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|Contacts:||Alfred J. Novak|
|Chief Executive Officer|
NOVOSTE ANNOUNCES THIRD QUARTER 2004
NORCROSS, GA., November 3, 2004 Novoste Corporation (NASDAQ: NOVT) today reported its financial results for the quarter ended September 30, 2004.
The Company reported that GAAP (Generally Accepted Accounting Principles) net revenue for the third quarter 2004 was $6.0 million compared to $13.5 million for the third quarter 2003. Revenues continue to be negatively impacted by the sales of drug-eluting stents (DES) and their aggressive use by physicians as an alternative therapy for in-stent restenosis. Additionally, a revenue reserve of $0.4 million was recognized in the prior year quarter as the 3.5 French products were exchanged for 5 French products sold in earlier periods. There was no comparable revenue reserve adjustment in the third quarter 2004; therefore net revenue of $6.0 million in the current quarter can be compared to third quarter 2003 adjusted net revenue of $13.1 million. A reconciliation of GAAP to as adjusted financial data is included in the attached financial statements. The conversion of Guidant accounts in the United States and Canada to the Novoste Beta-Cath System is ongoing and helped to slightly increase third quarter net revenue of $6.0 million compared to the second quarter 2004 net revenue of $5.8 million, in spite of the impact of DES. A decline in catheter unit sales was offset by the increase in revenue being attributed to the ability to charge for the service and lease costs associated with the radiation component of the Beta-Cath system and an increased catheter price.
The Company booked a $0.9 million non-cash impairment charge in the current quarter to reflect the reduced book value of its radiation source train (RST) plant. This charge represents managements best estimate of potential impairment at this time given the declining market for vascular brachytherapy, and the Companys suspension of production of RSTs, as it is able to meet near term RST needs from existing inventories. The carrying net book value of the RST plant before the charge was $2.8 million.
Excluding this non-cash impairment charge, gross margin as adjusted, for the third quarter 2004 was 27% as compared to an adjusted gross margin of 58% for the third quarter of 2003. The decrease in margin is a function of the significantly lower volume of procedures and high fixed costs. Operating expenses were $6.1 million for the third quarter 2004, down from $9.6 million in the third quarter of 2003. Research and development (R&D) expenses were $0.8 million, down from $3.2 million in the third quarter 2003, reflecting decreased spending on engineering and clinical trials. Selling, general and administrative (SG&A) expenses were $5.3 million in the quarter, down from $6.4 million in the third quarter 2003. The decrease in SG&A and other expenses is a result of the reduction in force and other ongoing measures taken by management to lower the Companys cost structure.
The following information was filed by Novt Corp (NVTP) on Wednesday, November 3, 2004 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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