July 25--Disrupted sales caused by the integration of recently purchased AngioScore led to continued net losses for Colorado Springs-based Spectranetics, but company executives expect the acquisition and Wednesday's governmental approval of two new products -- a $750 million international market opportunity -- to continue to boost revenue.
The Food and Drug Administration approval of Spectranetics' medical devices came less than a month after it completed its biggest acquisition in 30 years. With the purchase of California-based AngioScore and the FDA's clearance, the company's potential market has nearly doubled in the last month.
"We expect momentum in the overall combined business to build in the back half of the year as the team settles in and we put some of the inherent disruptions and challenges behind us," Spectranetics CEO Scott Drake said in a conference call with analysts Thursday.
Training new sales representatives and integrating AngioScore staff cost the company potential sales and increased costs, Drake said. The sales staff has expanded to about 120 representatives, up from 50 before the acquisition, he said.
Spectranetics lost $6.6 million, or 16 cents a share, in the second quarter, compared to a $728,000 loss in the same quarter last year. The loss continues the downward movement started by a $5.7 million loss last quarter, though revenue grew on a year-to-year and quarterly basis.
Revenue in the second quarter rose 10 percent from both the same quarter last year and the first quarter of 2014, totaling $43.6 million. International revenue grew faster than domestic this quarter, bolstered by strong sales in Europe and Japan, Drake said.
"We do expect the second half of the year to be a reduced loss versus the first half," Chief Financial Officer Guy Childs said. "Consistent with past trends, Q4 is typically seasonally strongest for us."
Stock prices have jumped since Spectranetics released the news of its acquisition and clearance of the two products. Prices closed at $26.69 Thursday, the company's highest price since April.
The new products, Turbo-Tandem and Turbo Elite, use lasers to clear blockages in stents inserted in leg arteries, known as in-stent restenosis. More than 115,000 procedures to treat in-stent restenosis are done annually in the U.S., according to a Spectranetics news release.
"We are the only company with the indicated devices to treat in-stent restenosis," Spectranetics CEO Scott Drake said in the release. "We possess clinical data that will change clinical practice and a scaled commercial team to capitalize on this $750 million market opportunity."
Spectranetics plans to launch the products on Aug. 1 after it trains its U.S. sales team next week in Colorado Springs, Drake said.
"We're gearing up for the biggest launch in the history of the company," he said.
In the wake of the AngioScore acquisition, the company revised its annual revenue forecast to $198.5 million to $201 million, up from the $171.5 to $174 million originally expected. One stock analyst on the conference call said the new outlook was "a little conservative" because it didn't account for the FDA approval or any revenue growth from AngioScore compared to last year's earnings.
Losses were also revised to $36 million to $38 million from the original $7.5 million to $9.5 million.
Founded in Colorado Springs 30 years ago, Spectranetics sells medical lasers that treat arterial blockages and remove pacemaker and defibrillator leads.
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