BURLINGTON, Mass., Oct. 26 /PRNewswire-FirstCall/ -- Palomar Medical Technologies, Inc. , a leading researcher and developer of light-based systems for cosmetic treatments, today announced financial results for the third quarter ended September 30, 2006. The Company’s third quarter product revenues increased by 42 percent as compared to the third quarter in 2005. The Company’s third quarter total revenues increased by 45 percent and net income increased by 82 percent, including back-owed royalties as described below, as compared to the third quarter in 2005. The Company also strengthened its balance sheet since the third quarter of last year, including increasing its cash and investments from $40 million to $81 million.
Revenues for the quarter ended September 30, 2006 were $28 million, up from $19.3 million in the third quarter of 2005. Product revenues increased to $23.7 million from $16.7 million and gross profit from product revenues increased to $16.6 million or 70 percent, up from $11.5 million or 69 percent in the year-earlier quarter. The Company reported net income of $8.4 million, or $0.41 per diluted share, for the third quarter of this year, versus net income of $4.6 million, or $0.24 per diluted share, for the third quarter of last year.
Revenues for the nine months ended September 30, 2006 were $87.1 million, up from $54.5 million in the nine months ended September 30, 2005. Product revenues increased to $65.7 million from $46.8 million and gross profit from product revenues increased to $47 million or 72 percent, up from $31.8 million or 68 percent in the first nine months of 2006 as compared to the first nine months of 2005. The increase in total revenues for the nine months ended September 30, 2006 compared to 2005 includes an increase in royalty revenues of $15.7 million, due in part to royalties resulting from our settlement with Cutera in the second quarter of 2006 and back-owed royalties from Laserscope in the third quarter of 2006. The Company reported net income of $32 million, or $1.59 per diluted share, for the first nine months of this year, versus net income of $12.1 million, or $0.64 per diluted share, for the first nine months of last year.
As a result of a royalty audit of Laserscope’s product sales from January 1, 2001 through June 30, 2006, there was an increase in the third quarter royalty revenue of $2.2 million, cost of royalty revenue of $864,000 and net income of $1.2 million. On October 18, 2006, Palomar and Laserscope entered into a new license agreement and terminated the prior license agreement. Under the new license agreement, Laserscope will pay Palomar a 7.5% royalty on sales of its current light-based hair removal products, including the Lyra and Gemini Laser Systems and the Solis IPL System, as well as on sales of new light-based hair removal systems developed in the future. For more information, please see the Non-Exclusive Patent License Agreement filed as Exhibit 99.2 to a Current Report on Form 8-K filed today.
Chief Executive Officer Joseph P. Caruso commented, “We are pleased to report another strong quarter of substantial increases in revenue and income. Our flagship Lux systems continue to drive our significant revenue growth. Over the last nine months we continued to strengthen our balance sheet by considerably increasing our cash and investments. We believe the popularity and acceptance of light-based solutions for cosmetic treatments will continue to increase as consumer awareness increases. Palomar is the driving force in shaping this trend. Our projects with Gillette, Johnson & Johnson and the government are progressing as planned, and we are satisfied with the balance we have been able to maintain between short-term financial performance and long-term strategic goals. It remains an important goal of ours to maintain our strategy of investing the necessary resources in research and development and intellectual property protection to maintain our technology leadership position in the professional market as we advance our technology toward the consumer market.”
Conference Call: As previously announced, Palomar will conduct a conference call and webcast today at 11:30 AM Eastern Time. Management will discuss financial results and strategic matters. If you would like to participate, please call (866) 510-0708 or listen to the webcast in the Investor Relations section of the Company’s website at http://www.palomarmedical.com. The telephone replay will be available one hour after the call at (888) 286-8010 passcode 13344157 and will be available for fourteen days. A webcast replay will also be available.
About Palomar Medical Technologies, Inc.: Palomar is a leading researcher and developer of light-based systems for cosmetic treatments. Palomar pioneered the optical hair removal field, when, in 1997, it introduced the first high-powered laser hair removal system. Since then, many of the major advances in light-based hair removal have been based on Palomar technology. There are now millions of light-based cosmetic procedures performed around the world every year in physicians’ offices, clinics, spas and salons. Palomar is testing many new and exciting applications to further advance the hair removal market and other cosmetic applications. Palomar is uniquely focused on developing proprietary light-based technology for introduction to the mass markets. Palomar has an agreement with The Gillette Company to develop and potentially commercialize a patented home-use, light-based hair removal device for women (please note that in October 2005, Procter & Gamble Company completed its acquisition of Gillette. Under the Development and License Agreement, Procter & Gamble, as the acquiring party, assumed all of Gillette’s rights and obligations.) Palomar also has an agreement with Johnson & Johnson Consumer Companies to develop and potentially commercialize home-use, light-based devices for reducing or reshaping body fat including cellulite, reducing the appearance of skin aging, and reducing or preventing acne, and was awarded a contract by the Department of the Army to develop a light-based self-treatment device for Pseudofolliculitis Barbae (“PFB”).
For more information on Palomar and its products, visit Palomar’s website at http://www.palomarmedical.com. To continue receiving the most up-to-date information and latest news on Palomar as it happens, sign up to receive automatic e-mail alerts by going to the Investor Relations’ section of the website.
With the exception of the historical information contained in this release, the matters described herein contain forward-looking statements, including but not limited to statements relating to new markets, development and introduction of new products, and financial projections that involve risk and uncertainties that may individually or mutually impact the matters herein, and cause actual results, events and performance to differ materially from such forward-looking statements. These risk factors include, but are not limited to, results of future operations, technological difficulties in developing or introducing new products, the results of future research, lack of product demand and market acceptance for current and future products, the effect of economic conditions, challenges in managing joint ventures and research with third parties and government contracts, the impact of competitive products and pricing, governmental regulations with respect to medical devices, including whether FDA clearance will be obtained for future products and additional applications, the results of litigation, difficulties in collecting royalties, potential infringement of third-party intellectual property rights, and/or other factors, which are detailed from time to time in the Company’s SEC reports, including the report on Form 10-K for the year ended December 31, 2005 and the Company’s quarterly reports on Form 10-Q. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Palomar Financial Summary: Consolidated Statements of Income (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2006 2005 2006 2005 Revenues Product revenues $23,671,555 $16,726,018 $65,678,399 $46,789,990 Royalty revenues 3,642,413 1,211,547 18,439,355 3,724,266 Funded product development revenues 707,814 1,341,108 3,015,171 4,032,539 Total revenues 28,021,782 19,278,673 87,132,925 54,546,795 Costs and expenses Cost of product revenues 7,036,514 5,220,270 18,689,965 14,977,455 Cost of royalty revenues 1,456,969 484,619 7,375,742 1,489,706 Research and development 3,537,561 3,162,199 11,021,628 9,218,413 Selling and marketing 5,821,573 4,335,302 17,043,040 12,512,292 General and administrative 2,362,082 1,712,847 3,045,800 4,733,197 Total costs and expenses 20,214,699 14,915,237 57,176,175 42,931,063 Income from operations 7,807,083 4,363,436 29,956,750 11,615,732 Interest income 1,031,530 315,116 3,476,494 741,133 Income before income taxes 8,838,613 4,678,552 33,433,244 12,356,865 Provision for income taxes 470,948 90,677 1,454,733 244,243 Net income $8,367,665 $4,587,875 $31,978,511 $12,112,622 Net income per share Basic $0.47 $0.27 $1.83 $0.72 Diluted $0.41 $0.24 $1.59 $0.64 Weighted average number of shares outstanding Basic 17,642,215 16,942,281 17,438,247 16,815,519 Diluted 20,244,414 19,115,171 20,109,935 19,044,006 Consolidated Balance Sheets (Unaudited) September 30, December 31, 2006 2005 Assets Current assets Cash and cash equivalents $ 22,392,771 $ 10,536,144 Available-for-sale investments, at market value 58,760,386 38,757,575 Accounts receivable, net 15,197,198 8,686,227 Inventories 10,183,051 6,753,110 Other current assets 3,068,462 582,074 Total current assets 109,601,868 65,315,130 Property and equipment, net 1,019,175 909,676 Other assets 111,074 111,074 Total Assets $ 110,732,117 $ 66,335,880 Liabilities and Stockholders’ Equity Current liabilities Accounts payable $2,314,150 $1,278,823 Accrued liabilities 13,421,376 11,465,100 Deferred revenue 4,697,766 1,725,849 Total current liabilities 20,433,292 14,469,772 Stockholders’ equity Preferred stock, $.01 par value- Authorized -- 1,500,000 shares Issued -- none - - Common stock, $.01 par value- Authorized -- 45,000,000 shares Issued and outstanding -- 17,673,859 and 17,126,467 shares, respectively 176,739 171,265 Additional paid-in capital 184,106,867 177,658,135 Accumulated deficit (93,984,781) (125,963,292) Total stockholders’ equity 90,298,825 51,866,108 Total liabilities and stockholders’ equity $110,732,117 $ 66,335,880 Contacts: Kayla Castle Investor Relations Manager Palomar Medical Technologies, Inc. 781-993-2411 ir@palomarmedical.com
Palomar Medical Technologies, Inc.
CONTACT: Kayla Castle, Investor Relations Manager of Palomar MedicalTechnologies, Inc., +1-781-993-2411, ir@palomarmedical.com
Web site: http://www.palomarmedical.com/
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