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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6 K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
EDAP TMS S.A. Files
EDAP TMS S.A. Reports 2006 Second Quarter Results
August 8, 2006
EDAP TMS S.A.
Parc Activite La Poudrette Lamartine
4/6 Rue du Dauphine
69120 Vaulx-en-Velin - France
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [ ]
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [ ] No [X]
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EDAP TMS S.A. REPORTS 2006 SECOND QUARTER RESULTS
HIFU UTILIZATION INCREASING AS COMPANY ACCELERATES ITS GROWTH PROGRAM;
COMPANY ADDING RESOURCES TO LAUNCH RPP CENTERS MORE QUICKLY
LYON, France, Aug. 8 /PRNewswire-FirstCall/ -- EDAP TMS S.A. (Nasdaq: EDAP),
today reported results for the second quarter and first half ended June 30,
2006. Growth in the company's HIFU revenue per procedure (RPP) business
continues strongly as the company executes its strategy to roll out additional
marketing and sales programs to accelerate growth in its HIFU business. Total
consolidated revenues increased slightly in the first half with ongoing growth
in recurring RPP and services revenues per the company's transition plan offset
by lower average prices in equipment sales mix during the period.
"We again see strong improvement in the first half compared to the prior
year with a major step up in RPP treatments clearly under way," said Hugues de
Bantel, CEO of EDAP. "We are now launching the immediately demanded sales and
marketing additions needed by our current centers and those coming aboard
presently to make EDAP grow at even better RPP treatment rates than the 69% we
are reporting today."
Highlights:
* The Company's RPP business is now proven successful in major European
markets increasing 69% year over year in the first half to 517
treatments. The company continues to add treatments at recently
launched centers as well as adding centers at increasing rates. The
new marketing investments are planned to increase treatment rates
further, especially in RPP centers, and increase new center launches.
* EDAP secured additional funds to add to its marketing capability as
part of a 30-month program to expand both the number of sites offering
Ablatherm-HIFU on either an RPP or sold unit basis as well as
increasing the number of patients seeking treatment by HIFU in key
European markets.
* The company is now accelerating growth with added marketing and sales
resources being directed toward both physicians and patients. These
include increased sales staff, dedicated third-party marketing support
in major countries, support of patient advocacy groups and prostate
cancer charities, ongoing clinical activity and direct marketing to
patients seeking treatment information for prostate cancer. EDAP has
already launched these strategies in selected locations and confirmed
the resulting increased Ablatherm-HIFU activity.
* The company recently announced strong growth in key markets including
Germany where the company has launched a dedicated subsidiary due to
the size of that market and is adding its third mobile Ablatherm-HIFU
unit to address accelerating demand growth. The two mobile units
already in Germany treated 310 patients in the first half, an increase
of 103% year to year.
* The company's results in the first half reflecting the sale of four
Ablatherm-HIFU units at lower average prices than the prior year
period have been made up by RPP treatments but complicated total
revenue growth comparison. Gross margin has improved from cost
controls, mix and RPP utilization in the period demonstrating the
strength of the company's multimodal sales model and successful focus
on growth in the RPP component of the business.
Commented de Bantel: "We believe that the European market is now open for
EDAP to aggressively market the Ablatherm-HIFU device to both doctors and
patients as a mainstream therapeutic choice for the first time since its
inception. We have recorded solid growth rates in RPP treatments and centers to
date, but believe the opportunity is here today to immediately begin the
necessary increase in sales and marketing capabilities to further increase the
current market demand. We have proven both the RPP business and the response
from these enhanced marketing strategies in the past months. This allows the
company to move to a recurring business, which has successfully replaced
revenues previously dependent on unpredictable equipment sales. We believe the
steps undertaken now will enable the company to report meaningful progress."
EDAP: TRANSITION TOWARDS RPP BUSINESS CONFIRMED
For the first half of 2006, the HIFU division recorded a 9% growth in its
revenue driven by significant increases in RPP and services revenues, offsetting
decreased selling price mix in equipment related to two site conversions from
long term commitments to sales while the other two sales were priced in normal
ranges. The shift is part of a company plan minimizing dependence on large unit
sales in favor of recurring revenue streams at higher margins as the company
adds scale. The company expects the RPP business growth to continue accelerating
compared to 2005 with the addition of new marketing initiatives being launched
at present and in the coming months. RPP revenues grew strong as a percentage of
total HIFU revenues at 37%.
HIFU Gross Margin improved to 56% from 48% in the first half from the
increased margin contribution of RPP and a 59% increase in Ablatherm-HIFU
services revenues as a result of the increase in HIFU installed base. Operating
loss increased 14% in the first half due to increased activity in sales and
marketing per the company's plan to invest ahead of accelerated growth, which
will fund future marketing additions out of cash flows.
HIFU Marketing, sales and clinical expenses increased 53% from EUR 1.1
million in first half 2005 to EUR 1.8 million, in 2006, in line with the
Company's stated goals and increased marketing in the field and at major urology
conferences. These expenses include the creation of a new HIFU website as well
as a significantly larger presence at the European Association of Urology
meeting. This included a major Ablatherm-HIFU symposium by EDAP attracting
record interest in HIFU and confirming EDAP's global leadership position in
clinical data, outcomes and technology.
EDAP - HIFU Division: Euros 000's
Year Revenues Gross Margin % Operating Income (Loss)
---------- -------- -------------- -----------------------
Q2 2005 1,841 47% (192)
Q2 2006 1,961 56% (215)
YTD 2005 3,601 48% (187)
YTD 2006 3,911 56% (214)
The company continues to observe strong growth responses in markets with
reimbursement and launched an additional 21 centers counting now 117 trained
sites and more than 10,000 treatments to date. Some centers in reimbursed
markets are already growing toward a near-term utilization target of 20% of the
site's localized prostate cancer cases. The company intends to support
additional RPP launches, especially in reimbursed markets, at a more rapid pace
by increasing its ability to convert urologists to Ablatherm-HIFU users.
Additionally, the company will support these sites with dedicated marketing
initiatives to assist the centers in attracting patients. Launches in
nonreimbursed markets directed toward private pay patients continue to do well.
This is based on the attractiveness of Ablatherm-HIFU treatment to patients
desiring to avoid more invasive methods. EDAP continues to work for additional
reimbursement approvals, both public and private, in several markets including
France and the United Kingdom based on not only the attractive treatment profile
of Ablatherm-HIFU, but also its ability to offer medical cost benefits by
lowering side effects and hospital requirements while offering efficacy rates
rivaling traditional options.
"Moving forward we believe EDAP will achieve an increase in the pace at
which we grow both new centers and total patient treatments, especially in the
RPP portion of the business," said de Bantel. "We intend to increase our
marketing and education programs using the new dedicated funds with a planned
return on these investments. We are also adding the needed sales staff to
further increase growth in the end markets in Europe, which will allow EDAP to
more rapidly launch new centers and surround them with dedicated marketing
support to drive patient traffic more rapidly. We have confirmed the success of
the Ablatherm-HIFU as a medical device and as a business model in the clinic,
and can offer these providers a nearly capital free and risk free way to begin
offering this therapy. We intend to accelerate this trend to the greatest extent
possible over the next 30 months beginning immediately."
TMS: STEADY SALES
The UDS division continued steady strength and predictable revenue with 21
lithotripters sold in the first half of 2006 compared to 16 in 2005. Revenue
increased by 2% primarily due to changes in sales mix. Gross margins improved
slightly to 31% due to ongoing cost management. There is a strong backlog of 9
equipments ordered to date for the third quarter.
TMS - UDS Division : Euros 000's
Year Revenues Gross Margin % Operating Income (Loss)
---------- -------- -------------- -----------------------
Q2 2005 3,802 30% 54
Q2 2006 3,981 29% (104)
YTD 2005 7,722 30% 86
YTD 2006 7,844 31% (110)
UDS Division slightly increased its marketing and development expenses in
line with an ongoing development project causing short term operating losses but
intended to provide added future opportunities. The project and its result will
be announced at a future date. The TMS division continues to cover a substantial
portion of the EDAP operational overhead and provide significant reach in the
urology market for both lithotripsy and HIFU. The company intends the division
to return to positive operating income.
CORPORATE: CASH FLOWS IN LINE WITH STRATEGY
EDAP-TMS losses increased according to the company's stated plans to
increase spending in marketing as well as support resources to accelerate these
plans. Corporate expenses grew slightly including listing, investor and
compliance fees. During the second quarter, the company's cash used was EUR
960,000, primarily due to increases in sales and marketing expenses of EUR
390,000 and an increase in accounts payable working capital of EUR 540,000. Net
cash used in the first six months of 2006 was EUR 1.7 million reflecting
principally an increase in sales and marketing expenses of EUR 690,000, an
increase in R&D and clinical studies expenses of EUR 290,000, a decrease in G&A
of EUR 150,000 and an increase in accounts payable working capital of EUR
650,000. The company also used cash for a net amount of EUR 300,000 to finance
investment of medical equipment produced by the company, primarily to develop
the RPP activity.
The company believes increased working capital investments will return to
cash at future points to be reinvested for additional growth support as it has
demonstrated in prior periods with increases for similar activities.
OUTLOOK
Hugues de Bantel, CEO of EDAP TMS, commented: "EDAP made significant
progress in the last six months transitioning into a company ready to grow in
recurring RPP revenues. We are already showing clear signs of this growth even
with some short-term fluctuation in our units sales pricing which has somewhat
hidden the RPP growth effects during this period of increased ramp up in RPP
marketing. The existing treatment growth rates show the opportunity available
for Ablatherm-HIFU in European markets. This is a 30-months program, allowing
for the progressive ramp up time necessary for RPP to achieve success.
"We are presently rolling out programs to bring more urologists online with
Ablatherm-HIFU therapy including more key thought leaders in major European
centers. These efforts include clinicals, symposia and training workshops
designed to help doctors achieve full confidence in HIFU as a well documented
and proven solution for nonsurgical localized prostate cancer patients those
suffering from failure following radiation therapy. We are also adding education
initiatives aimed to patients seeking noninvasive therapy options with low side
effects, no radiation and high success rates. We believe that Ablatherm-HIFU can
be the leading option for patients seeking these qualities. Online, patient
advocates and the media will be important elements in helping patients not only
find out about HIFU, but arrange a consultation with a doctor familiar with the
therapy and able to advise the patient of the best options for meeting his
treatment needs in terms of both efficacy and quality of life."
Conference Call and Webcast
The company will host a conference call to discuss the results and answer
questions from investors on Wednesday, August 9, 2006, at 12:00 noon Eastern
Time, 6:00 p.m. Paris Time. Investors may join the call live by dialing (866)
200-5830 with passcode 697355# within the United States or +1 (732) 694-1588
from international locations and requesting the EDAP TMS 2006 Second Quarter
Conference Call. Investors may also listen to the live call online at
http://www.edap-tms.com .
Investors unable to join the call can access a playback of the conference
call by telephone or online. To access the replay, please dial (866) 206-0173 or
+1 (732) 694-1571 and using access code 181722# beginning four hours after the
end of the call until August 16, 2006, or visit the company's Web site at
http://www.edap-tms.com .
About EDAP TMS S.A.
EDAP TMS S.A. develops and markets Ablatherm, the most advanced and
clinically proven choice for High Intensity Focused Ultrasound (HIFU) treatment
of localized prostate cancer. HIFU treatment is shown to be a minimally invasive
and effective treatment option with a low occurrence of side effects.
Ablatherm-HIFU is generally recommended for patients with localized prostate
cancer (stages T1-T2) who are not candidates for surgery or who prefer an
alternative option, or for patients who failed radiotherapy treatment. The
company is also developing this technology for the potential treatment of
certain other types of tumors. EDAP TMS S.A. also produces and commercializes
medical equipment for treatment of urinary tract stones using Extra-corporeal
Shockwave Lithotripsy (ESWL).
For more information on the Company, contact Halliburton Investor
Relations at (972) 458-8000, the Corporate Investor Relations Dept at
+33 (0)4 78 26 40 46 or see the Company's Web sites at http://www.edap-tms.com
and http://www.hifu-planet.com .
In addition to historical information, this press release contains
forward-looking statements that involve risks and uncertainties. These include
statements regarding the Company's growth and expansion plans. Such statements
are based on management's current expectations and are subject to a number of
uncertainties and risks that could cause actual results to differ materially
from those described in these forward-looking statements. Factors that may cause
such a difference include, but are not limited to, those described in the
Company's filings with the Securities and Exchange Commission. Ablatherm- HIFU
treatment is in clinical trials but not yet FDA approved or marketed in the
United States.
EDAP TMS S.A.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Amounts in thousands of Euro's and U.S. Dollars, except per share data)
Three Months Ended: Three Months Ended:
------------------------ ------------------------
June 30, June 30, June 30, June 30,
2006 2005 2006 2005
---------- ---------- ---------- ----------
Euros Euros $US $US
Net sales
of medical equipment 2,144 2,236 2,732 2,786
Net sales of RPPs 741 474 944 590
Net sales of spare parts,
supplies and services 2,219 2,238 2,828 2,787
NET SALES 5,104 4,948 6,504 6,163
Other revenues 64 4 82 5
TOTAL REVENUES 5,168 4,952 6,586 6,168
Cost of sales (2,956) (2,946) (3,767) (3,670)
GROSS PROFIT 2,212 2,006 2,819 2,498
Research & development expenses (628) (479) (801) (597)
Selling and marketing expenses (1,482) (1,004) (1,889) (1,250)
G & A expenses (894) (1,075) (1,139) (1,339)
Total operating expenses (3,004) (2,558) (3,829) (3,186)
OPERATING PROFIT (LOSS) (792) (552) (1,010) (688)
Interest (expense) income, net 21 21 27 26
Currency exchange gains (loss), net (103) 139 (131) 174
Other income (loss), net 4 (7) 5 (9)
INCOME (LOSS) BEFORE TAXES
AND MINORITY INTEREST (870) (399) (1,109) (497)
Income tax (expense) credit 20 1 26 2
NET INCOME (LOSS) (850) (398) (1,083) (495)
Earning per share - Basic (0.11) (0.05) (0.14) (0.06)
Average number of shares used
in computation of EPS 7,837,831 7,781,731 7,837,831 7,781,731
Earning per share - Diluted (0.11) (0.05) (0.14) (0.06)
Average number of shares used
in computation of EPS 8,576,387 8,344,368 8,576,387 8,344,368
NOTE: Translated for convenience of the reader to U.S. dollars at the 2006
average three months noon buying rate of 1 Euro = 1.2745 USD, and 2005 average
three months noon buying rate of 1 Euro = 1.2455 USD.
EDAP TMS S.A.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Amounts in thousands of Euro's and U.S. Dollars, except per share data)
Six Months Ended: Six Months Ended:
------------------------ ------------------------
June 30, June 30, June 30, June 30,
2006 2005 2006 2005
---------- ---------- ---------- ----------
Euros Euros $US $US
Net sales of medical equipment 4,459 4,935 5,533 6,301
Net sales of RPPs 1,425 846 1,768 1,080
Net sales of spare parts,
supplies and services 4,404 4,243 5,466 5,417
NET SALES 10,288 10,024 12,767 12,798
Other revenues 79 54 98 68
TOTAL REVENUES 10,367 10,078 12,865 12,866
Cost of sales (5,869) (6,008) (7,283) (7,670)
GROSS PROFIT 4,498 4,070 5,582 5,196
Research & development expenses (1,223) (930) (1,518) (1,187)
Selling and marketing expenses (2,572) (1,881) (3,192) (2,402)
G & A expenses (1,979) (2,134) (2,455) (2,725)
Total operating expenses (5,774) (4,945) (7,165) (6,314)
OPERATING PROFIT (LOSS) (1,276) (875) (1,583) (1,118)
Interest (expense) income, net 35 28 43 36
Currency exchange gains (loss), net (176) 307 (219) 392
Other income (loss), net 1 2 1 3
INCOME (LOSS) BEFORE TAXES
AND MINORITY INTEREST (1,416) (538) (1,758) (687)
Income tax (expense) credit (57) --- (70) ---
NET INCOME (LOSS) (1,473) (538) (1,828) (687)
Earning per share - Basic (0.19) (0.07) (0.23) (0.09)
Average number of shares used
incomputation of EPS 7,837,831 7,781,731 7,837,831 7,781,731
Earning per share - Diluted (0.19) (0.07) (0.23) (0.09)
Average number of shares used
incomputation of EPS 8,599,346 8,344,368 8,599,346 8,344,368
NOTE: Translated for convenience of the reader to U.S. dollars at the 2006
average six months noon buying rate of 1 Euro = 1.2410 USD, and 2005 average six
months noon buying rate of 1 Euro = 1.2767 USD.
EDAP TMS S.A.
CONSOLIDATED BALANCE SHEETS HIGHLIGHTS (UNAUDITED)
(Amounts in thousands of Euro's and U.S. Dollars)
June 30, March 31, June 30, March 31,
2006 2006 2006 2006
---------- ---------- ---------- ----------
Euros Euros $US $US
Cash, cash equivalents
and short term investments 6,635 7,591 8,479 9,214
Total current assets 22,216 22,346 28,390 27,126
Total current liabilities 10,822 10,174 13,829 12,351
Shareholders' Equity 16,057 16,871 20,519 20,480
NOTE: Translated for convenience of the reader to U.S. dollars at the noon
buying rate of 1 Euro = 1.2779 USD, on June 30, 2006 and at the noon buying rate
of 1 Euro = 1.2139 USD, on March 31, 2006.
EDAP TMS S.A.
CONDENSED STATEMENTS OF OPERATIONS BY DIVISION
SIX MONTHS ENDED JUNE 30, 2006
(Amounts in thousands of Euro's )
EDAP S.A. TMS S.A. Total
HIFU UDS EDAP TMS Consolidation After
Division Division HQ Impact Consolidation
---------- ---------- ---------- ------------- -------------
Net sales of medical devices 1,286 3,793 --- (620) 4,459
Net sales of RPPs 1,425 --- --- --- 1,425
Net sales of spare parts,
supplies & services 1,136 4,036 --- (768) 4,404
Other revenues 64 15 --- --- 79
TOTAL REVENUES 3,911 7,844 --- (1,388) 10,367
GROSS PROFIT 2,191 2,407 --- (100) 4,498
Research & Development (658) (565) --- --- (1,223)
Selling and Marketing (1,418) (1,154) --- --- (2,572)
Total G&A plus depreciation (329) (798) (852) --- (1,979)
OPERATING PROFIT (LOSS) (214) (110) (852) (100) (1,276)
CONTACT: EDAP TMS S.A.
Hugues de Bantel - Philippe Chauveau
Blandine Confort
+33 4 78 26 40 46
Halliburton Investor Relations
Matt Kreps - Geralyn DeBusk
972 458 8000
SOURCE EDAP TMS S.A.
-0- 08/08/2006
/CONTACT: Hugues de Bantel or Philippe Chauveau or Blandine Confort, all
of EDAP TMS S.A., +33-4-78-26-40-46; or Matt Kreps or Geralyn DeBusk, both of
Halliburton Investor Relations, +1-972-458-8000, for EDAP TMS S.A./
/Web site: http://www.edap-tms.com
http://www.hifu-planet.com /
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date : August 8, 2006 EDAP TMS S.A.
/S/ HUGUES DE BANTEL
-------------------------------
HUGUES DE BANTEL
CHIEF EXECUTIVE OFFICER