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