SOURCE: BIOLASE Technology, Inc.

BIOLASE Technology, Inc.

May 09, 2011 09:00 ET

BIOLASE Reports First Quarter Results

IRVINE, CA--(Marketwire - May 9, 2011) - BIOLASE Technology, Inc. (NASDAQ: BLTI)

--  $10.6 Million in Q1 Revenue, up 140 Percent Year over Year
--  Q1 GAAP Loss of $750,000, or $0.03 Loss per Share
--  Q1 Non-GAAP Profit of $92,000, or $0.00 per Share, Second Consecutive
    Quarter of Non-GAAP Profit
--  Revenue Guidance of $14.0 Million - $15.0 Million for Q2, up from $4.7
    Million, Excluding Royalty Income of $1.2 Million, Year over Year

BIOLASE Technology, Inc., the World's leading dental laser manufacturer and distributor, today reported unaudited operating results for its first quarter ended March 31, 2011.

Net revenue for this year's first quarter was $10.6 million, up 140 percent from $4.4 million in the same quarter for 2010 and up nine percent sequentially from $9.7 million in the 2010 fourth quarter, driven by BIOLASE's new direct sales business model implemented during the fourth quarter. The majority of sales in the quarter were from the sale of the Company's new flagship all-tissue laser system, the Waterlase® iPlus™, and the wireless iLase™ five watt diode laser system. Initial orders for the Waterlase iPlus received during the quarter have exceeded the Company's expectations.

The percentage of net revenue in this year's first quarter from the U.S. and international markets was approximately 81 percent and 19 percent, respectively, as compared to approximately 51 percent and 49 percent of net revenue in the prior year comparable period. International revenue in this year's first quarter was negatively affected as the Company renegotiated its international exclusivity rights granted to Henry Schein, Inc. (NASDAQ: HSIC). In April 2011, BIOLASE announced that it had regained full rights to sell and/or distribute the Company's products in all international markets which were previously exclusive markets of Schein. As a result, BIOLASE will now sell both direct and through multiple distributors, in those markets on a go-forward basis.

Federico Pignatelli, Chairman and CEO, said, "All of the commercial programs at BIOLASE are running ahead of our internal plan, and the first quarter results are emblematic of our progress. The Waterlase iPlus launch is progressing very well and the product is being enthusiastically accepted by dentists in the U.S. and internationally. We expect that the Waterlase iPlus system will be a strong contributor to revenue growth throughout 2011 and beyond. In addition, sales of the iLase remained strong through the quarter. We believe we have momentum to gain internationally in the second quarter, as we have now completed our repossession of rights to sell and distribute in international markets, and we expect to ship laser systems to these territories in this manner during the second quarter."

Recent Highlights

A series of recent actions and key accomplishments include the following:

--  Raised annual revenue guidance for 2011 to $60 to $65 million, up from
    $55 to $60 million, representing a growth of approximately 130 to 150
    percent over 2010, based in part on the impending launch of the new
    BIOLASE DaVinci Imaging division.
--  Net revenue for the second quarter ended June 30, 2011, is expected to
    be $14.0 to $15.0 million, up from $4.7 million of revenues, excluding
    royalty income of $1.2 million, in the second quarter of 2010.
--  The successful launch and initial domestic order generation of the new
    flagship surgical system, the Waterlase iPlus all-tissue laser, which
    substantially improves cutting speed and precision, which also includes
    a highly intuitive user interface designed for step to step tuition of
    use for broader applications.
--  The establishment of a new division, BIOLASE DaVinci Imaging, to design
    and distribute a full line of state-of-the-art extra-oral and intra-
    oral dental imaging devices that complement the minimally invasive
    dental treatment solutions offered by the BIOLASE Laser division.
    These products will cover a wide range of applications and are expected
    to be priced from a low range of $4,000 to a high of $130,000.  The
    Company's entire sales organization is currently undergoing training on
    the imaging product line in anticipation of taking orders in the second
    quarter of 2011.
--  The adoption of an immediate direct and multi-distributor sales model
    in Germany.  In addition, France, Spain, Italy, England, the
    Netherlands, Austria, Belgium, Australia, and New Zealand reverted from
    exclusive territories of Schein to non-exclusive direct sales and
    distributor territories.
--  The receipt of approximately $7.1 million in cash, net of commissions
    and expenses, which was raised through the sale of approximately 2.2
    million shares of BIOLASE common stock and approximately $600,000
    through the exercise of options to acquire common stock.  A portion of
    the proceeds, approximately $2.8 million, was used to pay off the
    remaining balance of a high-cost $3 million debt facility in the first
    quarter, making BIOLASE free of bank debt.
--  The award of several new patents for use of the Company's patented
    Er,Cr:YSGG laser technology for eye surgery, including for the
    treatment of presbyopia, a condition suffered by 2.5 billion people
    worldwide.  BIOLASE's continuing effort towards the grant of an
    Investigational Device Exemption (IDE) for human trials remains a
    strong focus of the Company.

Pignatelli continued, "Operationally, we saw excellent performance in the period, even in an environment where our purchasing, inventory build activity, manufacturing, and testing rose to much higher levels in the face of strong product demand across our platforms. I am proud of the team effort coordinated by our leadership in sales, operations, and finance. We are working hard to carry this organic growth momentum into the second quarter, and beyond, and look forward to adding additional products within the next two quarters to support our growth. It is a challenging and very exciting time to be part of BIOLASE."

Gross profit as a percentage of net revenue for this year's first quarter was 46 percent compared to six percent for the prior year period. The year-over-year quarterly increase of 40 percent was primarily due to higher sales volumes, better utilization of fixed costs, and reduced expenses, partially offset by significant one-time price concessions to certain luminaries in the dental field and increased one-time costs related to the launch of the Waterlase iPlus system.

Operating expenses in the 2011 first quarter were $5.2 million, compared to $5.6 million in the year-earlier period. The year-over-year reduction in expense was primarily due to ongoing cost-cutting measures that were partially offset by increased costs associated with the launch of the Waterlase iPlus system.

Net loss for the 2011 first quarter was $750,000, or $0.03 loss per share, compared to a net loss of $5.3 million, or $0.22 loss per share, in the 2010 first quarter. As already mentioned, first quarter profitability was negatively affected by significant initial costs associated with the late January launch of the Waterlase iPlus system. After removing interest and debt-related costs of $298,000 resulting from the Company's term loan pay-off, and non-cash expenses related to depreciation and amortization of $228,000 and stock and equity related compensation expenses of $316,000, this year's first quarter resulted in non-GAAP net income of $92,000, or $0.00 per share. The first quarter of 2010 resulted in a non-GAAP net loss of $4.8 million, or $0.20 loss per share.

The cash and cash equivalents balance at March 31, 2011 was $1.6 million, which does not reflect the significant sales that occurred at the end of the quarter. The Company has already collected over $3.0 million of its approximately $6.0 million net accounts receivable since March 31, 2011.

Conference Call

As previously announced, the Company will host a conference call today at 11:00 a.m. Eastern Time to discuss its operating results for the first quarter ended March 31, 2011, and to answer questions. The dial-in number for the call is toll-free 1-877-941-1427 or toll/international 1-480-629-9664. The live webcast and archived replay of the call can be accessed in the Investors section of the BIOLASE website at www.biolase.com.

About BIOLASE Technology, Inc.

BIOLASE Technology, Inc., the World's leading Dental Laser Company, is a medical technology company that develops, manufactures and markets dental lasers and also distributes and markets dental imaging equipment, products that are focused on technologies that advance the practice of dentistry and medicine. The Company's laser products incorporate patented and patent pending technologies designed to provide clinically superior performance with less pain and faster recovery times. Its imaging products provide cutting-edge technology at competitive prices to deliver the best results for dentists and patients. BIOLASE's principal products are dental laser systems that perform a broad range of dental procedures, including cosmetic and complex surgical applications, and a full line of dental imaging equipment. Other products under development address ophthalmology and other medical and consumer markets.

For updates and information on laser and Waterlase dentistry, find BIOLASE at http://www.biolase.com, Twitter at http://twitter.com/GoWaterlase, and YouTube at http://www.youtube.com/user/Rossca08.

This press release may contain forward-looking statements within the meaning of safe harbor provided by the Securities Reform Act of 1995 that are based on the current expectations and estimates by our management. These forward-looking statements can be identified through the use of words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," "may," "will," and variations of these words or similar expressions. Forward-looking statements are based on management's current, preliminary expectations and are subject to risks, uncertainties and other factors which may cause the Company's actual results to differ materially from the statements contained herein, and are described in the Company's reports it files with the Securities and Exchange Commission, including its annual and quarterly reports. No undue reliance should be placed on forward-looking statements. Such information is subject to change, and we undertake no obligation to update such statements.

                     BIOLASE TECHNOLOGY, INC.
      CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
            (in thousands, except per share data)

                                                     Three Months Ended
                                                          March 31,
                                                  ------------------------
                                                      2011         2010
                                                  -----------  -----------
Products and services revenue                     $    10,546  $     4,339
License fees and royalty revenue                           15           56
                                                  -----------  -----------
Net revenue                                            10,561        4,395
Cost of revenue                                         5,722        4,125
                                                  -----------  -----------
Gross profit                                            4,839          270
                                                  -----------  -----------
Operating expenses:
  Sales and marketing                                   2,453        2,633
  General and administrative                            1,699        1,725
  Engineering and development                           1,093        1,220
                                                  -----------  -----------
    Total operating expenses                            5,245        5,578
                                                  -----------  -----------
Loss from operations                                     (406)      (5,308)
                                                  -----------  -----------
(Loss) gain on foreign currency transactions              (38)          17
Interest income                                            --            1
Interest expense                                          (73)          (4)
Non-recurring charge, unamortized debt-related
 expense                                                 (225)          --
                                                  -----------  -----------
Non-operating (loss) income, net                         (336)          14
                                                  -----------  -----------
Loss before income tax provision                         (742)      (5,294)
Income tax provision                                        8           11
                                                  -----------  -----------
Net loss                                          $      (750) $    (5,305)
                                                  ===========  ===========
Net loss per share:
  Basic                                           $     (0.03) $     (0.22)
                                                  ===========  ===========
  Diluted                                         $     (0.03) $     (0.22)
                                                  ===========  ===========
Shares used in the calculation of net loss per
 share*:
  Basic                                                26,295       24,658
                                                  ===========  ===========
  Diluted                                              26,295       24,658
                                                  ===========  ===========

* Shares used in calculation of net loss per share reflect the impact of the stock dividend recorded on March 15, 2011.

                      BIOLASE TECHNOLOGY, INC.
               CONSOLIDATED BALANCE SHEETS (Unaudited)
               (in thousands, except per share data)

                                                    March 31,  December 31,
                                                      2011        2010
                                                  -----------  -----------

ASSETS
Current assets:
  Cash and cash equivalents                       $     1,632  $     1,694
  Accounts receivable, less allowance of $321
   and $311 in 2011 and 2010, respectively              5,966        3,331
  Inventory, net                                        7,178        6,987
  Prepaid expenses and other current assets               928        1,355
                                                  -----------  -----------
    Total current assets                               15,704       13,367

Property, plant and equipment, net                      1,184        1,331
Intangible assets, net                                    309          342
Goodwill                                                2,926        2,926
Deferred tax asset                                         12           11
Other assets                                              170          170
                                                  -----------  -----------
    Total assets                                  $    20,305  $    18,147
                                                  ===========  ===========

 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
  Term loan payable, current portion              $        --  $     2,622
  Accounts payable                                      4,540        4,029
  Accrued liabilities                                   5,035        5,482
  Customer deposits                                     2,954        5,877
  Deferred revenue, current portion                     1,662        1,650
                                                  -----------  -----------
    Total current liabilities                          14,191       19,660
Deferred tax liabilities                                  562          544
Warranty accrual, long-term                               524          424
Deferred revenue, long-term                               425          433
Other liabilities, long-term                              266          133
                                                  -----------  -----------
    Total liabilities                                  15,968       21,194
                                                  -----------  -----------
Stockholders' equity (deficit):
  Preferred stock, par value $0.001, 1,000 shares
   authorized, no shares issued and outstanding            --           --
  Common stock, par value $0.001, 50,000 shares
   authorized; 29,397 and 26,841 shares issued*
   and 27,433 and 24,877 shares outstanding* in
   2011 and 2010, respectively                             30           27
  Additional paid-in capital                          126,392      118,375
  Accumulated other comprehensive loss                   (210)        (324)
  Accumulated deficit                                (105,476)    (104,726)
                                                  -----------  -----------
                                                       20,736       13,352
  Treasury stock (cost of 1,964 shares
   repurchased)                                       (16,399)     (16,399)
                                                  -----------  -----------
    Total stockholders' equity (deficit)                4,337       (3,047)
                                                  -----------  -----------
      Total liabilities and stockholders'
       equity (deficit)                           $    20,305  $    18,147
                                                  ===========  ===========

* Shares issued and outstanding reflect the impact of the stock dividend recorded on March 15, 2011.

Non-GAAP Financial Measures

The non-GAAP financial measures contained herein are a supplement to the corresponding financial measures prepared in accordance with generally accepted accounting principles (GAAP). The non-GAAP financial measures presented exclude the items summarized in the below table. Management believes that adjustments for these items assist investors in making comparisons of period-to-period operating results and that these items are not indicative of the Company's on-going core operating performance.

Management uses non-GAAP net income (loss) and non-GAAP net income (loss) per diluted share in its evaluation of the Company's core after-tax results of operations and trends between fiscal periods and believes that these measures are important components of its internal performance measurement process. Management believes that providing these non-GAAP financial measures allows investors to view the Company's financial results in the way that management views the financial results.

The non-GAAP financial measures presented herein have certain limitations in that they do not reflect all of the costs associated with the operations of the Company's business as determined in accordance with GAAP. Therefore, investors should consider non-GAAP financial measures in addition to, and not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. The non-GAAP financial measures presented by the Company may be different from the non-GAAP financial measures used by other companies.

                        BIOLASE TECHNOLOGY, INC.
Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Measures
                             (Unaudited)
                 (in thousands, except per share data)

                                                     Three months ended
                                                         March 31,
                                                      2011         2010
                                                  -----------  -----------
GAAP net loss                                     $      (750) $    (5,305)

Adjustments:
Interest expense and debt-related costs                   298            4
Depreciation and amortization expense                     228          299
Stock based and equity instrument compensation
 expense                                                  316          206

                                                  -----------  -----------
Non-GAAP net income (loss).                       $        92  $    (4,796)
                                                  ===========  ===========


GAAP net loss per share:
  Basic and diluted                               $     (0.03) $     (0.22)

Adjustments:
Interest expense and debt-related costs                  0.01         0.00
Depreciation and amortization expense                    0.01         0.01
Stock based and equity instrument compensation
 expense                                                 0.01         0.01

Non-GAAP net income (loss) per share:
                                                  -----------  -----------
  Basic and diluted                               $      0.00  $     (0.20)
                                                  ===========  ===========

Contact Information

  • For further information, please contact:
    Jill Bertotti
    Allen & Caron
    +1-949-474-4300