ZILA News Zila Reports Fiscal 2007 First Quarter Financial Results
PHOENIX--(BUSINESS WIRE)--Zila, Inc. (Nasdaq GM: ZILA) announced results for its first quarter of
fiscal 2007 that ended October 31, 2006. With the recent acquisition of
Professional Dental Technologies, Inc. (“Pro-Dentec®”),
Zila has acquired the sales and distribution channel necessary for its
transition to a cancer detection company. Zila prepared for the
transition during the first quarter of fiscal 2007.
Financial highlights of the first quarter of fiscal 2007 include:
Net revenue was $1.4 million compared to net revenue of $1.7 million
for the 2006 fiscal first quarter. The decline in first quarter
revenue compared to the same period in fiscal 2006 was primarily due
to deliberate reductions in sales of ViziLite®
Plus into Zila’s existing distribution
channel as the Company prepared to establish direct sales to dental
offices, which were made possible through the acquisition of Pro-Dentec®.
Sequential quarterly revenue increased 38% to $1.4 million from the
fourth quarter of fiscal 2006 primarily due to increased Peridex®
sales and the continued adoption of ViziLite®
Plus within dental offices, resulting in growth and repeat orders by
dental offices as dentists continued to purchase from dental
distributors.
Gross margin was 39% in the first quarter of fiscal 2007 compared with
62% in the prior year’s period, driven
primarily by recording a reserve for certain ViziLite®
inventory components as they approach expiration. Gross profit dollars
were $0.54 million in the fiscal 2007 first quarter compared to $1.0
million in the prior year’s first quarter.
Marketing and selling expenses in the first quarter of fiscal 2007
were $1.5 million compared with $1.2 million in the prior year’s
first quarter, driven largely by Zila Pharmaceuticals' marketing
efforts and increased spending in support of ViziLite®
Plus.
Research and development spending, primarily in connection with Zila's
OraTest® program, decreased by nearly 9%,
to $1.5 million from $1.7 million for the first quarter of 2007
compared with the first quarter of 2006. This year’s
expenses were primarily driven by the new regulatory program while
expenses in the prior year quarter were principally related to
re-commissioning of the manufacturing facility that produces the
active pharmaceutical ingredient in OraTest®.
General and administrative costs increased to $3.2 million in the
fiscal 2007 quarter, from $2.6 million in the fiscal 2006 quarter, due
primarily to non-cash, stock-based compensation expense and increased
costs in support of ViziLite® Plus and the
Biotechnology Business Unit.
The net impact resulted in a loss from continuing operations for the
quarter of $5.9 million, or $0.13 per share, for the fiscal 2007
quarter compared to a loss of $4.8 million, or $0.11 per share, in the
comparable fiscal 2006 period. Included in this quarter’s
loss was $3.6 million of non-cash expense related to retirement of the
Black Diamond debt and approximately $1.1 million of derivative income
associated with the mark-to-market requirements of our warrant
liability. Inclusive of discontinued operations in each period, net
loss was $258,000, or $0.00 per fully diluted common share, and $5.0
million, or $0.11 per diluted common share for the three-month periods
ended October 31, 2006 and 2005, respectively.
Due to the divestitures of Zila Swab Technologies, Inc. and Zila
Nutraceuticals, Inc., for comparative purposes, prior year amounts
related to these discontinued operations were reclassified to coincide
with current year presentations.
During the first quarter of fiscal 2007, Zila completed a critical step
in transitioning to a cancer detection company by divesting its
Nutraceuticals Business Unit to NBTY, Inc. in a cash transaction of
$37.5 million, with up to an additional $3 million that may be paid
through an earn-out formula dependent upon the future performance of the
business. Part of the net proceeds from the sales of these entities was
used to repay the remaining outstanding funds owed in connection with
our $40 million credit facility. Zila expects to use the balance of the
proceeds to pursue opportunities focused on the development and
commercialization of cancer detection products by its Pharmaceuticals
and Biotechnology Business Units and for general corporate purposes.
Subsequent to the close of the first quarter in fiscal 2007, the Company
completed its transition to focus on developing and marketing cancer
detection technologies. On November 13, 2006 Zila entered into
definitive agreements for the private placement of approximately $40
million in common stock, convertible debt instruments and warrants to
selected accredited investors. The proceeds of the placement were used
to fund the acquisition of Pro-Dentec®, which
was completed on November 28, 2006, and to augment existing working
capital.
“The first quarter of fiscal 2007 was a
significant step forward for Zila in realizing what we believe is the
high-growth and high-value of the Company. We met our key objectives by
divesting our Nutraceuticals’ business, and
completing a very important and strategic financing, and acquiring a
national sales force and new products,”
stated Douglas D. Burkett, Ph.D., Zila Chairman, President, and CEO. “I
am very proud of what we have accomplished in a very short period of
time. With the new acquisition we believe that we now have the
infrastructure in place to educate dentists and establish a new standard
of care for the early detection of oral cancer that may save lives.”
Dr. Burkett continued, “The current gold
standard to detect oral cancer is obviously not effective, as supported
by statistics that show the rise in deaths from oral cancer, versus
decreases in deaths from all other major cancers. With Pro-Dentec’s
professional continuing education seminars and established relationships
in the industry, we look forward to having ViziLite®
Plus, and following FDA approval, OraTest®,
become the standard of care for the detection of oral cancer just as the
Pap Smear and PSA tests have become in the detection of cervical and
prostate cancers.”
The Company will host a teleconference and webcast to discuss its
quarterly results, at 1:30 p.m. PST (4:30 p.m. EST) on December 7, 2006.
Interested investors may participate in the teleconference by calling
toll-free 877-407-8031 (or 201-689-8031 for international callers)
approximately 10 minutes prior to the above start time. You may also
listen to the teleconference live via the Internet at www.zila.com.
For those unable to attend, the website will host an archive of the call
for 48 hours.
A telephone playback will be available for 48 hours beginning at 9:30
p.m. PST on December 7, 2006. The playback can be accessed by calling
877-660-6853 (or 201-612-7415 for international callers) and providing
passcode 286 and Conference ID 222192.
AboutZila, Inc.
Zila, Inc., headquartered in Phoenix, is a leading cancer diagnostic
company initially focused on oral cancer:
Zila Pharmaceuticals is dedicated to establishing ViziLite®
Plus as the new standard of care for the early detection of oral
abnormalities that could lead to cancer, with initial focus on the
dental market through Pro-Dentec®, a
leading designer, manufacturer and marketer of products sold
exclusively to dental professionals for Soft Tissue Management (“STM®”)
including the Rota-dent® Professional
Powered Brush, the Pro-Select3®
Piezo-Ultrasonic Scaler System and a suite of pharmaceutical STM®
products for both in-office and home-care use.
Zila Biotechnology is focused on achieving regulatory approval for the
next generation oral cancer diagnostic, OraTest®,
followed by the development of additional applications of its cancer
detection technologies.
For more information about Zila, visit www.zila.com.
This press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934. These forward-looking statements
are based largely on Zila's expectations or forecasts of future events,
can be affected by inaccurate assumptions and are subject to various
business risks and known and unknown uncertainties, a number of which
are beyond the Company's control. Therefore, actual results could differ
materially from the forward-looking statements contained herein. A wide
variety of factors could cause or contribute to such differences and
could adversely impact revenues, profitability, cash flows and capital
needs. There can be no assurance that the forward-looking statements
contained in this press release will, in fact, transpire or prove to be
accurate. The Company makes no commitment, and disclaims any duty, to
update or revise any forward-looking statements to reflect future events
or changes in expectations. For a more detailed description of these and
other cautionary factors that may affect Zila's future results, please
refer to Zila's Form 10-K for its fiscal year ended July 31, 2006 and
subsequent filings we make with the Securities and Exchange Commission.
Zila, Inc. and Subsidiaries
Income Statement (Unaudited)
(in thousands, except per share data)
Three months ended
October 31,
2006
2005
Net revenues
$
1,378
$
1,700
Cost of product sold
839
652
Gross profit
539
1,048
Operating costs and expenses:
Marketing and selling
1,548
1,247
General and administrative
3,183
2,630
Research and development
1,535
1,680
Depreciation and amortization
392
330
6,658
5,887
Loss from operations
(6,119)
(4,839)
Other income (expense):
Interest income
95
80
Interest expense
(4,811)
(8)
Derivative expense
1,059
-
Other expense
(10)
(13)
(3,667)
59
Loss from continuing operations before tax
(9,786)
(4,780)
Income tax benefit (expense)
3,865
(3)
Loss from continuing operations
(5,921)
(4,783)
Discontinued operations:
Net gain on disposal of discontinued operations
11,110
-
Loss from operations
(1,570)
(219)
Income tax
(3,877)
-
Income (loss) from discontinued operations
5,663
(219)
Net income (loss)
(258)
(5,002)
Preferred stock dividends
(10)
(10)
Net income (loss) attributable to common shareholders
$
(268)
$
(5,012)
Basic and diluted net income (loss) per common share:
From continuing operations
$
(0.13)
$
(0.11)
From discontinued operations
0.13
0.00
Net income (loss)
$
(0.00)
$
( 0.11)
Weighted average shares outstanding - basic and diluted
45,798
45,660
EBITDA (a)
$
5,290
$
(4,321)
(a) EBITDA is defined as earnings (loss) before net interest,
taxes (income), depreciation and amortization.
Reconciliation of GAAPmeasures to non-GAAP measures
(in thousands)
Three months ended
October 31,
2006
2005
EBITDA
$
5,290
$
(4,321)
Interest income (b)
125
83
Interest expense (b)
(5,064)
(52)
Depreciation and amortization (b)
(597)
(709)
Income tax expense (b)
(12)
(3)
Net loss
$
(258)
$
(5,002)
(b) Includes both continuing and discontinued operations.
