WESTFORD, Mass., April 26, 2016 /PRNewswire/ -- Cynosure, Inc. (Nasdaq: CYNO), which designs, manufactures and markets medical devices for aesthetic procedures and precision surgical applications worldwide, today reported financial results for the three months ended March 31, 2016.
“Sustained momentum in North America, in part reflecting the full U.S. launch of SculpSure, helped generate solid first-quarter results for Cynosure, as our domestic business posted year-over-year top-line growth for the 22nd consecutive quarter,” said Chief Executive Officer Michael Davin. “Higher revenue and favorable product mix drove increased margins and profitability, even as we accelerated our sales and marketing investments during the quarter to coincide with the rollout of SculpSure across all of our U.S. direct sales territories. We are extremely pleased with the progress of the launch and the response SculpSure is receiving from physicians and patients.”
“Product revenue from North America increased 76 percent from the first quarter of 2015 to $55.2 million, representing 72 percent of our total product revenue for the quarter,” Davin said. “International product revenue was down 13 percent year-over-year including the impact of foreign exchange and down 11 percent on a constant currency basis, reflecting ongoing economic weakness in the EMEA region. The softness among our European direct subsidiaries and international third-party distributors was partly offset by our subsidiaries’ results in the Asia Pacific region, where we posted 17 percent higher product revenue on a constant currency basis for the quarter as compared to last year.”
First Quarter 2016 Financial Results
Revenue was $94.7 million for the first quarter of 2016, an increase of 26 percent from the prior-year period. Product revenue in North America grew 76 percent year-over-year to $55.2 million. International product revenue was $21.9 million, or $22.5 million adjusted for constant currency. Parts, service and disposables revenue increased 26 percent year-over-year to $16.9 million. Royalty revenue decreased $4.3 million to $0.7 million reflecting the final $3 million payment received in the first quarter of 2015 under a previously disclosed settlement agreement with Tria Beauty.
Gross margin for the first quarter of 2016 was 58.5 percent, compared with 57.1 percent for the same period in 2015. On a non-GAAP basis, excluding non-cash charges related to the amortization of intangibles, gross margin for the first quarter of 2016 increased to $56.9 million, or 60.1 percent of revenue, compared with $44.3 million, or 59.2 percent of revenue, in the prior-year period. Gross margin for the 2015 period was affected by the $3 million final payment from Tria Beauty.
Total operating expenses for the first quarter of 2016 increased 25 percent to $51.0 million from $40.7 million in the same period in 2015, partly reflecting the SculpSure launch. Sales and marketing expenses for the first quarter of 2016 were $35.6 million, or 37.6 percent of total revenue, compared with sales and marketing expenses of $25.7 million, or 34.3 percent of total revenue, for the first quarter of 2015. The increase reflects the addition of sales, clinical support and marketing personnel, as well as additional marketing investments associated with the SculpSure launch.
Operating income for the first quarter of 2016 increased to $4.5 million from $2.1 million in the prior-year period. On a non-GAAP basis, excluding acquisition costs and amortization of intangibles, income from operations for the first quarter of 2016 was $6.6 million, compared with $5.1 million for the prior-year period.
Net income for the first quarter of 2016 was $2.8 million, or $0.12 per diluted share, compared with break-even net income, or $0.00 per diluted share, for the prior-year period. GAAP earnings included a $0.7 million unrealized gain on foreign currency in the 2016 period and a $1.7 million unrealized loss on foreign currency in the 2015 period. On a non-GAAP basis, excluding acquisition costs, non-cash unrealized foreign exchange measurement gains and losses, and amortization of intangibles, net income for the first quarter of 2016 was $4.3 million, or $0.19 per diluted share, compared with $3.3 million, or $0.15 per diluted share, for the prior-year period.
Cash and investments at March 31, 2016 were $178.2 million, compared with $182.8 million at year-end 2015.
Recent Highlights
- Cynosure’s technology was the subject of 20 scientific presentations at the 36th Annual Conference of the American Society for Laser Medicine & Surgery (ASLMS). The 17 oral abstracts and three ePosters presented at ASLMS detailed data from research programs for a range of indications addressed by the Company’s energy-based technologies, including non-invasive fat reduction, skin rejuvenation, melasma, facial photoaging, tattoo removal and genitourinary syndrome of menopause.
- Cynosure entered into an expanded distribution agreement with El.En. S.p.A. under which the Company will market and distribute MonaLisa Touch for gynecologic health indications in Germany, Spain and the United Kingdom. Cynosure is currently marketing MonaLisa Touch in North America under an exclusive distribution agreement signed with El.En. in late 2014.
Business Outlook
“The global trend toward less invasive aesthetic procedures plays directly into the strength of our products, technology platforms and worldwide distribution network,” Davin said. “We have a number of exciting catalysts in the quarters ahead, and we will apply the same financial and operational discipline as we execute our growth strategy going forward.”
First-Quarter 2016 Financial Results Conference Call
In conjunction with the announcement of its first-quarter financial results, Cynosure will host a conference call for investors and analysts at 9:00 a.m. ET today. On the call, Michael Davin and Timothy Baker, the Company’s President, Chief Operating Officer and Chief Financial Officer, will discuss Cynosure’s financial results and provide a business overview. Those who wish to listen to the conference call webcast should visit the “Investors” section of the Company’s website at www.cynosure.com. The live call can also be accessed by dialing (877) 709-8155 or (201) 689-8881. If you are unable to listen to the live call, the webcast will be archived for one year on the Company’s website.
About Cynosure, Inc.
Cynosure develops, manufactures, and markets aesthetic treatment systems that enable plastic surgeons, dermatologists and other medical practitioners to perform non-invasive and minimally invasive procedures to remove hair, treat vascular and benign pigmented lesions, remove multi-colored tattoos, revitalize the skin, reduce fat through non-invasive and minimally invasive laser lipolysis, reduce cellulite, clear nails infected by toe fungus, ablate sweat glands and improve gynecological health. Cynosure also markets radiofrequency energy-sourced medical devices for precision surgical applications such as facial plastic and general surgery, gynecology, ear, nose, and throat procedures, ophthalmology, oral and maxillofacial surgery, podiatry and proctology. Cynosure’s product portfolio is composed of a broad range of energy sources including Alexandrite, diode, Nd:YAG, picosecond, pulse dye, Q-switched lasers, intense pulsed light and radiofrequency technology. Cynosure sells its products globally under the Cynosure, Palomar, ConBio and Ellman brand names through a direct sales force in the United States, Canada, France, Morocco, Germany, Spain, the United Kingdom, Australia, China, Japan and Korea, and through international distributors in approximately 120 other countries. For corporate or product information, visit Cynosure’s website at www.cynosure.com.
Forward-Looking Statements
Any statements in this press release about future expectations, plans and prospects for Cynosure, Inc., including Cynosure’s expectations with respect to timing and success of product launches, regulatory clearances and international registrations, as well as other statements containing the words, “believes,” “looks forward,” “anticipates,” “plans,” “expects,” “will” and similar expressions, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including the market price of Cynosure’s stock prevailing from time to time, the nature of other investment opportunities presented to the Company from time to time, the Company’s cash flow from operations, levels of demand for procedures performed with Cynosure products and for Cynosure products themselves, competition in the aesthetic laser industry, general business and economic conditions, effects of acquisitions that Cynosure has made or may make, Cynosure’s ability to develop and commercialize new products, including the MonaLisa Touch and SculpSure products, Cynosure’s reliance on sole source suppliers, the inability to accurately predict the timing or outcome of regulatory decisions, and economic, market, technological and other factors discussed in Cynosure’s most recent Annual Report on Form 10-K for the year ended December 31, 2015, which is filed with the Securities and Exchange Commission. In addition, the forward-looking statements included in this press release represent Cynosure’s views as of the date of this press release.
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