Syneron Medical Reports Third Quarter 2015 Revenue of $62.1 Million

Product Revenue in North America Up 15% y/y; Asia-Pacific Region Up 28% y/y and EMEA Region Down 13% y/y, Both in Constant Currency

Sold 42 UltraShape Systems in North America and Generated Strong Growth in Consumables Utilization, with FTZs Representing 24% of UltraShape Revenue

Generated $4.1 million in PicoWay Sales

11 Nov, 2015, 07:00 ET from Syneron Medical Ltd.

IRVINE, Calif., Nov. 11, 2015 /PRNewswire/ -- Syneron Medical Ltd. (NASDAQ: ELOS), a leading global aesthetic device company, today announced financial results for the three month period ended September 30, 2015.

Third Quarter 2015 and Recent Non-GAAP[1] Highlights:

  • Revenue of $62.1 million, compared to $60.3 million in the third quarter 2014, up 3% year-over-year, or 8% in constant currency
  • North American product sales grew 15% year-over-year
  • Non-GAAP gross margin of 57.0%, or 58.9% in constant currency, compared to 55.6% in Q3 2014
  • Non-GAAP net income of $0.9 million, or $0.03 per share, compared to $0.9 million and $0.03 per share in Q3 2014
  • Repurchased $4.4 million of common stock during third quarter; Board of Directors approved acceleration of share repurchase program

Amit Meridor, Chief Executive Officer of Syneron Medical, said, "We achieved a fourth consecutive quarter of double digit product revenue growth in North America and strong growth in the Asia Pacific region. However, our overall growth was tempered by two factors: the loss of a CoolTouch OEM customer and weakness in the EMEA region. The loss of the CoolTouch OEM customer was the result of an unforeseen change in ownership, which impacted revenue by approximately $2 million because they immediately discontinued their contract and planned deliveries for the quarter. Given this development, we are evaluating alternatives for the CoolTouch OEM business. The weakness in the EMEA region was due to increased seasonality, a weak economic environment, as well as market conditions that are driving pricing pressure and our decision to protect margins and maintain pricing discipline in this region. EMEA revenue was down $3.3 million in the quarter, an 18% year-over-year decline, or 11% in constant currency.

"As to our key growth drivers, UltraShape™ revenue amounted to $4.5 million, including 42 systems sold and strong double-digit sequential growth of per procedure Focal Treatment Zones (FTZ) leading to $1.1 million, or 24% of total UltraShape revenue for the quarter. PicoWay® revenue amounted to $4.1 million, with continued momentum with Korean MFDS regulatory clearance in July followed by international launch of the PicoWay Resolve™ dual wavelength fractional modality in October. Profound sales during the first full quarter of our launch were approximately three quarters of a million dollars and our momentum with this innovative product line in the market is strong. This progress with our key products contributed to the improvement in our gross margin. Looking forward, into Q4 2015 and 2016, we believe Syneron has several growth opportunities with our strong product portfolio and pipeline. Accordingly, subject to legal restrictions, we plan to accelerate our share repurchase activities as we continue to execute on our strategic initiatives."

Non-GAAP Financial Highlights for the Third Quarter Ended September 30, 2015:

Gross Margin for the third quarter 2015 was 57.0%, or 58.9% in constant currency, compared to 55.6% in the third quarter 2014. The year-over-year improvement in constant currency gross margin reflects favorable geographic mix, and double digit product growth, particularly in North America and Asia Pacific, including the newly introduced high margin UltraShape in North America and PicoWay products worldwide.

Operating Income for the third quarter 2015 was $1.3 million, or $2.4 million in constant currency, compared to $2.6 million in the third quarter 2014. This reflects the Company's investments in sales and marketing expenses related to the significant expansion of the Company's North American sales force, including the establishment of a dedicated body shaping team.

Net Income and Earnings Per Share in the third quarter 2015 was $0.9 million, or $0.03 per share, compared to net income of $0.9 million, or $0.03 per share in the third quarter 2014.

Net income and earnings per share for the third quarter 2015 are adjusted to exclude the following items, which are detailed in the Company's financial tables presented at the end of this press release:

  • Impairment of intangible assets and goodwill of $5.6 million.
  • Amortization of acquired intangible assets of $1.5 million.
  • Stock-based compensation expense of $1.0 million.
  • Income tax benefit of $0.9 million.
  • Non recurring legal fees of $0.3 million.

GAAP Financial Highlights for the Third Quarter Ended September 30, 2015:

Gross Margin for the third quarter 2015 was 55.3%, compared to 53.6% in the third quarter 2014. The year-over-year improvement in gross margin reflects favorable geographic mix, and double digit product growth, particularly in North America and Asia Pacific, including the newly introduced high margin UltraShape in North America and PicoWay products worldwide.

Operating Loss for the third quarter 2015 was $7.1 million, compared to $1.1 million in the third quarter 2014. This reflects the Company's investments in sales and marketing expenses related to the significant expansion of the Company's North American sales force, including the establishment of a dedicated body shaping team. It also includes $5.6 million of intangible asset and goodwill impairment related to the CoolTouch subsidiary.

Net Loss and Loss Per Share in the third quarter 2015 was $6.5 million, or $0.18 per share, compared to $2.3 million, or $0.06 per share in the third quarter 2014.

Cash Position: As of September 30, 2015, the Company's overall cash position, including cash, short-term bank deposits and marketable securities, amounted to $79.5 million, compared to $92.3 million as of June 30, 2015. Cash use in the third quarter 2015 included investments in inventory to support growth and increased working capital. The reduction in cash position also included the repurchase of 463,004 shares of Syneron common stock during the third quarter 2015 at an average price of $9.47 for $4.4 million under the Company's previously authorized $20 million share repurchase program. Since December 2014, the Company has repurchased a total of 894,671 shares at an average price of $10.36 for $9.4 million under this program.

Use of Non-GAAP Measures

This press release provides financial measures for gross margin, operating income (loss), net income (loss) and earnings (loss) per share, which exclude expenses related to amortization of acquired intangible assets, stock-based compensation expense, re-measurement of contingent consideration fair value, impairment of intangible assets and goodwill, Fair Market Value (FMV) adjustment, tax benefit, changes in foreign currency exchange rates  and non-recurring legal fee, and are therefore not calculated in accordance with generally accepted accounting principles (GAAP).

Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance because it reflects our ongoing operational results, operating income (loss), net income (loss) and earnings (loss) per share. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management uses non-GAAP measures when evaluating the business internally and, therefore, believes it important to make these non-GAAP adjustments available to investors. A reconciliation of each GAAP to non-GAAP financial measure discussed in this press release is contained in the accompanying financial tables. Constant currency results assume foreign revenues, gross profit and operating income (loss) are translated from foreign currencies to the U.S. dollar, at rates consistent with those in the prior year.

Conference Call

Syneron management will host its third quarter 2015 earnings conference call today at 8:30 a.m. ET. Syneron will be broadcasting live via the Investor Relations section of its website, www.investors.syneron.com. To access the call, enter the Syneron Investor Relations website, then click on the webcast link "Q3 2015 Results Webcast."

Participants are encouraged to log on at least 15 minutes prior to the conference call in order to download the applicable audio software. The call can be heard live or with an on-line replay which will follow. Those interested in participating in the call and the question and answer session should dial 877-280-2293 in the U.S., and 1-809-212-923 from outside of the U.S. The conference pass code is: 4394991.

About Syneron Candela:

Syneron Candela is a leading global aesthetic device company with a comprehensive product portfolio and a global distribution footprint.  The Company's technology enables physicians to provide advanced solutions for a broad range of medical-aesthetic applications including body contouring, hair removal, wrinkle reduction, tattoo removal, improving the skin's appearance through the treatment of superficial benign vascular and pigmented lesions, and the treatment of acne, leg veins and cellulite. The Company sells its products under three distinct brands, Syneron, Candela and CoolTouch, and has a wide portfolio of trusted, leading products including UltraShape, VelaShape, GentleLase, VBeam Perfecta, PicoWay, Profound and elos Plus.

Founded in 2000, the corporate, R&D, and manufacturing headquarters for Syneron Candela are located in Israel. Syneron Candela also has R&D and manufacturing operations in the U.S.  The company markets, services and supports its products in 86 countries.  It has offices in North America, France, Germany, Italy, Portugal, Spain, UK, Australia, China, Japan, and Hong Kong and distributors worldwide.

For additional information, please visit http://www.syneron-candela.com.

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS Any statements contained in this document regarding future expectations, beliefs, goals, plans or prospects constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Further, any statements that are not statements of historical fact (including statements containing "believes," "anticipates," "plans," "expects," "may," "will," "would," "intends," "estimates" and similar expressions) should also be considered to be forward-looking statements.

Forward-looking statements in this press release include Mr. Meridor's statement that the Company has several significant growth opportunities with its strong product portfolio and pipeline and the anticipation to accelerate share repurchase activities.. There are a number of important factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including the risks associated with the successful build-out of our North American sales force and its ability to enable us to generate more North American revenue and improve margins, the market acceptance of our new products, including UltraShape and PicoWay products, and the stabilization of the European market, as well as those risks set forth in Syneron Medical Ltd.'s most recent Annual Report on Form 20-F, and the other factors described in the filings that Syneron Medical Ltd. makes with the SEC from time to time.  If one or more of these factors materialize, or if any underlying assumptions prove incorrect, Syneron Medical Ltd.'s actual results, performance or achievements may vary materially from any future results, performance or achievements expressed or implied by these forward-looking statements.

In addition, the statements in this document reflect the expectations and beliefs of Syneron Medical Ltd. as of the date of this document.  Syneron Medical Ltd. anticipates that subsequent events and developments will cause its expectations and beliefs to change.  However, while Syneron Medical Ltd. may elect to update these forward-looking statements publicly in the future, it specifically disclaims any obligation to do so.  The forward-looking statements of Syneron Medical Ltd. do not reflect the potential impact of any future dispositions or strategic transactions that may be undertaken.  These forward-looking statements should not be relied upon as representing Syneron Medical Ltd.'s views as of any date after the date of this document.

Syneron, the Syneron logo, UltraShape, eMatrix and elos are trademarks of Syneron Medical Ltd. and may be registered in certain jurisdictions. The elos (Electro-Optical Synergy) technology is a proprietary technology of Syneron Medical Ltd. All other names are the property of their respective owners.

[1] The third quarter 2015 year-over-year comparisons are on a non-GAAP basis, excluding items set forth in the section titled "Non-GAAP Financial Highlights for the Third Quarter Ended September 30, 2015."

 

 

Syneron Medical Ltd.

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except per share data)

For the three-months ended

For the nine-months ended

September 30,

September 30,

September 30,

September 30,

2015

2014

2015

2014

Revenues

$              62,074

$              60,257

$             198,959

$            181,688

Cost of revenues 

27,738

27,955

93,377

86,016

Gross profit

34,336

32,302

105,582

95,672

Operating expenses:

Sales and marketing 

23,934

20,261

69,468

57,605

General and administrative

6,301

6,881

22,187

20,453

Research and development

5,550

5,752

17,364

18,141

Other expenses, net

5,613

507

5,039

1,523

Total operating expenses

41,398

33,401

114,058

97,722

Operating loss

(7,062)

(1,099)

(8,476)

(2,050)

Financial income (expense), net 

-

(764)

6

(372)

Loss before taxes on income (tax benefit)

(7,062)

(1,863)

(8,470)

(2,422)

Taxes on income (tax benefit)

(536)

442

(155)

1,409

Net loss 

$               (6,526)

$               (2,305)

$                (8,315)

$               (3,831)

 Loss per share:

Basic and Diluted

Net loss per share

$                 (0.18)

$                 (0.06)

$                  (0.23)

$                 (0.10)

Weighted average shares outstanding:

Basic and Diluted

36,395

36,768

36,609

36,681

 

 

 

Syneron Medical Ltd.

Condensed Consolidated Balance Sheets

(in thousands)

September 30,

December 31,

2015

2014 (*)

(Unaudited)

Assets

Current assets:

Cash and cash equivalents

$              41,321

$              57,189

Short-term bank deposits

363

6,414

Available-for-sale marketable securities

29,449

30,055

Trade receivable, net

51,041

55,899

Other accounts receivables and prepaid expenses

15,916

15,168

Inventories

51,862

36,894

Total current assets

189,952

201,619

Long-term assets:

Severance pay fund

553

514

Long-term deposits and others 

296

267

Long-term available-for-sale marketable securities 

8,389

16,785

Investment in affiliated company

20,760

20,130

Property and equipment, net

9,196

7,011

Intangible assets, net 

14,165

21,698

Goodwill

22,785

25,285

Deferred taxes

14,489

13,525

Total long-term assets

90,633

105,215

Total assets

$            280,585

$            306,834

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$              17,242

$              21,948

Deferred revenues

11,949

14,054

Other accounts payable and accrued expenses

27,125

32,595

Total current liabilities

56,316

68,597

Long-term liabilities:

Contingent consideration liability

5,039

4,983

Deferred revenues

3,440

3,782

Warranty accruals

663

860

Accrued severance pay

627

507

Deferred taxes

-

140

Total long-term liabilities

9,769

10,272

Stockholders' equity

214,500

227,965

Total liabilities and stockholders' equity

$            280,585

$            306,834

 (*)

Derived from audited financial statements

 

 

 

Syneron Medical Ltd.

 Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

For the nine-months ended

September 30,

September 30,

2015

2014

Cash flows from operating activities:

Net loss 

$                  (8,315)

$                  (3,831)

Adjustments to reconcile net loss to net cash 

Non-cash items reported in discontinued operations

Share-based compensation 

2,811

3,016

Depreciation and amortization

6,645

6,442

Impairments of intangible assets

5,613

1,477

Realized loss, changes in accrued interest and amortization of premium (discount) on marketable securities

474

629

Adjustment to fair value of investment in JV

(630)

-

Revaluation of contingent liability

56

601

Changes in operating assets and liabilities:

Trade receivable, net

1,655

931

Inventories

(15,420)

(2,676)

Other accounts receivables

(763)

1,177

Deferred taxes

(1,141)

(1,082)

Accounts payable

(4,741)

(648)

Deferred revenue

1,197

1,030

Accrued warranty accruals

(1,517)

(2,548)

Other accrued liabilities

(5,208)

(233)

Net cash provided by (used in) operating activities

(19,284)

4,285

Cash flows from investing activities:

Purchases of property and equipment

(3,636)

(1,110)

Proceeds from the sale or maturity of marketable securities

26,899

31,002

Purchase of marketable securities

(18,274)

(23,984)

Proceeds from short-term bank deposits, net

6,051

3,546

Acquisition of a subsidiary 

-

(11,016)

Other investing activities

(29)

(15)

Net cash provided by (used in) investing activities

11,011

(1,577)

Cash flows from financing activities:

Repurchase of shares from shareholders

(8,916)

-

Proceeds from exercise of stock options

2,097

1,250

Net cash provided by (used in) financing activities

(6,819)

1,250

Effect of exchange rates on cash and cash equivalents

(776)

(829)

Net increase (decrease) in cash and cash equivalents

(15,868)

3,129

Cash and cash equivalents at beginning of period

57,189

37,583

Cash and cash equivalents at end of period

$                 41,321

$                 40,712

 

 

 

Syneron Medical Ltd.

Unaudited Non-GAAP Financial Measures and Reconciliation

(in thousands, except per share data)

For the three-months ended

For the nine-months ended

 September 30, 

September 30,

September 30,

September 30,

2015

2014

2015

2014

GAAP gross profit

$            34,336

$            32,302

$           105,582

$            95,672

Stock-based compensation

49

70

149

224

Amortization of intangible assets

1,010

1,110

3,030

3,010

Non-GAAP gross profit

$            35,395

$            33,482

$           108,761

$            98,906

GAAP operating loss

$             (7,062)

$             (1,099)

$             (8,476)

$             (2,050)

Stock-based compensation

979

1,057

2,811

3,016

Amortization of intangible assets

1,468

1,809

4,416

4,311

FMV adjustment to investment in JV

-

-

(630)

-

Remeasurement of contingent consideration 

-

507

56

507

Impairment of intangible assets

5,613

-

5,613

-

Other non-recurring items

260

350

1,656

1,889

Non-GAAP operating income

$              1,258

$              2,624

$              5,446

$              7,673

GAAP net loss

$             (6,526)

$             (2,305)

$             (8,315)

$             (3,831)

Stock-based compensation

979

1,057

2,811

3,016

Amortization of intangible assets

1,468

1,809

4,416

4,311

FMV adjustment to investment in JV

-

-

(630)

-

Remeasurement of contingent consideration 

-

507

56

507

Impairment of intangible assets

5,613

-

5,613

-

Other non-recurring items

260

350

1,656

1,889

Tax benefit

(856)

(478)

(1,637)

(1,138)

Non-GAAP net income 

$                 938

$                 940

$              3,970

$              4,754

Income (Loss) per share:

Basic

GAAP net loss per share 

$               (0.18)

$               (0.06)

$               (0.23)

$               (0.10)

Stock-based compensation

0.03

0.03

0.08

0.08

Amortization of intangible assets

0.04

0.05

0.12

0.12

FMV adjustment to investment in JV

-

-

(0.02)

-

Remeasurement of contingent consideration 

-

0.01

-

0.01

Impairment of intangible assets

0.15

-

0.15

-

Other non-recurring items

0.01

0.01

0.05

0.05

Tax benefit

(0.02)

(0.01)

(0.04)

(0.03)

Non-GAAP net income per share 

$                0.03

$                0.03

$                0.11

$                0.13

Diluted

GAAP net loss per share

$               (0.18)

$               (0.06)

$               (0.23)

$               (0.10)

Stock-based compensation

0.03

0.03

0.08

0.08

Amortization of intangible assets

0.04

0.05

0.12

0.12

FMV adjustment to investment in JV

-

-

(0.02)

-

Remeasurement of contingent consideration 

-

0.01

-

0.01

Impairment of intangible assets

0.15

-

0.15

-

Other non-recurring items

0.01

0.01

0.05

0.05

Tax benefit

(0.02)

(0.01)

(0.04)

(0.03)

Non-GAAP net income per share

$                0.03

$                0.03

$                0.11

$                0.13

Weighted average shares outstanding:

Basic

36,395

36,768

36,609

36,681

Diluted

36,672

37,228

37,059

37,185

 

 

 

Syneron Medical Ltd.

Unaudited Non-GAAP Financial Measures and Reconciliation

(in thousands, except per share data)

For the three-months ended

 September 30, 

2015

GAAP Revenue

$                        62,074

Exclude foreign exchange impact

3,045

Non-GAAP Revenue

$                        65,119

GAAP gross profit

$                        34,336

Stock-based compensation

49

Amortization of intangible assets

1,010

Exclude foreign exchange impact

2,935

Non-GAAP gross profit

$                        38,330

GAAP operating loss

$                         (7,062)

Stock-based compensation

979

Amortization of intangible assets

1,468

Impairment of intangible assets

5,613

Other non-recurring items

260

Exclude foreign exchange impact

1,145

Non-GAAP operating income

$                          2,403

 

 

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SOURCE Syneron Medical Ltd.



RELATED LINKS

http://www.syneron-candela.com