SOURCE: Given Imaging

Given Imaging

May 04, 2011 16:01 ET

Given Imaging Reports First Quarter 2011 Results

First Quarter 2011 Revenues Increased 25% to a Record $40 Million; Non-GAAP Gross Margin Increased to 77.4% of Revenues; Non-GAAP Operating Profit Increased 12%; PillCam SB Sales in the EMEA Region Grew 18%; Currency Fluctuations and Increased Taxes Reduced Net Income Compared to First Quarter 2010

YOQNEAM, ISRAEL--(Marketwire - May 4, 2011) - Given Imaging Ltd. (NASDAQ: GIVN) today announced financial results for the first quarter ended March 31, 2011.

Worldwide revenues were $40 million in the first quarter of 2011, a 25 percent increase from $32.1 million in the first quarter of 2010. First quarter 2011 revenues include sales of $5.5 million from Sierra Scientific Instruments (Sierra), which the company acquired on April 1, 2010. Gross margin on a non-GAAP basis in the first quarter of 2011 was 77.4 percent, compared to 77.1 percent in the first quarter of 2010.

Non-GAAP operating profit was $3.9 million, compared to $3.5 million in the first quarter of 2010. On a non-GAAP basis, net income for the first quarter of 2011 was $3 million, or $0.10 per share on a fully diluted basis, compared to $4.4 million, or $0.14 per share on a fully diluted basis, in the first quarter of 2010. On a GAAP basis, net income for the first quarter of 2011 was $0.7 million, or $0.02 per share, compared to $2.1 million, or $0.07 per share, in the same quarter of last year. In the first quarter of 2011 finance expense, net, was $0.1 million, compared to finance income, net, of $0.98 million in the first quarter of 2010. Tax expense for the first quarter of 2011 was $0.7 million, compared to $0.1 million in the same quarter of last year. A reconciliation of GAAP results to non-GAAP results is attached.

Cash and cash equivalents, short-term investments and marketable securities on March 31, 2011 totaled $83.9 million.

"We are pleased to report that we achieved a 25 percent increase in total revenues in the first quarter of 2011, fueled by sales of Sierra Scientific Instruments products, and by solid growth of our PillCam business in the EMEA and APAC regions," said Homi Shamir, president and CEO of Given Imaging. "Looking ahead, we are encouraged by several positive developments, including recovery of our core PillCam SB business in the EMEA region, which looks to be back on track, and the recent FDA decision to clear the marketing of PillCam SB in the U.S. for use in monitoring lesions that may indicate Crohn's disease. Finally, we are making progress towards starting the PillCam COLON pivotal trials in the U.S. and Japan."

First Quarter 2011 Revenue Analysis

Revenues in the Americas region were $24.1 million, including revenues of $3.2 million from sales of Sierra products. In the same period in 2010 revenues in the Americas region were $20.5 million. Revenues in the EMEA region were $11.2 million, including $1.5 million from sales of Sierra products, compared to $8.5 million in the same quarter last year. APAC revenues were $4.7 million, including Sierra sales of $0.7 million, compared to $3.1 million in the same period in 2010.

Worldwide PillCam SB sales amounted to 54,200 capsules in the first quarter of 2011, compared to 50,900 capsules in the same period last year. PillCam SB sales in the Americas region were 33,400 capsules, approximately the same as in the first quarter of last year. PillCam SB sales in the EMEA region increased 18 percent to 15,000 capsules, compared to 12,700 capsules in the first quarter of 2010 and PillCam SB sales in the APAC region increased 26 percent to 5,800 capsules, compared to 4,700 capsules in the same period in 2010.

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

2011 Guidance

The company reaffirms its guidance for 2011 of revenues between $165 million and $173 million, GAAP EPS of $0.35 - $0.40, and non-GAAP EPS of $0.65 - $0.70.

Recent Developments

PillCam SB Expanded Indication
-- In March 2011, Given Imaging received clearance from the U.S. Food and
   Drug Administration (FDA) to promote the PillCam SB video capsule for
   use in monitoring lesions that may indicate Crohn's disease.

Sensor Belt Expanded Availability
-- In February 2011, the FDA cleared revised labeling regarding the use of
   the SensorBelt in patients with a higher than normal Body Mass Index
   (BMI) of up to 43.3 kg/m2.

PillCam Patent Infringement Lawsuit
-- The Regional Court (Patent Chamber) in Dusseldorf, Germany ruled that
   the MiroCam capsule endoscopy system manufactured by IntroMedic of South
   Korea infringed two patents asserted by Given Imaging. The court's
   rulings allow Given Imaging to prevent IntroMedic's German distributor,
   Medwork Medicinal Products and Services GmbH, from selling the current
   model of the MiroCam capsule and MiroView software in Germany.

International Colon Capsule Expert Meeting
-- In February, the inaugural International Colon Capsule Expert Meeting
   took place in Italy, assembling a panel of gastrointestinal experts from
   around the world. The purpose of the meeting was to discuss and develop
   guidelines for colon capsule endoscopy in accordance with the
   methodology established by the European Society of Gastrointestinal
   Endoscopy. Guidelines are expected to be published in the fourth
   quarter of 2011.

Conference Call / Webcast Information

U.S. Call / Webcast

The company will host a conference call in English at 9:00 am ET on Thursday, May 5, 2011. To participate in this teleconference, please dial 888-715-1394 fifteen minutes before the conference is scheduled to begin. Callers outside of the U.S. should dial 913-312-1513. 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 May 19, 2011, by dialing 888-203-1112. Callers outside of the U.S. should dial 719-457-0820. The replay participant code is 3018955.

Hebrew Call

A separate conference call in Hebrew will take place on May 5, 2011 at 2:00 pm Israel time, 7:00 am ET. To access this call, please dial + 972-3-918-0609ten minutes before the conference is scheduled to begin. A replay of the call will be available from May 8 until May 10, 2011 by dialing +972-3-925-5900.

About Given Imaging Ltd.

Since pioneering the field of capsule endoscopy in 2001, Given Imaging has become a world leader in GI medical devices, offering health care providers a range of innovative options for visualizing, diagnosing and monitoring the digestive system. The company offers a broad product portfolio including PillCam® video capsules for the small bowel, esophagus and colon [PillCam® COLON not approved for use in the United States.], industry-leading ManoScan™ high-resolution manometry and Bravo® wireless and Digitrapper® pH and impedance products. Given Imaging is committed to delivering breakthrough innovations to the GI community and supporting its ongoing clinical needs. Given Imaging's headquarters are located in Yoqneam, Israel, with operating subsidiaries in the United States, Germany, France, Japan, Australia, Vietnam and Hong Kong. For more information, please visit www.givenimaging.com.

Use of Non-GAAP Measures

This press release provides financial measures for net income and basic and diluted earnings per share that exclude certain items and are therefore not calculated in accordance with generally accepted accounting principles (GAAP). Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance that enhances management's and investors' ability to evaluate the Company's net income and earnings per share and to compare it with historical net income and earnings per share.

The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management uses both GAAP and non-GAAP measures when evaluating the business internally and therefore felt it is important to make these non-GAAP adjustments available to investors.

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 successfully complete any necessary or required clinical studies with our products, (3) our ability to receive regulatory clearance or approval to market our products or changes in regulatory environment, (4) our success in implementing our sales, marketing and manufacturing plans, (5) the level of adoption of our products by medical practitioners, (6) the emergence of other products that may make our products obsolete, (7) lack of an appropriate bowel preparation materials to be used with our PillCam COLON capsule, (8) protection and validity of patents and other intellectual property rights, (9) the impact of currency exchange rates, (10) the effect of competition by other companies, (11) the outcome of significant litigation, (12) our ability to obtain reimbursement for our product from government and commercial payors, (13) quarterly variations in operating results, (14) the possibility of armed conflict or civil or military unrest in Israel, (15) the impact of global economic conditions, (16) our ability to successfully integrate acquired businesses, (17) changes and reforms in applicable healthcare laws and regulations, (18) adverse events related to our products or product quality issues that could require us to recall products and impact our sales, and (19) 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, 2010. 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
                              Excluded Items
            For the Three Months Ended March 31, 2011 and 2010
                    (Unaudited, dollars in thousands)


                       Research  Selling
                        And       And     General            Tax
              Gross    Develop-  Market-   And     Other    Expense
              Profit    ment      ing      Admin  Expenses (Benefit) Total
              -------- -------- -------- -------- -------- -------  -------

Three month
 period ended
 March 31, 2011

Compensation
 expenses     $      - $    182 $    561 $  1,394 $      - $     -  $ 2,137
Sierra PPA         237        -       81        -        -    (127)     191
              -------- -------- -------- -------- -------- -------  -------
Total         $    237 $    182 $    642 $  1,394 $      0 ($  127) $ 2,328
              ======== ======== ======== ======== ======== =======  =======

Three month
 period ended
 March 31, 2010

Compensation
 expenses     $      - $     83 $    327 $  1,203 $      - $     -  $ 1,613
Sierra
 acquisition
 expenses            -        -        -      686        -       -      686
              -------- -------- -------- -------- -------- -------  -------
Total         $      0 $     83 $    327 $  1,889 $      0 $     0  $ 2,299
              ======== ======== ======== ======== ======== =======  =======







           Given Imaging Ltd. and its Consolidated Subsidiaries
            Reconciliation of GAAP results to non-GAAP results
            For the Three months ended March 31, 2011 and 2010
          Condensed, in thousands except share and per share data


                           Q1 2011                       Q1 2010
                          Specified    Non              Specified    Non
                  GAAP    Items(*)    GAAP      GAAP    Items(*)    GAAP
                --------  --------  --------  --------  --------  --------
Revenues        $ 39,969         -  $ 39,969  $ 32,097         -  $ 32,097

Cost of
 revenues         (9,267)      237    (9,030)   (7,336)        -    (7,336)
                --------  --------  --------  --------  --------  --------

Gross profit      30,702       237    30,939    24,761         -    24,761
                --------  --------  --------  --------  --------  --------
Gross profit as
 a % of
 revenues           76.8%        -      77.4%     77.1%        -      77.1%

Operating
 expenses

Research and
 development,
 net              (5,461)      182    (5,279)   (3,777)       83    (3,694)

Sales and
 marketing       (17,249)      642   (16,607)  (14,749)      327   (14,422)

General and
 administrative   (6,522)    1,394    (5,128)   (5,134)    1,889    (3,245)

Other, net           (17)        -       (17)      (63)        -       (63)
                --------  --------  --------  --------  --------  --------

Total operating
 expenses        (29,249)    2,218   (27,031)  (23,723)    2,299   (21,424)

Operating
 profit            1,453     2,455     3,908     1,038     2,299     3,337

Operating profit
 as a % of
 revenues            3.6%        -       9.8%      3.2%        -      10.4%

Financing
 income
 (expense), net      (96)        -       (96)      978         -       978

                --------  --------  --------  --------  --------  --------
Profit before
 taxes on
 income            1,357     2,455     3,812     2,016     2,299     4,315

Income tax
 expense            (592)     (127)     (719)     (129)        -      (129)

                --------  --------  --------  --------  --------  --------
Net Profit           765     2,328     3,093     1,887     2,299     4,186

Net (income)
 loss
 attributable to
 non-controlling
 interest            (88)        -       (88)      166         -       166
                --------  --------  --------  --------  --------  --------

Net profit
 attributable to
 shareholders   $    677  $  2,328  $  3,005  $  2,053  $  2,299  $  4,352
                ========  ========  ========  ========  ========  ========
Net profit
 attributable to
 shareholders
 as a % of
 revenues            1.7%        -       7.5%      6.4%        -      13.6%

Earnings per
 share

Basic Earnings
 attributable to
 shareholders
 per Ordinary
 Share          $   0.02  $   0.08  $   0.10  $   0.07  $   0.08  $   0.15
                ========  ========  ========  ========  ========  ========
Diluted
 Earnings
 attributable to
 shareholders
 per Ordinary
 Share          $   0.02  $   0.08  $   0.10  $   0.07  $   0.07  $   0.14
                ========  ========  ========  ========  ========  ========
(*)See
 specified
 items on
 Excluded Items
 table






           Given Imaging Ltd. and its Consolidated Subsidiaries
                    Interim Consolidated Balance Sheets
                      In thousands except share data
                                (Unaudited)


                                                   March 31    December 31
                                                     2011          2010
                                                 ------------  ------------
Assets

Current assets
Cash and cash equivalents                        $     28,922  $     34,619
Short-term investments                                 39,947        51,973
Accounts receivable:
  Trade (Net of provisions for doubtful debts
   of $267 and of $295 as of March 31, 2011
   and December 31, 2010, respectively)                26,616        27,862
  Other                                                 3,640         4,291
Inventories                                            21,509        19,076
Prepaid expenses                                        2,306         1,585
Deferred tax assets                                     1,664         1,638
Advances to suppliers                                     373           441
                                                 ------------  ------------

Total current assets                                  124,977       141,485

Deposits                                                1,244         1,212

Assets held for employee severance payments             6,897         6,393

Marketable Securities                                  14,999         3,873

Non-current Inventory                                   5,077         5,626

Fixed assets, at cost, less accumulated
 depreciation                                          13,498        13,709


Intangible assets, less accumulated amortization       31,298        25,813

Goodwill                                               24,089        24,089
                                                 ------------  ------------

Total Assets                                     $    222,079  $    222,200
                                                 ============  ============






           Given Imaging Ltd. and its Consolidated Subsidiaries
                    Interim Consolidated Balance Sheets
                      In thousands except share data
                                (Unaudited)


                                                  March 31    December 31
                                                    2011          2010
                                                ------------  ------------
Liabilities and equity

Current liabilities

Current installments of obligation under
 capital lease                                  $        166  $        168
Accounts payable
  Trade                                                7,899         9,125
  Other                                               22,029        26,065
Deferred income                                          852           788
                                                ------------  ------------
Total current liabilities                             30,946        36,146
                                                ------------  ------------

Long-term liabilities
Obligation under capital lease, net                      201           244
Liability in respect of employees' severance
 payments                                              7,650         7,151
Deferred tax liabilities                               5,744         5,871
                                                ------------  ------------
Total long-term liabilities                           13,595        13,266
                                                ------------  ------------
Total liabilities                                     44,541        49,412
                                                ------------  ------------

Equity
Shareholders' equity
Ordinary Shares, NIS 0.05 par value each
 (90,000,000 shares authorized; 30,027,447
 and 29,829,277 shares issued and fully
 paid as of March 31, 2011 and December 31,
 2010, respectively)                                     353           350
Additional paid-in capital                           198,882       194,899
Capital reserve                                        2,051         2,051
Accumulated other comprehensive income                    94            95
Accumulated deficit                                  (24,030)      (24,707)
                                                ------------  ------------
Shareholders' equity                                 177,350       172,688
                                                ------------  ------------
Non-controlling interest                                 188           100
                                                ------------  ------------
Total Equity                                         177,538       172,788
                                                ------------  ------------


Total liabilities and equity                    $    222,079  $    222,200
                                                ============  ============






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


                                        Three month period ended
                                               March 31         Year ended
                                        ----------------------  December 31
                                           2011        2010        2010
                                        ----------  ----------  ----------

Revenues                                $   39,969  $   32,097  $  157,809
Cost of revenues                            (9,267)     (7,336)    (37,629)
                                        ----------  ----------  ----------

Gross profit                                30,702      24,761     120,180
                                        ----------  ----------  ----------

Operating expenses
Research and development, gross             (5,773)     (4,024)    (21,695)
Government grants                              312         247       1,477
                                        ----------  ----------  ----------
Research and development, net               (5,461)     (3,777)    (20,218)

Sales and marketing                        (17,249)    (14,749)    (67,114)
General and administrative                  (6,522)     (5,134)    (25,138)
Other, net                                     (17)        (63)       (759)
                                        ----------  ----------  ----------

Total operating expenses                   (29,249)    (23,723)   (113,229)
                                        ----------  ----------  ----------

Operating income                             1,453       1,038       6,951
Financing income (expense), net                (96)        978       2,599
                                        ----------  ----------  ----------

Income before taxes on income                1,357       2,016       9,550
Income tax expense                            (592)       (129)     (1,362)
                                        ----------  ----------  ----------

Net income                                     765       1,887       8,188

Net loss (income) attributable to
 non-controlling interest                      (88)        166         290
                                        ----------  ----------  ----------

Net income attributable to shareholders
 of the company                         $      677  $    2,053  $    8,478
                                        ==========  ==========  ==========

Earnings per share

Basic Earnings attributable to
 shareholders per Ordinary Share        $     0.02  $     0.07  $     0.29
                                        ==========  ==========  ==========

Diluted Earnings attributable to
 shareholders per Ordinary Share        $     0.02  $     0.07  $     0.28
                                        ==========  ==========  ==========

Weighted average number of Ordinary
 Shares used to compute basic
 Earnings per Ordinary share            29,434,741  29,427,767  29,670,842
                                        ==========  ==========  ==========

Weighted average number of Ordinary
 Shares used to compute diluted
 Earnings per Ordinary share            30,356,969  30,646,418  30,525,654
                                        ==========  ==========  ==========






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


                                        Three month period ended
                                               March 31         Year ended
                                        ----------------------  December 31
                                           2011        2010        2010
                                        ----------  ----------  ----------

Cash flows from operating activities:
Net income                              $      765  $    1,887  $    8,188

Adjustments required to reconcile net
 income to net cash provided by
 (used in) operating activities:

Depreciation and amortization                1,998       1,498       7,662
Goodwill impairment                              -           -          20
Deferred tax assets                            (26)        206         761
Deferred tax liabilities                      (127)          -        (888)
Stock option compensation                    2,137       1,613       8,482
Loss from disposal of long-term assets          27           -         739
Other                                          (10)         87         304
Decrease in accounts receivable -
 trade                                       1,246       3,028         560
Decrease (increase) in accounts
 receivable - other                            651        (320)       (488)
Decrease (increase) in prepaid expenses       (721)       (559)        (23)
Decrease (increase) in advances to
 suppliers                                      68         157          93
Decrease (increase) in inventories          (1,884)      1,425       2,331
Increase (decrease) in accounts payable     (5,312)     (5,210)      3,389
Increase  in deferred income                    64         252         554
                                        ----------  ----------  ----------
Net cash  provided by (used in)
 operating activities                       (1,124)      4,064      31,684
                                        ----------  ----------  ----------

Cash flows from investing activities:
Purchase of fixed assets and intangible
 assets                                     (7,299)     (1,222)     (5,056)
Acquisition of Sierra, net of cash
 acquired                                        -           -     (34,709)
Payment on account of business
 combination                                     -     (35,000)          -
Deposits, net                                  (28)        (24)         (6)
Proceeds from sales of marketable
 securities and short term investments      14,044      18,208      29,352
Investments in trading and marketable
 securities                                (13,148)     (7,546)    (36,968)
                                        ----------  ----------  ----------
Net cash used in investing activities       (6,431)    (25,584)    (47,387)
                                        ----------  ----------  ----------

Cash flows from financing activities:
Principal payments on capital lease
 obligation                                    (41)        (34)       (143)
Proceeds from the issuance of Ordinary
 Shares                                      1,849       1,991       4,219
Purchase of shares from a
 non-controlling shareholder in a
 Subsidiary                                      -           -        (403)
                                        ----------  ----------  ----------
Net cash provided by financing
 activities                                  1,808       1,957       3,673
                                        ----------  ----------  ----------

Effect of exchange rate changes on cash         50          80         191
                                        ----------  ----------  ----------

Decrease in cash and cash equivalents       (5,697)    (19,483)    (11,839)
Cash and cash equivalents at beginning
 of period                                  34,619      46,458      46,458
                                        ----------  ----------  ----------

Cash and cash equivalents at end of
 period                                 $   28,922  $   26,975  $   34,619
                                        ==========  ==========  ==========

Supplementary cash flow information
Income taxes paid                       $       50  $       48  $      234
                                        ==========  ==========  ==========

Contact Information