SOURCE: Syneron Medical

November 03, 2005 06:22 ET

Syneron Medical Reports Record 2005 Third Quarter Results, Increased Guidance and Management Changes

68% Increase in Revenue and Doubling of Net Income Confirms Syneron Strengthening Competitive Advantage in the Medical Aesthetic Sector

YOKNEAM, ISRAEL -- (MARKET WIRE) -- November 3, 2005 -- Syneron Medical Ltd. (NASDAQ: ELOS), an innovator in the development, marketing and sales of elos™ combined-energy medical aesthetic devices, today reported results for the third quarter and first nine months of 2005, as well as management changes for the next phase of its corporate growth strategy.

Revenue for the third quarter of 2005 rose 68% to $25 million, compared to $14.9 million reported in the third quarter of 2004. The VelaSmooth™ played a significant role in the growth of North American sales. Also contributing to the strong rise in sales was the active promotion of bundled sales in the U.S. during the third quarter of 2005, which contributed to a 40-50% increase in the average transaction size. North America accounted for 66% of total sales from July to September.

Operating expenses rose 27.6% during the third quarter of 2005 to $8.3 million, compared to $6.5 million a year ago. The limited rise in operating expenses reflects the leveraged effect of the sharp rise in sales, given the efficiencies of Syneron's cost structure, as well as lower marketing and sales costs in the third quarter of 2005.

Third quarter operating income doubled to $13.6 million, from $6.7 million in the third quarter of 2004. Operating margins rose to 54% in the third quarter, compared to 45% in the third quarter last year. Third quarter 2005 net income rose to $14.6 million, compared to $7.3 million net income reported in Q3 2004. The net income margin rose from 49% in Q3 2004 to 58% in Q3 2005. Earnings per diluted share were $0.53 in Q3 2005, compared with $0.29 in Q3 2004.

Revenue for the nine months to September 30, 2005 rose 57.6% to $63.7 million, compared to $40.4 million reported in the first nine months of 2004. Operating expenses for the first nine months of 2005 on a pro forma basis (excluding expenses for the secondary offering and the Thermage settlement) were $24.5 million, compared to $17.5 million recorded in the same period in 2004. Nine-month operating income grew 68.2% on a pro forma basis to $30.8 million, from $18.3 million in the first nine months of 2004. Nine-month net income was $32.5 million pro forma, compared to the $19.1 million net income reported in the same period the previous year. On a US GAAP basis, including the costs of the Thermage settlement and secondary offering, operating expenses for the first nine months of 2005 were $28 million, operating income for the nine months was $27.3 million, with net income of $29 million. Earnings per diluted share, on a pro forma basis for the first nine months of 2005, were $1.18, while on a GAAP basis, earnings per diluted share were $1.05.

Commenting on the results, Moshe Mizrahy, CEO, said, "The results for the third quarter clearly reflect the success of our efforts to create the most competitive and diversified product portfolio for use by medical aesthetic professionals. At the most basic level, our success derives from the competitive advantage of the elos technology which enables us to produce the safest, most effective equipment in the industry, as discussed in some 40 peer-reviewed articles, with maximum manufacturing efficiencies. At a higher level, our success also reflects the achievements of individuals and groups within Syneron, such as the sales and marketing management which developed and implemented marketing strategies that capitalize on the competitive advantages of Syneron's broad product portfolio."

Syneron is raising revenue guidance for 2005 to $91-92 million from $84-85 million.

Syneron's financial position remains strong. In the third quarter, Syneron generated cash of $13.5 million from operations and $2.6 million from exercise of options and interest, for a total cash position on September 30, 2005 of $118.5 million, with no debt. Shareholders' equity was $125.7 million at the end of the third quarter.

Management Changes

Looking forward to the next phase of its strategic corporate development, Syneron is today announcing changes in its senior management. The changes include the transition of responsibility as Chief Executive from Moshe Mizrahy, who has been instrumental in the rapid growth of Syneron since its inception and for Syneron's highly successful first year as a public company, to David Schlachet, currently CFO of Syneron, and the appointment of Shimon Eckhouse as active chairman.

Commenting on the management transition, Shimon Eckhouse said, "Moshe Mizrahy's skills with managing early-stage companies and developing Syneron's markets have been instrumental in achieving worldwide market recognition of the competitive advantages of our elos™ technology and Syneron's wide portfolio of medical aesthetic platforms. Looking to the next phase of Syneron's strategic development, David Schlachet brings broad senior managerial experience and extensive experience in implementing M&A strategies, having served as the chairman and CEO of several large publicly traded companies, as well as specific experience in the medical technology sector having been a managing partner of an Israeli venture fund specializing in medical devices and biotechnology and as Vice President of the Weizmann Institute of Science in Israel."

Conference call

Syneron Management will host a conference call to discuss the results and quarterly highlights at 10:00am ET today, November 3, 2005. Investors and other interested parties may access a live webcast through Syneron's web site at www.syneron.com. Please login at least 10 minutes prior to the conference call in order to download the applicable audio software. Following the conclusion of the call, a replay of the webcast will be available within 24 hours at the Company's web site.

About Syneron

Syneron Medical Ltd. manufactures and distributes medical aesthetic devices that are powered by the proprietary, patented elos combined-energy technology of Bi-Polar Radio Frequency and Light. The Company's innovative elos technology provides the foundation for highly effective, safe and cost-effective systems that enable physicians to provide advanced solutions for a broad range of medical-aesthetic applications including hair removal, wrinkle reduction, rejuvenating the skin's appearance through the treatment of superficial benign vascular and pigmented lesions, and the treatment of acne, leg veins and cellulite. Founded in 2000, the corporate, R&D, and manufacturing headquarters for Syneron Medical Ltd. is located in Israel. Syneron has offices and distributors throughout the world (http://syneron.com/locations.html), including North American Headquarters in Canada, European Headquarters in Germany, and Asia-Pacific Headquarters in Hong Kong, which provide sales, service and support. Additional information can be found at www.syneron.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Specifically, statements concerning Syneron's expectations regarding financial results for the 2005 fiscal year, as well as expectations regarding our ability to continue to grow and maintain leadership in the aesthetic industry, are forward-looking statements within the meaning of the safe harbor provisions of the Act. Forward-looking statements are based on management's current, preliminary expectations and are subject to risks and uncertainties, which may cause Syneron's actual results to differ materially from the statements contained herein. Syneron's second quarter financial results, as discussed in this release, are unaudited. Estimates of year-end financial results are subject to a number of assumptions regarding the future operation of Syneron's business. Undue reliance should not be placed on forward-looking statements, especially guidance on future financial performance, which speaks only as of the date such statements are made. Syneron undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made, or to reflect the occurrence of unanticipated events.

For more information, please contact Judith Kleinman, VP Investor Relations, Syneron Medical Ltd., 011 972 4909 6282, ir@syneron.com

Syneron, the Syneron logo, elos, and VelaSmooth are trademarks of Syneron Medical Ltd. and may be registered in certain jurisdictions. Elos (Electro-Optical Synergy) is a proprietary technology of Syneron Medical. All other names are the property of their respective owners.

                            SYNERON MEDICAL LTD.
                    CONSOLIDATED STATEMENT OF OPERATIONS
               U.S. dollars in thousands except per share data

                                                                     Year
                            Three month ended    Nine month ended   ended
                              September 30,       September 30,     Dec 31,
                             2005      2004      2005      2004      2004
                           --------  --------  --------  --------  --------
                            US GAAP   US GAAP   US GAAP   US GAAP   US GAAP
                           --------  --------  --------  --------  --------

Revenues                   $ 25,030  $ 14,908  $ 63,671  $ 40,405  $ 57,918
Cost of revenues              3,091     1,715     8,330     4,564     6,914
                           --------  --------  --------  --------  --------

Gross profit                 21,939    13,193    55,341    35,841    51,004
                           --------  --------  --------  --------  --------

Operating expenses
Research and development      1,450       806     3,697     1,959     3,078
Selling and marketing         5,990     4,866    18,455    14,057    19,625
General and
 administrative                 883       852     2,350     1,491     2,725
Other expenses                    -         -     3,494         -         -
                           --------  --------  --------  --------  --------

Total operating expenses      8,323     6,524    27,996    17,507    25,428
                           --------  --------  --------  --------  --------

Operating income             13,616     6,669    27,345    18,334    25,576
Financial income, net         1,177       757     2,025     1,155     2,384
                           --------  --------  --------  --------  --------

Income before taxes on
 income                      14,793     7,426    29,370    19,489    27,960
Taxes on income                 150       175       350       340       620
                           --------  --------  --------  --------  --------

Net income                 $ 14,643  $  7,251  $ 29,020  $ 19,149  $ 27,340
                           ========  ========  ========  ========  ========

Basic net earnings per
 share                     $   0.58  $   0.37  $   1.19  $   1.07  $   1.45
                           ========  ========  ========  ========  ========
Diluted net earnings per
 share                     $   0.53  $   0.29  $   1.05  $   0.83  $   1.14
                           ========  ========  ========  ========  ========

Weighted average number
 of shares used in per
 share calculations
Basic                        25,105    19,719    24,460    17,887    18,917
                           ========  ========  ========  ========  ========
Diluted                      27,605    25,006    27,508    23,016    24,083
                           ========  ========  ========  ========  ========



                                                                     Year
                            Three month ended    Nine month ended   ended
                              September 30,       September 30,     Dec 31,
                             2005      2004      2005      2004      2004
                           --------  --------  --------  --------  --------
                                                  PRO
                           US GAAP   US GAAP     FORMA    US GAAP   US GAAP
                           --------  --------  --------  --------  --------

Revenues                   $ 25,030  $ 14,908  $ 63,671  $ 40,405  $ 57,918
Cost of revenues              3,091     1,715     8,330     4,564     6,914
                           --------  --------  --------  --------  --------

Gross profit                 21,939    13,193    55,341    35,841    51,004
                           --------  --------  --------  --------  --------

Operating expenses
Research and development      1,450       806     3,697     1,959     3,078
Selling and marketing         5,990     4,866    18,455    14,057    19,625
General and
 administrative                 883       852     2,350     1,491     2,725
                           --------  --------  --------  --------  --------

Total operating expenses      8,323     6,524    24,502    17,507    25,428
                           --------  --------  --------  --------  --------

Operating income             13,616     6,669    30,839    18,334    25,576
Financial income, net         1,177       757     2,025     1,155     2,384
                           --------  --------  --------  --------  --------

Income before taxes on
 income                      14,793     7,426    32,864    19,489    27,960
Taxes on income                 150       175       350       340       620
                           --------  --------  --------  --------  --------

Net income                 $ 14,643  $  7,251  $ 32,514  $ 19,149  $ 27,340
                           ========  ========  ========  ========  ========


Basic net earnings per
 share                     $   0.58  $   0.37  $   1.33  $   1.07  $   1.45
                           ========  ========  ========  ========  ========
Diluted net earnings per
 share                     $   0.53  $   0.29  $   1.18  $   0.83  $   1.14
                           ========  ========  ========  ========  ========

Weighted average number
 of shares used in per
 share calculations
Basic                        25,105    19,719    24,460    17,887    18,917
                           ========  ========  ========  ========  ========
Diluted                      27,605    25,006    27,508    23,016    24,083
                           ========  ========  ========  ========  ========




                          SYNERON MEDICAL LTD.
                      CONSOLIDATED BALANCE SHEETS
                       U.S. dollars in thousands


                                         September 30,     December 31,
                                             2005              2004
                                         ----------        ----------
                                           US GAAP           US GAAP
                                         ----------        ----------
CURRENT ASSETS
Cash and cash equivalents                $   12,526        $   12,468
Short-term deposits                           8,286            57,893
Marketable securities                        93,168            23,071
Trade receivables                            16,481             8,628
Other accounts receivables
 and prepaid expenses                         2,346             1,532
Inventories                                   3,687             3,134
                                         ----------        ----------

Total current assets                        136,494           106,726
                                         ----------        ----------

LONG-TERM ASSETS

Severance pay fund                              273               196
Long-term deposits and others                 4,545                28
Long-term trade receivables                       -               754
Property and equipment, net                   1,178               842
                                         ----------        ----------

Total long-term assets                        5,996             1,820
                                         ----------        ----------

OTHER ASSETS                                  1,248             1,000
                                         ----------        ----------

Total assets                             $  143,738        $  109,546
                                         ==========        ==========

CURRENT LIABILITIES
Trade payables                           $    1,654        $    1,520
Other current liabilities                    12,145            10,135
                                         ----------        ----------

Total current liabilities                    13,799            11,655
                                         ----------        ----------

LONG-TERM LIABILITIES
Deferred revenues                             3,934             3,276
Accrued severance pay                           293               214
                                         ----------        ----------

Total long-term liabilities                   4,227             3,490
                                         ----------        ----------

Total shareholders' equity                  125,712            94,401
                                         ----------        ----------

Total liabilities and
 shareholders' equity                    $  143,738        $  109,546
                                         ==========        ==========



                            SYNERON MEDICAL LTD.
                    CONSOLIDATED STATEMENT OF CASH FLOWS
                         U.S. dollars in thousands

                                                                    Year
                           Three month ended    Nine month ended   ended
                             September 30,       September 30,     Dec 31,
                            2005      2004      2005      2004      2004
                          --------  --------  --------  --------  --------
                           US GAAP   US GAAP   US GAAP   US GAAP   US GAAP
                          --------  --------  --------  --------  --------

CASH FLOWS FROM
 OPERATING ACTIVITIES
Net income                $ 14,643  $  7,251  $ 29,020  $ 19,149  $ 27,340
Adjustments to reconcile
 net income to net cash
 provided by operating
 activities:
Depreciation and
 Amortization                  151        33       417        90       143
Accrued severance pay,
 net                             -         5         2         9         3
Increase in short-term
 and long-term trade
 receivables                (4,048)   (1,890)   (6,863)   (3,956)   (4,049)
Decrease (increase) in
 other accounts
 receivables and prepaid
 expenses                     (374)      120      (568)      (57)     (575)
Increase (decrease) in
 inventories                   129      (630)     (553)   (1,032)   (1,647)
Decrease (increase) in
 trade payables               (624)     (169)      134      (121)     (688)
Increase in other
 current liabilities         2,001     1,628       454       638       389
Decrease in long-term
 litigation settlement
 fee                             -      (117)        -      (900)     (900)
Loss (gain) on available
 for sale securities         1,026      (103)    1,207        (8)     (396)
Stock-based compensation        37        36       111       109       148
Increase in deferred
 revenues                      590      (931)    1,907     1,080     2,843
Loss on sales of
 property and equipment          -         2        12         2         3
                          --------  --------  --------  --------  --------

Net cash provided by
 operating activities       13,531     5,235    25,280    15,003    22,614
                          --------  --------  --------  --------  --------

CASH FLOWS FROM
 INVESTING ACTIVITIES
Investment in short-term
 deposits, net              50,216   (55,893)   48,125   (55,893)  (56,873)
Purchase of
 available-for-sale
 securities                (74,844)   (2,053)  (75,167)  (14,462)  (17,759)
Proceeds from sale of
 available-for-sale
 securities                  2,045         -     3,370     1,927     6,116
Investment in long-term
 deposits and others        (3,513)       (2)   (5,517)      (10)      (13)
Proceeds from long-term
 loans and others            1,235         -     2,000         -         -
Purchase of property and
 equipment                    (206)     (123)     (555)     (282)     (484)
Purchase of other assets         -         -      (466)        -    (1,000)
Proceeds from sale of
 property and equipment          8         -         8         -         -
                          --------  --------  --------  --------  --------

Net cash used in
 investing activities      (25,059)  (58,071)  (28,202)  (68,720)  (70,013)
                          --------  --------  --------  --------  --------

CASH FLOWS FROM
 FINANCING ACTIVITIES
Proceeds from issuance
 of ordinary and
 preferred shares, net           -    53,701         -    53,850    53,851
Exercise of options          1,392         -     2,980         -        98
Repurchase of preferred
 A shares from
 shareholders                    -         -         -      (235)     (235)
                          --------  --------  --------  --------  --------

Net cash provided by
 financing activities        1,392    53,701     2,980    53,615    53,714
                          --------  --------  --------  --------  --------

Increase (decrease) in
 cash and cash
 equivalents               (10,136)      865        58      (102)    6,315
                          --------  --------  --------  --------  --------
Cash and cash
 equivalents at the
 beginning of the period    22,662     5,186    12,468     6,153     6,153
                          --------  --------  --------  --------  --------

Cash and cash
 equivalents at the end
 of the period            $ 12,526  $  6,051  $ 12,526  $  6,051  $ 12,468
                          ========  ========  ========  ========  ========

Contact Information

  • For more information, please contact:
    Judith Kleinman
    VP Investor Relations
    Syneron Medical Ltd.
    011 972 4909 6282
    Email Contact