PET system and services provider CTI Molecular Imaging, Inc. this week announced a 7.5 percent decline in net revenues to $91.8 million in the third quarter, ending June 30th, compared to $99.2 million for the same period last year. Net income dipped to $2.7 million (on a fully diluted basis) from $7.5 million in the same period a year ago.
"As we previously announced, our operational performance in the quarter was a result of unexpectedly soft demand in the market for PET and PET/CT equipment and temporary transitional issues relating to the sales force realignment with Siemens [Medical Solutions]," said Ronald Nutt, PhD, president and CEO. "The realignment is now complete and this step will provide us with a much more powerful sales and marketing capability going forward. However, we continue to expect that the market demand for PET and PET/CT tomographs will remain sluggish through fiscal 2005, particularly in the domestic market."
During the third quarter, on a consolidated basis CTI Molecular Imaging sold 33 scanners and booked orders for an additional 42 units, compared with 49 units sold and 65 orders booked during the prior year period. "We expect this pause in growth of shipments will continue until the market absorbs the sharp increase in installed base over the past two years, after which time we expect the growth rate in scanner shipments will resume. In the meantime, our sales realignment with Siemens provides us with the ability to manage our cost structure and focus our combined resources more effectively as we navigate through the slowdown. Most importantly, the clinical awareness of the diagnostic benefit of PET and PET/CT continues to drive adoption growth and this trend provides us great confidence in the future," Nutt said.
CTI Solutions experienced strong growth in sales of FDG during the quarter, increasing 53 percent over the prior year's quarter and 7 percent sequentially, partially offset by a 2.5 percent sequential decline in average price. "FDG dose sales continue to grow at their recent historical rate of between 50 percent and 60 percent over the past several years," Nutt said. "Additionally, during the third quarter, the price decline for FDG experienced further moderation, consistent with our expectations for an eventual stabilization. In fact, the sequential price decline of 2.5 percent was the lowest rate since our IPO two years ago. These trends are indicative of positive utilization trends and a continued growing end-market which will fuel an eventual rebound in growth of scanner demand."
Nutt said he expects fourth quarter financial performance to be in line with the low end of the company's prior guidance, with revenues in the range of $110 million to $115 million.