Somanetics Corp. (SMTS) filed Quarterly Report for the period ended 2009-08-31.
Somanetics Corporation develops manufactures and markets the INVOS Cerebral/Somatic Oximeter System a non-invasive patient monitoring system that continuously measures changes in the blood oxygen levels in the brain and elsewhere in the body in somatic or skeletal muscle tissue in patients with or at risk for restricted blood flow. Surgeons anesthesiologists and other medical professionals can use the information provided by the INVOS System in conjunction with other available information to identify brain oxygen imbalances and take necessary corrective action potentially improving patient outcomes and reducing the costs of care. Somanetics supports its customers through a direct U.S. sales force and clinical education team. Tyco Healthcare markets INVOS System products in Europe Canada the Middle East and South Africa and Edwards Lifesciences represents INVOS System products in Japan. Somanetics Corp. has a market cap of $194.87 million; its shares were traded at around $16.2 with a P/E ratio of 24.42 and P/S ratio of 4.11.
Highlight of Business Operations:
Net Revenues. Our net revenues increased $145,147, or 1%, from $12,367,988 in the three-month period ended August 31, 2008 to $12,513,135 in the three-month period ended August 31, 2009. The increase in net revenues is primarily attributable to an increase in U.S. sales of $979,433, or 10%, from $9,399,612 in the third quarter of fiscal 2008 to $10,379,045 in the third quarter of fiscal 2009. This increase in U.S. sales was primarily due to an increase in sales of our disposable sensors of $1,017,245, or 13%, primarily as a result of a 10% increase in sensor unit sales.
The increase in U.S. sales was partially offset by a decrease in international sales of $834,286, or 28%, from $2,968,376 in the three month period ended August 31, 2008 to $2,134,090 in the three month period ended August 31, 2009. This decrease was primarily due to a $1,064,206, or 58%, decrease in sales of the INVOS System monitor, primarily to Covidien in Europe, as a result of the current economic downturn internationally that is affecting hospital budget spending and lengthening the sales cycle for our INVOS System monitor. This decrease was partially offset by a $229,920, or 20%, increase in sales of our disposable sensors, primarily to Covidien in Europe.
Research, Development and Engineering Expenses. Our research, development and engineering expenses increased $143,948, or 43%, from $332,236 in the third quarter of fiscal 2008 to $476,184 in the third quarter of fiscal 2009. The increase is primarily attributable to a $120,860 increase in salaries, primarily due to the addition of research and development personnel in fiscal 2008 and 2009, and $83,138 in development costs associated with our Contract Development Agreement with Shirley Research Corporation and the development of our Vital Sync System, partially offset by a $78,153 decrease in development cost associated with our INVOS System and disposable sensor. We expect our research, development and engineering expenses to increase in fiscal 2009 primarily as a result of development costs associated with development of our Vital Sync System, development costs associated with advances to the design and performance features of the INVOS System, including the disposable sensor, development costs associated with our Contract Development Agreement with Shirley Research Corporation and the hiring of additional research and development personnel.
Research, Development and Engineering Expenses. Our research, development and engineering expenses increased $501,352, or 56%, from $894,574 in the first three quarters of fiscal 2008 to $1,395,926 in the first three quarters of fiscal 2009. The increase is primarily attributable to a $295,674 increase in salaries, primarily due to the addition of research and development personnel in fiscal 2008 and 2009, and $203,431 in development costs and expenses associated with our Contract Development Agreement with Shirley Research Corporation and the development of our Vital Sync System, partially offset by a $36,987 decrease in development costs associated with our INVOS System and disposable sensor.
As of August 31, 2009, we did not have any outstanding or available debt financing arrangements, we had working capital of $59.7 million and our primary sources of liquidity were $20.7 million of cash and cash equivalents, $29.0 million of marketable securities and $28.0 million of long-term investments. Marketable securities and long-term investments consist of Aaa-rated United States Government agency bonds, and cash and cash equivalents are currently invested in bank savings accounts and money market accounts, pending their ultimate use.
For the first three quarters of fiscal 2009, we have recorded stock compensation expense of $1,198,528 as a result of stock options and restricted common shares granted to our officers, employees, directors and one of our consultants. For the first three quarters of fiscal 2008, we recorded stock compensation expense of $954,993. During the first nine months of fiscal 2009, we granted 68,250 stock options to an officer, employees and directors in April 2009 at an exercise price of $14.77 per share on the date of grant. In addition, we issued 9,000 restricted common shares to an officer in April 2009 with a market value of $14.77 per share on the date of grant, and we issued 8,588 restricted common shares to our employees in January 2009 with a market value of $16.31 per share on the date of grant. During the first nine months of fiscal 2008, we granted 197,500 stock options to our officers and employees in March 2008 at an exercise price of $12.61, we granted 50,000 stock options to our directors in April 2008 at an exercise price of $16.82 and we granted 5,500 stock options to employees in June 2008 at and exercise price of $18.19. In addition, we issued 70,000 restricted common shares to our officers in March 2008 with a market value of $12.61 per share on the date of grant, and we issued 5,273 restricted common shares to our employees in January 2008 with a market value of $21.81 per share on the date of grant.
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