Urologix Inc. (NSDQ:ULGX) reported “disappointing” second-quarter results on Tuesday, posting a net loss of $712,000.
The Plymouth, Mass.-based company develops devices for treating enlarged prostate, or benign prostatic hyperplasia. Its Targis System uses microwave energy to heat and destroy enlarged prostate tissue as an alternative to pharmaceutical treatment.
“The second quarter’s results are disappointing and inconsistent with the efforts towards sustained, sequential revenue growth,” CEO Stryker Warren Jr. said during a conference call scheduled for the earnings. He cited the economy, confusion over reimbursement rates, and turnover in its sales force as factors.
The company reported $3.3 million in revenue during the three months ending Dec. 31, a 1 percent decrease from the previous quarter and 18 percent lower than the $4.1 million logged in same period for the previous year. CFO Brian Smrdel said the decrease from last quarter was due to declining sales, but that the drop off compared to 2009’s Q2 can be attributed in part to last year’s temporary withdraw of a competitors product from the market.
The company’s $712,000 loss meant a loss of 5 cents per diluted share during Q2 2010. That compares with losses of $273,000, or 2 cents per diluted share for 2009.
Based on his conversations with urologists, Warren believes that the economy has caused people to cut back on elective procedures. Changes and uncertainty to reimbursement rates have also left some physicians unsure about where their income stands. Warren said there’s still outreach work to be done to make sure urologists understand new payment terms.
Urologix’s financial performance “continue[s] to be affected from transition within the company’s sales force,” Warren said durring the call. The company implemented a new strategy for recruiting sales managers in the fall. A new group of sales managers completed training in November and only started to gain traction in December, he said.
“Senior management is neither pleased nor satisfied with the financial results. We recognize we must demonstrate revenue growth,” Warren said durring the call.
“While the second quarter’s revenue did not satisfy our objective, Urologix’s potential opportunity is significant enough that successful execution in developing the market should generate revenue growth, positive cash flow and meaningful shareholder value,” he said in prepared remarks included on the company’s press release announcing the earnings.