Syneron Medical Ltd. Posts Larger 2Q Loss After Candela Deal
YOKNEAM, ISRAEL--(Marketwire - August 12, 2010) - Syneron Medical Ltd. (NASDAQ: ELOS)
Second Quarter Highlights:
-- Total revenue of $48.6 million, up 13.0% sequentially
-- North America revenue of $18.0 million, up 23.3% sequentially
-- International revenue of $30.6 million, up 7.6% sequentially
-- Cash, cash equivalents and marketable securities of $228.0 million
at June 30, 2010
Syneron Medical Ltd. (NASDAQ: ELOS), the leading global aesthetic device company, today announced second quarter 2010 financial results for the three month period ended June 30, 2010. Second quarter 2010 financial results are for Syneron and Candela as a combined company. The second quarter 2009 year-over-year comparative financial results referred to below are pro-forma financial results assuming the merger with Candela Corporation had occurred on January 1, 2009.
Lou Scafuri, Chief Executive Officer of Syneron, commented, "During the second quarter Syneron achieved positive results, reflecting the competitive momentum of the combined Syneron and Candela businesses in the marketplace. The quarter was headlined by sequential North American and International revenue growth. We were particularly pleased with the strong rebound in North America, where revenue grew 23% sequentially, driven by the initial benefits of the cross-selling opportunities between the Syneron and Candela customer bases and an expanded presence in the core physician market. Internationally, growth was driven by the launch of new products and continued strong demand from Asia and Latin America."
Revenue for the second quarter 2010 was $48.6 million, a sequential increase of 13.0% compared to $43.0 million in the first quarter 2010 and an increase of 6.8% compared to $45.5 million in the second quarter 2009. Second quarter 2010 revenue in North America was $18.0 million, a sequential increase of 23.3% compared to $14.6 million in the first quarter 2010 and compared to $18.9 million in the second quarter of 2009. International revenue was $30.6 million, a sequential increase of 7.6% compared to $28.4 million in the first quarter 2010 and an increase of 15.0% compared to $26.6 million in the second quarter of 2009. Product and service revenue for the second quarter 2010 were $33.9 million and $14.7 million, respectively.
Gross margin for the second quarter 2010 was 47.2% or 48.9% on a non-GAAP basis, excluding stock-based compensation, amortization and expenses related to the Candela merger compared to 34.5% or 47.4% on a non-GAAP basis in the first quarter 2010. Gross margin in the second quarter 2009 was 45.1% or 46.5% on a non-GAAP basis. Second quarter 2010 gross margin was impacted by a $0.7 million in expense related to the Candela merger and a higher mix of international distribution compared to direct sales.
Operating expenses for the second quarter 2010 were $29.5 million, compared to $44.7 million in the first quarter 2010 and $28.0 million in the second quarter of 2009. Second quarter 2010 operating expenses includes $2.0 million related to the Company's patent litigation with Palomar Medical Technologies, Inc. and $0.8 million in stock-based compensation.
GAAP net loss for the second quarter 2010 was $6.2 million, or $(0.18) per basic and diluted share, compared to a net loss of $22.5 million, or $(0.66) per basic and diluted share in the first quarter 2010. GAAP net loss for the second quarter 2009 was $6.4 million, or $(0.19) per basic and diluted share. On a non-GAAP basis, excluding stock-based compensation, amortization and merger-related expenses, loss from continuing operations before non-controlling interest for the second quarter 2010 was $4.1 million, or $(0.12) per basic and diluted share, compared to a non-GAAP loss from continuing operations before non-controlling interest of $6.2 million, or $(0.18) per basic and diluted share in the first quarter 2010. Non-GAAP loss from continuing operations before non-controlling interest for the second quarter 2009 was $4.0 million, or $(0.13) per share, basic and diluted.
Cash and cash equivalents, including short-term bank deposits and investments in marketable securities, were $228.0 million at June 30, 2010.
Mr. Scafuri, concluded, "We continued to make progress in the integration of the Candela business, positioning the Company to capitalize on the many synergies from the merger. We have identified specific opportunities to gain incremental operational efficiencies and further leverage Syneron's market leading position in the global aesthetics industry. Looking forward, we expect to continue winning in the marketplace as a result of the combined strength of Syneron and Candela's broad product portfolio, world-wide distribution channels, and diverse new product pipeline."
Use of Non-GAAP Measures
This press release provides financial measures for gross margin, net loss,
net loss per basic and diluted share, which exclude one-time expenses
relating to the merger with Candela Corporation and an expense charge
related to stock-based compensation and amortization 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 operational results and enhances management's and investors'
ability to evaluate the Company's gross margin, net loss and net loss per
basic and diluted 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 both GAAP and non-GAAP measures when
evaluating the business internally and, therefore, felt 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 2010 earnings conference
call today at 8:30 a.m. ET. Syneron will be broadcasting live via the
Investor Relations section of its website, www.syneron.com. To access the
call, enter the Syneron website, then click on the Investors Relations
Overview and select "Q2 2010 Results Conference Call."
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 877-844-6886 in the U.S., and 970-315-0315 from overseas. The conference pass code is: 91901721.
About Syneron Medical Ltd.
Syneron Medical Ltd. (NASDAQ: ELOS) is the leading global aesthetic device company with a comprehensive product portfolio and a global distribution footprint. The Company's technology enable physicians to provide advanced solutions for a broad range of medical-aesthetic applications including body contouring, hair removal, wrinkle reduction, rejuvenation of 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 two distinct brands, Syneron and Candela. Founded in 2000, the corporate, R&D, and manufacturing headquarters for Syneron Medical Ltd. are located in Israel. Syneron also has R&D and manufacturing operations in the US. The company markets and 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. Additional information can be found at www.syneron.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. 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 risk that the businesses of Syneron and Candela may not be integrated successfully; the risk that the merger transaction with Candela may involve unexpected costs or unexpected liabilities; the risk that synergies from the merger transaction may not be fully realized or may take longer to realize than expected; the risk that disruptions from the merger transaction make it more difficult to maintain relationships with customers, employees, or suppliers; as well as the 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, 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 Income (Loss)
(in thousands, except per share data)
For the three-months For the six-months
ended ended
June 30, June 30, June 30, June 30,
2010 2009 2010 2009
--------- --------- --------- ---------
Revenue $ 48,629 $ 14,155 $ 91,631 $ 26,044
Cost of sales 25,667 4,979 53,836 9,959
--------- --------- --------- ---------
Gross profit 22,962 9,176 37,795 16,085
Operating expenses:
Sales and marketing 14,477 8,681 35,300 18,756
General and administrative 7,949 2,818 22,707 8,834
Research and development 6,721 2,938 13,751 5,886
Other expenses 334 - 2,426 -
Legal settlement, net - - - (3,975)
--------- --------- --------- ---------
Total operating expenses 29,481 14,437 74,184 29,501
--------- --------- --------- ---------
Loss from operations (6,519) (5,261) (36,389) (13,416)
Other income (expense):
Interest income 162 473 325 1,214
Other expense (250) - (559) -
--------- --------- --------- ---------
Total other income (expense) (88) 473 (234) 1,214
--------- --------- --------- ---------
Loss from continuing operations
before income taxes (6,607) (4,788) (36,623) (12,202)
(Benefit) expense from income
taxes (3) 852 (6,206) 1,597
--------- --------- --------- ---------
Loss from continuing operations
before non-controlling
interest (6,604) (5,640) (30,417) (13,799)
Net loss attributable to
non-controlling interest 429 106 1,555 106
Income from discontinued
operations, net of income
taxes - - 196 -
--------- --------- --------- ---------
Net Loss attributable to
Syneron shareholders $ (6,175) $ (5,534) $ (28,666) $ (13,693)
========= ========= ========= =========
Loss per share:
Basic and diluted
Loss from continuing
operations before
non-controlling interest $ (0.19) $ (0.20) $ (0.89) $ (0.50)
Net loss attributable to
non-controlling interest 0.01 - 0.05 -
Income from discontinued
operations - - 0.01 -
--------- --------- --------- ---------
Net Loss attributable to
Syneron shareholders $ (0.18) $ (0.20) $ (0.83) $ (0.50)
--------- --------- --------- ---------
Weighted average shares
outstanding:
Basic and diluted 34,439 27,504 34,233 27,492
--------- --------- --------- ---------
Syneron Medical Ltd.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
June 30, December 31,
2010 2009
----------- -----------
Assets
Current assets:
Cash and cash equivalents $ 81,928 $ 24,372
Short-term bank deposits 2,470 1,000
Available-for-sale marketable securities 115,518 169,309
Accounts receivable, net 42,782 13,758
Other current assets 10,721 2,753
Inventories, net 21,361 8,592
----------- -----------
Total current assets 274,780 219,784
----------- -----------
Non-current assets:
Severance pay fund 266 246
Long-term deposits and others (*) 1,492 221
Long-term available-for-sale marketable
securities (*) 28,044 11,449
Investments in affiliated company 1,050 1,050
Property and equipment, net 4,248 2,885
Goodwill and Intangible assets, net 53,751 34,632
Deferred taxes 10,808 -
----------- -----------
Total non-current assets 99,659 50,483
----------- -----------
Total assets $ 374,439 $ 270,267
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 16,578 $ 3,735
Other accounts payable and accrued expenses 58,638 30,153
----------- -----------
Total current liabilities 75,216 33,888
----------- -----------
Non-current liabilities:
Contingent consideration 16,131 7,331
Deferred Revenues 5,386 902
Warranty Accruals 679 558
Accrued severance pay 357 330
Deferred taxes 5,617 -
----------- -----------
Total non-current liabilities 28,170 9,121
----------- -----------
Stockholders' equity: 271,053 227,258
----------- -----------
Total liabilities and stockholders' equity $ 374,439 $ 270,267
=========== ===========
Syneron Medical Ltd.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
For the six months ended
------------------------
June 30, June 30,
2010 2009
----------- -----------
Cash flows from operating activities:
Net loss before non-controlling interest $ (28,215) $ (13,799)
Adjustments to reconcile net loss to net cash
used by operating activities:
Non-cash items reported in discontinued
operations (232) -
Share-based compensation expense 1,579 2,689
Depreciation and amortization 4,778 1,155
Provision for bad debts 3,639 3,335
Impairments of available-for-sale marketable
securities and other intangible assets 1,594 172
Realized loss, changes in accrued interest,
and amortization of premium on marketable
securities 478 988
Revaluation of contingent liability 914 -
Other non-cash items (54) -
Changes in operating assets and liabilities
Accounts receivable (885) 10,445
Inventories 9,612 2,338
Other current assets (1,008) 822
Other assets (15) -
Accounts payable 6,869 (5,971)
Accrued payroll and related expenses 1,362 9
Deferred revenue (2,162) (2,499)
Accrued warranty costs (618) 324
Income taxes payable and deferred 3,499 816
Other accrued liabilities (599) (2,090)
----------- -----------
Net cash provided by (used by) operating
activities 536 (1,266)
----------- -----------
Cash flows from investing activities:
Purchases of property and equipment (755) (221)
Maturities of held-to-maturity marketable
securities 460 -
Proceeds from the sale of available-for-sale
marketable securities 131,240 121,186
Purchase of available-for-sale marketable
securities (94,610) (146,498)
Net cash received from acquisition of
subsidiary 22,533 (41)
Other investing activities (1,679) (2,604)
----------- -----------
Net cash provided by (used by) investing
activities 57,189 (28,178)
----------- -----------
Cash flows from financing activities:
Proceeds from the issuance of common stock 631 1
----------- -----------
Net cash provided by financing activities 631 1
----------- -----------
Effect of exchange rates on cash and cash
equivalents (800) -
----------- -----------
Net increase (decrease) in cash and cash
equivalents 57,556 (29,443)
Cash and cash equivalents at beginning of period 24,372 72,366
----------- -----------
Cash and cash equivalents at end of period $ 81,928 $ 42,923
=========== ===========
Syneron Medical Ltd.
Unaudited Non-GAAP Financial Measures and Reconciliation
(in thousands, except per share data)
For the three-months For the six-months
ended ended
June 30, June 30, June 30, June 30,
2010 2009 2010 2009
--------- --------- --------- ---------
GAAP operating loss $ (6,519) $ (5,261) $ (36,389) $ (13,416)
Stock-based compensation 797 770 1,579 2,689
Amortization of acquired
intangible assets 1,549 68 3,047 136
Merger, restructuring and
other non-recurring costs 831 - 19,392 -
--------- --------- --------- ---------
Non-GAAP operating loss $ (3,342) $ (4,423) $ (12,371) $ (10,591)
========= ========= ========= =========
GAAP loss from continuing
operations before non-
controlling interest $ (6,604) $ (5,640) $ (30,417) $ (13,799)
Stock-based compensation 797 770 1,579 2,689
Amortization of acquired
intangible assets 1,549 68 3,047 136
Merger, restructuring and
other non-recurring costs 831 - 19,392 -
Income tax adjustments (703) - (7,442) -
--------- --------- --------- ---------
Non-GAAP loss from continuing
operations before non-
controlling interest $ (4,130) $ (4,802) $ (13,841) $ (10,974)
========= ========= ========= =========
GAAP loss per share from
continuing operations
before non-controlling
interest $ (0.19) $ (0.30) $ (0.89) $ (0.30)
Stock-based compensation 0.02 0.03 0.05 0.10
Amortization of acquired
intangible assets 0.04 0.00 0.09 0.00
Merger, restructuring and
other non-recurring costs 0.02 - 0.56 -
Income tax adjustments (0.02) - (0.22) -
--------- --------- --------- ---------
Non-GAAP loss per share from
continuing operations before
non-controlling interest $ (0.12) $ (0.27) $ (0.41) $ (0.20)
========= ========= ========= =========
Weighted average shares
outstanding:
Basic and diluted 34,439 27,504 34,233 27,492
--------- --------- --------- ---------
Syneron Medical Ltd.
Unaudited Pro Forma Condensed Consolidated Statements of Income (Loss)
(in thousands, except per share data)
For the three months ended June 30, 2009
----------------------------------------------
Syneron Candela Pro Forma Pro Forma
Medical Corporation Adjustments Combined
---------- ---------- ---------- ----------
Revenue $ 14,155 $ 31,393 $ (87) $ 45,461
Cost of sales 4,979 19,396 575 24,950
---------- ---------- ---------- ----------
Gross profit 9,176 11,997 (662) 20,511
Operating expenses:
Sales and marketing 8,681 7,628 969 17,278
General and administrative 2,818 2,716 113 5,647
Research and development 2,938 2,146 - 5,084
Legal settlement, net - - - -
---------- ---------- ---------- ----------
Total operating expenses 14,437 12,490 1,082 28,009
---------- ---------- ---------- ----------
Loss from operations (5,261) (493) (1,744) (7,498)
Other income:
Interest income 473 86 - 559
Other income - 276 - 276
---------- ---------- ---------- ----------
Total other income 473 362 - 835
---------- ---------- ---------- ----------
Loss from continuing
operations before income
taxes (4,788) (131) (1,744) (6,663)
Expense (benefit) from
income taxes 852 (510) (634) (292)
---------- ---------- ---------- ----------
(Loss) income from
continuing operations
before non-controlling
interest (5,640) 379 (1,110) (6,371)
========== ========== ========== ==========
Loss per share:
Basic and diluted
(Loss) income from
continuing operations
before non-controlling
interest $ (0.21) $ 0.02 $ (0.19)
========== ========== ==========
Weighted average shares
outstanding:
Basic and diluted 27,504 22,726 34,174
---------- ---------- ----------
Syneron Medical Ltd.
Unaudited Pro Forma Condensed Consolidated Statements of Income (Loss)
(in thousands, except per share data)
For the six months ended June 30, 2009
----------------------------------------------
Syneron Candela Pro Forma Pro Forma
Medical Corporation Adjustments Combined
---------- ---------- ---------- ----------
Revenue $ 26,044 $ 61,159 $ (175) $ 87,029
Cost of sales 9,959 37,229 827 48,015
---------- ---------- ---------- ----------
Gross profit 16,085 23,930 (1,002) 39,014
Operating expenses:
Sales and marketing 18,756 15,179 1,938 35,873
General and administrative 8,834 5,962 226 15,022
Research and development 5,886 4,634 - 10,520
Legal settlement, net (3,975) - - (3,975)
---------- ---------- ---------- ----------
Total operating expenses 29,501 25,775 2,164 57,440
---------- ---------- ---------- ----------
Loss from operations (13,416) (1,845) (3,166) (18,427)
Other income:
Interest income 1,214 94 - 1,308
Other income - 260 - 260
---------- ---------- ---------- ----------
Total other income 1,214 354 - 1,568
---------- ---------- ---------- ----------
Loss from continuing
operations before income
taxes (12,202) (1,491) (3,166) (16,859)
Expense (benefit) from
income taxes 1,597 (975) (1,151) (529)
---------- ---------- ---------- ----------
(Loss) income from
continuing operations
before non-controlling
interest (13,799) (516) (2,015) (16,330)
========== ========== ========== ==========
Loss per share:
Basic and diluted
(Loss) income from
continuing operations
before non-controlling
interest $ (0.50) $ (0.02) $ (0.48)
========== ========== ==========
Weighted average shares
outstanding:
Basic and diluted 27,492 22,714 34,162
---------- ---------- ----------
Syneron Medical Ltd.
Unaudited Pro Forma Non-GAAP Financial Measures and Reconciliation
(in thousands, except per share data)
For the three months ended
June 30, 2009
-------------------------------------
Syneron Candela Pro Forma
Medical Corporation Combined
----------- ----------- -----------
GAAP operating loss $ (5,261) $ (2,237) $ (7,498)
Stock-based compensation 770 552 1,322
Amortization of acquired intangible
assets 68 1,334 1,402
Merger, restructuring and other
non-recurring costs - 497 497
----------- ----------- -----------
Non-GAAP operating (loss) income $ (4,423) $ 146 $ (4,