SHPI News Specialized Health Products Reports Record Revenues and is Profitable for the Second Quarter
BOUNTIFUL, Utah--(BUSINESS WIRE)--Aug. 9, 2006--Specialized Health Products International, Inc. ("SHPI") (OTCBB: SHPI), a manufacturer and marketer of proprietary safety medical devices, today announced consolidated financial results for the three and six-month periods ended June 30, 2006.
Second quarter highlights are as follows (financial comparisons are to second quarter 2005):
-- Revenues more than doubled to $3.4 million
-- Manufactured product sales increased $1.6 million or 175% to $2.5 million
-- Company reported net income of $228,000, an improvement of $716,000
-- Merger with The Med-Design Corporation closed on June 2, 2006
-- Cash and cash equivalents increased to $7.1 million and all debt is extinguished
Total revenues for the second quarter of 2006 were $3.4 million, representing a 102% increase compared to $1.7 million reported for the second quarter of 2005. Manufactured product sales increased 175% to $2.5 million and accounted for 75% of total revenue. Royalties from licensed products increased 29% to $527,000. SHPI revenue streams contributed $3.0 million of total revenue in the second quarter. Consolidated results include approximately one month of sales from Med-Design manufactured products and royalties from licensed products, which contributed $384,000 of total revenue in the quarter.
Gross profit for the quarter was $2.2 million, representing a 94% increase compared to the second quarter of 2005 and a 65% gross profit margin. SHPI reported net income of $228,000 for the quarter, an improvement of $716,000 compared to a net loss of $488,000 reported in the second quarter of 2005. Net income for the second quarter of 2006 was breakeven on an earnings per diluted share basis compared to a net loss of $(0.01) per diluted share for the same period last year.
Revenues for the six months ended June 30, 2006 were $5.4 million, an increase of 62% compared to $3.3 million reported for the same period in 2005. Manufactured product sales increased 128% to $3.9 million and accounted for 73% of total revenue for the six-month period. Royalty revenue was flat compared to the first six months of 2005 at $962,000. SHPI reported a net loss of $315,000 or $(0.01) per diluted share for the six months ended June 30, 2006, compared to a net loss of $706,000 or $(0.02) per diluted share for the same period in 2005.
"The second quarter marked a turning point for SHPI," commented Jeff Soinski, President and Chief Executive Officer. "We achieved our first $3 million revenue quarter and transitioned the company to profitability on a GAAP accounting basis. We also completed our acquisition of Med-Design and substantially completed our integration, so that we can immediately start to benefit from the significant cost-savings associated with the merger. With the strong growth of our manufactured products, driven primarily by the success of our MiniLoc(TM) Safety Infusion Set product line launched in the second half of last year, and the addition of the Med-Design revenue streams, we believe we are well-positioned to continue to deliver profitable growth in the coming quarters."
"We are off to a strong start in the third quarter. We are experiencing continued strength in our safety infusion set product lines, have added new OEM customers for our SecureLoc(TM) Safety Introducer Needle launched at the end of last year, and have fully completed the Med-Design integration," continued Mr. Soinski. "During the quarter, we have also re-launched the SafeStep(R) Huber Needle Set brand acquired from Med-Design and have begun a product optimization program."
"We expect to begin shipping two new manufactured product lines in the third quarter under exclusive supply agreements with large corporate customers," added Mr. Soinski. "Bard Access Systems recently received FDA marketing clearance for PowerLoc(TM), a power-injectable safety infusion set designed to be used in conjunction with Bard's exciting new PowerPort(TM) product line. Under our agreement, we will manufacture the PowerLoc(TM) Safety Infusion Set product line for Bard and supply it to them on an OEM private label basis. We also expect to begin shipping bone marrow biopsy needles to Tyco Healthcare during the quarter. We will initially manufacture and supply conventional product to Tyco based upon an enhanced ergonomic design, and follow with proprietary safety product offerings once FDA marketing clearance is obtained."
"We had previously projected 70% to 80% revenue growth in 2006 on a combined company basis compared with SHPI's stand alone revenue in 2005," said Mr. Soinski. "Based upon our performance in the first half of the year, we now believe that we can deliver 80% to 90% revenue growth in 2006 for total revenue of $12.6 to $13.3 million this year. In addition, we expect to be profitable on a GAAP accounting basis and cash flow positive from operations in 2006."
Conference Call
SHPI will conduct a conference call to discuss second quarter and first half 2006 financial results on Thursday, August 10, 2006, at 4:30 p.m. Eastern time. Investors can participate in the conference call live by dialing (800) 230-1096 in the U.S. and (612) 288-0337 internationally. In addition, the call will be webcast live and available for playback within one hour of completion of the call through a link on the SHPI's website at www.shpi.com. A replay of the call will also be available for one week after the event by dialing (800) 475-6701 in the U.S. and (320) 365-3844 internationally and entering access code: 838517.
About Specialized Health Products International, Inc.
Specialized Health Products International, Inc. ("SHPI") is a leading developer, manufacturer and marketer of proprietary disposable medical devices for clinician and patient safety. SHPI has developed multiple safety needle products based upon a broad intellectual property portfolio that applies to virtually all medical needles used today. SHPI manufactures and markets certain products, including three of the leading brands in the safety Huber needle market, under its own label. It licenses or supplies other products to leading manufacturers and marketers in the global disposable medical products industry, including Tyco Healthcare, Bard Access Systems, and BD Medical. In June 2006, SHPI merged with The Med-Design Corporation, another leading technology provider in the safety medical needle space. For more information about SHPI, visit the company's website at www.shpi.com.
This news release contains forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended. Such statements are subject to risks and uncertainties that could cause actual results to vary materially from those projected in the forward-looking statements. The Company may experience significant fluctuations in future operating results due to a number of economic conditions, risks in product and technology development, the effect of the Company's accounting policies and other risk factors detailed in the Company's SEC filings. These factors and others could cause operating results to vary significantly from those in prior periods and those projected in forward-looking statements. Additional information with respect to these and other factors, which could materially affect the Company and its operations, are included on certain forms the Company files with the Securities and Exchange Commission. (Financial Tables Follow) SPECIALIZED HEALTH PRODUCTS INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Six Months Ended
----------------------- -----------------------
Revenue: June 30, June 30, June 30, June 30,
2006 2005 2006 2005
----------- ----------- ----------- -----------
Product sales $2,540,161 $924,139 $3,930,009 $1,722,706
Product royalties 526,806 409,752 961,617 966,364
Technology fees and
license revenues 49,167 69,953 98,334 268,859
Development fees and
related services 252,057 261,974 406,072 367,775
----------- ----------- ----------- -----------
Total revenues 3,368,191 1,665,818 5,396,032 3,325,704
Cost of revenues 1,192,549 541,526 1,915,877 867,782
----------- ----------- ----------- -----------
Gross profit 2,175,642 1,124,292 3,480,155 2,457,922
----------- ----------- ----------- -----------
Operating expenses:
Research and
development (2006
excludes
amortization of
deferred
compensation of
$109,855 and
$219,709; 2005
excludes $108,832
and $215,620) 831,541 707,344 1,661,833 1,378,577
Sales and marketing
(2006 excludes
amortization of
deferred
compensation of
$7,483 and $13,176;
2005 excludes $4,770
and $8,118) 342,771 238,071 623,131 461,141
General and
administrative (2006
excludes
amortization of
deferred
compensation of
$211,396 and
$422,791; 2005
excludes $210,506
and $419,235) 431,116 335,932 809,596 670,340
Amortization of
deferred
compensation 328,897 324,108 655,674 639,434
----------- ----------- ----------- -----------
Total operating
expenses 1,934,325 1,605,455 3,750,234 3,149,492
----------- ----------- ----------- -----------
Income (loss) from
operations 241,317 (481,163) (270,079) (691,570)
----------- ----------- ----------- -----------
Other income
(expense):
Interest income 29,354 2,475 29,471 5,864
Other income
(expense) (42,987) (9,581) (71,302) (16,660)
----------- ----------- ----------- -----------
Total other income
(expense), net (13,633) (7,106) (41,831) (10,796)
Income/franchise tax - - (3,435) (3,539)
----------- ----------- ----------- -----------
Net income (loss) $227,684 $(488,269) $(315,345) $(705,905)
=========== =========== =========== ===========
Basic net income
(loss) per common
share $.00 $(.01) $(.01) $(.02)
=========== =========== =========== ===========
Basic weighted average
number of common
shares outstanding 51,302,747 44,582,473 47,984,807 44,520,693
Diluted net income
(loss) per common
share $.00 $(.01) $(.01) $(.02)
=========== =========== =========== ===========
Diluted weighted
average number of
common shares
outstanding 51,302,747 44,582,473 47,984,807 44,520,693
SPECIALIZED HEALTH PRODUCTS INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS June 30, December 31,
------ 2006 2005
(Unaudited) (Audited)
------------ ------------
Current assets:
Cash and cash equivalents $ 7,073,729 $ 707,222
Accounts receivable, net 2,456,997 1,577,715
Inventory, net 1,212,918 618,490
Prepaid expenses and other 528,730 58,190
------------ ------------
Total current assets 11,272,374 2,961,617
------------ ------------
Property and equipment, net of accumulated
depreciation and amortization of
$1,087,860 and $985,760, respectively 1,211,048 886,141
Intangible assets, net 2,695,226 241,115
Goodwill 882,703 -
Other assets 103,345 549,742
------------ ------------
$ 16,164,696 $ 4,638,615
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities $ 4,505,591 $ 2,162,895
Deferred revenue, net of current portion 270,401 368,735
Deferred rent - 3,176
Accrual for patent litigation expenses,
net of current portion 611,763 845,200
Note payable - long term - 500,000
------------ ------------
Total liabilities 5,387,755 3,880,006
------------ ------------
Stockholders' equity:
Preferred stock, $.001 par value;
30,000,000 shares authorized,
no shares outstanding - -
Common stock, $.02 par value; 70,000,000
shares authorized, 66,205,177 and
44,629,445 shares issued and outstanding
at June 30, 2006 and December 31, 2005,
respectively 1,324,104 892,589
Additional paid-in capital 49,679,616 42,153,783
Deferred compensation - (2,376,330)
Accumulated deficit (40,226,779) (39,911,433)
------------ ------------
Total stockholders' equity 10,776,941 758,609
------------ ------------
$ 16,164,696 $ 4,638,615
============ ============
