“As anticipated, the fourth quarter of 2008 presented several challenges which we intend to manage and rise above. We believe there is a building body of evidence that affirms the power of our strategic plan and validates our investment thesis. We remain focused and committed to the execution of our strategic priorities which include the expansion of our leadership position through product innovation, receiving atrial fibrillation approvals from the Food and Drug Administration and achieving sustainable profitability,” said David J. Drachman, president and chief executive officer. “In support of our steadfast commitment to achieve profitability, we have implemented several workforce actions which resulted in a savings to our current cost structure of approximately $7 million.”
2008 Financial Results
Revenues from domestic open-heart products were consistent with 2007 at $27.1 million. Revenues from domestic minimally invasive products were $19.8 million, representing a 37.6% increase over 2007 revenues of $14.4 million. International revenues grew to $8.3 million, a 26.5% increase over 2007 revenues of $6.6 million.
Gross profit for 2008 was $42.0 million and gross margin was 76.1%, compared to gross profit of $38.2 million and gross margin of 79.0% for 2007. The decrease in gross margin was primarily due to the introduction of new, lower gross margin products, including capital equipment, and an increased mix of international revenues. Operating expenses were $53.0 million for 2008 as compared with $50.7 million for 2007. The increase in operating expenses was primarily due to an increase in sales and marketing expenses, an increase in share-based compensation and employee separation costs, partially offset by reduced general administrative costs. Excluding fourth quarter 2008 employee separation related costs of $1.0 million, operating expenses were $52.0 million, a 2.6% increase over 2007.
Cash and restricted cash less total debt was $11.4 million at December 31, 2008, a decrease of $0.8 million as compared to September 30, 2008.
Fourth quarter 2008 financial results
Revenues for the fourth quarter of 2008 were $12.1 million, an 8.3% decrease as compared with fourth quarter 2007 revenues of $13.2 million. Revenues from domestic open-heart products were $6.0 million and revenues from domestic minimally invasive products were $4.0 million. International revenues were $2.0 million for the fourth quarter of 2008.
Gross profit for the fourth quarter of 2008 was $9.0 million and gross margin was 74.3%, compared to gross profit of $10.5 million and a gross margin of 80.1% for the fourth quarter of 2007. The decline in gross margin was primarily due to lower product margins associated with new products and an increased mix of international sales and non-recurring valuation adjustments. Operating expenses were $12.4 million for the fourth quarter of 2008, an increase of $0.3 million as compared with fourth quarter 2007 operating expenses of $12.2 million. Fourth quarter operating expenses included approximately $1.0 million in employee separation related expenses.
The net loss for the fourth quarter of 2008 was $3.2 million as compared to $1.6 million for the fourth quarter of 2007. Net loss per share was $0.22 as compared to the fourth quarter 2007 net loss per share of $0.11.
