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TranS1 Inc. Reports Operating Results (10-Q)

August 06, 2010 | About:

10qk

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TranS1 Inc. (TSON) filed Quarterly Report for the period ended 2010-06-30.

Trans1 Inc. has a market cap of $50.4 million; its shares were traded at around $2.44 with and P/S ratio of 1.7. TSON is in the portfolios of Jim Simons of Renaissance Technologies LLC.
This is the annual revenues and earnings per share of TSON over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of TSON.


Highlight of Business Operations:

Comparison of the Three Months Ended June 30, 2009 and 2010 Revenue Revenue decreased from $7.9 million in the three months ended June 30, 2009 to $7.2 million in the three months ended June 30, 2010. The $0.7 million decrease in revenue from 2009 to 2010 was related to lower than expected case volume as a result of concerns and uncertainty in the marketplace surrounding physician reimbursement for our AxiaLIF procedure. Domestically, sales of our AxiaLIF 2L products decreased from $2.3 million in the three months ended June 30, 2009 to $2.2 million in the three months ended June 30, 2010 and sales of our AxiaLIF single level products decreased from $4.4

million in the three months ended June 30, 2009 to $3.6 million in the three months ended June 30, 2010. New products accounted for revenue of $0.4 million in the three months ended June 30, 2010. In the three months ended June 30, 2010, average revenue per AxiaLIF case continued to climb, helped by a price increase effective April 1, 2010, the limited market release of our AxiaLIF 2L+ product, and penetration into existing cases by our new products. In the three months ended June 30, 2009 and 2010, we recorded 671 and 541 domestic AxiaLIF cases, respectively, including 175 AxiaLIF 2L cases in the three months ended June 30, 2009, and 148 AxiaLIF 2L cases in the three months ended June 30, 2010. Additionally, during the three months ended June 30, 2009 and 2010, we generated $211,000 and $81,000, respectively, in revenues from stand alone sales of our facet and Vectre screw systems. Revenue generated outside the United States was $0.6 million in both the three months ended June 30, 2009 and 2010. There were no initial stocking shipments to new distributors outside the United States in the three months ended June 30, 2009, compared to $51,000 in initial stocking shipments to new distributors in the three months ended June 30, 2010. In the three months ended June 30, 2009 and 2010, 93% and 92%, respectively, of our revenues were generated in the United States.

Sales and Marketing Sales and marketing expenses decreased from $8.9 million in the three months ended June 30, 2009 to $6.4 million in the three months ended June 30, 2010. The decrease in expenses from 2009 to 2010 of $2.5 million was primarily due to lower personnel-related costs of $1.1 million, including lower commissions of $0.4 million, as we reduced our U.S. sales force to focus our resources, decreased travel and entertainment expenses of $0.6 million, and decreased surgeon training expenses of $0.5 million.

Comparison of the Six Months Ended June 30, 2009 and 2010 Revenue Revenue decreased from $16.6 million in the six months ended June 30, 2009 to $14.0 million in the six months ended June 30, 2010. The $2.6 million decrease in revenue from 2009 to 2010 was related to lower than expected case volume as a result of concerns and uncertainty in the marketplace surrounding physician reimbursement for our AxiaLIF procedure. Domestically, sales of our AxiaLIF 2L products decreased from $4.6 million in the six months ended June 30, 2009 to $4.1 million in the six months ended June 30, 2010 and sales of our AxiaLIF single level products decreased from $9.5 million in the six months ended June 30, 2009 to $7.0 million in the six months ended June 30, 2010. New products accounted for revenue of $0.5 million in 2010. In the six months ended June 30, 2010, average revenue per AxiaLIF case continued to climb, helped by a price increase effective April 1, 2010, the limited market release of our AxiaLIF 2L+ product in January 2010, and penetration into existing cases by our new products. In the six months ended June 30, 2009 and 2010, we recorded 1,422 and 1,078 domestic AxiaLIF cases, respectively, including 343 AxiaLIF 2L cases in 2009 and 289 AxiaLIF 2L cases in 2010. Additionally, during the six months ended June 30, 2009 and 2010, we generated $508,000 and $207,000, respectively, in revenues from stand alone sales of our facet and Vectre screw systems. Revenue generated outside the United States increased from $1.0 million in the six months ended June 30, 2009 to $1.3 million in the six months ended June 30, 2010. In February 2009, we began to sell directly to hospitals in Germany through our own sales force, which previously had been done through a distributor. In the six months ended June 30, 2009 and 2010, there were $87,000 and $51,000, respectively, in initial stocking shipments to new distributors outside the United States. In the six months ended June 30, 2009 and 2010, 94% and 91%, respectively, of our revenues were generated in the United States.

Sales and Marketing Sales and marketing expenses decreased from $18.1 million in the six months ended June 30, 2009 to $14.1 million in the six months ended June 30, 2010. The decrease in expenses from 2009 to 2010 of $4.0 million was primarily due to lower commissions of $1.2 million, related to the lower revenue, decreased personnel-related costs of $0.7 million as we reduced our U.S. sales force to focus our resources, decreased travel and entertainment expenses of $1.0 million and decreased surgeon training costs of $0.7 million. These lower expenses were partially offset by severance costs of $0.5 million for employees affected by the sales force reduction.

Cash, cash equivalents and short-term investments decreased from $55.3 million at December 31, 2009 to $46.7 million at June 30, 2010. The decrease of $8.6 million was primarily the result of net cash used in operating activities of $8.2 million and purchases of property and equipment of $0.4 million.

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