IRVINE, CA--(Marketwire - August 17, 2010) - BIOLASE Technology, Inc. (NASDAQ: BLTI), the
world's leading dental laser company, today reported operating results for
its second quarter and six months ended June 30, 2010 and the outline of a
new global distribution model.
As first discussed in March, the first half of 2010 revenues and operating
results were expected to be impacted by a fundamental change in the
purchasing pattern of its exclusive North American distribution partner
Henry Schein, Inc. (NASDAQ: HSIC). The new purchasing pattern replaced
minimum laser purchase commitments from Henry Schein, which would have been
recognized as revenue upon shipment of product in the first half, to
prepayments for future deliveries, with revenue being recognized in future
quarters. In addition to the impact on revenues, the related short-term
transitional agreement struck on March 9, 2010 with Henry Schein provided
for a 60 day cancellation period (which was reduced to 45 days effectively
today), preserved some cash flows, decreased pipeline inventories, and
allowed BIOLASE to begin exploring alternative long-term distribution
models and accounts. Arrangements are in the process of being finalized
for that new distribution model.
Net revenue for this year's second quarter was $5.9 million, compared to
$14.3 million in the prior year quarterly period. Net revenue for first
six months of this year was $10.3 million, compared to $20.9 million in the
prior year period. The year-over-year change in revenue in the second
quarter and the first half of this year was driven by minimized domestic
laser purchases by Henry Schein as it reduced its inventories. Under the
renegotiated distribution agreement with Henry Schein, the majority of its
required minimum laser orders for the first quarter were replaced by
prepayments for future deliveries of the Company's products, primarily the
iLase™ personal dental laser. This arrangement delayed the recognition
of approximately $6 million in revenue from the first half of 2010 to
future periods, while maintaining some portion of normal cash flows during
the transition. The Company is currently accelerating shipping which is
expected to improve revenue results in the last half of the year as the
iLase production continues to rise.
BIOLASE Chairman and Chief Executive Officer David M. Mulder said, "As we
anticipated and first announced in March, first half revenues were
significantly impacted by the resolution of the remaining commitments from
the initial 14-month agreement with Henry Schein and a short-term
transitional agreement in March, both with prepayments versus actual
purchases allowing Schein to reduce inventories. We expect prepayment
impacts should lessen as the year progresses and as we solidify our new
business model, but we have also been exploring an improved overall model
for BIOLASE as a whole. During this transitional agreement, we have been
building up the BIOLASE sales team, initiating marketing efforts to
non-traditional Henry Schein accounts, exploring relationships with other
potential North American distributors, and moving forward with Henry Schein
to explore a new, long-term non-exclusive relationship allowing for broader
distribution and more BIOLASE control over Waterlase™ sales. We believe
we are now on the cusp of announcing a new long-term distribution model and
look forward to taking advantage of the economic recovery that we believe
is beginning to provide some lift in both domestic and international
markets end user sales."
Gross margin as a percentage of net revenue for this year's second quarter
was 33 percent compared to 57 percent for the prior year quarterly period
and 6 percent for this year's first quarter. The year-over-year decrease
was primarily due to the lower revenue numbers, in comparison to fixed and
unabsorbed manufacturing costs in cost of goods sold, partially offset by
net increased revenue recognized on deferred royalties as a part of the new
Procter & Gamble transaction. Operating expenses in the second quarter of
2010 were $6.1 million, compared to $5.6 million in the year-earlier
quarterly period, principally due to the build out of the sales and
marketing team. Most of the cost decreases announced late in the quarter
were not in the sales and marketing category.
Net loss for this year's second quarter was $4.2 million, or $0.17 loss per
share, compared to net income of $2.3 million, or $0.10 per share, in the
2009 second quarter. Non-GAAP net loss was $3.7 million, or $0.15 loss per
share, for the 2010 second quarter compared with non-GAAP net income of
$3.0 million, or $0.12 per share, for the similar quarter in 2009.
Net loss for the first six months of 2010 was $9.5 million, or $0.39 loss
per share, compared to a net loss of $2.3 million, or $0.10 loss per share,
in the first six months of 2009. Non-GAAP net loss was $8.5 million, or
$0.35 loss per share, for this year's first six months compared with
non-GAAP net loss of $743,000, or $0.03 loss per share, for the similar
period in 2009.
Recent Highlights:
-- Appointment of two new Board members, Drs. Alex Arrow and Norman J.
Nemoy.
-- Appointment of Mr. Federico Pignatelli as Executive Vice Chairman.
-- A continued restructuring and build up of the sales force to better
position the Company's sales team in the dental market long-term.
-- Cost reductions implemented at the end of the 2010 second quarter to
enable anticipated future increases in sales to be more profitable.
-- Global launch and Canadian approval to sell the iLase diode laser,
which began shipping late in the second quarter.
-- Secured $5 million debt facility with MidCap Financial, LLC and Silicon
Valley Bank, of which $3 million was funded on May 27, 2010.
-- Negotiated a new license agreement with The Procter & Gamble Company
(P&G) to enable BIOLASE to launch light-based oral care devices to
dental professionals.
-- Two new patents awarded for technology that are utilized with the
BIOLASE family of diode lasers, including the ezlase™ and iLase.
-- Launch of a consumer awareness campaign, including multimedia
educational tools, viral video marketing and social network outreach.
-- A presentation at a national meeting of eye surgeons covering the
multiple benefits and promising potential applications of the Company's
Waterlase for eye surgery.
Conference Call
As previously announced, the Company will host a conference call today at
9:00 a.m. Eastern Time to discuss its operating results for the second
quarter and six months ended June 30, 2010, and to answer questions. The
dial-in number for the call is toll-free 1-877-941-4774 or
toll/international 1-480-629-9760. The live webcast and archived replay of
the call can be accessed in the Investors section of the BIOLASE website at
www.biolase.com.
About BIOLASE Technology, Inc.
BIOLASE Technology, Inc. (http://www.biolase.com), the world's leading
dental laser company, develops, manufactures and markets Waterlase
technology and lasers and related products that advance the practice of
dentistry and medicine. The Company's products incorporate patented and
patent pending technologies designed to provide clinically superior
performance with reduced pain and faster recovery times. BIOLASE's
principal products are dental laser systems that perform a broad range of
dental procedures, including cosmetic and complex surgical applications.
Other products under development address ophthalmology, pain management and
other medical and consumer markets.
This press release may contain forward-looking statements within the
meaning of safe harbor provided by the Securities Reform Act of 1995 that
are based on the current expectations and estimates by the Company's
management. These forward-looking statements can be identified through the
use of words such as "anticipates," "expects," "intends," "plans,"
"believes," "seeks," "estimates," "may," "will," and variations of these
words or similar expressions. Forward-looking statements are based on
management's current, preliminary expectations and are subject to risks,
uncertainties and other factors which may cause the Company's actual
results to differ materially from the statements contained herein, and are
described in the Company's reports it files with the Securities and
Exchange Commission, including its annual and quarterly reports. No undue
reliance should be placed on forward-looking statements. Such information
is subject to change, and the Company undertakes no obligation to update
such statements.
BIOLASE TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2010 2009 2010 2009
-------- -------- -------- --------
Products and services revenue $ 4,744 $ 13,887 $ 9,083 $ 20,006
License fees and royalty revenue 1,148 430 1,204 905
-------- -------- -------- --------
Net revenue 5,892 14,317 10,287 20,911
Cost of revenue 3,961 6,219 8,086 11,045
-------- -------- -------- --------
Gross profit 1,931 8,098 2,201 9,866
-------- -------- -------- --------
Operating expenses:
Sales and marketing 3,082 2,770 5,715 5,815
General and administrative 1,976 1,735 3,701 4,304
Engineering and development 995 1,119 2,215 2,202
-------- -------- -------- --------
Total operating expenses 6,053 5,624 11,631 12,321
-------- -------- -------- --------
(Loss) profit from operations (4,122) 2,474 (9,430) (2,455)
-------- -------- -------- --------
Gain (loss) on foreign currency
transactions 26 (109) 43 206
Interest income -- 2 1 3
Interest expense (55) (12) (59) (42)
-------- -------- -------- --------
Non-operating (loss) income, net (29) (119) (15) 167
-------- -------- -------- --------
(Loss) income before income tax
provision (4,151) 2,355 (9,445) (2,288)
Income tax provision 13 25 24 58
-------- -------- -------- --------
Net (loss) income $ (4,164) $ 2,330 $ (9,469) $ (2,346)
======== ======== ======== ========
Net (loss) income per share:
Basic $ (0.17) $ 0.10 $ (0.39) $ (0.10)
======== ======== ======== ========
Diluted $ (0.17) $ 0.10 $ (0.39) $ (0.10)
======== ======== ======== ========
Shares used in the calculation of
net (loss) income per share:
Basic 24,400 24,244 24,391 24,244
======== ======== ======== ========
Diluted 24,400 24,321 24,391 24,244
======== ======== ======== ========
BIOLASE TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands, except per share data)
June 30, December 31,
2010 2009
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 2,895 $ 2,975
Accounts receivable, less allowance of $443
and $421 in 2010 and 2009, respectively 1,675 4,229
Inventory, net 9,284 7,861
Prepaid expenses and other current assets 1,181 1,347
Assets held for sale 531 --
---------- ----------
Total current assets 15,566 16,412
Property, plant and equipment, net 1,185 2,180
Intangible assets, net 407 472
Goodwill 2,926 2,926
Deferred tax asset 25 17
Other assets 170 170
---------- ----------
Total assets $ 20,279 $ 22,177
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Term loan payable, current portion $ 644 $ --
Accounts payable 4,491 4,887
Accrued liabilities 4,621 5,152
Customer deposits 6,326 --
Deferred revenue, current portion 1,976 1,123
---------- ----------
Total current liabilities 18,058 11,162
Term loan payable, long-term 2,258 --
Deferred tax liabilities 509 473
Warranty accrual, long-term 521 448
Deferred revenue, long-term 76 1,975
Other liabilities, long-term 160 190
---------- ----------
Total liabilities 21,582 14,248
---------- ----------
Stockholders' equity (deficit):
Preferred stock, par value $0.001, 1,000 shares
authorized, no shares issued and outstanding -- --
Common stock, par value $0.001, 50,000 shares
authorized; 26,384 and 26,340 shares issued and
24,420 and 24,376 shares outstanding in 2010
and 2009, respectively 27 27
Additional paid-in capital 117,759 117,228
Accumulated other comprehensive loss (516) (222)
Accumulated deficit (102,174) (92,705)
---------- ----------
15,096 24,328
Treasury stock (cost of 1,964 shares repurchased) (16,399) (16,399)
---------- ----------
Total stockholders' equity (deficit) (1,303) 7,929
---------- ----------
Total liabilities and stockholders' equity
(deficit) $ 20,279 $ 22,177
========== ==========
Non-GAAP Financial Measures
The non-GAAP financial measures contained herein are a supplement to the
corresponding financial measures prepared in accordance with generally
accepted accounting principles (GAAP). The non-GAAP financial measures
presented exclude the items summarized in the below table. Management
believes that adjustments for these items assist investors in making
comparisons of period-to-period operating results and that these items are
not indicative of the Company's on-going core operating performance.
Management uses non-GAAP net income (loss) and non-GAAP net income (loss)
per diluted share in its evaluation of the Company's core after-tax results
of operations and trends between fiscal periods and believes that these
measures are important components of its internal performance measurement
process. Management believes that providing these non-GAAP financial
measures allows investors to view the Company's financial results in the
way that management views the financial results.
The non-GAAP financial measures presented herein have certain limitations
in that they do not reflect all of the costs associated with the operations
of the Company's business as determined in accordance with GAAP. Therefore,
investors should consider non-GAAP financial measures in addition to, and
not as a substitute for, or as superior to, measures of financial
performance prepared in accordance with GAAP. The non-GAAP financial
measures presented by the Company may be different from the non-GAAP
financial measures used by other companies.
BIOLASE TECHNOLOGY, INC.
Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Measures
(in thousands, except per share data)
Three months Ended Six Months Ended
June 30, June 30,
2010 2009 2010 2009
-------- -------- -------- --------
GAAP net (loss) income $ (4,164) $ 2,330 $ (9,469) $ (2,346)
Adjustments:
Interest expense 55 12 59 42
Depreciation and amortization
expense 272 361 571 776
Stock based compensation expense 180 317 386 785
-------- -------- -------- --------
Non-GAAP net (loss) income $ (3,657) $ 3,020 $ (8,453) $ (743)
======== ======== ======== ========
GAAP net (loss) income per share: $ (0.17) $ 0.10 $ (0.39) $ (0.10)
Basic and Diluted
Adjustments:
Interest expense 0.00 0.00 0.00 0.00
Depreciation and amortization
expense 0.01 0.01 0.02 0.03
Stock based compensation expense 0.01 0.01 0.02 0.04
Non-GAAP net (loss) income per
share:
-------- -------- -------- --------
Basic and Diluted $ (0.15) $ 0.12 $ (0.35) $ (0.03)
======== ======== ======== ========
