ADZA Adeza Biomedical (MM)

Adeza (NASDAQ:ADZA) today announced financial results for the quarter ended September 30, 2006 and updated 2006 financial guidance. Adeza reported record product sales of $13.5 million for the third quarter of 2006, an increase of 18% from product sales of $11.4 million for the third quarter of 2005. This increase was due primarily to higher sales volume of FullTerm�, The Fetal Fibronectin Test. Net income for the third quarter of 2006 was $751,000, or diluted earnings per share of $0.04, which included charges of $825,000 for stock-based compensation expense related to SFAS 123R and a tax rate of 59.5%. Net income for the third quarter of 2005 was $2.2 million, or diluted earnings per share of $0.12, which included no stock-based compensation expense related to SFAS 123R and a 5.9% tax rate. Gross profit for the third quarter of 2006 was $11.5 million, or 85.4%, which included stock-based compensation expense related to SFAS 123R of $39,000. This compares with gross profit of $9.7 million, or 85.1%, for the third quarter of 2005. Sales and marketing expenses for the third quarter of 2006 were $6.6 million, including stock-based compensation expense related to SFAS 123R of $418,000, compared with $4.6 million for the same quarter in 2005. This increase reflects expansion of the company�s direct sales force and marketing programs. General and administrative expenses for the third quarter of 2006 were $1.8 million, including stock-based compensation expense related to SFAS 123R of $309,000, compared with $2.0 million in the comparable quarter of the prior year. Research and development expenses were $2.5 million for the third quarter of 2006, including stock-based compensation expense related to SFAS 123R of $59,000, compared with $1.6 million in the same quarter of the prior year. This increase was mainly due to product development efforts, including costs related to Gestiva�, Adeza�s drug candidate for the prevention of preterm birth in women with a history of preterm delivery. Product sales for the first nine months of 2006 totaled $37.3 million, an increase of 18% from $31.7 million for the first nine months of 2005. For the nine months ended September 30, 2006, Adeza reported net income of $1.3 million, or diluted earnings per share of $0.07, which included $2.7 million for stock-based compensation expense due to the adoption of SFAS 123R and a tax rate of 56.0%. This compares with net income of $5.4 million, or diluted earnings per share of $0.31, for the nine months ended September 30, 2005, which included no employee stock-based compensation expense related to SFAS 123R and a 5.5% tax rate. As of September 30, 2006, Adeza had cash and cash equivalents of $94.2 million, an increase of $4.5 million since December 31, 2005. Stockholders� equity was $102.0 million and working capital was $101.3 million as of September 30, 2006. �We see significant market opportunity for FullTerm, the Fetal Fibronectin Test and have initiatives underway to drive growth in both the �high risk� and �signs-and-symptoms� market,� said Emory V. Anderson, president and chief executive officer. �With respect to Gestiva, following the receipt of our approvable letter, we have requested a meeting with the U.S. Food and Drug Administration (FDA) to review the requirements outlined in the letter.� 2006 Financial Guidance Adeza today updated its guidance for 2006. The company expects revenue to be in the range of $51 million to $53 million. Previous 2006 revenue guidance was in the range of $54 million to $57 million. Adeza is reaffirming its financial guidance that gross margin for 2006 is expected to exceed 80%. The tax rate through September 30, 2006 of 56.0% is expected to remain above the previously announced 48% to 52% guidance range, primarily as a result of accounting for stock-based compensation expense under SFAS 123R. Conference Call Adeza�s management will host an investment-community conference call today beginning at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these results and to answer questions. Individuals interested in participating in the conference call may do so by dialing (888) 463-4383 for domestic callers, or (706) 634-5615 for international callers. A telephone replay will be available for 48 hours following the conclusion of the call by dialing (800) 642-1687 for domestic callers, or (706) 645-9291 for international callers, and entering reservation code 9490938. The live call also will be available via the Internet on the Investor Relations section of the company�s Web site at www.adeza.com. A webcast replay of the call will be available following the conclusion of the call. About Adeza Adeza designs, manufactures and markets innovative products for women's health. Adeza's initial focus is on reproductive healthcare using its proprietary technologies to predict preterm birth and assess infertility. Adeza's principal product is a patented diagnostic test, FullTerm, The Fetal Fibronectin Test, which utilizes a single-use, disposable cassette and is analyzed on Adeza's patented TLiIQ� System. This product is approved by the FDA for use in assessing the risk of preterm birth. Adeza also markets and sells the E-tegrity� Test, an infertility-related test to assess receptivity of the uterus to embryo implantation in women with unexplained infertility. In May 2006, Adeza announced the submission of its New Drug Application (NDA) to the FDA for Gestiva, a long-acting form of a naturally occurring progesterone to prevent preterm birth in women with a history of preterm delivery. On October 23, 2006 Adeza announced that it received an approvable letter from the FDA, subject to the completion of certain animal studies and other conditions. More information is available at www.adeza.com. Adeza cautions you that statements included in this press release that are not a description of historical facts are forward-looking statements, including for example, statements about forecasts of future revenue and the bases for revenue growth, and the uses of Adeza�s products and potential regulatory approvals. The inclusion of forward-looking statements should not be regarded as a representation by Adeza that any of its plans will be achieved. Actual results may differ materially from those set forth in this release due to the risks and uncertainties inherent in Adeza's business including, without limitation, risks related to fluctuations in our business and market acceptance of our products, and risks related to obtaining and maintaining government approvals of our products. Further information about these and other risks is included in Adeza�s Annual Report on Form 10-K and other periodic and current reports filed by Adeza with the Securities Exchange Commission, which are available from the SEC's Web site (www.sec.gov), and also available on the Investor Relations section of Adeza�s Web site. All forward-looking statements are qualified in their entirety by this cautionary statement and Adeza undertakes no obligation to revise or update this news release to reflect events or circumstances after the date hereof. ADEZA BIOMEDICAL CORPORATION CONDENSED STATEMENTS OF INCOME (In thousands, except per share amounts) (Unaudited) � Three Months Nine Months Ended Ended September 30, September 30, 2006� 2005� 2006� 2005� � � Product sales $ 13,471� $11,419� $ 37,293� $31,663� Cost of product sales 1,961� 1,703� 5,623� 4,559� � Gross profit 11,510� 9,716� 31,670� 27,104� � Operating costs and expenses: Sales and marketing 6,581� 4,566� 20,042� 14,078� General and administrative 1,840� 1,959� 6,302� 5,363� Research and development 2,490� 1,634� 5,763� 3,711� � Total operating costs and expenses 10,911� 8,159� 32,107� 23,152� � Income (loss) from operations 599� 1,557� (437) 3,952� Interest income 1,256� 729� 3,378� 1,802� � Income before provision for income taxes 1,855� 2,286� 2,941� 5,754� Provision for income taxes 1,104� 136� 1,647� 319� � Net income $ 751� $ 2,150� $ 1,294� $ 5,435� � � Net income per share: Basic $ 0.04� $ 0.13� $ 0.07� $ 0.32� Diluted $ 0.04� $ 0.12� $ 0.07� $ 0.31� � Shares used to compute net income per share: Basic 17,494� 16,991� 17,459� 16,803� Diluted 18,156� 17,931� 18,174� 17,798� ADEZA BIOMEDICAL CORPORATION CONDENSED BALANCE SHEETS (In thousands, except par value) � September 30, December 31, 2006� 2005� (unaudited) (1) Assets � Current assets: Cash and cash equivalents $ 94,199� $ 89,722� Accounts receivable, net 9,470� 9,182� Inventories 1,030� 849� Prepaid expenses and other current assets 410� 292� Current deferred tax asset 4,929� 4,929� Total current assets 110,038� 104,974� � Property and equipment, net 419� 348� Noncurrent deferred tax asset 193� 193� Intangible assets, net 92� 128� � Total assets $ 110,742� $ 105,643� � � Liabilities and Stockholders' Equity � Current liabilities: Accounts payable 1,971� $ 1,994� Accrued compensation 2,061� 2,216� Accrued royalties 807� 1,427� Other accrued liabilities 1,827� 1,246� Taxes payable 2,008� 1,322� Deferred revenue 82� 33� Total current liabilities 8,756� 8,238� � � Stockholders' equity: Common stock, $0.001 par value; 100,000 shares authorized; 17,504 and 17,376 shares issued and outstanding at September 30, 2006 and December 31, 2005, respectively. � 17� 17� Additional paid-in-capital 133,114� 132,432� Deferred compensation -� (2,604) Accumulated other comprehensive income 1� -� Accumulated deficit (31,146) (32,440) Total stockholders' equity 101,986� 97,405� � Total liabilities and stockholders' equity $ 110,742� $ 105,643� � � (1) - Derived from the December 31, 2005 audited financial statements included in the Annual Report on Form 10-K of Adeza Biomedical Corporation for fiscal year 2005. Adeza (NASDAQ:ADZA) today announced financial results for the quarter ended September 30, 2006 and updated 2006 financial guidance. Adeza reported record product sales of $13.5 million for the third quarter of 2006, an increase of 18% from product sales of $11.4 million for the third quarter of 2005. This increase was due primarily to higher sales volume of FullTerm(TM), The Fetal Fibronectin Test. Net income for the third quarter of 2006 was $751,000, or diluted earnings per share of $0.04, which included charges of $825,000 for stock-based compensation expense related to SFAS 123R and a tax rate of 59.5%. Net income for the third quarter of 2005 was $2.2 million, or diluted earnings per share of $0.12, which included no stock-based compensation expense related to SFAS 123R and a 5.9% tax rate. Gross profit for the third quarter of 2006 was $11.5 million, or 85.4%, which included stock-based compensation expense related to SFAS 123R of $39,000. This compares with gross profit of $9.7 million, or 85.1%, for the third quarter of 2005. Sales and marketing expenses for the third quarter of 2006 were $6.6 million, including stock-based compensation expense related to SFAS 123R of $418,000, compared with $4.6 million for the same quarter in 2005. This increase reflects expansion of the company's direct sales force and marketing programs. General and administrative expenses for the third quarter of 2006 were $1.8 million, including stock-based compensation expense related to SFAS 123R of $309,000, compared with $2.0 million in the comparable quarter of the prior year. Research and development expenses were $2.5 million for the third quarter of 2006, including stock-based compensation expense related to SFAS 123R of $59,000, compared with $1.6 million in the same quarter of the prior year. This increase was mainly due to product development efforts, including costs related to Gestiva(TM), Adeza's drug candidate for the prevention of preterm birth in women with a history of preterm delivery. Product sales for the first nine months of 2006 totaled $37.3 million, an increase of 18% from $31.7 million for the first nine months of 2005. For the nine months ended September 30, 2006, Adeza reported net income of $1.3 million, or diluted earnings per share of $0.07, which included $2.7 million for stock-based compensation expense due to the adoption of SFAS 123R and a tax rate of 56.0%. This compares with net income of $5.4 million, or diluted earnings per share of $0.31, for the nine months ended September 30, 2005, which included no employee stock-based compensation expense related to SFAS 123R and a 5.5% tax rate. As of September 30, 2006, Adeza had cash and cash equivalents of $94.2 million, an increase of $4.5 million since December 31, 2005. Stockholders' equity was $102.0 million and working capital was $101.3 million as of September 30, 2006. "We see significant market opportunity for FullTerm, the Fetal Fibronectin Test and have initiatives underway to drive growth in both the 'high risk' and 'signs-and-symptoms' market," said Emory V. Anderson, president and chief executive officer. "With respect to Gestiva, following the receipt of our approvable letter, we have requested a meeting with the U.S. Food and Drug Administration (FDA) to review the requirements outlined in the letter." 2006 Financial Guidance Adeza today updated its guidance for 2006. The company expects revenue to be in the range of $51 million to $53 million. Previous 2006 revenue guidance was in the range of $54 million to $57 million. Adeza is reaffirming its financial guidance that gross margin for 2006 is expected to exceed 80%. The tax rate through September 30, 2006 of 56.0% is expected to remain above the previously announced 48% to 52% guidance range, primarily as a result of accounting for stock-based compensation expense under SFAS 123R. Conference Call Adeza's management will host an investment-community conference call today beginning at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these results and to answer questions. Individuals interested in participating in the conference call may do so by dialing (888) 463-4383 for domestic callers, or (706) 634-5615 for international callers. A telephone replay will be available for 48 hours following the conclusion of the call by dialing (800) 642-1687 for domestic callers, or (706) 645-9291 for international callers, and entering reservation code 9490938. The live call also will be available via the Internet on the Investor Relations section of the company's Web site at www.adeza.com. A webcast replay of the call will be available following the conclusion of the call. About Adeza Adeza designs, manufactures and markets innovative products for women's health. Adeza's initial focus is on reproductive healthcare using its proprietary technologies to predict preterm birth and assess infertility. Adeza's principal product is a patented diagnostic test, FullTerm, The Fetal Fibronectin Test, which utilizes a single-use, disposable cassette and is analyzed on Adeza's patented TLiIQ(R) System. This product is approved by the FDA for use in assessing the risk of preterm birth. Adeza also markets and sells the E-tegrity(R) Test, an infertility-related test to assess receptivity of the uterus to embryo implantation in women with unexplained infertility. In May 2006, Adeza announced the submission of its New Drug Application (NDA) to the FDA for Gestiva, a long-acting form of a naturally occurring progesterone to prevent preterm birth in women with a history of preterm delivery. On October 23, 2006 Adeza announced that it received an approvable letter from the FDA, subject to the completion of certain animal studies and other conditions. More information is available at www.adeza.com. Adeza cautions you that statements included in this press release that are not a description of historical facts are forward-looking statements, including for example, statements about forecasts of future revenue and the bases for revenue growth, and the uses of Adeza's products and potential regulatory approvals. The inclusion of forward-looking statements should not be regarded as a representation by Adeza that any of its plans will be achieved. Actual results may differ materially from those set forth in this release due to the risks and uncertainties inherent in Adeza's business including, without limitation, risks related to fluctuations in our business and market acceptance of our products, and risks related to obtaining and maintaining government approvals of our products. Further information about these and other risks is included in Adeza's Annual Report on Form 10-K and other periodic and current reports filed by Adeza with the Securities Exchange Commission, which are available from the SEC's Web site (www.sec.gov), and also available on the Investor Relations section of Adeza's Web site. All forward-looking statements are qualified in their entirety by this cautionary statement and Adeza undertakes no obligation to revise or update this news release to reflect events or circumstances after the date hereof. -0- *T ADEZA BIOMEDICAL CORPORATION CONDENSED STATEMENTS OF INCOME (In thousands, except per share amounts) (Unaudited) Three Months Nine Months Ended Ended September 30, September 30, ----------------- ----------------- 2006 2005 2006 2005 -------- -------- -------- -------- Product sales $13,471 $11,419 $37,293 $31,663 Cost of product sales 1,961 1,703 5,623 4,559 -------- -------- -------- -------- Gross profit 11,510 9,716 31,670 27,104 Operating costs and expenses: Sales and marketing 6,581 4,566 20,042 14,078 General and administrative 1,840 1,959 6,302 5,363 Research and development 2,490 1,634 5,763 3,711 -------- -------- -------- -------- Total operating costs and expenses 10,911 8,159 32,107 23,152 -------- -------- -------- -------- Income (loss) from operations 599 1,557 (437) 3,952 Interest income 1,256 729 3,378 1,802 -------- -------- -------- -------- Income before provision for income taxes 1,855 2,286 2,941 5,754 Provision for income taxes 1,104 136 1,647 319 -------- -------- -------- -------- Net income $751 $2,150 $1,294 $5,435 ======== ======== ======== ======== Net income per share: Basic $0.04 $0.13 $0.07 $0.32 ======== ======== ======== ======== Diluted $0.04 $0.12 $0.07 $0.31 ======== ======== ======== ======== Shares used to compute net income per share: Basic 17,494 16,991 17,459 16,803 ======== ======== ======== ======== Diluted 18,156 17,931 18,174 17,798 ======== ======== ======== ======== *T -0- *T ADEZA BIOMEDICAL CORPORATION CONDENSED BALANCE SHEETS (In thousands, except par value) September 30, December 31, 2006 2005 ------------- ------------ (unaudited) (1) Assets Current assets: Cash and cash equivalents $94,199 $89,722 Accounts receivable, net 9,470 9,182 Inventories 1,030 849 Prepaid expenses and other current assets 410 292 Current deferred tax asset 4,929 4,929 ------------- ------------ Total current assets 110,038 104,974 Property and equipment, net 419 348 Noncurrent deferred tax asset 193 193 Intangible assets, net 92 128 ------------- ------------ Total assets $110,742 $105,643 ============= ============ Liabilities and Stockholders' Equity Current liabilities: Accounts payable 1,971 $1,994 Accrued compensation 2,061 2,216 Accrued royalties 807 1,427 Other accrued liabilities 1,827 1,246 Taxes payable 2,008 1,322 Deferred revenue 82 33 ------------- ------------ Total current liabilities 8,756 8,238 Stockholders' equity: Common stock, $0.001 par value; 100,000 shares authorized; 17,504 and 17,376 shares issued and outstanding at September 30, 2006 and December 31, 2005, respectively. 17 17 Additional paid-in-capital 133,114 132,432 Deferred compensation - (2,604) Accumulated other comprehensive income 1 - Accumulated deficit (31,146) (32,440) ------------- ------------ Total stockholders' equity 101,986 97,405 ------------- ------------ Total liabilities and stockholders' equity $110,742 $105,643 ============= ============ (1) - Derived from the December 31, 2005 audited financial statements included in the Annual Report on Form 10-K of Adeza Biomedical Corporation for fiscal year 2005. *T