Conceptus Inc. (CPTS, Financial) filed Quarterly Report for the period ended 2010-06-30.
Conceptus Inc. has a market cap of $422 million; its shares were traded at around $13.6 with a P/E ratio of 38.8 and P/S ratio of 3.1. CPTS is in the portfolios of PRIMECAP Management, Jim Simons of Renaissance Technologies LLC.
Net sales were $36.8 million for the three months ended June 30, 2010 as compared to $33.0 million for the three months ended June 30, 2009, representing an increase of approximately $3.8 million or 11%. Net sales were $70.2 million for the six months ended June 30, 2010 as compared to $60.2 million for the six months ended June 30, 2009, representing an increase of approximately $10.0 million or 17%. The increases in both periods are the result of continued commercialization and marketing of the Essure system worldwide and reflect the increasing numbers of physicians entering and completing training in the use of the procedure. The increases also reflect continuation of our programs aimed at raising consumer and physician awareness of the Essure procedure.
Cost of goods sold for the three months ended June 30, 2010 was $7.3 million as compared to $6.7 million for the three months ended June 30, 2009, which represents an increase of $0.6 million, or 9%. Cost of goods sold for the six months ended June 30, 2010 was $13.7 million as compared to $12.4 million for the six months ended June 30, 2009, which represents an increase of $1.3 million, or 10%. Gross margin for the three months ended June 30, 2010 was 80%, which is consistent with the gross margin of 80% for the three months ended June 30, 2009. For the six months ended June 30, 2010, gross margin was 81%, which represents an improvement from a gross margin of 79% for the six months ended June 30, 2009. The six-month year-over-year increase in gross margin is related to lower manufacturing costs associated with higher unit volume and a domestic price increase implemented during the first quarter of 2010. Our gross profit margin will vary as our geographic mix changes. Increases in sales of our devices through distributors in international markets will tend to reduce our overall gross profit margin.
Research and development expenses were $3.6 million and $3.4 million for the six months ended June 30, 2010 and 2009, respectively, which represents an increase of $0.2 million, or 4%. As a percentage of net sales, research and development expenses for the six months ended June 30, 2010 and 2009 represented 5% and 6%, respectively. The increase was primarily the result of (i) increased payroll, stock compensation and recruiting expenses of approximately $0.2 million, (ii) increased consulting expenses of approximately $0.2 million for the next generation of Essure device, and (iii) an increased approximately $0.1 million due to expensed materials, offset by lower expense related to clinical trials of approximately $0.3 million.
The increase was the result of (i) payroll, stock compensation and recruiting related expenses of approximately $2.0 million, primarily due to the expansion of the U.S. field sales force, (ii) an increase of approximately $2.0 million in legal fees due to the litigation associated with our patents, (iii) an increase of approximately $1.6 million in advertising expenditures primarily for our consumer-awareness campaign, (iv) an increase of approximately $0.4 million in travel related expenses, and (v) an increase of approximately $0.4 million in insurance, rent and business taxes. We expect selling, general and administrative expenses to continue to increase in the third quarter of 2010 as we expect to hire additional sales professionals.
Total interest income and expenses and other income and expenses, net for the three months ended June 30, 2010 was a net expense of $1.6 million as compared to a net expense of $1.5 million for the three months ended June 30, 2009, which represents an increase of $0.1 million or 5%. Total interest income and expenses and other expenses, net for the six months ended June 30, 2010 was a net expense of $3.0 million as compared to a net expense of $3.1 million for the six months ended June 30, 2009, which represents a decrease of $0.1 million or 2% primarily due to lower yields on invested cash.
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Conceptus Inc. has a market cap of $422 million; its shares were traded at around $13.6 with a P/E ratio of 38.8 and P/S ratio of 3.1. CPTS is in the portfolios of PRIMECAP Management, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
Effective January 1, 2010, the Centers for Medicare and Medicaid Service (CMS), the Medicare Physician Fee Schedule national average payment for hysteroscopic sterilization (CPT code) is $423 when performed in a hospital (facility) and $1,822 (non-facility) when performed in a physicians office. In addition, in the CMS Final Rule for the 2010 Outpatient Prospective Payment System, or OPPS, which assigns hospital outpatient reimbursement amounts, CPT 58565 maps to APC 202 which is assigned a Medicare National Average of $3,033, which under Medicare includes the cost of the implant. In 2010, the Medicare national average payment for hysteroscopic sterilization in the Ambulatory Surgery Center (ASC) is $1,672, which includes the cost of the implant. We believe these values are favorable for the Essure procedure and will help establish increased utilization of the device amongst doctors.Net sales were $36.8 million for the three months ended June 30, 2010 as compared to $33.0 million for the three months ended June 30, 2009, representing an increase of approximately $3.8 million or 11%. Net sales were $70.2 million for the six months ended June 30, 2010 as compared to $60.2 million for the six months ended June 30, 2009, representing an increase of approximately $10.0 million or 17%. The increases in both periods are the result of continued commercialization and marketing of the Essure system worldwide and reflect the increasing numbers of physicians entering and completing training in the use of the procedure. The increases also reflect continuation of our programs aimed at raising consumer and physician awareness of the Essure procedure.
Cost of goods sold for the three months ended June 30, 2010 was $7.3 million as compared to $6.7 million for the three months ended June 30, 2009, which represents an increase of $0.6 million, or 9%. Cost of goods sold for the six months ended June 30, 2010 was $13.7 million as compared to $12.4 million for the six months ended June 30, 2009, which represents an increase of $1.3 million, or 10%. Gross margin for the three months ended June 30, 2010 was 80%, which is consistent with the gross margin of 80% for the three months ended June 30, 2009. For the six months ended June 30, 2010, gross margin was 81%, which represents an improvement from a gross margin of 79% for the six months ended June 30, 2009. The six-month year-over-year increase in gross margin is related to lower manufacturing costs associated with higher unit volume and a domestic price increase implemented during the first quarter of 2010. Our gross profit margin will vary as our geographic mix changes. Increases in sales of our devices through distributors in international markets will tend to reduce our overall gross profit margin.
Research and development expenses were $3.6 million and $3.4 million for the six months ended June 30, 2010 and 2009, respectively, which represents an increase of $0.2 million, or 4%. As a percentage of net sales, research and development expenses for the six months ended June 30, 2010 and 2009 represented 5% and 6%, respectively. The increase was primarily the result of (i) increased payroll, stock compensation and recruiting expenses of approximately $0.2 million, (ii) increased consulting expenses of approximately $0.2 million for the next generation of Essure device, and (iii) an increased approximately $0.1 million due to expensed materials, offset by lower expense related to clinical trials of approximately $0.3 million.
The increase was the result of (i) payroll, stock compensation and recruiting related expenses of approximately $2.0 million, primarily due to the expansion of the U.S. field sales force, (ii) an increase of approximately $2.0 million in legal fees due to the litigation associated with our patents, (iii) an increase of approximately $1.6 million in advertising expenditures primarily for our consumer-awareness campaign, (iv) an increase of approximately $0.4 million in travel related expenses, and (v) an increase of approximately $0.4 million in insurance, rent and business taxes. We expect selling, general and administrative expenses to continue to increase in the third quarter of 2010 as we expect to hire additional sales professionals.
Total interest income and expenses and other income and expenses, net for the three months ended June 30, 2010 was a net expense of $1.6 million as compared to a net expense of $1.5 million for the three months ended June 30, 2009, which represents an increase of $0.1 million or 5%. Total interest income and expenses and other expenses, net for the six months ended June 30, 2010 was a net expense of $3.0 million as compared to a net expense of $3.1 million for the six months ended June 30, 2009, which represents a decrease of $0.1 million or 2% primarily due to lower yields on invested cash.
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