SOURCE: Lumenis Ltd.

Lumenis Ltd.

August 04, 2014 16:05 ET

Lumenis Ltd. Reports Second Quarter Financial Results

Revenue Growth of 9.3% -- 8th Consecutive Quarter of Year-Over-Year Growth

YOKNEAM, ISRAEL--(Marketwired - Aug 4, 2014) - Lumenis Ltd. (NASDAQ: LMNS), the world's largest medical laser company for surgical, ophthalmic and aesthetic applications, today announced second quarter 2014 financial results.

Second Quarter 2014 Summary:

  • Revenues of $72.5 million, up 9.3% year-over-year
  • Adjusted EBITDA of $7.7 million, up 31.1% year-over-year
  • Non-GAAP Net Income of $4.7 million, up 65.1% year-over-year. GAAP Net Income of $3.5 million
  • Non-GAAP Net Income per diluted share of $0.13, up 36.1% year-over-year
  • $4.8 million net cash flow generated from ongoing business activities (1) in the 3-month period ended June 30, 2014

"We continue to report solid revenue growth year-over-year, driven by the combination of successful sales execution and the early adoption of our newly launched products," said Tzipi Ozer-Armon, Chief Executive Officer. "Our performance in the second quarter is the outcome of both strong fundamentals and improved business activity in all three segments, led by our Aesthetic business. In addition, three of our four geographic regions reported double-digit growth. We also demonstrated continued strong improvement in all profit metrics in the quarter. We remain focused on our well-defined growth strategy of expanding our geographic footprint and introducing new products, and we are confident in our outlook for the rest of 2014."

Second Quarter 2014 Financial Results

Total revenue in the second quarter of 2014 was $72.5 million, an increase of 9.3% compared to revenue of $66.3 million last year. Product revenue was $58.9 million, an increase of 10.6% compared to product revenue of $53.3 million last year. Service revenue was $13.6 million, an increase of 4.2% compared to service revenue of $13.0 million last year. Total revenue growth was driven by all three business segments, with particular strength coming from our Aesthetic segment. By geography, Asia Pacific (APAC), Europe, the Middle East and Africa (EMEA) and Japan posted double-digit growth year-over-year, offset partially by a decrease in sales in the Americas compared to last year.

Second quarter 2014 gross profit was $39.1 million, an increase of $3.8 million, or 10.7%, compared to $35.3 million last year. Second quarter 2014 GAAP gross margin increased 66 basis points to 53.9%, compared to 53.2% last year.

On a GAAP Basis:
Second quarter 2014 GAAP operating expenses were $34.0 million, an increase of $9.7 million, or 39.7%, compared to operating expenses of $24.3 million last year. Second quarter 2013 operating expenses included one-time benefit of approximately $7.1 million related to legal settlements. Excluding the legal settlements benefit, the increase in operating expenses year-over-year was mainly driven by increased investment in sales and marketing and increased general and administrative expenses, including one-time IPO related expenses, offset partially by lower R&D expense compared to last year. 

Second quarter 2014 GAAP operating income was $5.1 million, a decrease of $5.9 million, or 53.5%, compared to GAAP operating income of $11.0 million last year. Second quarter 2014 GAAP operating margin was 7.1%, compared to 16.6% last year. Second quarter 2013 GAAP operating profit included the aforementioned one-time benefit related to a legal settlements.

Second quarter 2014 GAAP net income was $3.5 million, a decrease of $5.8 million, compared to $9.4 million last year. GAAP net income per diluted share was $0.10 in the second quarter of 2014 compared to $0.32 last year, based on 35.8 million and 29.5 million diluted shares outstanding respectively.

On a Non-GAAP Basis:
Second quarter 2014 Non-GAAP operating income was $6.1 million, an increase of $1.7 million, or 38.0%, compared to Non-GAAP operating income of $4.4 million last year. Second quarter 2014 Non-GAAP operating margin was 8.4%, compared to 6.6% last year. Second quarter of 2014, Non-GAAP operating income excludes $0.3 million in one-time expense related to our IPO and stock based compensation expense of approximately $0.7 million.

Second quarter 2014 Adjusted EBITDA was $7.7 million, an increase of $1.8 million, or 31.1%, compared to $5.9 million last year. Adjusted EBITDA margin was 10.6% compared to 8.8% last year.

Second quarter 2014 Non-GAAP net income was $4.7 million, an increase of $1.9 million, or 65.1%, compared to $2.9 million last year. In addition to the above mentioned adjustments to operating income, second quarter 2014 Non-GAAP net income excludes revaluation expense of embedded derivatives of $0.2 million.

Second quarter 2014 Non-GAAP net income per diluted share was $0.13 compared to $0.10 last year based on 35.8 million and 29.5 million diluted shares outstanding respectively.

Cash and cash equivalents were $111.6 million as of June 30, 2014 compared to $42.8 million as of December 31, 2013. The increase in cash and cash equivalents is primarily due to net proceeds related to our IPO, $8.0 million cash flow generated from ongoing business activities, offset partially by cash payments to Bank Hapoalim B.M of $6.0 million related to the completion of the IPO and achievement of a profitability milestone, as well as to additional IPO-related payments of $1.0 million.

Full Year 2014 Financial Guidance

Following the second quarter results we are raising the guidance for the full year ended December 31, 2014, and we expect to report:

  • Revenue in a range of $284 to $287 million, representing an increase of 7% to 8% year-over-year. This compares to prior revenue guidance of $282 to $285 million.
  • Adjusted EBITDA in a range of $29.1 to $30.6 million, representing an increase of 12% to 18% year-over-year. This compares to prior EBITDA guidance of $28.6 to $30.2 million.
  • Non-GAAP Net Income in a range of $18.1 to $19.6 million, representing an increase of 22% to 32% year-over-year, and Non-GAAP EPS of $0.51 to $0.55. This compares to prior net income guidance of $17.6 to $19.2 million and Non-GAAP EPS guidance of $0.50 to $0.54.

(1): Net cash flow generated from ongoing business activities includes cash flow from operating and investing activities as well as foreign currency translation adjustments related to cash and cash equivalents in the period excluding a total of $7.0 million related to payments to Bank Hapoalim B.M and IPO related payments.

Conference Call

Lumenis will host a conference call on Monday, August 4, 2014 at 5:00 p.m. Eastern Time to discuss its second quarter 2014 financial results. The call will be concurrently webcast. To listen to the conference call on your telephone, please dial the following numbers approximately ten minutes prior to the start of the call: 888-312-3048 for callers based in the United States, 1-80-924-5906 for callers based in Israel and 719-457-1035 for callers based in all other countries. The reservation code for the call is 7955361. To access the live audio webcast or subsequent archived recording, visit the Investor Relations section of Lumenis' website at http://investor.lumenis.com. A telephone replay of the call will be available for 14 days following the call. To listen to the replay, please dial 888-203-1112 for United States-based callers and 719-457-0820 for international callers. The reservation code is 7955361. 

About Lumenis

Lumenis is a global leader in the field of minimally-invasive clinical solutions for the Surgical, Ophthalmology and Aesthetic markets, and is a world-renowned expert in developing and commercializing innovative energy-based technologies, including Laser, Intense Pulsed Light (IPL) and Radio-Frequency (RF). For nearly 50 years, Lumenis' ground-breaking products have redefined medical treatments and have set numerous technological and clinical gold-standards. Lumenis has successfully created solutions for previously untreatable conditions, as well as designed advanced technologies that have revolutionized existing treatment methods in each and every one of the verticals we operate in. Our drive for innovation stems from an uncompromising commitment to improving the health and well-being of our patients; addressing new and growing needs of aging populations; and in offering medical professionals cutting-edge solutions that fit seamlessly into the health-economics environment of the 21st century. The world over, we bring Energy to Healthcare. For more information visit: www.lumenis.com

Forward-Looking Statements

Information provided in this press release may contain statements relating to current expectations, estimates, forecasts and projections about future events that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include but are not limited to the Company's plans, objectives and expectations for future operations, including its projected results of operations. Forward-looking statements are often characterized by the use of forward-looking terminology such as "may," "will," "expect," "anticipate," "estimate," "continue," "believe," "should," "intend," "plan," "project" or other similar words, but are not the only way these statements are identified. These forward-looking statements are based upon management's current estimates and projections of future results or trends. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including those risks discussed under the heading "Risk Factors" in our most recent Annual Report on Form 20-F filed with the Securities and Exchange Commission. These forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

   
LUMENIS LTD. AND SUBSIDIARIES  
Total Revenue, By Geography  
(unaudited)  
   
(U.S. dollars in thousands) Three Months
Ended June 30,
    Six Months
Ended June 30,
 
  2014   2013   Change     2014   2013   Change  
Americas $ 21,972   $ 23,228   -5.4 %   $ 43,517   $ 43,807   -0.7 %
APAC   26,891     23,605   13.9 %     45,646     40,215   13.5 %
EMEA   13,231     11,048   19.8 %     27,491     22,451   22.4 %
Japan   10,397     8,429   23.3 %     21,641     19,948   8.5 %
Total Revenues $ 72,491   $ 66,310   9.3 %   $ 138,295   $ 126,421   9.4 %
                                   
                                   
LUMENIS LTD. AND SUBSIDIARIES  
Total Revenue, By Segment  
(unaudited)  
   
(U.S. dollars in thousands) Three Months
Ended June 30,
    Six Months
Ended June 30,
 
  2014   2013   Change     2014   2013   Change  
Aesthetic $ 31,484   $ 25,870   21.7 %   $ 58,048   $ 47,481   22.3 %
Surgical   27,023     26,667   1.3 %     51,368     49,869   3.0 %
Ophthalmic   13,984     13,773   1.5 %     28,879     29,071   -0.7 %
Total Revenues $ 72,491   $ 66,310   9.3 %   $ 138,295   $ 126,421   9.4 %
   
   
                                   
LUMENIS LTD. AND SUBSIDIARIES
Condensed Consolidated Balance Sheet
(Unaudited)
       
  June 30,   December 31,
U.S. dollars in thousands 2014   2013
           
ASSETS          
  Cash and cash equivalents $ 111,648   $ 42,811
  Trade receivables (net of allowance for doubtful accounts of $2,522 and $2,690 in 2014 and 2013, respectively)   46,039     42,867
  Prepaid Expenses and other receivables   8,791     10,194
  Inventories   42,100     36,075
Total Current Assets   208,578     131,947
  Finished goods used in operations, net   5,536     4,793
  Property and equipment, net   8,961     8,094
  Goodwill   50,217     50,217
  Severance pay fund   3,519     3,875
  Other assets   7,199     7,519
Total Long-Term Assets   75,432     74,498
TOTAL ASSETS $ 284,010   $ 206,445
           
LIABILITIES AND SHAREHOLDERS' EQUITY          
  Restructured debt $ 17,181   $ 17,493
  Trade payables   33,910     24,553
  Other accounts payable and accrued expenses   38,971     39,413
  Deferred revenues and customers advances   20,856     19,057
Total Current Liabilities   110,918     100,516
  Restructured debt   50,936     52,024
  Accrued post-employment benefits   8,745     8,906
  Deferred revenues   7,674     8,144
  Other liabilities   19,135     19,155
Total Long-Term Liabilities   86,490     88,229
TOTAL LIABILITIES   197,408     188,745
SHAREHOLDERS' EQUITY   86,602     17,700
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 284,010   $ 206,445
           
           
           
LUMENIS LTD. AND SUBSIDIARIES  
Condensed Consolidated Statements of Operations  
(Unaudited)  
                   
  Three Months
Ended June 30,
    Six Months
Ended June 30,
 
U.S. dollars in thousands (except per share data) 2014   2013     2014   2013  
                           
Revenues:                          
Products $ 58,896   $ 53,261     $ 111,502   $ 100,459  
Services   13,595     13,049       26,793     25,962  
Total Revenues   72,491     66,310       138,295     126,421  
                           
Cost of Revenues                          
Products   26,748     23,979       51,436     46,436  
Services   6,669     7,029       13,198     13,997  
Total Cost of Revenues   33,417     31,008       64,634     60,433  
                           
Gross Profit   39,074     35,302       73,661     65,988  
                           
Operating Expenses:                          
Research and development, net   4,982     5,368       11,250     10,420  
Selling and marketing   22,836     21,055       43,697     40,065  
General and administrative   6,144     4,577       12,016     9,463  
Legal settlement, net   -     (6,692 )     -     (6,692 )
Total Operating Expenses   33,962     24,308       66,963     53,256  
                           
Operating Income   5,112     10,994       6,698     12,732  
                           
Financial expenses, net   847     867       906     1,833  
IPO related Bank Cash Fee   -     -       4,000     -  
Total Financial Expenses   847     867       4,906     1,833  
                           
Tax expenses   747     762       1,411     1,576  
Net Income $ 3,518   $ 9,365     $ 381   $ 9,323  
                           
Net income per common shares:                          
Basic $ 0.10   $ 0.32     $ 0.01   $ 0.32  
Diluted $ 0.10   $ 0.32     $ 0.01   $ 0.32  
                           
Weighted-average common shares outstanding:                          
Basic   35,596,777     28,982,409       33,242,381     28,982,023  
Diluted   35,796,271     29,451,610       34,006,081     29,439,366  
                           
                           
                           
LUMENIS LTD. AND SUBSIDIARIES  
Consolidated Statements of Cash Flows  
(Unaudited)  
                       
  Three Months
Ended June 30,
    Six Months
Ended June 30,
 
U.S. dollars in thousands 2014     2013     2014     2013  
                               
Cash flows from operating activities:                              
Net income $ 3,518     $ 9,365     $ 381     $ 9,323  
Adjustments required to reconcile net income to net cash provided by operating activities:                              
Depreciation and amortization   1,609       1,460       3,197       2,712  
Compensation related to employees stock option plan   650       415       1,444       820  
Adjustments related to restructured debt   (759 )     (550 )     2,368       (1,283 )
Revaluation of financial assets and other, net   (174 )     54       122       492  
Deferred income taxes, net   (134 )     (76 )     457       356  
Increase in trade receivables, net   (4,930 )     (3,001 )     (2,836 )     (6,173 )
Decrease (increase) in inventories and finished goods used in operations   (5,700 )     (201 )     (8,400 )     663  
Decrease (increase) in prepaid expenses and other receivables   1,638       (386 )     985       (415 )
Increase in trade payables   7,212       1,478       9,009       6,173  
Increase (decrease) in other accounts payables and accrued expenses (including short and long-term deferred revenues and customer advances)   (4,662 )     3,075       (4,227 )     3,010  
Increase (decrease) in accrued post-employment benefits, net   115       (23 )     153       123  
Increase in other long term liabilities   633       367       366       866  
Net cash provided by (used in) operating activities   (984 )     11,977       3,019       16,667  
                               
Cash flows from investing activities:                              
Purchase of property and equipment   (1,237 )     (872 )     (2,156 )     (1,510 )
Investment in short & Long term bank deposits   (110 )     -       (110 )     -  
Proceeds from maturity of short & Long term bank deposits   8       159       8       159  
Net cash used in investing activities   (1,339 )     (713 )     (2,258 )     (1,351 )
                               
Cash flows from financing activities:                              
Issuance of share capital, net   (1,036 )     -       67,816       -  
Proceeds from exercise of share options   -       -       35       12  
Net cash provided by (used in) financing activities   (1,036 )     -       67,851       12  
                               
Foreign currency translation adjustments related to Cash and cash equivalents   138       25       225       (296 )
                               
Increase (decrease) in cash and cash equivalents   (3,221 )     11,289       68,837       15,032  
Cash and cash equivalents at the beginning of the period   114,869       30,846       42,811       27,103  
Cash and cash equivalents at the end of the period $ 111,648     $ 42,135     $ 111,648     $ 42,135  
                               
Supplemental information and disclosures of non-cash investing and financing activities:                              
  Issuance costs by utilizing prepayments   -       -       311       -  
  Accrued issuance costs   -       -       521       -  
  Purchase of property and equipment   444       425       444       425  
                                 

Use of Non-GAAP Financial Measures:

The Company has presented the following non-GAAP financial measures in this press release: non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, adjusted EBITDA, non-GAAP net income per share and adjusted EBITDA margin. The Company defines non-GAAP operating income as its reported operating income (GAAP) excluding stock-compensation expense, one-time charges and other non-recurring operating costs and expenses. The Company defines adjusted EBITDA as its non-GAAP net income before financial expenses, net, taxes on income, and excluding depreciation and amortization expense. The Company defines its non-GAAP net income to exclude non-recurring or unusual expenses.

     
  LUMENIS LTD. AND SUBSIDIARIES  
  Reconciliation of GAAP to Non-GAAP Results  
  (Unaudited)  
                     
                     
  Three Months
Ended June 30,
    Six Months
Ended June 30,
 
(U.S. dollars in thousands) 2014   2013     2014     2013  
                             
Table of Reconciliation from GAAP Gross Profit to Non-GAAP Gross Profit  
GAAP Gross Profit $ 39,074   $ 35,302     $ 73,661     $ 65,988  
Stock-based compensation   36     34       82       72  
Non-GAAP Gross Profit $ 39,110   $ 35,336     $ 73,743     $ 66,060  
                             
Table of Reconciliation from GAAP Operating Income to Non-GAAP Operating Income and Adjusted EBITDA  
GAAP Operating Income $ 5,112   $ 10,994     $ 6,698     $ 12,732  
Stock-based compensation   650     415       1,443       820  
Legal settlement   -     (7,097 )     -       (6,977 )
IPO related expenses   314     -       1,194       -  
Other Non-Recurring items   -     90       -       90  
Non GAAP Operating Income   6,076     4,402       9,335       6,665  
Depreciation and Amortization   1,609     1,460       3,197       2,712  
Adjusted EBITDA (Non-GAAP) $ 7,685   $ 5,862     $ 12,532     $ 9,377  
                             
Table of Reconciliation from GAAP Net Income to Non-GAAP Net Income  
GAAP Net Income $ 3,518   $ 9,365     $ 381     $ 9,323  
Stock-based compensation   650     415       1,443       820  
Legal settlements   -     (7,097 )     -       (6,977 )
IPO related expenses   314     -       1,194       -  
One-time payment to Bank Hapoalim BM   -     -       4,000       -  
Revaluation of embedded derivatives and other non-recurring items   228     170       (111 )     552  
Non-GAAP Net Income $ 4,710   $ 2,853     $ 6,907     $ 3,718  
                             
Table Comparing GAAP Diluted Net Income Per common Share to Non-GAAP Diluted Net Income Per Common Share  
GAAP diluted net income per common share $ 0.10   $ 0.32     $ 0.01     $ 0.32  
Non-GAAP diluted net income per common share $ 0.13   $ 0.10     $ 0.20     $ 0.13  
Shares used in computing GAAP diluted net income per common share   35,796,271     29,451,610       34,006,081       29,439,366  
Shares used in computing Non-GAAP diluted net income per common share   35,803,771     29,510,757       34,009,831       29,557,616