HAYWARD, Calif., Nov. 10 /PRNewswire-FirstCall/ -- Thermage, Inc. , a leader in non-invasive tissue tightening in the aesthetic industry, today reported financial results for the third quarter ended September 30, 2008. Reliant Technologies, Inc. also reported its financial results for the third quarter.
Thermage revenue for the third quarter of 2008 was $13.0 million, a decline of 6% from $13.9 million for the third quarter of 2007. Domestic revenue decreased 10% and international revenue fell 1% from the third quarter of 2007. Gross margin for the quarter was 75.4% as compared to 77.6% for the same period last year. Third quarter operating expenses declined from the prior year by $0.4 million, or 3%, to $10.6 million. Net loss for the quarter was $1.1 million, or $0.05 per share, compared to net income of $0.4 million, or $0.02 per diluted share, in the third quarter of 2007. The third quarter of 2008 included a $0.9 million loss, or $0.03 per share, associated with the company's investment in a Lehman Brothers bond. Non-GAAP (1) net income for the third quarter of 2008 was $0.7 million, or $0.03 per diluted share, compared to non-GAAP (1) net income of $1.6 million, or $0.07 per diluted share, for the prior year period.
Third quarter 2008 revenue for Reliant totaled $19.9 million, 22% over the $16.3 million in revenue in the third quarter of the prior year. Reliant's operating loss for the third quarter of 2008 was $1.6 million on a GAAP basis and included approximately $1.6 million in stock based compensation charges and approximately $1.1 million in transaction expenses related to the pending merger with Thermage.
On a combined pro forma basis, revenue for the third quarter of 2008 for both companies would have totaled $32.9 million. This represents a growth rate of approximately 9% from the pro forma combined revenue of the two companies of $30.1 million in the third quarter of 2007.
"This was a challenging quarter for the industry. The poor economic climate and tight credit conditions resulted in physicians delaying purchases and a slowdown in end-user demand," said Stephen J. Fanning, Chairman, President and Chief Executive Officer. "While Thermage revenue declined slightly from the prior year, our gross margin of 75% remains one of the highest in the industry. In addition, we exhibited good control of our operating expenses and generated approximately $1.4 million in cash from operations in the quarter."
"Reliant's growth for the quarter was the highest reported in the aesthetic energy device industry," Mr. Fanning continued. "With growing acceptance of its Fraxel products and procedures for skin resurfacing and rejuvenation earlier, Reliant generated strong growth, despite the difficult environment. We are focused on closing the Reliant transaction and completing the integration as quickly as possible. The Reliant acquisition offers significant opportunities for an expanded market presence and cost synergies."
"We anticipate that the environment will remain challenging. However, we believe that the merger of Thermage and Reliant joins the two leading brands and innovators in aesthetic device technology. Both companies have business models focused on generating substantial recurring revenue that should serve to help us weather current economic conditions and ultimately result in strengthening our leadership position in the industry," concluded Mr. Fanning.
Due to the pending completion of the Reliant acquisition and the uncertain economic environment, Thermage is withdrawing previous guidance for full year 2008.
(1) To supplement the condensed financial information presented on a GAAP basis, management has provided non-GAAP net income, and non-GAAP earnings per share measures that exclude the impact of all stock-based compensation expenses, loss on investments, and merger related costs, all net of income taxes. The Company believes that these non-GAAP financial measures provide investors with insight into what is used by management to conduct a more meaningful and consistent comparison of the Company's ongoing operating results and trends, compared with historical results. This presentation is also consistent with management's internal use of the measure, which it uses to measure the performance of ongoing operating results, against prior periods and against our internally developed targets. A table reconciling the GAAP financial measures to the non-GAAP measures is included in the condensed financial information attached to this release.
The conference call is scheduled to begin at 1:30 p.m. PT (4:30 p.m. ET) on November 10, 2008. The call will be broadcast live over the Internet hosted at the Investor Relations section of the Company's website at http://www.thermage.com. In addition, you may call to listen to the live broadcast: 800-218-0530 for domestic participants and 303-262-2190 for international participants.
A taped replay of the conference call will also be available beginning approximately one hour after the call's conclusion and will remain accessible for seven days. This replay can be accessed by dialing 800-405-2236 for domestic callers and 303-590-3000 for international callers. Both callers will need to use the Passcode 11120695#. An archived webcast will also be available at http://www.thermage.com.
About Thermage, Inc.
Thermage's innovative technology provides a unique non-invasive procedure designed to tighten and contour skin, significantly expanding the non-invasive aesthetic applications physicians can offer to the rapidly growing "anti-aging" market. For more information, call 1-510-259-7117 or visit http://www.thermage.com.
This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Specifically, statements concerning the pending merger with Reliant and related integration as well as the uncertain economic environments are forward-looking statements within the meaning of the Safe Harbor. Forward-looking statements are based on management's current, preliminary expectations and are subject to risks and uncertainties, which may cause Thermage's actual results to differ materially from the statements contained herein including but not limited to market acceptance and demand of current and future products among physicians and patients, our ability to successfully integrate the operations of Reliant and realize synergies, the potential impact of general economic conditions on the demand for our products, risks inherent with third-party supply and distribution networks, risks inherent to future sales growth, and the ability to execute proposed initiatives. Further information on potential risk factors that could affect Thermage's business and its financial results are detailed in its Form 10-K for the year ended December 31, 2007, its Form 10-Q for the quarter ended June 30, 2008 and other reports as filed from time to time with the Securities and Exchange Commission. Undue reliance should not be placed on forward-looking statements, especially guidance on future financial performance, which speaks only as of the date they are made. Thermage undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made, or to reflect the occurrence of unanticipated events.
Additional Information and Where You Can Find It
This communication may be deemed to be solicitation material in respect of the proposed transaction between Thermage and Reliant. In connection with the transaction, Thermage has filed a registration statement on Form S-4 with the SEC containing a proxy statement/prospectus/ information statement. The proxy statement/prospectus/information statement will be mailed to the stockholders of Thermage and Reliant. Investors and security holders of Thermage and Reliant are urged to read the proxy statement/prospectus/information statement when it becomes available because it will contain important information about Thermage, Reliant and the proposed transaction. The proxy statement/prospectus/information statement (when it becomes available), and any other documents filed by Thermage with the SEC, may be obtained free of charge at the SEC's web site at http://www.sec.gov. In addition, investors and security holders may obtain free copies of the documents filed with the SEC by Thermage by contacting Thermage Investor Relations by e-mail at IR@thermage.com or by telephone at (510) 259-7117. Investors and security holders are urged to read the proxy statement/prospectus/information statement and the other relevant materials when they become available before making any voting or investment decision with respect to the proposed transaction.
CONTACT: Jack Glenn, Chief Financial Officer of Thermage, Inc.,
+1-510-786-6890; or Investors, Doug Sherk|Jenifer Kirtland, both of EVC
Group, Inc., +1-415-896-6820, or Media, Steve DiMattia of EVC Group, Inc.,
+1-646-201-5445, for Thermage, Inc.
Web site: http://www.thermage.com/