SOURCE: Lumenis Ltd.

Lumenis Ltd.

November 11, 2014 16:15 ET

Lumenis Ltd. Reports Third Quarter Financial Results

Revenue Growth of 9.4% -- 9th Consecutive Quarter of Year-Over-Year Growth

YOKNEAM, ISRAEL--(Marketwired - Nov 11, 2014) - Lumenis Ltd. (NASDAQ: LMNS), the world's largest medical laser company for surgical, ophthalmic and aesthetic applications, today announced third quarter 2014 financial results.

Third Quarter 2014 Summary:

  • Revenues of $74.2 million, up 9.4% year-over-year
  • Adjusted EBITDA of $10.2 million, 13.7% of revenues, up 16.4% year-over-year
  • Non-GAAP Net Income of $6.0 million, up 4.2% year-over-year. GAAP Net Income of $5.5 million
  • Non-GAAP Net Income per diluted share of $0.17
  • $1.0 million net cash flow generated from ongoing business activities(1) in the 3-month period ending September 30, 2014

"Our strategy of developing and commercializing innovative new products continues to demonstrate results as we posted our third consecutive quarter of over 9% revenue growth and new products generated over 15% of product revenues," said Mrs. Tzipi Ozer-Armon, Chief Executive Officer. "In our Aesthetics business specifically, strong demand for our new products, ResurFX for non-ablative skin resurfacing and the LightSheer Desire for next generation hair removal, helped generate high double-digit revenue growth. We remain committed to achieving long term, sustainable, and profitable growth and I am confident that our innovative portfolio of existing products and our strong product pipeline will allow us to achieve this objective."

Third Quarter 2014 Financial Results

Total revenue in the third quarter of 2014 was $74.2 million, an increase of 9.4% compared to revenue of $67.8 million last year. On a constant currency basis, total revenue increased 10% year-over-year. Product revenue was $60.8 million, an increase of 10.4% compared to product revenue of $55.0 million last year. Service revenue was $13.4 million, an increase of 4.7% compared to service revenue of $12.8 million last year. Total revenue growth was driven by growth in our Aesthetics and Surgical segments, partially offset by declines in our Ophthalmic segment. By geography, Asia Pacific (APAC) and Europe, the Middle East and Africa (EMEA) posted strong growth. In the Americas, performance was almost flat while Japan declined compared to last year.

Gross profit in the third quarter of 2014 was $39.7 million, an increase of $2.4 million, or 6.3%, compared to $37.3 million last year. Third quarter 2014 GAAP gross margin decreased 150 basis points to 53.5%, compared to 55.0% last year. The decline is mainly attributed to product mix.

(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 $0.2 million IPO related payments.

On a GAAP Basis:

Third quarter 2014 GAAP operating expenses were $32.5 million, an increase of $1.8 million, or 5.9%, compared to operating expenses of $30.7 million last year. The increase in operating expenses year-over-year was mainly driven by increased sales and marketing and general and administrative expenses, offset partially by lower R&D expense compared to last year. 

Third quarter 2014 GAAP operating income was $7.1 million, an increase of $0.5 million, or 8.4%, compared to GAAP operating income of $6.6 million last year. Third quarter 2014 GAAP operating margin was 9.6%, compared to 9.7% last year.

Third quarter 2014 GAAP net income was $5.5 million, an increase of $2.1 million, compared to $3.4 million last year. GAAP net income per diluted share was $0.15 in the third quarter of 2014 compared to $0.11 last year, based on 35.8 million and 30.0 million diluted shares outstanding respectively.

On a Non-GAAP Basis:

Third quarter 2014 Non-GAAP operating income was $8.0 million, an increase of $0.8 million, or 11.7%, compared to Non-GAAP operating income of $7.2 million last year. Third quarter 2014 Non-GAAP operating margin was 10.8%, compared to 10.6% last year. Third quarter of 2014, Non-GAAP operating income excludes $0.7 million related to stock based compensation expense and $0.2 million related to litigation expenses.

Third quarter 2014 Adjusted EBITDA was $10.2 million, an increase of $1.5 million, or 16.4%, compared to $8.7 million last year. Adjusted EBITDA margin was 13.7% of revenues compared to 12.9% last year.

Third quarter 2014 Non-GAAP net income was $6.0 million, an increase of $0.3 million, or 4.2%, compared to $5.7 million last year. In addition to the above mentioned adjustments to operating income, third quarter Non-GAAP net income excludes revaluation income of embedded derivatives of approximately $0.5 million in 2014.

Non-GAAP net income per diluted share was $0.17 in the third quarter of 2014 compared to $0.19 last year based on 35.8 million and 30.2 million diluted shares outstanding respectively.

Cash and cash equivalents were $99.1 million as of September 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 and shares options proceeds, $8.9 million cash flow generated from ongoing business activities, partially offset by cash payments to Bank Hapoalim of $15.0 million related to annual loan repayment and $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 $1.2 million.

Updated Full Year 2014 Financial Guidance

For the full year ended December 31, 2014, we expect to report:

  • Revenue in a range of $285 to $287 million, representing an increase of 7% to 8% year-over-year. This compares to a range of $284 million to $287 million previously.
  • Adjusted EBITDA in a range of $29.6 to $30.6 million, representing an increase of 14% to 18% year-over-year. This compares to a range of $29.1 million to $30.6 million previously.
  • 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.

Conference Call

Lumenis will host a conference call on Tuesday, November 11, 2014 at 5:00 p.m. Eastern Time to discuss its third 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: 888-437-9445 for callers based in the United States, 1-80-924-5906 for callers based in Israel and 719-325-2455 for callers based in all other countries. The reservation code for the call is 7078121.  Please dial in approximately ten minutes prior to start time. 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 7078121. A replay of the webcast will be available on the investor relations page of the company's website.

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 our 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 U.S. 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)
 
(USD$, thousands)   Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
    2014   2013   Change     2014   2013   Change  
Americas   23,710   23,853   -0.6 %   67,227   67,660   -0.6 %
APAC   27,389   22,962   19.3 %   73,035   63,177   15.6 %
EMEA   14,129   11,133   26.9 %   41,620   33,584   23.9 %
Japan   8,964   9,893   -9.4 %*   30,605   29,841   2.6 %
Total Revenues   74,192   67,841   9.4 %   212,487   194,262   9.4 %
(*) -5.2% on a constant currency basis
 
 
LUMENIS LTD. AND SUBSIDIARIES
Total Revenue, By Segment
(unaudited)
 
(USD$, thousands)   Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
    2014   2013   Change     2014   2013   Change  
Aesthetic   30,892   25,457   21.3 %   88,940   72,938   21.9 %
Surgical   28,215   26,038   8.4 %   79,583   75,907   4.8 %
Ophthalmic   15,085   16,346   -7.7 %**   43,964   45,417   -3.2 %
Total Revenues   74,192   67,841   9.4 %   212,487   194,262   9.4 %
(**) -6.4% on a constant currency basis
 
 
LUMENIS LTD. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
                 
    Three Months Ended   Nine Months Ended
    September 30,   September 30,
U.S. dollars in thousands (except per share data)   2014   2013   2014   2013
                         
Revenues:                        
Products   $ 60,785   $ 55,041   $ 172,287   $ 155,500
Services     13,407     12,800     40,200     38,762
Total Revenues     74,192     67,841     212,487     194,262
                         
Cost of Revenues                        
Products     27,632     24,219     79,068     70,655
Services     6,892     6,306     20,090     20,303
Total cost of Revenues     34,524     30,525     99,158     90,958
Gross profit     39,668     37,316     113,329     103,304
                         
Operating expenses:                        
Research and development, net     5,066     5,787     16,316     16,207
Selling and marketing     21,706     19,596     65,403     59,661
General and administrative (**)     5,764     5,351     17,780     14,814
Legal settlement, net     -     -     -     (6,692)
Total Operating expenses     32,536     30,734     99,499     83,990
Operating income:     7,132     6,582     13,830     19,314
                         
Financial expenses, net     847     2,645     1,753     4,478
IPO related Bank Cash Fee     -     -     4,000     -
Total Financial Expenses     847     2,645     5,753     4,478
Tax expenses     761     569     2,172     2,145
Net Income   $ 5,524   $ 3,368   $ 5,905   $ 12,691
                         
                         
Net income per common shares:                        
Basic   $ 0.15   $ 0.12   $ 0.17   $ 0.44
Diluted   $ 0.15   $ 0.11   $ 0.17   $ 0.43
                         
Weighted-average common shares outstanding:                        
Basic     35,705,211     28,982,409     34,071,931     28,982,338
Diluted     35,825,320     30,007,295     34,621,101     29,628,863
 
(**) General and administrative expenses for the nine months ended September 30, 2014, include IPO related expenses in the amount of $1,194.
 
         
LUMENIS LTD. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
         
    September 30,   December 31,
U.S. dollars in thousands   2014   2013
             
ASSETS            
Cash and cash equivalents   $ 99,127   $ 42,811
Trade receivables (net of allowance for doubtful accounts of $2,210 and $2,690 at September 30, 2014 and December 31, 2013, respectively).     44,557     42,867
Prepaid Expenses and other receivables     10,177     10,194
Inventories     41,491     36,075
             
Total Current Assets     195,352     131,947
             
             
Finished goods used in operations, net     6,090     4,793
             
Property and equipment, net     8,771     8,094
             
Goodwill     50,217     50,217
             
Severance pay fund     3,204     3,875
             
Other assets     7,094     7,519
             
Total Long-term assets     75,376     74,498
             
TOTAL ASSETS   $ 270,728   $ 206,445
             
LIABILITIES AND SHAREHOLDERS' EQUITY            
             
CURRENT LIABILITIES            
             
Restructured debt     17,004     17,493
Trade payables     30,600     24,553
Other accounts payable and accrued expenses     37,264     39,413
Deferred revenues and customers advances     20,609     19,057
             
Total current liabilities     105,477     100,516
             
Restructured debt     35,567     52,024
Accrued post-employment benefits     8,068     8,906
Deferred revenues     8,109     8,144
Other liabilities     19,085     19,155
             
Total long-term liabilities     70,829     88,229
TOTAL LIABILITIES     176,306     188,745
             
SHAREHOLDERS' EQUITY     94,422     17,700
             
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 270,728   $ 206,445
             
 
LUMENIS LTD. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
 
                         
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
U.S. dollars in thousands   2014     2013     2014     2013  
                                 
Cash flows from operating activities:                                
Net income   $ 5,524     $ 3,368     $ 5,905     $ 12,691  
Adjustments required to reconcile income to net cash provided by operating activities:                                
Depreciation and amortization     2,124       1,771       5,321       4,483  
Compensation related to employees stock option plan     666       570       2,109       1,390  
Adjustments related to restructured debt     (810 )     677       1,558       (606 )
Revaluation of financial assets and other, net     484       (76 )     607       193  
Deferred income taxes, net     202       298       659       877  
Decrease (increase) in trade receivables, net     669       1,150       (2,167 )     (5,023 )
Decrease (increase) in inventories and finished goods used in operations     (1,831 )     (378 )     (10,231 )     285  
Increase in prepaid expenses and other receivables     (1,366 )     (613 )     (381 )     (1,028 )
Increase (decrease) in trade payables     (3,150 )     78       5,859       6,251  
Increase (decrease) in other accounts payables and accrued expenses (including short and long-term deferred revenues and customer advances)     465       (719 )     (3,762 )     2,291  
Increase (decrease) in accrued post-employment benefits, net     (63 )     109       90       232  
Increase (decrease) in other long term liabilities     (377 )     369       (11 )     1,235  
                                 
Net cash provided by operating activities     2,537       6,604       5,556       23,271  
                                 
Cash flows from investing activities:                                
Purchase of property and equipment     (893 )     (1,039 )     (3,049 )     (2,549 )
Investment in short & Long term bank deposits     (234 )     -       (344 )     -  
Proceeds from maturity of short & Long term bank deposits     78       -       86       159  
Net cash used in investing activities     (1,049 )     (1,039 )     (3,307 )     (2,390 )
                                 
Cash flows from financing activities:                                
Issuance of share capital, net     (521 )     -       67,295       -  
Proceeds from exercise of share options     2,238       -       2,273       12  
Repayments of long-term loans from bank     (15,000 )     (10,266 )     (15,000 )     (10,266 )
Net cash provided by (used in) financing activities     (13,283 )     (10,266 )     54,568       (10,254 )
                                 
Foreign currency translation adjustments related to Cash and cash equivalents     (726 )     439       (501 )     143  
                                 
Increase (decrease) in cash and cash equivalents     (12,521 )     (4,262 )     56,316       10,770  
Cash and cash equivalents at the beginning of the period     111,648       42,135       42,811       27,103  
Cash and cash equivalents at the end of the period   $ 99,127     $ 37,873     $ 99,127     $ 37,873  
                                 
Supplemental information and disclosures of non-cash investing and financing activities:                                
  Issuance costs by utilizing prepayments     -       -       311       -  
  Purchase of property and equipment     254       -       254       -  
  Receivables for options exercised     371       -       371       -  
                                   
                                 

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
September 30,
    Nine Months Ended
September 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   $ 39,668     $ 37,316     $ 113,329     $ 103,304  
Stock-based compensation     39       27       121       99  
Non-recurring items     -       (185 )     -       (185 )
Non-GAAP Gross Profit   $ 39,707     $ 37,158     $ 113,450     $ 103,218  
                                 
Table of Reconciliation from GAAP Operating Income to Non-GAAP Operating Income and Adjusted EBITDA
GAAP Operating Income   $ 7,132     $ 6,582     $ 13,830     $ 19,314  
Stock-based compensation     666       570       2,109       1,390  
Legal settlement     250       -       250       (6,977 )
IPO related expenses     -       -       1,194       -  
Other Non-recurring items     -       54       -       145  
Non GAAP Operating Income     8,048       7,206       17,383       13,872  
Depreciation and Amortization     2,124       1,532       5,321       4,244  
Adjusted EBITDA (Non-GAAP)   $ 10,172     $ 8,738     $ 22,704     $ 18,116  
                                 
Table of Reconciliation from GAAP Net Income to Non-GAAP Net Income
GAAP Net Income   $ 5,524     $ 3,368     $ 5,905     $ 12,691  
Stock-based compensation     666       570       2,109       1,390  
Legal settlements     250       -       250       (6,977 )
IPO related expenses     -       -       1,194       -  
One-time payment to Bank Hapoalim BM     -       1,397       4,000       1,397  
Revaluation of embedded derivatives and other non-recurring items     (487 )     377       (598 )     929  
Non-GAAP Net Income   $ 5,953     $ 5,712     $ 12,860     $ 9,430  
                                 
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   $ 0.15     $ 0.11     $ 0.17     $ 0.43  
Non-GAAP diluted net income per common share   $ 0.17     $ 0.19     $ 0.37     $ 0.32  
Shares used in computing GAAP diluted net income per common share     35,825,320       30,007,295       34,621,101       29,628,863  
Shares used in computing Non-GAAP diluted net income per common share     35,840,567       30,243,638       34,683,111       29,786,477