Full Press Release Details
NeuroMetrix Reports Q2 2010 Financial Results
Product Distribution and Development Strategy Revised
Mass. (BUSINESS WIRE) August 10, 2010 NeuroMetrix, Inc. (Nasdaq:
NURO), a health care company transforming patient care through neurotechnology,
today announced its financial results for the quarter ended June 30, 2010.
revenues for the second quarter of 2010 were $3.9 million, compared with $6.8
million for the second quarter of 2009. Revenues in the quarter were comprised
of 13% medical equipment sales and 87% consumables sales in comparison with 10%
and 90%, respectively, for the second quarter of 2009. Medical equipment sales
consist of nerve testing devices (NC-stat and ADVANCE ) and related modules,
and service agreement revenues. Consumables sales include single use
nerve-specific electrodes, EMG needles, and other accessories. The January 1,
2010 change in Medicare reimbursement for nerve conduction studies using
pre-configured electrodes such as those used with NC-stat contributed to the
decline in revenue between the two quarterly periods. This decline primarily
reflected a 22% reduction in electrode average selling price and a 25% decrease
in electrodes sold. Gross margin in the second quarter of 2010 was 63.5% of total
revenues compared with 71.4% for the second quarter of 2009. Net loss for the
second quarter of 2010 was $4.5 million, or $(0.20) per share. In comparison,
net loss for the second quarter of 2009 was $1.8 million, or $(0.13) per share.
the six months ended June 30, 2010 total revenues were $7.4 million
compared with $13.6 million for the comparable period in 2009. Gross margin for
the six months was 63.6% of total revenues compared with 71.5% for the six
month period in 2009. Net loss for the six month period ended June 30,
2010 was $9.3 million or ($0.40) per share. In comparison, net loss for the
comparable period in 2009 was $3.0 million or ($0.22) per share.
Company believes that physicians are generally receiving reimbursement under
the new Category 1 CPT code (95905) from Medicare for medically necessary nerve
conduction studies performed using pre-configured electrode arrays. The Company also believes that physicians
are receiving reimbursement for CPT 95905 from a small number of commercial
insurers. It is working with reimbursement experts to expand coverage for CPT
quarter highlights included:
second quarter grew 8% on a sequential quarter basis. This was primarily
attributable to higher electrode revenue. Electrode selling prices were stable
and the number of electrodes shipped increased by 8%.
base of active accounts was 4,167 at the end of the quarter. This was a
contraction of 3.3% from 4,309 accounts at the beginning of the quarter and
represents a slight reduction in the rate of account erosion as compared to the
preceding quarter. The Company placed 77 new systems in the quarter, net of
returns, slightly up from 75, net of returns, in the first quarter of 2010.
performed using NC-stat and ADVANCE devices were 34,638 in the second quarter.
This represented a decrease of 5.2% from 36,529 studies in the preceding
we made some progress in the second quarter, the pace was not satisfactory,
stated Shai N. Gozani, MD, PhD, President and Chief Executive
Officer. Consequently, we have refined
our strategy in several key areas. In our nerve testing business, we recognize
that our products need broader market exposure for growth. Today we sell to new
customers in the U.S. physician office market through a direct sales force. We
plan to supplement that direct sales force with about twenty five independent
sales representatives. Our direct sales force will be a smaller, core team
assigned to key market areas with the independent representatives covering the
remaining geography. In total, we expect to have about 40 sales
territories. For the orthopedic and
specialty markets, today also covered by our sales force, we intend to use
regional distributors to expand coverage. The transition to a hybrid
direct/distribution model is underway and will continue in the third and fourth
quarters. After sale support for all new
and existing customers will be provided by our team of field-based clinical
educators. We believe that this team is positively impacting customer testing
by providing high quality technical and clinical support, and therefore we plan
to slightly increase its size.
recently narrowed the focus of our product development efforts. We are
implementing several modifications to ADVANCE which are designed to enhance the
ability of physicians to customize reporting of test results which we believe
will make the device attractive for use in the physician office market. Once
the modifications are complete, it is our intention to introduce ADVANCE into
that market. ASCEND, our development
stage product for therapeutic nerve injections and regional anesthesia, will be
de-emphasized in the near term which will postpone completion of its
development and the regulatory process leading to product launch.
see a significant opportunity to expand utilization of our nerve testing
technology in individuals with diabetes. Currently about twenty five percent of
the tests performed with our NC-stat and ADVANCE devices are targeted at
diagnosis of large fiber diabetic peripheral neuropathy, or DPN, in patients
exhibiting clinical symptoms of that condition. Nerve conduction studies, or
NCS, are the gold standard for diagnosis of DPN; however, cost and limited
access have prevented utilization of NCS for wide spread screening which is
essential for early detection of DPN and prevention of its complications, such
as foot ulcers. We believe that a rapid, low cost, point-of-care test for DPN
represents an attractive U.S. and international market opportunity. We have
made development of a low cost version of NC-stat and a low cost disposable
electrode for this application, an R&D priority. Assuming that we reach our
project milestones, we believe we have the capability to launch this product in
the U.S. and several international markets in the second half of 2011.
order to resource these product and sales initiatives, and to conserve
operating funds, NeuroMetrix recently
implemented a reduction in force that resulted in the elimination of
approximately twenty five positions representing twenty five percent of its
workforce, as well as other cost savings initiatives. It is estimated that this
should reduce annual spending by $2.5 million. During the third quarter of 2010
the Company expects to record a charge of $0.3 million, primarily related to
to Host Live Conference Call and Webcast
management will host a conference call today, August 10, 2010 at 8:00 a.m.,
Eastern time, to discuss the Company s financial results, business and
financial developments, as well as other forward-looking information about the
Company s business. To access the call, dial 866-314-5232 (domestic), or 617-213-8052
(international). The confirmation code is 96808464. The call will also be
webcast and will be accessible from the Company s website at
http://www.neurometrix.com under the Investor Relations tab. A replay of the
conference call will be available for three months starting two hours after the