Syneron Medical Reports Revenue of $73.5 Million for the Second Quarter 2015

North America product revenue up 45% y/y; Asia-Pacific Region product revenue up 25% y/y in constant currency

Sold 63 UltraShape systems and generated strong growth in FTZ utilization

Generated $4.6 million in PicoWay sales

Launched Profound neck and face tightening product

Aug 04, 2015, 06:36 ET from Syneron Medical Ltd.

IRVINE, Calif., Aug. 4, 2015 /PRNewswire/ -- Syneron Medical Ltd. (NASDAQ: ELOS), a leading global aesthetic device company, today announced financial results for the three month period ended June 30, 2015.

Second Quarter 2015 and Recent Non-GAAP1 Highlights:

  • Revenue of $73.5 million, up 14% year-over-year, or 19% in constant currency.
  • North American product sales grew 45% year-over-year.
  • International sales grew 8% year-over-year, or 15% in constant currency, including 14% product growth in the EMEA region and 25% product growth in the Asia-Pacific region.
  • Non-GAAP gross margin of 53.9%, or 55.6% in constant currency, compared to 54.2% in Q2 2014.
  • Non-GAAP net income of $2.5 million, or $0.07 per share.
  • Ended quarter with $92.3 million overall cash position, and no debt.

North America Body Shaping Division Highlights:

  • Sold 63 UltraShape™ systems.
  • Generated strong double-digit sequential growth of per procedure Focal Treatment Zones (FTZ).
  • Strong acceptance of Syneron's unique combination treatment with VelaShape and UltraShape contributes to VelaShape III sales and generates superior body shaping clinical outcome.
  • Advanced clinical trial activity in support of expanding UltraShape's FDA cleared indications for use.

Amit Meridor, Chief Executive Officer of Syneron, said, "We achieved another solid quarter in our North America Body Shaping Division, driven by the expansion of our sales team and marketing initiatives. We remain on track with our UltraShape revenue plan for the year. We are also investing in clinical trials to expand our FDA UltraShape clinical indications for additional body areas."

North America Aesthetic Division Highlights:

  • Generated strong PicoWay™ sales.
  • PicoWay received FDA clearance in the U.S. for treatment of pigmented lesions.
  • Launched Profound™ RF micro-needle technology for minimally invasive sub-mental and face lift treatments, generating positive initial traction.

Mr. Meridor added, "Growth in the North America Aesthetic Division was driven by the ongoing launch of PicoWay, good results from the Gentle Pro family of dual wavelength laser systems, and launch of the Profound minimally invasive micro-needle RF system. FDA clearance of PicoWay for treatment of pigmented lesions further expands its market opportunity and strengthens our confidence in its growth potential. PicoWay also has strong potential growth trajectory outside of North America. We were pleased to receive regulatory clearance in the important Korean market in late July."

Revenue: Second quarter 2015 revenue was $73.5 million, up 14%, compared to $64.6 million in the second quarter 2014. Second quarter 2015 constant currency revenue growth was 19%, when excluding the negative impact of $3.1 million related to the change in foreign currency exchange rates as compared to the second quarter 2014.

Mr. Meridor said, "We achieved three consecutive quarters of double-digit revenue growth, demonstrating strong momentum in our global business. This includes another quarter of robust product growth in the EMEA and Asia-Pacific regions driven by our global sales infrastructure and broad product portfolio. Looking forward, we see significant growth potential with the re-launch of UltraShape in international markets and the launch of three new facial and body shaping products in 2016 based on our Candela and ELOS™ proprietary technologies."

Shimon Eckhouse, Active Chairman of Syneron, said, "Our development team is focused on bringing highly innovative products to our aesthetic doctor customers. The Profound launched in the second quarter offers a revolutionary single treatment - 30-minute face and neck procedure based on our proprietary RF micro needle technology. In recently published clinical studies, the Profound demonstrated clinical results equivalent to 50% of face lift surgery in face and neck treatments. In 2016 we also plan to launch two additional products for facial aesthetic applications based on Candela's pulsed dye laser and solid state laser technologies combined with Syneron's proprietary ELOS™ technology. Additional product launches planned for 2016 include significant enhancements to our body shaping portfolio."

Non-GAAP Financial Highlights for the Second Quarter Ended June 30, 2015:

Gross Margin for the second quarter 2015 was 53.9%, or 55.6% in constant currency, compared to 54.2% in the second quarter 2014. The year-over-year improvement in constant currency gross margin reflects favorable geographic mix and strong product growth, particularly in North America, including the newly introduced high margin UltraShape and PicoWay products.

Operating Income for the second quarter 2015 was $2.9 million, or $4.4 million in constant currency, compared to $3.2 million in the second 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 the dedicated body shaping team. It also includes a negative impact of $1.5 million due to changes in foreign currency exchange rates.

Net Income and Earnings Per Share for both the second quarter 2015 and second quarter 2014 was $2.5 million, or $0.07 per share.

Net income and earnings per share for the second 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 $1.5 million.
  • Stock-based compensation of $0.9 million.
  • Fair Market Value (FMV) income adjustment of $0.6 million.
  • Non recurring legal fees of $1.4 million.
  • Income tax benefit of $0.4 million.

GAAP Financial Highlights for the Second Quarter Ended June 30, 2015:

Gross Margin for the second quarter 2015 was 52.4%, compared to 52.6% in the second quarter 2014. The year-over-year flat gross margin reflects favorable geographic mix and strong product growth, particularly in North America, including the newly introduced high margin UltraShape and PicoWay products.

Operating loss for the second quarter 2015 was $0.2 million, compared to $0.1 million in the second quarter 2014. This reflects the Company's investments in sales and marketing infrastructure related to the significant expansion of the Company's North American sales force, including the establishment of the dedicated body shaping team. It also includes non-recurring legal fees of $0.8 million and a negative impact of $1.5 million due to changes in foreign currency exchange rates.

Net Loss and Loss Per Share in the second quarter 2015 was $0.3 million, or $0.01 per share, compared to $0.4 million, or $0.01 per share in the first quarter 2014.

Cash Position: As of June 30, 2015, the Company's overall cash position, including cash, short-term bank deposits and marketable securities, amounted to $92.3 million, compared to $99.8 million as of March 31, 2015. Cash use in the second quarter 2015 included investments in inventory to support anticipated growth in 2015 and increased working capital related to the Company's strong performance. The reduction in cash position also included the repurchase of 55,025 shares of Syneron stock during the second quarter 2015 at an average price of $10.94 for $0.6 million under the Company's previously authorized $20 million share repurchase program. Since December 2014, the Company has repurchased a total of 431,677 shares at an average price of $11.10 for $5.0 million under this program.

Use of Non-GAAP Measures This press release provides financial measures for gross margin, operating 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, re-measurement of contingent consideration fair value, impairment of intangible assets, Fair Market Value (FMV) adjustment, tax benefit, changes in foreign currency exchange rates, and legal settlement, 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 margin, 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.

Conference Call Syneron management will host its second 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 "Q2 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 1-809-212-925 from outside of the U.S. The conference pass code is: 2999072.

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 optimism about being on track with the Company's UltraShape revenue plan for 2015, re-launch of UltraShape in international markets, investments to seek additional FDA-approved indications of use for UltraShape, market opportunities and growth potential for PicoWay and Profound products, and anticipated product launches in 2016. 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 the UltraShape, PicoWay and Profound products, our ability to obtain FDA approval for additional indications of use for UltraShape, the success of our anticipated product launches in 2016, our ability to grow non-core market revenues, changes in foreign currency exchange rates, the continued stabilization of the Europe and Middle East and Asia Pacific markets, 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.

Syneron Medical Ltd.

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except per share data)

For the three-months ended

For the six-months ended

June 30,

June 30,

June 30,

June 30,

2015

2014

2015

2014

Revenues

$ 73,507

$ 64,618

$ 136,884

$ 121,431

Cost of revenues

34,960

30,647

65,674

58,061

Gross profit

38,547

33,971

71,210

63,370

Operating expenses:

Sales and marketing

24,718

20,026

46,164

37,344

General and administrative

8,495

7,322

15,210

13,572

Research and development

6,155

6,151

11,814

12,389

Other (income) expenses, net

(630)

617

(574)

1,016

Total operating expenses

38,738

34,116

72,614

64,321

Operating loss

(191)

(145)

(1,404)

(951)

Financial Income, net

410

228

5

392

Income (Loss) before tax on income (tax benefit)

219

83

(1,399)

(559)

Taxes on income

509

517

381

967

Net loss

$ (290)

$ (434)

$ (1,780)

$ (1,526)

Loss per share:

Basic and Diluted

Net loss per share

$ (0.01)

$ (0.01)

$ (0.05)

$ (0.04)

Weighted average shares outstanding:

Basic and Diluted

36,519

36,670

36,620

36,637

Syneron Medical Ltd.

Condensed Consolidated Balance Sheets

(in thousands)

June 30,

December 31,

2015

2014 (*)

(Unaudited)

Assets

Current assets:

Cash and cash equivalents

$ 42,856

$ 57,189

Short-term bank deposits

5,362

6,414

Available-for-sale marketable securities

31,028

30,055

Trade receivable, net

62,051

55,899

Other accounts receivables and prepaid expenses

15,976

15,168

Inventories

46,046

36,894

Total current assets

203,319

201,619

Long-term assets:

Severance pay fund

559

514

Long-term deposits and others

310

267

Long-term available-for-sale marketable securities

13,037

16,785

Investment in affiliated company

20,760

20,130

Property and equipment, net

8,380

7,011

Intangible assets, net

18,745

21,698

Goodwill

25,285

25,285

Deferred taxes

14,131

13,525

Total long-term assets

101,207

105,215

Total assets

$ 304,526

$ 306,834

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$ 25,383

$ 21,948

Deferred revenues

12,838

14,054

Other accounts payable and accrued expenses

31,885

32,595

Total current liabilities

70,106

68,597

Long-term liabilities:

Contingent consideration liability

5,039

4,983

Deferred revenues

3,598

3,782

Warranty accruals

650

860

Accrued severance pay

612

507

Deferred taxes

-

140

Total long-term liabilities

9,899

10,272

Stockholders' equity:

224,521

227,965

Total liabilities and stockholders' equity

$ 304,526

$ 306,834

(*)

Derived from audited financial statements

Syneron Medical Ltd.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

For the six-months ended

June 30

June 30

2015

2014

Cash flows from operating activities:

Net loss

$ (1,780)

$ (1,526)

Adjustments to reconcile net loss to net cash

Non-cash items reported in discontinued operations

Share-based compensation

1,831

1,960

Depreciation and amortization

4,446

3,939

Impairments of intangible assets

-

1,506

Realized loss, changes in accrued interest and amortization

347

473

Adjustment to fair value of investment in JV

(630)

-

Revaluation of contingent liability

56

94

Changes in operating assets and liabilities:

Trade receivable, net

(9,217)

(3,180)

Inventories

(8,963)

377

Other accounts receivables

(478)

1,171

Deferred taxes

(792)

(588)

Accounts payable

3,678

(2,290)

Deferred revenue

1,197

1,030

Accrued warranty accruals

622

(1,690)

Other accrued liabilities

(1,322)

(2,016)

Net cash used in operating activities

(11,005)

(740)

Cash flows from investing activities:

Purchases of property and equipment

(2,563)

(936)

Proceeds from the sale or maturity of marketable securities

18,692

26,050

Purchase of marketable securities

(16,211)

(18,368)

Proceeds from short-term bank deposits, net

1,052

5,045

Acquisition of a subsidiary

-

(11,016)

Other investing activities

(43)

(21)

Net cash provided by investing activities

927

754

Cash flows from financing activities:

Repurchase of shares from shareholders

(4,521)

-

Proceeds from exercise of stock options

977

568

Net cash provided by (used in) financing activities

(3,544)

568

Effect of exchange rates on cash and cash equivalents

(711)

366

Net increase (decrease) in cash and cash equivalents

(14,333)

948

Cash and cash equivalents at beginning of period

57,189

37,583

Cash and cash equivalents at end of period

$ 42,856

$ 38,531

Syneron Medical Ltd.

Unaudited Non-GAAP Financial Measures and Reconciliation

(in thousands, except per share data)

For the three-months ended

For the six-months ended

June 30

June 30

June 30

June 30

2015

2014

2015

2014

GAAP gross profit

$ 38,547

$ 33,971

$ 71,210

$ 63,370

Stock-based compensation

50

88

100

154

Amortization of intangible assets

1,011

950

2,020

1,900

Non-GAAP gross profit

$ 39,608

$ 35,009

$ 73,330

$ 65,424

GAAP operating loss

$ (191)

$ (145)

$ (1,404)

$ (951)

Stock-based compensation

902

1,189

1,831

1,959

Amortization of intangible assets

1,468

1,251

2,948

2,502

FMV adjustment to investment in JV

(630)

-

(630)

-

Remeasurement of contingent consideration

-

(305)

56

(305)

Other non-recurring items

1,396

1,168

1,396

1,844

Non-GAAP operating income

$ 2,945

$ 3,158

$ 4,197

$ 5,049

GAAP net loss

$ (290)

$ (434)

$ (1,780)

$ (1,526)

Stock-based compensation

902

1,189

1,831

1,959

Amortization of intangible assets

1,468

1,251

2,948

2,502

FMV adjustment to investment in JV

(630)

-

(630)

-

Remeasurement of contingent consideration

-

(305)

56

(305)

Other non-recurring items

1,396

1,168

1,396

1,844

Tax benefit

(390)

(383)

(781)

(660)

Non-GAAP net income

$ 2,456

$ 2,486

$ 3,040

$ 3,814

Income (Loss) per share:

Basic

GAAP net loss per share

$ (0.01)

$ (0.01)

$ (0.05)

$ (0.04)

Stock-based compensation

0.03

0.03

0.05

0.05

Amortization of intangible assets

0.04

0.03

0.08

0.07

FMV adjustment to investment in JV

(0.02)

-

(0.02)

-

Remeasurement of contingent consideration

-

(0.01)

-

(0.01)

Other non-recurring items

0.04

0.04

0.04

0.05

Tax benefit

(0.01)

(0.01)

(0.02)

(0.02)

Non-GAAP net income per share

$ 0.07

$ 0.07

$ 0.08

$ 0.10

Diluted

GAAP net loss per share

$ (0.01)

$ (0.01)

$ (0.05)

$ (0.04)

Stock-based compensation

0.03

0.03

0.05

0.05

Amortization of intangible assets

0.04

0.03

0.08

0.07

FMV adjustment to investment in JV

(0.02)

-

(0.02)

-

Remeasurement of contingent consideration

-

(0.01)

0.00

(0.01)

Other non-recurring items

0.04

0.04

0.04

0.05

Tax benefit

(0.01)

(0.01)

(0.02)

(0.02)

Non-GAAP net income per share

$ 0.07

$ 0.07

$ 0.08

$ 0.10

Weighted average shares outstanding:

Basic

36,519

36,670

36,620

36,637

Diluted

37,283

37,237

37,297

37,277

1 The second 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 Second Quarter Ended June 30, 2015."

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SOURCE Syneron Medical Ltd.



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http://www.syneron-candela.com