Syneron Medical Reports Record Fourth Quarter 2015 Revenue of $78.9 Million

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Feb 22, 2016, 07:00 ET

Syneron Medical Ltd logo

IRVINE, Calif., Feb. 22, 2016 /PRNewswire/ -- Syneron Medical Ltd. (NASDAQ: ELOS), a leading global aesthetic device company, today announced financial results for the three and twelve month periods ended December 31, 2015.

Fourth Quarter 2015 and Recent Non-GAAP^{^[1]} Highlights:

Record revenue of $78.9 million, compared to $74.1 million in the fourth quarter 2014, up 7% year-over-year, or 11% in constant currency
North American product sales grew 23% year-over-year
Total Body Shaping revenue of $9.3 million, including North America UltraShape® revenue of $5.2 million; sold 54 UltraShape® systems in the quarter
PicoWay™ revenue of $7.2 million
Non-GAAP gross margin of 56.5%, or 58.1% in constant currency, compared to 55.7% in Q4 2014
Non-GAAP net income of $2.4 million, or $0.07 per share, compared to $3.2 million and $0.09 per share in Q4 2014
Generated $15.2 million in cash flow from operations
Repurchased $6.7 million of common stock during fourth quarter

Full Year 2015 Non-GAAP[2] Highlights:

Revenue of $277.9 million, compared to $255.8 million in 2014, up 9% year-over-year, or 13% in constant currency
North American product sales grew 27% year-over-year
Total Body Shaping revenue of $36.1 million, including North America UltraShape® revenue of $16.2 million
PicoWay™ revenue of $18.7 million
Non-GAAP gross margin of 55.2%, or 56.9% in constant currency, compared to 54.8% in 2014
Non-GAAP net income of $6.4 million, or $0.18 per share, compared to $7.9 million and $0.22 per share in 2014
Repurchased $15.6 million of common stock during 2015, $20 million board approved program completed in February 2016

Amit Meridor, Chief Executive Officer of Syneron Medical, said, "We ended 2015 with record quarterly revenue, driven by positive momentum in our initiatives to penetrate the high growth segments of the aesthetic market. As a result, we achieved our fifth consecutive quarter of double digit product growth in North America, as well as strong growth in the Asia-Pacific region. This was partially offset by weakness in the EMEA region, where market conditions continue to be challenging."

Revenue Highlights for the Fourth Quarter Ended December 31, 2015:

Total revenue in the fourth quarter 2015 was $78.9 million, representing growth of 7% year-over-year, or 11% in constant currency. Fourth quarter 2015 revenue included $1.6 million from a settlement with an OEM customer of the Company's CoolTouch subsidiary related to the discontinuation of their contract following a change in ownership.

During the quarter, North America UltraShape® revenue was $5.2 million, contributing to full-year sales of $16.2 million in 2015, which was the first full year of its launch. Syneron generated $7.2 million of revenue from PicoWay™ during the quarter, with full-year revenue coming in at $18.7 million in 2015, which was the first full year of its launch. This result was led by the international launch of PicoWay™ Resolve during the fourth quarter; Resolve expands PicoWay's use to a wider range of skin rejuvenation and facial treatments.

Non-GAAP Financial Highlights for the Fourth Quarter Ended December 31, 2015:

Gross Margin for 2015 fourth quarter was 56.5%, or 58.1% in constant currency, compared to 55.7% in the fourth quarter 2014. The year-over-year improvement in constant currency gross margin reflects mainly the newly introduced high margin UltraShape® in North America and PicoWay™ products worldwide.

Operating Income for the fourth quarter 2015 was $3.0 million, or $5.0 million in constant currency, compared to $5.2 million in the fourth 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 fourth quarter 2015 was $2.4 million, or $0.07 per share, compared to net income of $3.2 million, or $0.09 per share in the fourth quarter 2014.

Net income and earnings per share for the fourth 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:

Amortization of acquired intangible assets of $1.3 million.
Stock-based compensation expense of $1.0 million.
Re-measurement of contingent consideration fair value of $(4.2) million
Impairment of intangible asset and goodwill of $1.5 million
Fair Market Value (FMV) adjustment of $1.0 million
Income tax positive adjustment of $0.4 million
Other non-recurring expenses of $0.2 million

GAAP Financial Highlights for the Fourth Quarter Ended December 31, 2015:

Gross Margin for the fourth quarter 2015 was 55.0%, compared to 54.4% in the fourth quarter 2014. The year-over-year improvement in gross margin reflects mainly the newly introduced high margin UltraShape® in North America and PicoWay™ products worldwide.

Operating Income for the fourth quarter 2015 was $2.2 million, compared to an operating loss of $(0.2) million in the fourth quarter 2014. This reflects mainly the company's positive re-measurement of its contingent consideration fair value, net of $1.5 million impairment of the company's goodwill and intangibles asset, $1 million fair market value negative adjustment of the company's investment in a joint venture and net of investments in the Company's North America sales force, including the establishment of the Body Shaping team.

Net Income and Earnings Per Share in the fourth quarter 2015 was $2.0 million, or $0.05 per share, compared to a net loss of ($1.4) million, or loss of $0.04 per share in the fourth quarter 2014. This reflects mainly the company's positive re-measurement of its contingent consideration fair value, net of $1.5 million impairment of the company's goodwill and intangibles asset, $1 million fair market value negative adjustment of the company's investment in a joint venture and net of investments in the Company's North America sales force, including the establishment of the Body Shaping team.

Cash Position: As of December 31, 2015, the Company's overall cash position, including cash, short-term bank deposits and marketable securities, amounted to $86.7 million, compared to $79.5 million as of September 30, 2015. During the fourth quarter 2015 the Company repurchased 915,983 shares of Syneron common stock at an average price of $7.46 per share for $6.7 million under the Company's previously authorized $20 million share repurchase program. From December 2014 through year-end 2015, the Company repurchased a total of 1,810,654 shares at an average price of $9.00 per share for an aggregate of $16.1 million under this program. In January and February 2016, the Company completed its previously authorized $20 million share repurchase 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 expenses, 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 fourth 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 "Q4 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 877-280-2342 in the U.S., and 1-212-444-0895 from outside of the U.S. The conference pass code is: 8495560.

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.

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.

Syneron Medical Ltd.
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share data)

		For the three-months ended			For the twelve-months ended
			December 31,	December 31,		December 31,	December 31,
			2015	2014		2015	2014


Revenues			$ 78,889	$ 74,062		$ 277,849	$ 255,750
Cost of revenues			35,507	33,755		128,884	119,771

Gross profit			43,382	40,307		148,965	135,979
Operating expenses:
	Sales and marketing		27,121	23,136		97,163	80,741
	General and administrative		8,286	7,915		30,061	28,368
	Research and development		7,906	6,478		25,270	24,619
	Other (income) expenses, net		(2,109)	2,945		2,930	4,468

Total operating expenses			41,204	40,474		155,424	138,196

Operating income (loss)			2,178	(167)		(6,459)	(2,217)

	Financial Income (loss), net		-	(316)		167	(688)

Income (Loss) before tax on income (tax benefit)			2,178	(483)		(6,292)	(2,905)

Taxes on income			203	886		48	2,295

Net income (loss)			$ 1,975	$ (1,369)		$ (6,340)	$ (5,200)

Income (Loss) per share:

Basic
	Net income (loss) per share		$ 0.06	$ (0.04)		$ (0.17)	$ (0.14)

Diluted
	Net income (loss) attributable to Syneron shareholders		$ 0.05	$ (0.04)		$ (0.17)	$ (0.14)


Weighted average shares outstanding:
	Basic		35,870	36,770		36,416	36,703

	Diluted		36,041	36,770		36,416	36,703

Syneron Medical Ltd.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)

		December 31,	December 31,
		2015	*2014 ()**

Assets

Current assets:
	Cash and cash equivalents	$ 56,330	$ 57,189
	Short-term bank deposits	357	6,414
	Available-for-sale marketable securities	14,274	30,055
	Trade receivable, net	53,423	55,899
	Other accounts receivables and prepaid expenses	15,386	15,168
	Inventories	49,352	36,894

Total current assets		189,122	201,619

Long-term assets:
	Severance pay fund	509	514
	Long-term deposits and others	292	267
	Long-term available-for-sale marketable securities	15,695	16,785
	Investment in affiliated company	19,800	20,130
	Property and equipment, net	9,823	7,011
	Intangible assets, net	12,694	21,698
	Goodwill	21,442	25,285
	Deferred taxes	17,262	13,525

Total long-term assets		97,517	105,215

Total assets		$ 286,639	$ 306,834


Liabilities and Stockholders' Equity

Current liabilities:
	Accounts payable	$ 23,045	$ 21,948
	Deferred revenues	12,481	14,054
	Other accounts payable and accrued expenses	36,163	32,595

Total current liabilities		71,689	68,597

Long-term liabilities:
	Contingent consideration liability	878	4,983
	Deferred revenues	3,395	3,782
	Warranty accruals	861	860
	Accrued severance pay	603	507
	Deferred taxes	-	140

Total long-term liabilities		5,737	10,272

Stockholders' equity:		209,213	227,965

Total liabilities and stockholders' equity		$ 286,639	$ 306,834

(*)	Derived from audited financial statements

Syneron Medical Ltd.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)

				For the twelve-months ended

					December 31,	December 31,
					2015	2014
Cash flows from operating activities:
	Net loss				$ (6,340)	$ (5,200)
		Adjustments to reconcile net loss to net cash
		Non-cash items reported in discontinued operations
		Share-based compensation			3,775	3,700
		Depreciation and amortization			8,625	8,283
		Impairments of intangible assets			7,132	2,890
		Realized loss, changes in accrued interest and amortization of premium (discount) on marketable securities			1,770	757
		Adjustment to fair value of investment in JV			330	4,590
		Revaluation of contingent liability			(4,105)	(3,012)
		Changes in operating assets and liabilities:
			Trade receivable, net		(778)	(2,817)
			Inventories		(14,520)	(3,503)
			Other accounts receivables		(191)	183
			Deferred taxes		(3,909)	(976)
			Accounts payable		1,171	3,994
			Deferred revenue		1,197	1,910
			Accrued warranty accruals		103	675
			Other accrued liabilities		2,912	4,639

Net cash provided by (used in) operating activities					(2,828)	16,113

Cash flows from investing activities:
		Purchases of property and equipment			(4,870)	(2,151)
		Purchases of Intangible asset			-	(600)
		Proceeds from the sale or maturity of marketable securities			38,815	37,811
		Purchase of marketable securities			(23,747)	(30,945)
		Proceeds from short-term bank deposits, net			6,051	11,099
		Acquisition of a subsidiary			-	(11,016)
		Other investing activities			(25)	(9)

Net cash provided by investing activities					16,224	4,189

Cash flows from financing activities:
		Repurchase of shares from shareholders			(15,590)	(485)
		Proceeds from exercise of stock options			2,125	1,525

Net cash provided by (used in) financing activities					(13,465)	1,040

Effect of exchange rates on cash and cash equivalents					(790)	(1,736)

Net increase (decrease) in cash and cash equivalents					(859)	19,606

Cash and cash equivalents at beginning of period					57,189	37,583

Cash and cash equivalents at end of period					$ 56,330	$ 57,189

Syneron Medical Ltd.
Unaudited Non-GAAP Financial Measures and Reconciliation
(in thousands, except per share data)

		For the three-months ended			For the twelve-months ended
			December 31,	December 31,		December 31,	December 31,
			2015	2014		2015	2014


GAAP gross profit			$ 43,382	$ 40,307		$ 148,965	$ 135,979

	Stock-based compensation		48	(65)		196	159
	Amortization of intangible assets		1,010	1,010		4,040	4,020
	Other non-recurring items		128	-		128

Non-GAAP gross profit			$ 44,568	$ 41,252		$ 153,329	$ 140,158



GAAP operating income (loss)			$ 2,178	$ (167)		$ (6,459)	$ (2,217)

	Stock-based compensation		964	684		3,774	3,700
	Amortization of intangible assets		1,295	1,510		5,711	5,821
	FMV adjustment to investment in JV		960	-		330	-
	Remeasurement of contingent consideration		(4,161)	(3,613)		(4,105)	(3,613)
	Impairment of intangible assets		1,519	-		7,132	-
	Other non-recurring items		223	6,788		1,879	9,184

Non-GAAP operating income			$ 2,978	$ 5,202		$ 8,262	$ 12,875
						0.00


GAAP net income (loss)			$ 1,975	$ (1,369)		$ (6,340)	$ (5,200)

	Stock-based compensation		964	684		3,774	3,700
	Amortization of intangible assets		1,295	1,510		5,711	5,821
	FMV adjustment to investment in JV		960	-		330	-
	Remeasurement of contingent consideration		(4,161)	(3,613)		(4,105)	(3,613)
	Impairment of intangible assets		1,519	-		7,132	-
	Other non-recurring items		223	6,788		1,879	9,184
	Tax benefit		(356)	(810)		(1,992)	(1,948)

Non-GAAP net income before non-controlling interest			$ 2,419	$ 3,190		$ 6,389	$ 7,944


Income (Loss) per share:
Basic
GAAP net income (loss) per share before non-controlling interest			$ 0.06	$ (0.04)		$ (0.17)	$ (0.14)

	Stock-based compensation		0.03	0.02		0.11	0.10
	Amortization of intangible assets		0.04	0.04		0.16	0.16
	FMV adjustment to investment in JV		0.03	-		0.01	-
	Remeasurement of contingent consideration		(0.12)	(0.09)		(0.11)	(0.10)
	Impairment of intangible assets		0.04	-		0.20	-
	Other non-recurring items		0.01	0.18		0.05	0.25
	Tax benefit		(0.01)	(0.02)		(0.06)	(0.05)

Non-GAAP net income per share operations before non-controlling interest			$ 0.08	$ 0.09		$ 0.19	$ 0.22

Diluted
GAAP net income (loss) per share before non-controlling interest			$ 0.05	$ (0.04)		$ (0.17)	$ (0.14)

	Stock-based compensation		0.03	0.02		0.10	0.10
	Amortization of intangible assets		0.04	0.04		0.16	0.16
	FMV adjustment to investment in JV		0.03	-		0.01	-
	Remeasurement of contingent consideration		(0.12)	(0.09)		(0.11)	(0.10)
	Impairment of intangible assets		0.04	-		0.20	-
	Other non-recurring items		0.01	0.18		0.05	0.25
	Tax benefit		(0.01)	(0.02)		(0.06)	(0.05)

Non-GAAP net income per share operations before non-controlling interest			$ 0.07	$ 0.09		$ 0.18	$ 0.22

Weighted average shares outstanding:

	Basic		35,870	36,770		36,416	36,703

	Diluted		36,051	37,128		36,739	37,160

Syneron Medical Ltd.
Unaudited Non-GAAP Financial Measures and Reconciliation
(in thousands, except per share data)

		For the three-months ended		For the twelve-months ended
			December 31,	December 31,
			2015	2015


GAAP Revenue			$ 78,889	$ 277,849

	Exclude foreign exchange impact		3,036	12,038

Non-GAAP Revenue			$ 81,925	$ 289,887



GAAP gross profit			$ 43,382	$ 148,965

	Stock-based compensation		48	196
	Amortization of intangible assets		1,010	4,040
	Other non-recurring items		128	128
	Exclude foreign exchange impact		3,036	11,682

Non-GAAP gross profit			$ 47,604	$ 165,011



GAAP operating income			$ 2,178	$ (6,459)

	Stock-based compensation		964	3,774
	Amortization of intangible assets		1,295	5,711
	FMV adjustment to investment in JV		960	330
	Remeasurement of contingent consideration		(4,161)	(4,105)
	Impairment of intangible assets		1,519	7,132
	Other non-recurring items		223	1,879
	Exclude foreign exchange impact		2,011	5,409

Non-GAAP operating income			$ 4,989	$ 13,671

[1] The fourth 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 Fourth Quarter Ended December 31, 2015."
[2] The full year 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 Full Year Ended December 31, 2015"

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SOURCE Syneron Medical Ltd.