Urologix (NASDDAQ:ULGX) reported “disappointing” second-quarter results on Tuesday, posting a net loss of $712,000 for the three months ending Dec. 31.
The Plymouth-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 the company’s conference call. He cited the economy, confusion over reimbursement rates, and turnover in its sales force as factors.
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The company reported $3.3 million in revenue during the quarter, down 1 percent from the previous quarter and 18 percent lower than last year’s second quarter. Chief Financial Officer Brian Smrdel said the decline from last quarter was due to declining sales, but that the drop off compared to 2010’s second quarter can be attributed in part to last year’s temporary withdraw of a competitors product from the market.
Warren said that the economy has caused people to cut back on elective procedures, based on his conversations with urologists. Meanwhile, several months of changes and uncertainty to reimbursement rates have left some physicians unsure about where the rates stand. Congress acted to stabilize reimbursements in December, but Warren said there’s still outreach work to be done to make sure urologists understand the new terms.
In addition to the economy and lingering concern about reimbursements, Warren said results “continue to be affected from transition within the company’s sales force.” 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,” said Warren. “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.”
