13,213,700				16,686,236
Total liabilities and shareholders’ equity		$	17,301,046			$	20,040,735

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UROPLASTY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

		Year Ended March 31
		2014				2013
Cash flows from operating activities:
Net loss		$	(5,353,090	)		$	(3,305,146	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			353,238				1,152,929
(Gain) loss on disposal of equipment			(2,872	)			7,617
Amortization of premium on marketable securities			8,341				47,559
Share-based consulting expense			-				1,623
Share-based compensation expense			1,436,270				810,016
Deferred income tax expense			6,498				(29,053	)
Deferred rent			(37,053	)			(36,902	)
Changes in operating assets and liabilities:
Accounts receivable, net			(257,794	)			108,495
Inventories			207,050				(25,370	)
Other current assets			63,899				(205,778	)
Accounts payable			281,104				30,925
Accrued compensation			436,765				(25,301	)
Accrued liabilities, other			6,472				164,176
Accrued pension liability, net			(51,000	)			79,598
Net cash used in operating activities			(2,902,172	)			(1,224,612	)
Cash flows from investing activities:
Proceeds from maturity of available-for-sale investments			7,930,000				4,200,000
Proceeds from maturity of held-to-maturity investments			-				6,920,000
Purchases of available-for-sale marketable investments			-				(8,425,034	)
Purchases of held-to-maturity marketable investments			-				(2,500,000	)
Purchases of property, plant and equipment			(248,105	)			(189,929	)
Proceeds from sale of property, plant and equipment			6,773				5,591
Payments for intangible assets			(49,940	)			(17,455	)
Net cash provided by (used in) investing activities			7,638,728				(6,827	)
Cash flows from financing activities:
Proceeds from exercise of options			359,502				150,000
Net cash provided by financing activities			359,502				150,000
Effect of exchange rate changes on cash and cash equivalents			51,687				(37,923	)
Net increase in cash and cash equivalents			5,147,745				(1,119,362	)
Cash and cash equivalents at beginning of period			3,533,864				4,653,226
Cash and cash equivalents at end of period		$	8,681,609			$	3,533,864

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Non-GAAP Financial Measures:  The following table reconciles our operating loss calculated in accordance with accounting principles generally accepted in the U.S. (GAAP) to non-GAAP financial measures that exclude non-cash charges for share-based compensation, depreciation and amortization from gross profit, operating expenses and operating loss.  The non-GAAP financial measures used by management and disclosed by us are not a substitute for, nor superior to, financial measures and consolidated financial results calculated in accordance with GAAP, and you should carefully evaluate our reconciliations to non-GAAP.  We may calculate our non-GAAP financial measures differently from similarly titled measures used by other companies.  Therefore, our non-GAAP financial measures may not be comparable to those used by other companies.  We have described the reconciliations of each of our non-GAAP financial measures described above to the most directly comparable GAAP financial measures.

We use these non-GAAP financial measures, and in particular non-GAAP operating loss, for internal managerial purposes because we believe such measures are important indicators of the strength and the operating performance of our business.  Analysts and investors frequently ask us for this information.  We believe that they use these measures to evaluate the overall operating performance of companies in our industry, including as a means of comparing period-to-period results and as a means of evaluating our results with those of other companies.

Our non-GAAP operating loss for the three months ended March 31, 2014 and 2013 was approximately $814,000 and $477,000, respectively.  Our non-GAAP operating loss for fiscal 2014 and 2013 was approximately $3,510,000 and $1,336,000, respectively.  The fiscal 2014 increase in non-GAAP operating loss is attributed to the increase in operating spending (including $1.4 million of cash costs related to our review of internal control over financial reporting and executive management changes), offset partially by the increase in net sales and gross profit percent.

						Expense Adjustments
Three-Months Ended		GAAP				Share-based Expense				Depreciation				Amortization of Intangibles				Non-GAAP
March  31, 2014
Gross profit		$	5,579,000			$	6,000			$	7,000			$	-			$	5,592,000
% of net sales			87.7	%															87.9	%
Operating expenses
General and administrative			1,356,000				(166,000	)			(47,000	)			-				1,143,000
Research and development			717,000				(15,000	)			(1,000	)			-				701,000
Selling and marketing			4,625,000				(39,000	)			(24,000	)			-				4,562,000
Amortization			8,000				-				-				(8,000	)			-
			6,706,000				(220,000	)			(72,000	)			(8,000	)			6,406,000
Operating loss		$	(1,127,000	)		$	226,000			$	79,000			$	8,000			$	(814,000	)
March  31, 2013
Gross profit		$	4,790,000			$	8,000			$	8,000			$	-			$	4,806,000
% of net sales			86.5	%															86.8	%
Operating expenses
General and administrative			1,009,000				(133,000	)			(50,000	)			-				826,000
Research and development			719,000				(14,000	)			(1,000	)			-				704,000
Selling and marketing			3,814,000				(47,000	)			(14,000	)			-				3,753,000
Amortization			216,000				-				-				(216,000	)			-
			5,758,000				(194,000	)			(65,000	)			(216,000	)			5,283,000
Operating loss		$	(968,000	)		$	202,000			$	73,000			$	216,000			$	(477,000	)

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						Expense Adjustments
Year Ended		GAAP				Share-based Expense				Depreciation				Amortization of Intangibles				Non-GAAP
March 31, 2014
Gross profit		$	21,527,000			$	27,000			$	33,000			$	-			$	21,587,000
% of net sales			87.6	%															87.8	%
Operating expenses
General and administrative			6,522,000				(1,117,000	)			(200,000	)			-				5,205,000
Research and development			2,151,000				(51,000	)			(4,000	)			-				2,096,000
Selling and marketing			18,123,000				(241,000	)			(86,000	)			-				17,796,000
Amortization			30,000				-				-				(30,000	)			-
			26,826,000				(1,409,000	)			(290,000	)			(30,000	)			25,097,000
Operating loss		$	(5,299,000	)		$	1,436,000			$	323,000			$	30,000			$	(3,510,000	)
March 31, 2013
Gross profit		$	19,403,000			$	31,000			$	34,000			$	-			$	19,468,000
% of net sales			86.6	%															86.8	%
Operating expenses
General and administrative			4,188,000				(473,000	)			(196,000	)			-				3,519,000
Research and development			2,415,000				(54,000	)			(3,000	)			-				2,358,000
Selling and marketing			15,238,000				(254,000	)			(57,000	)			-				14,927,000
Amortization			863,000				-				-				(863,000	)			-
			22,704,000				(781,000	)			(256,000	)			(863,000	)			20,804,000
Operating loss		$	(3,301,000	)		$	812,000			$	290,000			$	863,000			$	(1,336,000	)

 

 

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