Theragenics Corp. (TGX, Financial) filed Quarterly Report for the period ended 2011-09-30.
Theragenics Corp. has a market cap of $55.5 million; its shares were traded at around $1.63 with a P/E ratio of 13.5 and P/S ratio of 0.7.
Core Oncology (āCoreā) became an additional non-exclusive distributor of TheraSeedĀ® in January 2010. In February 2011, we terminated our agreement with Core due to Core s failure to satisfy its financial obligation to us in accordance with the contractual terms of the agreement. Core had been attempting to become current with amounts due to us. However, litigation filed against Core by a third party in late January 2011 created what we viewed as an unacceptable level of uncertainty surrounding Core s ability to satisfy their financial obligations to us for both current and ongoing sales. Subsequent to termination of the agreement, we have continued to supply TheraSeedĀ® to Core on a prepaid basis as they attempt to obtain refinancing. Sales to Core in our brachytherapy segment totaled approximately 11% and 12% of total brachytherapy seed segment revenue for the three and nine months ended September 30, 2011, respectively, and 14% and 13% for the three and nine months ended September 30, 2010, respectively. In the 2011 periods, certain customers who previously purchased TheraSeed through Core began purchasing either from us on a direct basis or through one of our other TheraSeed distributors.
License fees in our brachytherapy segment increased $156,000, or 41%, and $527,000, or 50%, for the three and nine months ended September 30, 2011, respectively, over the comparable 2010 periods. License fees include fees from the licensing of our TheraSphereĀ® product, a medical device used for the treatment of liver cancer. Licensing fees also include fees related to the licensing of certain intellectual property related to an expandable brachytherapy delivery system that we developed. This agreement, which was executed in May 2008, provides for a minimal non-refundable initial license fee and non-refundable continuing royalties based upon sales subject to certain minimums. Costs and expenses associated with our license agreements are not material.
Operating income in our surgical products segment increased in both the three and nine months ended September 30, 2011 from the comparable 2010 periods. Our gross profit margins on sales were 37% for both the three months ended September 30, 2011 and 2010, respectively. For the nine month periods, gross profit margins on sales were 36% in 2011 and 37% in 2010. Gross margins continue to be affected by changes in product and customer mix. In addition, our gross margins in the third quarter of 2011 were impacted by the reduction of the higher than normal backlog that existed at the end of the second quarter. We utilized temporary workers and incurred overtime to reduce that backlog, which had a negative impact on our margins. Our gross margins in the 2011 year-to-date period were also affected by the closing of our Dallas, Texas plant for several days in the first quarter due to severe winter storms. We had to utilize more temporary workers and incur more overtime than we ordinarily would in order to maintain production.
Operating income in our brachytherapy business increased in both the third quarter and nine months ended September 30, 2011 as compared to the 2010 periods. Manufacturing related expenses in our brachytherapy business tend to be fixed in nature. Accordingly, even modest changes in revenue can have a significant impact on operating income. Gross margins and operating income in our brachytherapy seed business are expected to continue to be highly dependent on sales levels due to this high fixed cost component. The 2010 periods included bad debt expense of $250,000 and $750,000 for the three and nine month ended September 30, 2010, respectively, related to amounts due from Core Oncology for which we believe collectability is doubtful. In the 2011 periods, bad debt expense related to Core Oncology totaled $215,000 in the first nine months of the year with no such bad debt expense incurred in the third quarter.
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Theragenics Corp. has a market cap of $55.5 million; its shares were traded at around $1.63 with a P/E ratio of 13.5 and P/S ratio of 0.7.
Highlight of Business Operations:
Sales to Bard under the Bard Agreement represented approximately 26% and 28% of total brachytherapy seed segment revenue for the three and nine months ended September 30, 2011, respectively, and 30% and 34% of total brachytherapy seed segment revenue for the three and nine months ended September 30, 2010, respectively. Our surgical products segment also sells to Bard. Total consolidated sales to Bard, including sales in our brachytherapy seed segment and our surgical products segment, represented less than 10% of consolidated revenue for both the three and nine months ended September 30, 2011 and 11% and 12% for the three and nine months ended September 30, 2010, respectively.Core Oncology (āCoreā) became an additional non-exclusive distributor of TheraSeedĀ® in January 2010. In February 2011, we terminated our agreement with Core due to Core s failure to satisfy its financial obligation to us in accordance with the contractual terms of the agreement. Core had been attempting to become current with amounts due to us. However, litigation filed against Core by a third party in late January 2011 created what we viewed as an unacceptable level of uncertainty surrounding Core s ability to satisfy their financial obligations to us for both current and ongoing sales. Subsequent to termination of the agreement, we have continued to supply TheraSeedĀ® to Core on a prepaid basis as they attempt to obtain refinancing. Sales to Core in our brachytherapy segment totaled approximately 11% and 12% of total brachytherapy seed segment revenue for the three and nine months ended September 30, 2011, respectively, and 14% and 13% for the three and nine months ended September 30, 2010, respectively. In the 2011 periods, certain customers who previously purchased TheraSeed through Core began purchasing either from us on a direct basis or through one of our other TheraSeed distributors.
License fees in our brachytherapy segment increased $156,000, or 41%, and $527,000, or 50%, for the three and nine months ended September 30, 2011, respectively, over the comparable 2010 periods. License fees include fees from the licensing of our TheraSphereĀ® product, a medical device used for the treatment of liver cancer. Licensing fees also include fees related to the licensing of certain intellectual property related to an expandable brachytherapy delivery system that we developed. This agreement, which was executed in May 2008, provides for a minimal non-refundable initial license fee and non-refundable continuing royalties based upon sales subject to certain minimums. Costs and expenses associated with our license agreements are not material.
Operating income in our surgical products segment increased in both the three and nine months ended September 30, 2011 from the comparable 2010 periods. Our gross profit margins on sales were 37% for both the three months ended September 30, 2011 and 2010, respectively. For the nine month periods, gross profit margins on sales were 36% in 2011 and 37% in 2010. Gross margins continue to be affected by changes in product and customer mix. In addition, our gross margins in the third quarter of 2011 were impacted by the reduction of the higher than normal backlog that existed at the end of the second quarter. We utilized temporary workers and incurred overtime to reduce that backlog, which had a negative impact on our margins. Our gross margins in the 2011 year-to-date period were also affected by the closing of our Dallas, Texas plant for several days in the first quarter due to severe winter storms. We had to utilize more temporary workers and incur more overtime than we ordinarily would in order to maintain production.
Operating income in our brachytherapy business increased in both the third quarter and nine months ended September 30, 2011 as compared to the 2010 periods. Manufacturing related expenses in our brachytherapy business tend to be fixed in nature. Accordingly, even modest changes in revenue can have a significant impact on operating income. Gross margins and operating income in our brachytherapy seed business are expected to continue to be highly dependent on sales levels due to this high fixed cost component. The 2010 periods included bad debt expense of $250,000 and $750,000 for the three and nine month ended September 30, 2010, respectively, related to amounts due from Core Oncology for which we believe collectability is doubtful. In the 2011 periods, bad debt expense related to Core Oncology totaled $215,000 in the first nine months of the year with no such bad debt expense incurred in the third quarter.
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