Interest expense for the fourth quarter declined significantly to $26,000 against $267,000 a year ago, primarily due to the retirement of a subordinated debt facility with Escalate Capital in the fourth quarter of 2007. Interest income declined to $15,000 from $457,000 in the fourth quarter of 2007 due to lower cash balances and lower interest rates. Cash balances were lower during the quarter against a year ago due to continued usage of our cash to fund operations and patent litigation.
Net profit for the fourth quarter of 2008 was $97,000 or 1 cent per share, against a net loss of $4.0 million or 23 cents loss per share in the same period last year. Net loss for the fourth quarter of 2007 included a non-cash charge of $1.3 million, or 7 cents per share, related to the retirement of the Escalate Capital debt facility, representing the unamortized debt issuance and debt discount costs that would have otherwise been charged to interest expense over its term. Excluding patent litigation expense, non-cash charges for stock-based compensation and the fourth quarter 2007 non-cash charge for debt retirement, the net profit for the quarter was $1.1 million against a net loss of $2.2 million for the same period last year.
Lloyd Malchow, SenoRx president and chief executive officer, said “Our fourth quarter results reflect solid operating performance and the continuation of an encouraging trend in revenue growth and gross margin expansion. Solid revenue growth combined with ongoing improvement in gross margin, resulted in strong performance on the bottom line. Revenue growth in the quarter benefitted from continuing momentum in the market’s adoption of our Contura(tm) MLB balloon catheter, along with continued strength in new placements of our EnCor systems, despite some constraints on capital equipment purchases worldwide related to the challenging global economic conditions.”
For the fiscal year ended December 31, 2008, gross profit grew 51.6% to $30.2 million from $19.9 million a year ago. Gross margin in 2008 increased to 64.6%, up from 56.8% in 2007. Operating loss for the year declined to $9.1 million, against $9.7 million last year. Operating results included the impact of $2.3 million for stock-based compensation expense, against $2.1 million for stock-based compensation in 2007. Net loss for 2007 included a positive non-cash adjustment of $991,000 in the second quarter for the fair value of the warrant liability related to the Escalate Capital debt facility, which was more than offset by the non-cash charge of $1.3 million in the fourth quarter related to the retirement of the same note. Excluding patent litigation expenses, which totaled $4.9 million in 2008, non-cash charges for stock-based compensation and the non-cash adjustments for fair value and debt reduction in 2007, the net loss for the year was $1.6 million against $7.6 million last year.
“2008 was another year of significant progress and accomplishment for SenoRx,” said Malchow. “We continued to deliver substantial revenue growth and further improve our gross margin, along with reporting a profit in the fourth quarter. We completed the successful commercial launch of Contura MLB, firmly establishing SenoRx in the therapeutic segment of the breast care market. Sales momentum for Contura MLB is very encouraging as we move into 2009. Fourth quarter sales for Contura MLB increased sequentially 54.9% over the third quarter of 2008, reflecting accelerating adoption of the product by clinicians. The installed base of our EnCor systems also continued to grow, increasing to 776 units at the end of 2008, against 536 a year ago. Additionally, our selling and marketing expense declined as a% of revenues as we realized economies of scale on our investment in expanding our U.S. direct sales force over the past 18 months. We are now in a position to further leverage our sales and marketing efforts as the pace of expansion in our sales force has slowed, combined with significant progress during the year in increasing our international sales through in-country distribution partners in more than 30 countries outside the US and Canada.”
“We enter 2009 well positioned for profitable growth,” Malchow continued. “We will be disciplined in our management of cash while executing our strategy to capitalize on the opportunities for growth in the expanding global market for interventional and therapeutic products in breast care. Our financial condition is sound with $15.3 million in cash and cash equivalents and minimal debt at December 31, 2008. During the fourth quarter, SenoRx exercised its option to borrow $2.0 million on an existing term loan prior to its expiration.”