Cyberonics Reports Record Fiscal 2012 Third Quarter Results

HOUSTON, Feb. 24, 2012 /PRNewswire/ -- Cyberonics, Inc. (NASDAQ: CYBX) today announced results for the quarter ended January 27, 2012.

Quarterly highlights

Operating results for the third quarter of fiscal 2012 compared to the third quarter of fiscal 2011, and other achievements include:

• Net sales of $54.5 million, a 16% increase from $47.1 million;
• U.S. epilepsy sales increased by 15% to $45.2 million;
• International sales increased by 24%;
• Income from operations of $16.4 million, an increase of 40%;
• Adjusted EBITDA of $20.8 million, an increase of 46%;
• Income per diluted share of $0.34 cents, an increase of 36% from an income per diluted share last year of $0.25 cents;
• FDA and European approval of re-designed AspireHC™ generator; and
• Repayment of $7 million convertible debt.

As discussed below under "Use of Non-GAAP Financial Measures," the company presents in this release a non-GAAP financial measure: Adjusted EBITDA.  Investors should consider non-GAAP measures in addition to, and not as a substitute for, or superior to, financial performance measures prepared in accordance with GAAP.  Please refer to the attached reconciliation between GAAP Net Income and non-GAAP Adjusted EBITDA.

Results and objectives

"Our fiscal third quarter's record sales performance was very strong," commented Dan Moore, Cyberonics' President and Chief Executive Officer.  "U.S. epilepsy sales increased by 15% and U.S. unit sales increased by 10%. In January, we received approval from FDA of our redesigned AspireHC™ generator and initiated a limited commercial release.

"International net sales increased to $8.7 million from the $7.1 million recorded in the comparable quarter of fiscal 2011, an increase of 24%, reflecting the excellent performance in Europe.  On a constant currency basis, the percentage increase in sales for the quarter was materially the same.

"Operating income of $16.4 million increased by 40%, and operating cash flow for the quarter totaled $21.1 million, an increase of 59% over the comparable period last year.  Available cash at period end was $78 million, an increase of $8 million from the end of the second quarter, after the $7 million repayment of convertible notes (leaving only $4,000 outstanding) and stock repurchases of $6 million.

"Our growth expectations for both sales and operating income for the fiscal year are improved, and we are increasing our guidance as a result.

"We are pleased that regulatory approvals for the re-designed AspireHC™ generator were received in a timely manner.  Filings to allow the resumption of the AspireSR™ generator E-36 European clinical trial commenced in early February, and we expect to resume enrollment by the end of the fiscal year.  

"The management team hosted an Investor Day on December 8, 2011, which included presentations on our epilepsy development activity, and also outlined our efforts to obtain reimbursement for VNS Therapy for treatment-resistant depression, to evaluate the use of VNS Therapy in chronic heart failure, and to explore other opportunities in neuroscience.  Our efforts in each of these areas continue to move forward, and we remain excited about the future."

Share repurchase update

During the quarter, we repurchased 178,000 shares of common stock on the open market.

Fiscal 2012 guidance

Cyberonics is increasing net sales guidance for fiscal year 2012 to a range from $215 million to $217 million from the previously provided range of $213 million to $216 million.  The company now expects that income from operations for fiscal year 2012 will be in the range from $58 million to $60 million, an increase from the prior guidance of $55 million to $58 million.

Additional details will be provided during today's conference call and in an investor presentation summarizing the company's third quarter fiscal year 2012 results.  The presentation is available in the Investor Relations section of Cyberonics' corporate website at http://www.cyberonics.com.

Use of Non-GAAP financial measures

In this press announcement, management has disclosed a financial measurement that presents financial information not in accordance with Generally Accepted Accounting Principles (GAAP).  This measurement is not a substitute for a GAAP measurement, although company management uses this measurement as an aid in monitoring the company's ongoing financial performance from quarter to quarter and year to year on a regular basis and for benchmarking against other medical technology companies.  Adjusted earnings before interest, income tax, depreciation and amortization adjusted for certain other non-cash items ("Adjusted EBITDA") measures the earnings of the company after excluding from net income, income tax expense, depreciation, amortization and impairment of intellectual property, as well as equity compensation and other income (expense), net.

Non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.  Investors should consider non-GAAP measures in addition to, and not as a substitute for, or superior to, financial performance measures prepared in accordance with GAAP.

Please refer to the attached reconciliation between the GAAP and non-GAAP financial measure.

Fiscal Year 2012 Third Quarter Results Conference Call Instructions

Cyberonics will host a conference call today, Friday, February 24, 2012, beginning at 8:00 a.m. Central Time (9:00 a.m. Eastern Time) to review its results of operations for the fiscal year 2012 third quarter, followed by a question and answer session.

The conference call will be available to interested parties through a live audio webcast in the investor relations section of Cyberonics' corporate website at http://www.cyberonics.com, where it will be archived and accessible for approximately 12 months.  To listen to the conference call live by telephone dial 877-638-4557 (if dialing from within the U.S.) or 914-495-8522 (if dialing from outside the U.S.).  The conference ID is 44495703.  

A replay of the conference call will be available approximately two hours after the completion of the conference call by dialing 855-859-2056 (if dialing from within the U.S.) or 404-537-3406 (if dialing from outside the U.S.).  The replay conference ID access code is 44495703.  The replay will be available for one week on the above number.

About Cyberonics, Inc. and the VNS Therapy® System

Cyberonics, Inc. is a medical technology company with core expertise in neuromodulation.  The company developed and markets the VNS Therapy System, which is FDA-approved for the treatment of refractory epilepsy and treatment-resistant depression.  The VNS Therapy System uses a surgically implanted medical device that delivers pulsed electrical signals to the vagus nerve.  Cyberonics markets the VNS Therapy System in selected markets worldwide.

Additional information on Cyberonics and the VNS Therapy System is available at www.cyberonics.com.

Safe harbor statement

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended.  These statements can be identified by the use of forward-looking terminology, including "may," "believe," "will," "expect," "anticipate," "estimate," "plan," "intend," "forecast," or other similar words.  Statements contained in this press release are based on information presently available to us and assumptions that we believe to be reasonable.  We are not assuming any duty to update this information if those facts change or if we no longer believe the assumptions to be reasonable. Investors are cautioned that all such statements involve risks and uncertainties, including without limitation, statements concerning expectations for improved growth in sales and operating income in fiscal 2012, resumption of the AspireSR™ generator E-36 European clinical trial by the end of the fiscal year, obtaining reimbursement for VNS Therapy for treatment-resistant depression, developing a VNS Therapy System indication for chronic heart failure, exploring other opportunities in neuroscience, fulfilling our stock repurchase program, and fiscal 2012 guidance for net sales and income from operations.  Our actual results may differ materially.  Important factors that may cause actual results to differ include, but are not limited to: continued market acceptance of VNS Therapy™ and sales of our product; the development and satisfactory completion of clinical trials and/or market test and/or regulatory approval of VNS Therapy™ for the treatment of other indications; satisfactory completion of the post-market study required by the U.S. Food and Drug Administration as a condition of approval for the treatment-resistant depression indication; adverse changes in coverage or reimbursement amounts by third-parties; intellectual property protection and potential infringement claims; maintaining compliance with government regulations and obtaining necessary government approvals for new indications; product liability claims and potential litigation; reliance on single suppliers and manufacturers for certain components; the accuracy of management's estimates of future expenses and sales; the potential identification of material weaknesses in our internal controls over financial reporting; and other risks detailed from time to time in our filings with the Securities and Exchange Commission (SEC).  For a detailed discussion of these and other cautionary statements, please refer to our most recent filings with the SEC, including our Annual Report on Form 10-K for the fiscal year ended April 29, 2011 and our Quarterly Report on Form 10-Q for the fiscal quarters ended July 29, 2011 and October 28, 2011.

Contact information

Greg Browne, CFO 
Cyberonics, Inc. 
100 Cyberonics Blvd. 
Houston, TX 77058 
Main:  (281) 228-7262 
Fax:  (281) 218-9332 
[email protected]

SOURCE Cyberonics, Inc.

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