Highlights (versus same period last year)
§ Solid financial performance:
- 43.5% increase in revenue to $31.3 million ($21.8 million)
- 39.0% increase in gross profit to $20.7 million ($14.9 million)
- 150.5% increase in operating profit before share based payments to $2.6 million ($1.0 million)
§ Excellent operational progress:
- 39.7% increase in installed P200 base to 2,293 devices (1,641)
- 41.1% increase in optomap® Retinal Exams to 1.6 million (1.1 million)
- 7.5 million optomap® Retinal Exams performed to date in all markets
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§ Broadened product offering:
- European CE Marking for P200MA (December 2005)
- US FDA §510(k) clearance to market for P200MA (March 2006)
- P200MA now being installed in a select number of trial sites in the United States and Germany
- P200MA produces angiographic retinal image – optomap® fa Medical Procedure
- Trials to confirm clinical efficacy of optomap® fa Medical Procedure underway
Enquiries
John McNeil, Director of Communications +44 (0)1383 843 337 / +44 (0)7870 240325
Note to Editors
Optos plc is incorporated in Scotland under the Companies Act 1985 with registered number SC139953. Founded in 1992 Optos plc is a leading medical technology company for the design, development, manufacturing and marketing of devices able to image the retina, the light-sensitive area at the back of the eye. Optos' platform technology is the Panoramic200 Scanning Laser Ophthalmoscope device - known as the P200. In a quarter of a second the P200 device produces a high resolution image of up to 200 degrees or approximately 82 percent of the retina in a single capture. The image - branded the optomap® Retinal Exam - provides eye care practitioners with clinically useful information that facilitates the early detection of disorders and diseases evidenced in the retina. Optos’ technology provides an unequalled combination of wide-field retinal imaging, speed and convenience for both practitioner and patient. Optos plc is headquartered in Dunfermline, Scotland and currently has approximately 220 employees serving more than 2,250 customers in four country markets - USA, Canada, UK and Germany as at 31 March 2006. Optos plc was admitted to trading on the Main Market of the London Stock Exchange on 15 February 2006 and its shares trade under the symbol OPTS.
Operating and Financial Review
Overview
Optos’ strategy is to integrate the optomap® Retinal Exam into every comprehensive eye examination. An estimated 160 million examinations are conducted annually in the Company’s existing markets, with a recurring value of approximately $2 billion. Optos is focused on four strategic goals: deepening penetration in its existing markets; entering into new geographic markets; broadening its retinal imaging product portfolio; and, maintaining high levels of customer satisfaction. Continued progress was made against each of these objectives in the first half of the year.
Operating Performance
Deepened penetration is a direct result of the growth in the installed base of P200 devices and increased demand for the optomap® Retinal Exam. At the end of the period 2,293 P200 devices had been installed in the Company’s existing markets, representing a 39.7% increase from an installed base of 1,641 at the end of the same period last year. Segmented by country, installs in the US were up 40.1% to 2,068 from 1,476; in Canada up 46.0% to 127 from 87; in the UK up 5.9% to 72 from 68 and in Germany up 160.0% to 26 from 10 devices at the same time last year. Customer renewals continued to be strong during the period, providing clear evidence of the commercial benefits that the P200 device and optomap® Retinal Exam delivers.
Strong growth in the installed base of P200 devices has driven the increase in the number of optomap® Retinal Exams being performed. In the first six months the number of optomap® Retinal Exams increased by 41.1% over the same period last year to 1.6 million. This continued rapid growth brings the total cumulative number of optomap® Retinal Exams conducted in the Company’s existing markets to approximately 7.5 million, which underscores the value that the Company is delivering to eye-care practitioners in terms of improving the standard of patient care.
Throughout North America there is significant upside potential in targeting optical and eye-care chains, and in March 2006 Optos installed its P200 device in each of the 18 eye-care practices throughout the state of Connecticut owned by OptiCare Inc. Under the terms of the initial three-year, pay-per-patient agreement Optos’ P200 device was installed in each practice and Optos receives revenue from the sale of each optomap® Retinal Exam that is performed, subject to a minimum monthly payment over the life of the agreement. Optos expects to ramp up its sales and marketing efforts at this targeted audience group in the second half of the year.
Optos continued to broaden its product portfolio and introduced optomap plus Medical Retinal Exam to its customer base, which offers the ability to record and track previously identified pathology. The Company also received European CE marking in December 2005 and US FDA 510(k) clearance to market in March 2006 for its new P200MA device. The P200MA is aimed at the secondary, as opposed to the primary, care market and has been designed to produce an angiographic retinal image called optomap® fa Medical Procedure. This new retinal image examination will offer eye-care practitioners advanced diagnostic, monitoring and treatment capabilities for particular eye disorders, including diabetic retinopathy and age-related macular degeneration. The P200MA is currently being introduced in a select number of specialist eye care centres in the United States and in Germany. These include the Bascom Palmer Eye Institute in Miami, The Jules Stein Eye Institute at UCLA, The Retina Associates in Los Angeles and at LMU, a prominent teaching hospital in Munich, Germany.
The Company recently consolidated its European manufacturing, distribution and service functions by opening a new centre in Dunfermline, Scotland. Current and anticipated growth in Europe requires Optos to hold sufficient stock of completed devices and spares to meet and service its geographic expansion plans. Co-locating this with the manufacturing capability is providing faster and improved customer service and permits enhanced sharing of information about field performance with the manufacturing team. The new facility also provides the capacity to build the new P200MA device and any subsequent devices based on this design in-house, strengthening the Company’s efforts on continuous innovation and improvement, assisting in driving down costs and providing superior modular performance.
Finally, in January 2006 Optos was named a ‘Technology Pioneer 2006’ by the World Economic Forum, one of only 36 companies worldwide. The companies selected were recognised for the cutting-edge work being undertaken and because of the potential long-term impact on business and society.
Financial Performance
The interim results have been prepared under International Financial Reporting Standards (“IFRS”).
Optos’ strong operational performance has been clearly reflected in the Company’s financial results. Revenue during the period under review increased by 43.5% to $31.3 million reflecting deepened market penetration and high rates of customer renewals. This strong performance resulted in a 39.0% year on year rise in gross profits to $20.7 million. Operating profit before share based payments for the period increased by 150.5% to $2.6 million. Profit improvement was achieved in conjunction with continued investment in marketing, field sales capabilities and support services in order to deliver on the Company’s stated growth strategy. Operating profit after share based payments was $724,000 compared to $827,000 during the same period last year.
In the first half of the year net finance costs amounted to $3.3 million, an increase from $2.7 million in the same period last year. The increase in finance costs reflects the growth in the installed base of P200 devices and imputed interest due to IAS 32. As a result of the share based payments and finance costs Optos recorded a net loss of $2.6 million versus a net loss of $1.9 million in the same period last year. The net loss per share amounted to 5.11 cents versus 4.17 cents in the first half of the previous fiscal year.
Optos’ balance sheet was strengthened through $48.7 million in net IPO cash proceeds. At 31 March 2006 the Company had a cash balance of $39.8 million compared to debt of $2.4 million at the close of the same prior year period. These resources provide a solid platform for future commercial growth.
Board
Subsequent to the period end, on 05 May 2006, Optos announced the appointment of David R. Guyer as a Non-Executive Director. Dr Guyer is a consultant to management and the Board of OSI Pharmaceuticals, where he provides specialist input in ophthalmology and retinal disease. Until recently he was Executive Vice President of OSI Pharmaceuticals and Chief Executive Officer of Eyetech, the biopharmaceutical business unit of OSI that specialised in the development and commercialisation of novel therapeutics to treat diseases of the eye, which he co-founded prior to its acquisition by OSI. Dr Guyer brings a wealth of medical, scientific and geographical business expertise to the Company as Optos moves to extend its retinal image products into the medical arena and expand its presence in existing and into new markets.
Outlook
Looking ahead, growth will be driven by sales and marketing efforts in all of Optos’ markets with the aim of ensuring eye-care practitioners integrate the optomap® Retinal Exam into every comprehensive eye examination. Optos expects to benefit from expanding the number of markets in which it operates. During the period Optos continued to invest in preparation for expansion into Spain and France and with its regulatory work in its assessment of the Japanese market.
Optos plans to introduce an upgraded Version 2.3 Image Capture and Review software package that is designed to drive increased volumes of the optomap® Retinal Exam and is expected to be introduced by the close of the current calendar year. Trials are underway to confirm the clinical efficacy of the optomap® fa Medical Procedure. Results of the trials are expected by the close of the current fiscal year.
Optos believes that it is well-positioned to capture additional market share and is confident as it executes on its plan to drive continued commercial growth.
Stephane Sallmard, Chief Executive Officer