MONTGOMERYVILLE, Pa., Nov. 2 /PRNewswire-FirstCall/ -- PhotoMedex, Inc. today announced the results of its operations for the third quarter ended September 30, 2006. Revenues for the third quarter ended September 30, 2006 were $8,291,547, as compared to revenues for the third quarter ended September 30, 2005 of $7,623,838, an increase of 8.8 percent.
XTRAC(R) procedures billed in this year’s third quarter increased 45 percent from 2005 third quarter levels. On a sequential basis, in the third quarter of 2006, revenue from the XTRAC(R) business (domestic and international) rose 37 percent from the levels reported in the second quarter of 2006 and 68 percent from the third quarter in 2005.
Jeffrey O’Donnell, PhotoMedex CEO and President, commented, “Our dermatology business had a solid performance in the third quarter; up, in what typically is a historically difficult quarter. Total XTRAC revenues, including domestic treatments, revenues, and international laser sales experienced double digit growth again. Despite weaker than anticipated results from our Surgical Division, we believe that the Surgical Division has a bright future. Company-wide, our performance has resulted in positive cash flow and we are pleased with improvements in key metrics.”
Continuing, O’Donnell stated, “Our recently announced private placement changes the game for PhotoMedex. We now have the working capital to hire the additional human resources to create and implement a clinical specialists’ field force, which we feel is needed to increase procedures, per laser, per quarter. We believe we will also be able to take advantage of new corporate partnerships on the surgical side, as well as expand our surgical services nationwide, through a major national hospital chain.”
The net loss for the quarter ended September 30, 2006 was $1,693,035, or $(0.03) per fully diluted share, compared to a net loss for the third quarter of 2005 of $1,349,900, or $(0.03) per fully diluted share. This year’s third quarter net loss included charges for stock-based compensation expense of $349,553 and depreciation and amortization of $1,047,178. Last year’s third quarter net loss included depreciation and amortization of $883,961. There was no employee stock-based compensation expense recorded for the three months ended September 30, 2005 because the adoption of the new accounting standard FAS 123R occurred on January 1, 2006. A reconciliation of non-GAAP financial measures used in this news release to GAAP financial measures, and a presentation of the most directly comparable GAAP financial measures is included below in the section on Non-GAAP Measures.
Revenues for the nine months ended September 30, 2006 were $24,596,452, as compared to the revenues for the nine months ended September 30, 2005 of $20,662,340.
The net loss for the nine months ended September 30, 2006 was $5,383,228, or $(0.10) per fully diluted share, compared to a net loss for the nine months of last year of $3,138,663, or $(0.07) per fully diluted share. This year’s net loss included charges for stock-based compensation expense of $1,248,111 and depreciation and amortization of $3,101,689. Last year’s net loss for the nine months included depreciation and amortization of $2,216,715. There was no employee stock-based compensation expense recorded for the nine months ended September 30, 2005.
As of September 30, 2006, the Company had cash and cash equivalents of $4,437,457, including restricted cash of $156,000. On October 31, 2006, the company entered into a definitive agreement with institutional investors for the private placement of approximately 9.8 million shares of common stock at a price of $1.17 per share, together with warrants to purchase approximately 2.4 million shares of common stock at an exercise price of $1.60 per share. Gross proceeds from the private placement will be approximately $11.4 million.
Non-GAAP Measures
To supplement PhotoMedex’s consolidated financial statements presented in accordance with GAAP, PhotoMedex has begun providing certain non-GAAP measures of financial performance. These non-GAAP measures include non-GAAP net loss and non-GAAP loss per fully diluted share.
PhotoMedex’s reference to these non-GAAP measures should be considered in addition to results prepared under current accounting standards, but are not a substitute for, nor superior to, GAAP results. These non-GAAP measures are provided to enhance investors’ overall understanding of PhotoMedex’s current financial performance and provide further information for comparative information due to the adoption of the new accounting standard FAS 123R.
Specifically, the Company believes the non-GAAP measures provide useful information to both management and investors by isolating certain expenses, gains and losses that may not be indicative of its core operating results and business outlook. In addition, PhotoMedex believes non-GAAP measures that exclude stock-based compensation expense enhance the comparability of results against prior periods. Reconciliation to the most directly comparable GAAP measure of all non-GAAP measures included in this press release is as follows:
Three Months Ended Nine Months Ended September 30, September 30, 2006 2005 2006 2005 Net loss $(1,693,035) $(1,349,900) $(5,383,228) $(3,138,663) Adjustments Stock-based compensation 349,553 -- 1,248,111 -- Depreciation and amortization 1,047,178 883,961 3,101,689 2,216,715 Other non-cash charges 22,685 82,724 110,366 346,272 Total adjustments $1,419,416 $966,685 $4,460,166 $2,562,987 Non-GAAP adjusted income (loss) $(273,619) $(383,215) $(923,062) $(575,676) Shares used in computing basic and fully diluted 52,659,132 51,198,095 52,486,758 47,972,456 Non-GAAP adjusted loss per fully diluted share $0.01 $0.01 $(0.02) $(0.01) Conference Call and Webcast Details
PhotoMedex will hold a conference call to discuss the Company’s third quarter 2006 results on Thursday, November 2 at 4:30 p.m. Eastern Time.
To participate in the conference call, dial 800.289.0529 (and confirmation code # 3184912) approximately 5 to 10 minutes prior to the scheduled start time. If you are unable to participate, a digital replay of the call will be available from Thursday, November 2, from 7:30 p.m. EST until midnight on Wednesday, November 15, by dialing 888.203.1112 and using confirmation code # 3184912.
The live broadcast of PhotoMedex’s quarterly conference call will be available online with an accompanying slide presentation by going to www.photomedex.com and clicking on the link to Investor Relations, and at www.streetevents.com. The online replay will be available shortly after the call at those sites.
About PhotoMedex
PhotoMedex is engaged in the development of proprietary excimer laser and fiber optic systems and techniques directed toward dermatological applications, with FDA clearance to market the XTRAC(R) laser system for the treatment of psoriasis, vitiligo, atopic dermatitis and leukoderma. In addition, the Company provides contract medical procedures to hospitals, surgi-centers and doctors’ offices, offering a wide range of products and services across multiple specialty areas, including dermatology, urology, gynecology, orthopedics, and other surgical specialties. The Company is a leader in the development, manufacturing and marketing of medical laser products and services. In addition, as a result of the merger with ProCyte, PhotoMedex now develops and markets products based on its patented, clinically proven Copper Peptide technology for skin health, hair care and wound care. PhotoMedex sells directly to dermatologists, plastic and cosmetic surgeons, spas and salons and through licenses with strategic partners into the consumer market, including a long-term worldwide license agreement with Neutrogena(R), a Johnson & Johnson company. ProCyte brands include Neova(R), Ti-Silc(R), VitalCopper(R), Simple Solutions(R) and AquaSante(R).
SAFE HARBOR STATEMENT
Some paragraphs of this press release, particularly those describing PhotoMedex’ strategies, contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1993, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. While PhotoMedex is working to achieve those goals and strategies, actual results could differ materially from those projected in the forward-looking statements as a result of a number of factors, including difficulties in marketing its products and services, need for capital, competition from other companies and other factors, any of which could have an adverse effect on the business plans of PhotoMedex, its reputation in the industry or its expected financial return from operations. Factors such as these could have an adverse effect on PhotoMedex’ results of operations. In light of significant uncertainties inherent in forward-looking statements included herein, the inclusion of such statements should not be regarded as a representation by PhotoMedex and its subsidiaries that they will achieve such forward-looking statements.
Contact: Allen & Caron PhotoMedex, Inc. Matt Clawson (investors) Dennis McGrath, CFO 949-474-4300 215-619-3287 matt@allencaron.cominfo@photomedex.com TABLES FOLLOW PHOTOMEDEX, INC. CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended September Nine Months Ended September 2006 2005 2006 2005* Revenues $ 8,291,547 $7,623,838 $24,596,452 $20,662,340 Cost of sales 4,658,936 4,303,384 13,591,024 11,157,944 Gross profit 3,632,611 3,320,454 11,005,428 9,504,396 Operating expenses: Selling, general and administrative 4,899,404 4,526,178 15,206,041 11,944,593 Research and development and engineering 267,062 304,935 764,445 819,845 5,166,466 4,831,113 15,970,486 12,764,438 Loss from continuing operations before interest expense, net (1,533,855) (1,510,659) (4,965,058) (3,260,042) Other income -- 244,988 -- 333,655 Interest expense, net (159,180) (84,229) (418,170) (212,276) Net loss (1)$(1,693,035) $(1,349,900) (1)$(5,383,228) $(3,138,663) Basic and diluted net loss per share $(0.03) $ (0.03) $(0.10) $(0.07) Shares used in computing basic and diluted net loss per share 52,659,132 51,198,095 52,486,758 47,972,456 (1)Includes Depreciation and Amortization $1,047,178 $883,961 $3,101,689 $2,216,715 Share-based compensation expense $349,553 $-- $1,248,111 $-- * PhotoMedex, Inc. acquired ProCyte Corporation (“ProCyte”) on March 18, 2005 and, as such, the operating results of ProCyte for the nine months ended September 30, 2005 include activity from ProCyte from March 19, 2005 through September 30, 2005. PHOTOMEDEX, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) September 30, 2006 December 31, 2005 Assets Cash and cash equivalents $ 4,437,457 $5,609,967 Accounts receivable, net 4,721,340 4,651,080 Inventories 7,525,412 8,047,444 Other current assets 870,755 621,372 Property and equipment, net 8,340,585 7,044,713 Intangibles and other assets 23,028,316 22,701,030 Total Assets $48,923,865 $48,675,606 Liabilities and Stockholders’ Equity Accounts payable and accrued liabilities $ 5,909,144 $5,171,387 Other current liabilities 834,608 670,740 Bank and lease notes Payable 6,756,148 4,416,451 Stockholders’ equity 35,423,965 38,417,028 Total Liabilities and Stockholders’ Equity $48,923,865 $48,675,606 PHOTOMEDEX, INC. CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended Nine Months Ended September 30, September 30, 2006 2005 2006 2005 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(1,693,035) $(1,349,900) $(5,383,228) $(3,138,663) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 1,047,178 883,961 3,101,689 2,216,715 Stock-based compensation expense related to employee options and restricted stock 349,552 -- 1,248,111 -- Provision for bad debts 7,965 -- 66,211 276,124 Other 14,720 82,724 44,155 70,148 Changes in assets and liabilities: (Increase) decrease in: Accounts Receivables 135,114 27,571 (136,471) 260,265 Inventories 640,212 184,067 612,427 (403,335) Prepaid expenses and other assets 343,358 110,630 710,407 545,943 Increase (decrease) in: Accounts payable & other accrued expenses 205,858 173,657 355,939 (2,242,753) Deferred revenues 28,051 (95,313) 198,758 (201,070) Net cash (used in) provided by operating activities 1,078,973 17,397 817,998 (2,616,626) CASH FLOWS FROM INVESTING ACTIVITIES: (1,413,424) (846,878) (3,546,179) 2,942,393 CASH FLOWS FROM FINANCING ACTIVITIES: 483,566 493,316 1,606,602 966,566 NET INCREASE IN CASH 149,115 (336,165) (1,121,579) 1,292,333 CASH, BEGINNING OF PERIOD 4,132,342 5,513,315 5,403,036 3,884,817 CASH, END OF PERIOD 4,281,457 5,177,150 4,281,457 5,177,150 RESTRICTED CASH 156,000 206,931 156,000 206,931 TOTAL $4,437,457 $5,384,081 $4,437,457 $5,384,081
The following tables reflect results of operations from our business segments for the periods indicated below:
Three Months Ended September 30, 2006 INTERN’L DOMESTIC DERM. SKIN XTRAC EQUIPMENT CARE Revenues $1,601,125 $616,342 $3,050,249 Costs of revenues 1,224,007 320,502 913,012 Gross profit 377,118 295,840 2,137,237 Gross profit % 23.6% 48.0% 70.1% Allocated Operating expenses: Selling, general and administrative 987,163 60,876 1,300,536 Engineering and product development -- -- 144,996 Unallocated Operating expenses -- -- -- 987,163 60,876 1,445,532 Income (loss) from operations (610,045) 234,964 691,705 Interest expense, net -- -- -- Net income (loss) ($610,045) $234,964 $691,705 Three Months Ended September 30, 2006 SURGICAL PRODUCTS SURGICAL AND SERVICES OTHER TOTAL Revenues $1,793,088 $1,230,743 $8,291,547 Costs of revenues 1,409,453 791,962 4,658,936 Gross profit 383,635 438,781 3,632,611 Gross profit % 21.4% 35.7% 43.8% Allocated Operating expenses: Selling, general and administrative 226,436 120,908 2,695,919 Engineering and product development -- 122,066 267,062 Unallocated Operating expenses -- -- 2,203,485 226,436 242,974 5,166,466 Income (loss) from operations 157,199 195,808 (1,533,855) Interest expense, net -- -- (159,180) Net income (loss) $157,199 $195,808 ($1,693,035) Three Months Ended September 30, 2005 INTERN’L DOMESTIC DERM. SKIN XTRAC EQUIPMENT CARE Revenues $1,019,184 $299,176 $2,928,681 Costs of revenues 859,061 244,065 869,405 Gross profit 160,123 55,111 2,059,276 Gross profit % 15.7% 18.4% 70.3% Allocated Operating expenses: Selling, general and administrative 703,924 46,407 1,574,059 Engineering and product development -- -- 142,948 Unallocated Operating expenses -- -- -- 703,924 46,407 1,717,007 Income (loss) from operations (543,801) 8,704 342,269 Other income Interest expense, net -- -- -- Net income (loss) ($543,801) $8,704 $342,269 Three Months Ended September 30, 2005 SURGICAL PRODUCTS SURGICAL AND SERVICES OTHER TOTAL Revenues $1,903,336 $1,473,461 $7,623,838 Costs of revenues 1,465,502 865,351 4,303,384 Gross profit 437,834 608,110 3,320,454 Gross profit % 23.0% 41.3% 43.6% Allocated Operating expenses: Selling, general and administrative 308,701 157,269 2,790,360 Engineering and product development -- 161,987 304,935 Unallocated Operating expenses -- -- 1,735,818 308,701 319,256 4,831,113 Income (loss) from operations 129,133 288,854 (1,510,659) Other income 244,988 Interest expense, net -- -- (84,229) Net income (loss) $129,133 $288,854 ($1,349,900)
PhotoMedex, Inc.
CONTACT: Investors, Matt Clawson of Allen & Caron, +1-949-474-4300,matt@allencaron.com, for PhotoMedex, Inc.; or Dennis McGrath, CFO ofPhotoMedex, Inc., +1-215-619-3287, info@photomedex.com
Web site: http://www.photomedex.com/
