SOURCE: Given Imaging

August 06, 2008 16:01 ET

Given Imaging Reports Second Quarter 2008 Results

Second Quarter 2008 Revenues Increase 19% to $33.1 Million; Revenues in the Americas Region Increase 25% Compared to First Quarter 2008; Second Quarter 2008 GAAP Net Income of $2.9 Million; The Company Is Increasing Its EPS Guidance for 2008 to the Range of $0.34 - $0.42

YOQNEAM, ISRAEL--(Marketwire - August 6, 2008) - Given Imaging Ltd. (NASDAQ: GIVN) today announced financial results for the second quarter ended June 30, 2008.

Worldwide revenues increased by 19% to $33.1 million in the second quarter of 2008, from $27.8 million in the second quarter of 2007. Revenues increased 22% compared to the first quarter of 2008. Gross margin in the second quarter of 2008 was 75.5%, which was the same as the second quarter of 2007. Gross margin in the first quarter of 2008 was 71.1%.

On a GAAP basis, net income increased to $2.9 million or $0.09 per share on a fully diluted basis in the second quarter of 2008, compared to net income of $623,000, or $0.02 per share on a fully diluted basis in the second quarter of 2007. A table detailing certain items affecting net income in the second quarter and first half of 2007 and 2008 is available below.

For the second quarter of 2008, net cash used in operating activities totaled $1.4 million. Cash and cash equivalents, short-term investments and marketable securities at June 30, 2008 totaled $107.3 million.

"We are very pleased with our robust second quarter financial results," said Homi Shamir, president and CEO of Given Imaging. "Expanding market penetration and stronger global demand for PillCam SB in our three operating regions helped increase sales by 19%. We are especially pleased to be back on track with revenue growth in the Americas region which increased 25% on a sequential basis while PillCam reorders increased 28% sequentially in the region. In the first six months of 2008 total revenues grew 18.3% over the same period last year, which positions us to meet our 2008 revenue guidance. Looking ahead, we are confident in our ability to expand the global market for PillCam SB, as well as to develop the market for our other next generation PillCam products."

Second Quarter 2008 Revenue Analysis

Sales in the Americas region were $19.7 million, up 7% from the $18.4 million in the same period in 2007. EMEA sales increased 20.3% to $8.3 million compared to $6.9 million in the same period in 2007, while APAC sales doubled to $5.0 million from $2.5 million in the same period in 2007.

Worldwide PillCam SB sales were 53,500 in the second quarter of 2008, an increase of 10.3% compared to the same period last year. PillCam SB sales in the Americas increased 8% to 38,200 in the second quarter of 2008 compared to 35,400 in the second quarter of 2007. PillCam SB sales in the EMEA region increased 9.0% and sales in APAC region increased 40%. The increase in PillCam SB sales in the APAC region is mainly attributable to sales in Japan and Australia. Reorders of PillCam SB increased 15.5% to approximately 51,300 compared to approximately 44,400 in the second quarter of 2007. Reorders of PillCam SB in the Americas region grew 15.4% to 37,500 compared to 32,500 the second quarter of 2007. Reorders in the EMEA region increased 10%, while APAC reorders increased by 45%.

PillCam sales accounted for 83% of total revenues compared to 86% of total sales in the same period of last year.

Supplemental second quarter data can be found at www.givenimaging.com in the Investor Relations section.

Six Month Financial Results

For the six month period ended June 30, 2008, sales increased 18.3% to $60.2 million compared to $50.9 million in the same period in 2007. Gross profit for the six month period was 73.5% compared to 74.8% in 2007. On a GAAP basis, net income for the first six months of 2008 was $4.0 million or $0.13 per share on a fully diluted basis, compared to a net income of $694,000, or $0.02 per share, for the same period in 2007.

Additional Income Statement Information

The following charges (credits) are included in the income statements for the three and six month periods ended June 30, 2008 and in the corresponding period of 2007 (in millions of USD):

                           Second Qtr  First Half  Second Qtr  First Half
                              2008        2008        2007        2007
                           ----------  ----------  ----------  ----------
Stock based compensation
 expenses (FAS123R)            1.7         3.2         1.2         2.3
InScope gain                     -        (5.4)          -           -
IP litigation expenses         0.4         3.3         1.2         1.3
Settlement agreement
 with Olympus Corporation    (2.33)      (2.33)          -           -

Increasing 2008 GAAP EPS Guidance

As a result of settling our patent litigation with Olympus Corporation, the Company is increasing full year 2008 GAAP, fully diluted earnings per share from $0.26 and $0.34 to $0.34 and $0.42.

Reimbursement Highlights

--  Medical Mutual of Ohio, serving more than 3.9 million individuals in
    Ohio and South Carolina, recently updated its capsule endoscopy policy and
    will allow physicians to use PillCam SB as a primary test for symptoms
    indicative of small bowel tumors or Crohn's disease. In addition, Medical
    Mutual will allow the use of PillCam ESO in the evaluation of esophageal
    varices in patients who have esophageal varices or portal hypertension and
    when EGD is contraindicated. The policy also includes the use of the Agile
    patency capsule prior to the administration of the PillCam video capsule.
    
--  Australia's Minister of Health and Ageing approved Medicare funding of
    PillCam SB in patients with Peutz-Jeghers syndrome (PJS). PJS is a genetic
    condition that is characterized by the presence of gastrointestinal polyps
    and a high risk of certain types of cancer including cancer of the small
    intestine. It is estimated that up to 1 in 25,000 individuals have PJS.
    Surveillance of these patients with capsule endoscopy has been recommended
    at an interval of every two years.
    

Conference Call / Webcast Information

U.S. Call / Webcast

Given Imaging will host a conference call Thursday, August 7, 2008, at 9:00 a.m. Eastern time to discuss second quarter 2008 results. To participate in the teleconference, please dial 1-888-778-9069 fifteen minutes before the conference begins. International callers should dial 913-312-0849. The call will also be webcast live at www.givenimaging.com. A replay of the call will be available for two weeks on the company's website, or until August 21, 2008 by dialing 1-888-203-1112. International callers should dial 719-457-0820. The replay participant code is 5010408.

Hebrew Call

The company will host a separate conference call in Hebrew on August 7 at 14:00 Israel time, (7:00 a.m. ET). To access this call, please dial +972-3-9180650 ten minutes before the conference is scheduled to begin. A replay of the call will be available from August 10-12 by dialing +972-3-9255900.

About Given Imaging Ltd.

Given Imaging is redefining gastrointestinal diagnosis by developing, producing and marketing innovative, patient-friendly products for detecting gastrointestinal disorders. The company's technology platform is the PillCam® Platform, featuring the PillCam video capsule, a disposable, miniature video camera contained in a capsule, which is ingested by the patient, a sensor array, data recorder and RAPID® software. Given Imaging has a number of available capsules: the PillCam SB video capsule to visualize the entire small intestine which is currently marketed in the United States and in more than 60 other countries; the PillCam ESO video capsule to visualize the esophagus; the Agile™ patency capsule to determine the free passage of the PillCam capsule in the GI tract and the PillCam COLON video capsule to visualize the colon that has been cleared for marketing in the European Union. PillCam COLON has received a CE Mark, but is not cleared for marketing or available for commercial distribution in the USA. More than 750,000 patients worldwide have benefited from the PillCam capsule endoscopy procedure. Given Imaging's headquarters, manufacturing and R&D facilities are located in Yoqneam, Israel. It has operating subsidiary companies in the United States, Germany, France, Japan, Australia and Singapore. Given Imaging's largest shareholders include Elron Electronic Industries (NASDAQ: ELRN) (TELAVIV: ELRN). For more information, visit http://www.givenimaging.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, projections about our business and our future revenues, expenses and profitability. Forward-looking statements may be, but are not necessarily, identified by the use of forward-looking terminology such as "may," "anticipates," "estimates," "expects," "intends," "plans," "believes," and words and terms of similar substance. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual events, results, performance, circumstances or achievements of the Company to be materially different from any future events, results, performance, circumstances or achievements expressed or implied by such forward-looking statements. Factors that could cause actual events, results, performance, circumstances or achievements to differ from such forward-looking statements include, but are not limited to, the following: (1) our ability to develop and bring to market new products, (2) our ability to receive regulatory clearance or approval to market our products or changes in regulatory environment, (3) our success in implementing our sales, marketing and manufacturing plans, (4) protection and validity of patents and other intellectual property rights, (5) the impact of currency exchange rates, (6) the effect of competition by other companies, (7) the outcome of significant litigation, (8) our ability to obtain reimbursement for our product from government and commercial payors, (9) quarterly variations in operating results, (10) the possibility of armed conflict or civil or military unrest in Israel, and (11) other risks and factors disclosed in our filings with the U.S. Securities and Exchange Commission, including, but not limited to, risks and factors identified under such headings as "Risk Factors," "Cautionary Language Regarding Forward-Looking Statements" and "Operating Results and Financial Review and Prospects" in the Company's Annual Report on Form 20-F for the year ended December 31, 2007. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except for the Company's ongoing obligations to disclose material information under the applicable securities laws, it undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

           Given Imaging Ltd. and its Consolidated Subsidiaries
                        Consolidated Balance Sheets
                      In thousands except share data

                                                    June 30,   December 31,
                                                  ------------ ------------
                                                      2008         2007
                                                  ------------ ------------
                                                  (Unaudited)   (Audited)
                                                  ------------ ------------
Assets

Current assets
Cash and cash equivalents                         $     43,584 $     37,103
Short-term investments                                  14,001       23,191
Accounts receivable:
  Trade (Net of provisions for doubtful debts of
   $338 and of $329 as of June 30, 2008 and
   December 31, 2007, respectively)                     20,527       23,315
  Other                                                  5,802       10,385
Inventories                                             18,577       15,960
Prepaid expenses                                         1,207        1,289
Deferred tax assets                                      1,175        1,350
Advances to suppliers                                      215          190
                                                  ------------ ------------

Total current assets                                   105,088      112,783
                                                  ------------ ------------

Deposits                                                 1,122          892

Assets held for employee severance payments              3,963        3,007

Marketable Securities                                   48,605       41,629

Fixed assets, at cost, less accumulated
 depreciation                                           15,511       15,422

Other assets, at cost, less accumulated
 amortization                                            4,614        3,583
                                                  ------------ ------------


Total Assets                                      $    178,903 $    177,316
                                                  ============ ============




           Given Imaging Ltd. and its Consolidated Subsidiaries
                        Consolidated Balance Sheets
                      In thousands except share data

                                                    June 30,   December 31,
                                                  -----------  -----------
                                                      2008         2007
                                                  -----------  -----------
                                                  (Unaudited)   (Audited)
                                                  -----------  -----------
Liabilities and shareholders' equity

Current liabilities

Current installments of obligation under capital
 lease                                            $       128  $       121
Accounts payable
  Trade                                                 9,215        7,275
  Other                                                17,560       21,012
Deferred income                                         2,866        9,379
                                                  -----------  -----------
Total current liabilities                              29,769       37,787
                                                  -----------  -----------

Long-term liabilities
Obligation under capital lease, net                       508          448
Liability in respect of employees’ severance
 payments                                               4,560        3,490
                                                  -----------  -----------
Total long-term liabilities                             5,068        3,938
                                                  -----------  -----------
Total liabilities                                      34,837       41,725
                                                  -----------  -----------

Minority interest                                       3,162        1,996
                                                  -----------  -----------

Shareholders’ equity
Share capital:
Ordinary Shares, NIS 0.05 par value each
 (90,000,000 shares authorized; 29,252,785 and
 29,241,875 shares issued and fully paid as of
 June 30, 2008 and December 31, 2007, respectively)       343          343
Additional paid-in capital                            170,265      166,813
Capital reserve                                         2,166        2,166
Accumulated other comprehensive loss                     (103)           -
Accumulated deficit                                   (31,767)     (35,727)
                                                  -----------  -----------
Total shareholders' equity                            140,904      133,595
                                                  -----------  -----------



Total liabilities and shareholders' equity        $   178,903  $   177,316
                                                  ===========  ===========





           Given Imaging Ltd. and its Consolidated Subsidiaries
                  Consolidated Statements of Operations
               In thousands except share and per share data

                       Six month             Three month
                     period ended            period ended
                       June 30,                June 30,         Year ended
                ----------------------  ---------------------- December 31,
                   2008        2007        2008        2007        2007
                ----------  ----------  ----------  ----------  ----------
               (Unaudited) (Unaudited) (Unaudited) (Unaudited)   (Audited)
                ----------  ----------  ----------  ----------  ----------
Revenues        $   60,196  $   50,896  $   33,072  $   27,844  $  112,868
Cost of
 revenues          (15,943)    (12,846)     (8,108)     (6,824)    (29,721)
Early repayment
 of royalty
 bearing
 government
  grants                 -           -           -           -      (4,843)
                ----------  ----------  ----------  ----------  ----------

Gross profit        44,253      38,050      24,964      21,020      78,304
                ----------  ----------  ----------  ----------  ----------

Operating expenses
Research and
 development,
 gross              (7,689)     (5,988)     (3,893)     (3,205)    (12,847)
Royalty and
 non-royalty
 bearing grants        790         693         370         600       1,242
                ----------  ----------  ----------  ----------  ----------
Research and
 development,
 net                (6,899)     (5,295)     (3,523)     (2,605)    (11,605)

Sales and
 marketing         (31,922)    (25,412)    (16,960)    (13,906)    (55,446)
General and
 administrative    (10,173)     (9,021)     (2,894)     (5,078)    (20,981)
Termination of
 marketing
 agreement           5,443           -           -           -      22,860
Other                    -           -           -           -        (422)
                ----------  ----------  ----------  ----------  ----------

Total operating
 expenses          (43,551)    (39,728)    (23,377)    (21,589)    (65,594)
                ----------  ----------  ----------  ----------  ----------

Operating
 profit (loss)         702      (1,678)      1,587        (569)     12,710
Financing
 income, net         2,466       1,929         870         727       5,520
                ----------  ----------  ----------  ----------  ----------

Profit before taxes
 on income and
 minority share      3,168         251       2,457         158      18,230
Income tax
 benefit (expense)    (126)       (244)         33           3      (4,548)
                ----------  ----------  ----------  ----------  ----------

Profit before
 minority
 Share               3,042           7       2,490         161      13,682

Minority share
 in losses of
 subsidiary            918         687         394         462       1,503
                ----------  ----------  ----------  ----------  ----------

Net profit      $    3,960  $      694  $    2,884  $      623  $   15,185
                ==========  ==========  ==========  ==========  ==========

Earnings per share

Basic
 Earnings per
 Ordinary Share $     0.14  $     0.02  $     0.10  $     0.02  $     0.52
                ==========  ==========  ==========  ==========  ==========

Diluted
 Earnings per
 Ordinary Share $     0.13  $     0.02  $     0.09  $     0.02  $     0.49
                ==========  ==========  ==========  ==========  ==========

Weighted average
 number of
 Ordinary Shares
 used to compute
 basic Earnings
 per Ordinary
 share          29,251,868  28,760,450  29,252,785  28,861,380  28,961,968
                ==========  ==========  ==========  ==========  ==========

Weighted average
 number of
 Ordinary Shares
 used to compute
 diluted Earnings
 per Ordinary
 share          30,886,460  30,747,285  30,678,341  30,990,699  31,030,458
                ==========  ==========  ==========  ==========  ==========




           Given Imaging Ltd. and its Consolidated Subsidiaries
                  Consolidated Statements of Cash Flows
                               In thousands

                           Six month            Three month
                         period ended           period ended
                           June 30,               June 30,     Year ended
                     --------------------  --------------------December 31,
                       2008        2007       2008       2007       2007
                     ---------  ---------  ---------  ---------  ---------
                    (Unaudited)(Unaudited)(Unaudited)(Unaudited) (Audited)
                     ---------  ---------  ---------  ---------  ---------
Cash flows from
 operating
 activities:
Net profit           $   3,960  $     694  $   2,884  $     623  $  15,185

Adjustments required
 to reconcile net
 loss to net cash
 used in operating
 activities:

Minority share in
 losses of
 subsidiary               (918)      (687)      (394)      (462)    (1,503)
Depreciation and
 amortization            2,541      2,280      1,276      1,130      4,771
Deferred tax assets        175       (443)        13       (204)        24
Stock based
 compensation            3,256      2,337      1,745      1,228      5,651
Excess tax benefits
 related to stock
 based compensation          -          -          -          -       (693)
Other                        9       (111)       (80)      (184)       380
Net decrease
 (increase) in
 trading securities          -      3,478          -        400      5,092
Decrease (increase)
 in accounts
 receivable - trade      2,788      1,346     (2,163)      (793)    (4,428)
Decrease (increase)
 in accounts
 receivable - other      4,583     (1,488)    (2,967)      (743)    (8,922)
Decrease (increase)
 in prepaid expenses        82       (381)        (1)        45         51
Decrease (increase)
 in advances to
 to suppliers              (25)      (133)        38        (90)      (108)
Decrease (increase)
 in inventories         (2,617)      (192)    (2,017)      (973)     2,208
Increase (decrease)
 in accounts payable    (1,785)     2,133        303      5,734      8,570
Decrease in deferred
 income                 (6,513)      (530)       (21)      (572)   (14,903)
Net cash provided by
 (used in) operating ---------  ---------  ---------  ---------  ---------
 activities          $   5,536  $   8,303  $  (1,384) $   5,139  $  11,375
                     ---------  ---------  ---------  ---------  ---------

Cash flows from
 investing
 activities:
Excess of cash
 investment over
 equity share in
 subsidiary                965          -        965          -
Purchase of fixed
 assets and
 intangible assets      (3,597)    (2,005)    (2,350)    (1,313)    (5,772)
Deposits                  (244)        22       (219)        33       (355)
Proceeds from sales
 of marketable
 securities             34,714      9,132     16,274      9,132     18,753
Proceeds from sales
 of fixed assets            30          -          5          -          -
Purchase of
 marketable
 securities            (32,514)   (26,797)   (12,887)    (9,439)   (36,584)
                     ---------  ---------  ---------  ---------  ---------
Net cash (used in)
 provided by
 investing
 activities          $    (646) $ (19,648) $   1,788  $  (1,587) $ (23,958)
                     ---------  ---------  ---------  ---------  ---------




           Given Imaging Ltd. and its Consolidated Subsidiaries
                  Consolidated Statements of Cash Flows
                               In thousands

                           Six month            Three month
                         period ended           period ended
                           June 30,               June 30,     Year ended
                     --------------------  --------------------December 31,
                       2008        2007       2008       2007       2007
                     ---------  ---------  ---------  ---------  ---------
                    (Unaudited)(Unaudited)(Unaudited)(Unaudited) (Audited)
                     ---------  ---------  ---------  ---------  ---------
Cash flows from
 financing activities:
Principal payments
 on capital
 lease obligation    $     (85) $      (6) $     (35) $      (3) $     (37)
Proceeds from the
 issuance of
 Ordinary Shares           196      2,892          -      2,540      4,280
Issuance of shares
 to a minority
 shareholder in a
 consolidated
 company                 1,207          -          -          -          -
Excess tax benefits
 related to stock
 based compensation          -                     -          -        693
                     ---------  ---------  ---------  ---------  ---------
Net cash provided by
 (used in) financing
 activities          $   1,318  $   2,886  $     (35) $   2,537  $   4,936
                     ---------  ---------  ---------  ---------  ---------

Effect of exchange
 rate changes on cash      273        (17)        98        (66)       240
                     ---------  ---------  ---------  ---------  ---------

Increase (decrease)
 in cash and cash
 equivalents             6,481     (8,476)       467      6,023     (7,407)

Cash and cash
 equivalents at
 beginning of period    37,103     44,510     43,117     30,011     44,510
                     ---------  ---------  ---------  ---------  ---------

Cash and cash
 equivalents at
 end of period       $  43,584  $  36,034  $  43,584  $  36,034  $  37,103
                     =========  =========  =========  =========  =========

Supplementary cash
 flow Information
Income taxes paid    $     122  $     153  $      47  $      78  $   1,098
                     =========  =========  =========  =========  =========

Assets acquired
 under capital
 Lease               $     109  $       -  $       -  $       -  $     569
                     =========  =========  =========  =========  =========

Contact Information