Biosensors Reports Financial Results for the Third Quarter of Fiscal Year 2014

SINGAPORE, Feb. 12, 2014 /PRNewswire/ -- Biosensors International Group, Ltd. ("Biosensors" or the "Company", Bloomberg: BIG SP; Reuters: BIOS.SI; SGX: B20), a developer, manufacturer and marketer of innovative medical devices, today announced financial results for the third quarter of its Fiscal Year 2014 ("Q3 FY14") and nine months ended 31 December 2013 ("FY14 nine-month period").

Third Quarter Highlights and Recent Developments:

• Total revenue of $82.5 million was comparable with US$81.3 million in the third quarter of Fiscal Year 2013 ("Q3 FY13"). Total product revenue grew 6% year-over-year while licensing and royalty revenue stabilized over the previous quarter.
• CITICPE became a key shareholder of Biosensors in December 2013, bringing strategic value to the Company and representing an important change to its shareholder structure
• Initiated cost reduction and organizational restructuring plans in December 2013  
• Initiated a pilot launch of BioFreedom™ in December 2013 and received positive feedback from physicians and patients

"In the third quarter, the operating environment for our business continued to be challenging. EMEA and APAC were the leading drug-eluting stents ("DES") sales growth regions, although lower average selling prices remained as headwinds. In China, the weak market sentiment continued to cause some pressure on our revenue there," said Biosensors' CEO Dr. Jack Wang. "Going forward, we will continue to focus on executing our overall corporate strategy. In the face of the current market environment, we remain committed to growing our Company by adding new product lines, reallocating management resources to focus on growth, implementing cost reduction measures to enhance efficiencies of our existing DES product line, as well as exploring new investment opportunities."

Performance Summary for Q3 FY14

For Q3 FY14, Biosensors reported total revenue of US$82.5 million, which was comparable with US$81.3 million in Q3 FY13 and which resulted from growth in product revenue offset by lower licensing revenue. Product revenue of US$71.7 million represented a 6% year-on-year increase over US$67.6 million in Q3 FY13, which was the result of modest growth in the Company's Critical Care Products ("CCP") revenue and Interventional Cardiology Products ("IVP") revenue and the contribution from the Company's newly acquired Cardiac Diagnostic business.

Licensing and royalty revenue for Q3 FY14 was US$10.8 million which was comparable with Q2 FY14, and represented a 21% drop from US$13.7 million in Q3 FY13.

Gross margin on total product sales was 74% for the quarter, down from 82% in Q3 FY13, mainly due to lower gross margin for the Company's IVP product line as a result of the Company's distribution activities in Japan for the Nobori stents, coupled with the consolidation of the Company's newly acquired Cardiac Diagnostic business, which has a lower gross margin, and the reduction in China's DES pricing.

Total operating expense as a percentage of product revenue for the quarter was 64%, compared to 62% in Q3 FY13. 

In detail, the quarter's sales and marketing ("S&M") expense was US$28.0 million; general and administrative ("G&A") expense was US$10.8 million; research and development ("R&D") expense, which included costs for new product development and testing, clinical trials, patent registration and regulatory approval, was US$10.0 million.

Net profit for Q3 FY14 was US$11.1 million, or 0.65 US cents of both basic earnings per share ("basic EPS") and diluted earnings per share ("diluted EPS"). This compares to a net profit of US$24.9 million, or basic EPS of 1.45 US cents and diluted EPS of 1.43 US cents, for Q3 FY13.

Performance Summary for the FY14 Nine-month Period

For the FY14 nine-month period, Biosensors reported total revenue of US$242.2 million, a 2% decline from US$247.4 million for the fiscal nine months ended 31 December 2012 ("FY13 nine-month period"), which was largely a result of lower licensing and royalty revenue. Product revenue of US$209.0 million represented a 3% year-on-year increase over US$202.1 million in the FY13 nine-month period, which was largely the result of contribution from the Company's newly acquired Cardiac Diagnostic business.

Licensing and royalty revenue for the FY14 nine-month period was US$33.2 million, down US$12.1 million or 27% from US$45.3 million in the same period last year.

Gross margin on total product sales was 74% for the FY14 nine-month period, down from 81% in the same period last year, mainly due to lower gross margin for the Company's IVP product line as a result of the Company's distribution activities in Japan for the Nobori DES, coupled with the consolidation of the Company's newly acquired Cardiac Diagnostic business which has a lower gross margin, and the overall reduction in China's DES pricing.

Total operating expense as a percentage of product revenue for the FY14 nine-month period was 63%, compared to 56% in the same period last year. 

In detail, S&M expense in the FY14 nine-month period was US$78.6 million; G&A expense was US$32.3 million; R&D expense, which included costs for new product development and testing, clinical trials, patent registration and regulatory approval, was US$23.3 million.

Net profit excluding exceptional items for the FY14 nine-month period was US$34.7 million, or basic EPS of 2.03 US cents and diluted EPS of 2.01 US cents. This compares to a net profit of US$81.9 million, or basic EPS of 4.75 US cents and diluted EPS of 4.68 US cents, for the FY13 nine-month period after excluding the exceptional items of fair value adjustments for warrants and provisions for restructuring expenses.

Including exceptional items, net profit for the FY14 nine-month period was US$34.5 million, or basic EPS of 2.01 US cents and diluted EPS of 2.00 US cents, compared to net profit of US$85.7 million, or basic EPS of 4.97 US cents and diluted EPS of 4.90 US cents, for the FY13 nine-month period.

Financial Guidance for FY14

For the fiscal year ending 31 March 2014 ("FY14"), in view of lower royalty income from Terumo, overall weak market conditions in the short run and lower average selling prices in various markets, management anticipates the sales growth for this fiscal year to be weak despite the double digit sales volume growth in the Group's DES product lines and expects total revenue to be comparable with FY13. These challenges are mitigated by product revenue growth in the EMEA and APAC regions, revenues from the commercialization of various new products and the recently acquired business of Spectrum Dynamics. In addition, the Company initiated the launch of BioFreedom in selected markets in December 2013. Management has implemented measures to enhance efficiency and improve profitability by restructuring its cost and operating structure in line with changing market conditions. 

The Company's practice is to provide guidance on a full year basis only. This forecast reflects Biosensors' current and preliminary views, which are subject to change. It also excludes the potential impact from foreign exchange fluctuations, or any exceptional events and unforeseen circumstances that may occur.

"Looking ahead, in our core DES franchise, we anticipate key regions such as EMEA and APAC to continue to lead growth. In China, we expect the market sentiment to gradually improve over time. We will also continue to work closely with Terumo in Japan to improve Nobori sales," said Dr. Wang. "Recently, CITICPE became one of our major shareholders. We are excited to have this reputable firm join us as an investor and a member of the board. Management regards CITICPE as a valuable strategic partner. We expect to work closely with them and other board members. With this partnership, along with our product diversification and restructuring initiatives aimed at improving efficiency and profitability, we are confident that we are on track to strengthen our foundation for years to come."

Media/Investor Relations Contact

Wong Teck Yenn
Director, Investor Relations
Tel: (65) 6213 5777
Email: [email protected]

About Biosensors International Group, Ltd

Biosensors International Group, Ltd. develops, manufactures and markets innovative medical devices, aiming to improve patients' lives through pioneering medical technology that pushes forward the boundaries of innovation. Founded in 1990, we were listed on the Mainboard of the Singapore Stock Exchange in 2005.

The Group currently operates through four business units ("BU"): cardiovascular BU, which includes the BioMatrix™ family of drug-eluting stents and the licensing of its proprietary drug-eluting stent technology; cardiac diagnostic BU, which includes the newly acquired assets of Spectrum Dynamics, offering advanced medical imaging and clinical solutions to help interventional cardiologists determine the most appropriate treatment for patients; peripheral intervention BU, which includes drug-eluting balloons for the treatment of patients with peripheral arterial disease; and critical care products BU.

The Group has operations worldwide and is headquartered in Singapore.

For more information, please visit www.biosensors.com.

Forward-Looking Statements

Certain statements herein include forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the use of forward-looking terminology, such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe," "project" or "continue" or the negative thereof or other similar words. All forward looking statements involve risks and uncertainties, including, but not limited to, customer acceptance and market share gains, competition from companies that have greater financial resources; introduction of new products into the marketplace by competitors; successful product development; dependence on significant customers; the ability to recruit and retain quality employees as Biosensors grows; and economic and political conditions globally. Actual results may differ materially from those discussed in, or implied by, the forward-looking statements. The forward-looking statements speak only as of the date of this release and Biosensors assumes no duty to update them to reflect new, changing or unanticipated events or circumstances.

SOURCE Biosensors International Group, Ltd.