Syneron Medical Ltd. Reports Third Quarter 2010 Results
YOKNEAM, ISRAEL--(Marketwire - November 11, 2010) - Syneron Medical Ltd. (NASDAQ: ELOS), the leading global aesthetic device company, today announced third quarter 2010 financial results for the three month period ended September 30, 2010. Third quarter 2010 financial results are for Syneron and Candela as a combined company. The third 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.
Third Quarter 2010 Highlights Include:
-- Revenue of $44.4 million, up 10.0% year-over-year
-- International revenue of $29.0 million, up 20.8% year-over-year
-- Non-GAAP gross margin of 52.3%, up from 46.3% in the prior year and
48.9% in Q2 2010
-- Non-GAAP operating loss of $0.5 million, or 1.1% of revenue compared to
$8.8 million, or 21.8% of revenue in the prior year
-- Cash and cash equivalents, including short-term bank deposits and
investments in marketable securities, were $222.6 million at September
30, 2010
Lou Scafuri, Chief Executive Officer of Syneron, commented, "The third quarter results reflect our continued success in the marketplace and our ability to deliver products that address the changing paradigm in the aesthetic industry. In particular, we benefitted from the international strength of our business to drive significant growth. We are confident the Company will continue to execute on cross-selling opportunities that are driving our revenue growth.
"During the quarter we effectively managed our expenses and delivered operational efficiencies from the Candela integration, which led to further improvements in our operating results. Overall, we are pleased with our third quarter results and expect to further advance our market leadership based on the strength of our innovative products and unmatched global channel to market capabilities."
Revenue: Third quarter 2010 revenue was $44.4 million, an increase of 10.0% compared to $40.4 million in the third quarter 2009. International revenue was $29.0 million, an increase of 20.8% compared to $24.0 million in the third quarter 2009. Third quarter 2010 revenue in North America was $15.4 million, compared to $16.4 million in the third quarter 2009.
Non-GAAP Financial Highlights for the Third Quarter Ended September 30, 2010:
Gross Margin: Third quarter 2010 gross margin was 52.3%, compared to 48.9% in the second quarter 2010 and 46.3% in the third quarter 2009.
Operating Loss: Third quarter 2010 operating loss was $0.5 million, compared to an operating loss of $3.3 million in the second quarter 2010 and $8.8 million in the third quarter 2009. Third quarter 2010 operating loss represented 1.1% of revenue in the quarter, compared to 6.9% in the second quarter 2010 and 21.8% in the third quarter 2009.
Net Loss: Third quarter 2010 loss from continuing operations before non-controlling interest was $1.5 million, compared to a loss of $4.1 million in the second quarter 2010 and $8.1 million in the third quarter 2009.
Loss Per Share: Third quarter 2010 loss per share was $(0.04), compared to a loss per share of $(0.12) in the second quarter 2010 and $(0.24) in the third quarter 2009.
GAAP Financial Highlights for the Third Quarter Ended September 30, 2010:
Gross Margin: Third quarter 2010 gross margin was 50.8%, compared to 47.2% in the second quarter 2010 and 45.2% in the third quarter 2009.
Operating Loss: Third quarter 2010 operating loss was $5.0 million, compared to an operating loss of $6.5 million in the second quarter 2010 and $11.5 million in the third quarter 2009.
Net Loss: Third quarter 2010 net loss was $5.3 million, compared to a net loss of $6.2 million in the second quarter 2010. In the third quarter of 2009 the net loss before non-controlling interest was $10.1 million.
Loss Per Share: Third quarter 2010 loss per share was $(0.15), compared to a loss per share of $(0.18) in the second quarter 2010 and $(0.30) in the third quarter 2009.
Cash Position: As of September 30, 2010, cash and cash equivalents, including short-term bank deposits and investments in marketable securities, were $222.6 million.
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 third 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 "Q3 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: 20334812.
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 enables 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 nine-months
ended ended
-------------------- --------------------
September September September September
30, 2010 30, 2009 30, 2010 30, 2009
--------- --------- --------- ---------
Revenue $ 44,442 $ 14,279 $ 136,073 $ 40,323
Cost of sales 21,867 4,705 75,704 14,664
--------- --------- --------- ---------
Gross profit 22,575 9,574 60,369 25,659
Operating expenses:
Sales and marketing 13,821 7,531 49,121 26,287
General and administrative 6,783 4,225 29,490 13,059
Research and development 6,672 3,063 20,423 8,949
Other expenses 348 - 2,774 -
Legal settlement, net - - - (3,975)
--------- --------- --------- ---------
Total operating expenses 27,624 14,819 101,808 44,320
--------- --------- --------- ---------
Loss from operations (5,049) (5,245) (41,439) (18,661)
Other income (expense):
Financial Income, net 480 447 298 1,661
Other expense (14) - (66) -
--------- --------- --------- ---------
Total other income (expense) 466 447 232 1,661
--------- --------- --------- ---------
Loss from continuing operations
before income taxes (4,583) (4,798) (41,207) (17,000)
(Benefit) expense from income
taxes 669 858 (5,537) 2,455
--------- --------- --------- ---------
Loss from continuing operations
before non-controlling
interest (5,252) (5,656) (35,670) (19,455)
Net loss attributable to
non-controlling interest - 107 1,555 213
Income from discontinued
operations, net of income
taxes - - 196 -
--------- --------- --------- ---------
Net Loss attributable to
Syneron shareholders $ (5,252) $ (5,549) $ (33,919) $ (19,242)
========= ========= ========= =========
Loss per share:
Basic and diluted
Loss from continuing
operations before
non-controlling interest $ (0.15) $ (0.21) $ (1.04) $ (0.71)
Net loss attributable to
non-controlling interest - - 0.05 0.01
Income from discontinued
operations - - 0.01 -
--------- --------- --------- ---------
Net Loss attributable to
Syneron shareholders $ (0.15) $ (0.21) $ (0.98) $ (0.70)
--------- --------- --------- ---------
Weighted average shares
outstanding:
Basic and diluted 34,473 27,530 34,314 27,505
--------- --------- --------- ---------
Syneron Medical Ltd.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
September 30, December 31,
2010 2009
------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 75,774 $ 24,372
Short-term bank deposits 2,231 1,000
Available-for-sale marketable securities 134,418 169,309
Accounts receivable, net 42,401 13,758
Other current assets 11,722 2,753
Inventories, net 23,558 8,592
------------- -------------
Total current assets 290,104 219,784
------------- -------------
Non-current assets:
Severance pay fund 297 246
Long-term deposits and others 1,419 221
Long-term available-for-sale marketable
securities 10,187 11,449
Investments in affiliated company 1,050 1,050
Property and equipment, net 3,891 2,885
Goodwill and Intangible assets, net 52,667 34,632
Deferred taxes 10,014 -
------------- -------------
Total non-current assets 79,525 50,483
------------- -------------
Total assets $ 369,629 $ 270,267
============= =============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 15,891 $ 3,735
Other accounts payable and accrued expenses 56,469 30,153
------------- -------------
Total current liabilities 72,360 33,888
------------- -------------
Non-current liabilities:
Contingent consideration 17,294 7,331
Deferred Revenues 4,407 902
Warranty Accruals 572 558
Accrued severance pay 526 330
Deferred taxes 5,550 -
------------- -------------
Total non-current liabilities 28,349 9,121
------------- -------------
Stockholders' equity: 268,920 227,258
------------- -------------
Total liabilities and stockholders' equity $ 369,629 $ 270,267
============= =============
Syneron Medical Ltd.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
For the nine months ended:
----------------------------
September 30, September 30,
2010 2009
------------- -------------
Cash flows from operating activities:
Net loss before non-controlling interest $ (35,474) $ (19,455)
Adjustments to reconcile net loss to
net cash used by operating activities:
Non-cash items reported in discontinued
operations (232) -
Share-based compensation expense 2,504 3,427
Depreciation and amortization 6,911 1,509
Impairments of available-for-sale
marketable securities and other
intangible assets 1,608 208
Realized loss, changes in accrued
interest, and amortization of premium
on marketable securities 689 1,322
Revaluation of contingent liability 1,262 -
Other non-cash items (45) -
Changes in operating assets and
liabilities
Accounts receivable 2,488 15,878
Inventories 11,813 3,161
Other current assets (1,245) 831
Other assets (10) -
Accounts payable 7,173 (5,160)
Accrued payroll and related expenses (3,407) 13
Deferred revenue (4,244) (3,189)
Accrued warranty costs (426) 28
Income taxes payable and deferred 3,172 1,366
Other accrued liabilities 702 (842)
------------- -------------
Net cash used by operating activities (6,761) (903)
------------- -------------
Cash flows from investing activities:
Purchases of property and equipment (482) (396)
Maturities of held-to-maturity marketable
securities 460 -
Proceeds from the sale of
available-for-sale marketable securities 167,548 211,565
Purchase of available-for-sale marketable
securities (131,784) (247,368)
Net cash received from acquisition of
subsidiary 22,533 (41)
Other investing activities (1,276) (3,135)
------------- -------------
Net cash provided by (used by) investing
activities 56,999 (39,375)
------------- -------------
Cash flows from financing activities:
Proceeds from the issuance of common
stock 631 194
------------- -------------
Net cash provided by financing activities 631 194
------------- -------------
Effect of exchange rates on cash and cash
equivalents 533 -
------------- -------------
Net increase (decrease) in cash and cash
equivalents 51,402 (40,084)
Cash and cash equivalents at beginning of
period 24,372 72,366
------------- -------------
Cash and cash equivalents at end of period $ 75,774 $ 32,282
============= =============
Syneron Medical Ltd.
Unaudited Non-GAAP Financial Measures and Reconciliation
(in thousands, except per share data)
For the three-months For the nine-months
ended ended
-------------------- --------------------
September September September September
30, 2010 30, 2009 30, 2010 30, 2009
--------- --------- --------- ---------
GAAP operating loss $ (5,049) $ (5,245) $ (41,439) $ (18,661)
Stock-based compensation 925 738 2,504 3,427
Amortization of acquired
intangible assets 1,602 68 4,649 204
Merger, restructuring and
other non-recurring costs 2,031 - 24,449 -
--------- --------- --------- ---------
Non-GAAP operating loss $ (491) $ (4,439) $ (9,837) $ (15,030)
========= ========= ========= =========
GAAP loss from continuing
operations before
non-controlling interest $ (5,252) $ (5,656) $ (35,670) $ (19,455)
Stock-based compensation 925 738 2,504 3,427
Amortization of acquired
intangible assets 1,602 68 4,649 204
Merger, restructuring and
other non-recurring costs 2,031 - 24,449 -
Income tax adjustments (781) - (8,223) -
--------- --------- --------- ---------
Non-GAAP loss from continuing
Operations before
non-controlling interest $ (1,475) $ (4,850) $ (12,291) $ (15,824)
========= ========= ========= =========
GAAP loss per share from
continuing operations
before non-controlling
interest $ (0.15) $ (0.21) $ (1.04) $ (0.71)
Stock-based compensation 0.03 0.03 0.07 0.12
Amortization of acquired
intangible assets 0.04 - 0.14 0.01
Merger, restructuring and
other non-recurring costs 0.06 - 0.71 -
Income tax adjustments (0.02) - (0.24) -
--------- --------- --------- ---------
Non-GAAP loss per share from
continuing operations
before non-controlling
interest $ (0.04) $ (0.18) $ (0.36) $ (0.58)
========= ========= ========= =========
Weighted average shares
outstanding:
Basic and diluted 34,473 27,530 34,314 27,505
--------- --------- --------- ---------
Syneron Medical Ltd.
Unaudited Pro Forma Condensed Consolidated Statements of Income (Loss)
(in thousands, except per share data)
For the three months ended September 30, 2009
--------------------------------------------------
Syneron Candela Pro Forma Pro Forma
Medical Corporation Adjustments Combined
----------- ----------- ----------- -----------
Revenue $ 14,279 $ 26,224 $ (87) $ 40,416
Cost of sales 4,705 17,175 268 22,148
----------- ----------- ----------- -----------
Gross profit 9,574 9,049 (355) 18,268
Operating expenses:
Sales and marketing 7,531 6,778 966 15,275
General and
administrative 4,225 5,345 74 9,644
Research and
development 3,063 1,789 - 4,852
Legal settlement, net - - - -
----------- ----------- ----------- -----------
Total operating
expenses 14,819 13,912 1,040 29,771
----------- ----------- ----------- -----------
Loss from operations (5,245) (4,863) (1,395) (11,503)
Other income:
Financial Income, net 447 219 - 666
Other income - - - -
----------- ----------- ----------- -----------
Total other income 447 219 - 666
----------- ----------- ----------- -----------
Loss from continuing
operations before
income taxes (4,798) (4,644) (1,395) (10,837)
Expense (benefit) from
income taxes 858 (1,060) (507) (709)
----------- ----------- ----------- -----------
Loss from continuing
operations before
non-controlling
interest (5,656) (3,584) (888) (10,128)
=========== =========== =========== ===========
Loss per share:
Basic and diluted
Loss from continuing
operations before
non-controlling
interest $ (0.30)
===========
Weighted average shares
outstanding:
Basic and diluted 34,200
-----------
Syneron Medical Ltd.
Unaudited Pro Forma Condensed Consolidated Statements of Income (Loss)
(in thousands, except per share data)
For the nine months ended September 30, 2009
--------------------------------------------------
Syneron Candela Pro Forma Pro Forma
Medical Corporation Adjustments Combined
----------- ----------- ----------- -----------
Revenue $ 40,323 $ 87,383 $ (262) $ 127,444
Cost of sales 14,664 54,404 1,095 70,163
----------- ----------- ----------- -----------
Gross profit 25,659 32,979 (1,357) 57,281
Operating expenses:
Sales and marketing 26,287 21,957 2,904 51,148
General and
administrative 13,059 11,307 300 24,666
Research and
development 8,949 6,423 - 15,372
Legal settlement, net (3,975) - - (3,975)
----------- ----------- ----------- -----------
Total operating
expenses 44,320 39,687 3,204 87,211
----------- ----------- ----------- -----------
Loss from operations (18,661) (6,708) (4,561) (29,930)
Other income:
Financial Income, net 1,661 565 - 2,226
Other income - 9 - 9
----------- ----------- ----------- -----------
Total other income 1,661 574 - 2,235
----------- ----------- ----------- -----------
Loss from continuing
operations before
income taxes (17,000) (6,134) (4,561) (27,695)
Expense (benefit) from
income taxes 2,455 (2,035) (1,659) (1,239)
----------- ----------- ----------- -----------
Loss from continuing
operations before
non-controlling
interest (19,455) (4,099) (2,902) (26,456)
=========== =========== =========== ===========
Loss per share:
Basic and diluted
Loss from continuing
operations before
non-controlling
interest $ (0.77)
===========
Weighted average shares
outstanding:
Basic and diluted 34,175
-----------
Syneron Medical Ltd.
Unaudited Pro Forma Non-GAAP Financial Measures and Reconciliation
(in thousands, except per share data)
For the three months ended
September 30, 2009
-------------------------------------
Syneron Candela Pro Forma
Medical Corporation Combined
----------- ----------- -----------
GAAP operating loss $ (5,245) $ (6,258) $ (11,503)
Stock-based compensation 738 477 1,215
Amortization of acquired
intangible assets 68 1,291 1,359
Merger, restructuring and other
non-recurring costs - 105 105
----------- ----------- -----------
Non-GAAP operating loss $ (4,439) $ (4,385) $ (8,824)
=========== =========== ===========
GAAP loss from continuing operations $ (5,656) $ (4,472) $ (10,128)
Stock-based compensation 738 477 1,215
Amortization of acquired
intangible assets 68 1,291 1,359
Merger, restructuring and other
no