SOURCE: Syneron Medical Ltd.

Syneron Medical Ltd.

February 09, 2012 07:30 ET

Syneron Reports Fourth Quarter 2011 Results

All Time High Revenue of $61.0 Million; 2011 Revenue of $228.3 Million, Up 20.5% Over 2010; PAD(1) Segment Non-GAAP Operating Margin of 10.1%

YOKNEAM, ISRAEL--(Marketwire - Feb 9, 2012) - Syneron Medical Ltd. (NASDAQ: ELOS), the leading global aesthetic device company, today announced fourth quarter 2011 financial results for the three month period ended December 31, 2011.

Fourth Quarter 2011 Year-Over-Year Financial Highlights Include:

  • Revenue of $61.0 million, up 14.1%
  • International revenue of $40.1 million, up 13.8%
  • North America revenue of $20.9 million, up 14.5%
  • EBU2 segment revenue of $6.0 million, up 336.3%
  • Non-GAAP gross margin of 55.0%, slightly down from 55.6%
  • Non-GAAP net income of $1.1 million, compared to $3.6 million in the prior year
  • Net cash and investments portfolio of $171.1 million at December 31, 2011

Louis P. Scafuri, Chief Executive Officer of Syneron, commented, "We continued to execute on our growth strategy in the fourth quarter, as evidenced by the launch of the elos based eLase™ with Motif™ and eTwo™ facial rejuvenation systems, and the introduction of our increased utilization accessories that maximize productivity and profitability for our customers. eLase and eTwo have been very well received in the market because of their innovative science-based technology and safe and patient friendly treatment options, and we expect that they will continue to gain momentum in the marketplace. In the EBU, growth was driven by the mē home-use hair removal system, elure skin lightening, and the launch of new products in the Tända family.

"Turning to 2012, our focus will remain on increasing the top line, driving mix to higher margin products and consumables, investing in research and development, and increasing our profitability. We have several new product launches that we expect to drive growth, including the launch of our GentleMax Pro, the most powerful and further enhanced dual wavelength platform in the market. This industry leading platform will be launched during the first quarter of 2012. In addition we anticipate the launch of two exciting new body contouring products in the second half of 2012. This is complemented by our acquisition of Ultrashape, further expanding our body sculpting portfolio with an innovative, focused ultrasound technology for the destruction of fat cells. As part of our growth strategy we have also decided to expand our focus in the Chinese market as evidenced by our recent announcement on the expansion of our product offering in China. Overall, we believe the Company is well positioned to further expand its market share, leverage our worldwide channel to market capabilities, and continue to drive significant growth in the EBU segment."

Non-GAAP Financial Highlights for the Fourth Quarter Ended December 31, 2011:

Gross Margin: Fourth quarter 2011 non-GAAP gross margin was 55.0%, compared to 55.6% in fourth quarter 2010 and 53.8% in the third quarter of 2011. The decrease in gross margin compared to the fourth quarter of 2010 was primarily related to a higher mix of EBU product sales which currently have lower gross margins compared to the PAD products. The increase in non-GAAP gross margin compared to the third quarter of 2011 was primarily driven by higher production and sales volume and operational efficiency and costs cutting measures.

Operating Income: Fourth quarter 2011 non-GAAP operating income was $2.2 million, compared to $4.0 million in fourth quarter 2010. Fourth quarter 2011 non-GAAP operating income represented 3.5% of revenue in the quarter, compared to 7.5% of revenue in fourth quarter 2010.

The decrease in non-GAAP operating income was primarily related to an increase in operating expenses associated with the significant growth in EBU segment revenues. The EBU currently incurs higher relative operating expenses compared to the PAD segment due to start-up costs associated with developing and significant investment in marketing its emerging technologies and products.

Net Income: Fourth quarter 2011 non-GAAP net income was $1.1 million, compared to $3.6 million in the fourth quarter of 2010.

Earnings Per Share: Fourth quarter 2011 non-GAAP earnings per share was $0.03, compared to $0.10 in fourth quarter 2010.

Non-GAAP net income and earnings per share for fourth quarter 2011 are adjusted to exclude the following one-time items, which are detailed in the Company's financial tables:

  • Amortization of acquired intangible assets of $1.9 million
  • Post-acquisition severance accrual of $1.3 million
  • Stock-based compensation of $0.9 million
  • Other one-time charges and non-recurring costs, net, of $2.9 million

GAAP Financial Highlights for the Fourth Quarter Ended December 31, 2011:

Gross Margin: Fourth quarter 2011 gross margin was 53.3%, compared to 53.7% in fourth quarter 2010 and 51.7% in the third quarter of 2011. The decrease in gross margin compared to the fourth quarter of 2010 was primarily related to a higher mix of EBU product sales which currently have lower gross margins compared to the PAD products. The increase in GAAP gross margin compared to the third quarter of 2011 was primarily driven by higher production and sales volume and operational efficiency and costs cutting measures.

Operating Income (Loss): Fourth quarter 2011 operating loss was $5.0 million, compared to operating income of $8.0 million in fourth quarter 2010.

The decrease in GAAP operating income was primarily a result of a one-time income of $8.5 million related to the recognition of a deferred gain related to the Company's merger with Candela Corporation that was recorded in the fourth quarter of 2010 and an increase in operating expenses associated with the significant growth in EBU segment revenues. The EBU currently incurs higher relative operating expenses compared to the PAD segment due to start-up costs associated with developing and marketing its emerging technologies and products.

Net Income (Loss): Fourth quarter 2011 net loss was $4.8 million, compared to net income of $8.4 million in fourth quarter of 2010.

Earnings (Loss) Per Share: Fourth quarter 2011 loss per share was $(0.14), compared to earnings per share of $0.24 in fourth quarter 2010.

Cash Position: As of December 31, 2011, cash and cash equivalents, including short-term bank deposits and investments in marketable securities, net were $171.1 million compared to $177.2 million as of September 30, 2011.

Asaf Alperovitz, Chief Financial Officer of Syneron, commented, "Non-GAAP operating margin in the Professional Aesthetic Devices, or PAD, segment was strong at 10.1% despite the increased sales and marketing efforts to support the launch of our eLase and eTwo products. Our consolidated results included a higher mix of EBU revenue, which currently have lower gross margin and higher relative operating expenses compared to the PAD, impacting our overall profitability. We continue to balance our efforts to drive increased profitability in the PAD segment with our investments in the EBU. We believe there is a great opportunity to increase our consolidated revenue and margins as we introduce new premium products in the PAD and EBU segments, benefit from our consumables revenue model, continue building our brands in the EBU segment and further leverage our global infrastructure."

Unaudited Non-GAAP segment results for the three months ended December 31, 2011 and 2010 (in thousands):

For the three-months ended
December 31, % of December 31, % of % of
2011 Revenues 2010 Revenues Change
Revenues
PAD $ 55,051 90.2% $ 52,170 97.4% 5.5%
EBU 5,990 9.8% 1,373 2.6% 336.3%
Total revenues $ 61,041 100.0% $ 53,543 100.0% 14.0%
Operating income (loss)
PAD $ 5,575 10.1% $ 5,948 11.4% (6.3%)
EBU (3,422 ) (57.1%) (1,926 ) (140.3%) 77.7%
Total operating income $ 2,153 3.5% $ 4,022 7.5% (46.5%)

Unaudited Non-GAAP segment results for the twelve months ended December 31, 2011 and 2010 (in thousands):

For the twelve-months ended
December 31, % of December 31, % of % of
2011 Revenues 2010 Revenues Change
Revenues
PAD $ 208,401 91.2% $ 185,951 97.9% 12.1%
EBU 20,041 8.8% 3,927 2.1% 410.3%
Total revenues $ 228,442 100.0% $ 189,878 100.0% 20.3%
Operating income (loss)
PAD $ 16,835 8.1% $ 302 0.2% 5474.5%
EBU (12,538 ) (62.6%) (6,117 ) (155.8%) 105.0%
Total operating income (loss) $ 4,297 1.9% $ (5,815 ) (3.1%) (173.9%)

Unaudited GAAP segment results for the three months ended December 31, 2011 and 2010 (in thousands):

For the three-months ended
December 31, % of December 31, % of % of
2011 Revenues 2010 Revenues Change
Revenues
PAD $ 55,021 90.2% $ 52,083 97.4% 5.6%
EBU 5,990 9.8% 1,373 2.6% 336.3%
Total revenues $ 61,011 100.0% $ 53,456 100.0% 14.1%
Operating income (loss)
PAD $ (1,412 ) (2.6%) $ 9,963 19.1% (114.2%)
EBU (3,539 ) (59.1%) (1,926 ) (140.3%) 83.7%
Total operating income (loss) $ (4,951 ) (8.1%) $ 8,037 15.0% (161.6%)

Unaudited GAAP segment results for the twelve months ended December 31, 2011 and 2010 (in thousands):

For the twelve-months ended
December 31, % of December 31, % of % of
2011 Revenues 2010 Revenues Change
Revenues
PAD $ 208,280 91.2% $ 185,601 97.9% 12.2%
EBU 20,041 8.8% 3,927 2.1% 410.3%
Total revenues $ 228,321 100.0% $ 189,528 100.0% 20.5%
Operating loss
PAD $ (33,001 ) (15.8%) $ (27,285 ) (14.7%) 20.9%
EBU (12,655 ) (63.1%) (6,117 ) (155.8%) 106.9%
Total operating loss $ (45,656 ) (20.0%) $ (33,402 ) (17.6%) 36.7%

Use of Non-GAAP Measures
This press release provides financial measures for gross margin, operating margin, operating income (loss), net income (loss), earnings (loss) per share, which exclude one-time expenses relating to the mergers with Candela Corporation and Primaeva Medical Inc, an expense charge related to stock-based compensation and amortization, one-time severance and other one-time charges and non-recurring costs, and are therefore not calculated in accordance with generally accepted accounting principles (GAAP). Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance because it reflects our operational results and enhances management's and investors' ability to evaluate the Company's gross margin, operating margin, operating income (loss), net income (loss) and earnings (loss) per share. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management uses both GAAP and non-GAAP measures when evaluating the business internally and, therefore, felt it important to make these non-GAAP adjustments available to investors. A reconciliation of each GAAP to non-GAAP financial measure discussed in this press release is contained in the accompanying financial tables.

Conference call
Syneron management will host its fourth quarter 2011 earnings conference call today at 8:30 a.m. ET. Syneron will be broadcasting live via the Investor Relations section of its website, www.syneron.com. To access the call, enter the Syneron website, then click on the Investor Relations - Overview and select "Q4 2011 Results Webcast."

Participants are encouraged to log on at least 15 minutes prior to the conference call in order to download the applicable audio software. The call can be heard live or with an on-line replay which will follow. Those interested in participating in the call and the question and answer session should dial 877-844-6886 in the U.S., and 970-315-0315 from overseas. The conference pass code is: 48538831.

About Syneron Medical Ltd.
Syneron Medical Ltd. (NASDAQ: ELOS) is the leading global aesthetic device company with a comprehensive product portfolio and a global distribution footprint. The Company's technology enables physicians to provide advanced solutions for a broad range of medical-aesthetic applications including body contouring, hair removal, wrinkle reduction, rejuvenation of the skin's appearance through the treatment of superficial benign vascular and pigmented lesions, and the treatment of acne, leg veins and cellulite. The Company sells its products under two distinct brands, Syneron and Candela. Founded in 2000, the corporate, R&D, and manufacturing headquarters for Syneron Medical Ltd. are located in Israel. Syneron also has R&D and manufacturing operations in the US. The Company markets and services and supports its products in 90 countries. It has offices in North America, France, Germany, Italy, Portugal, Spain, UK, Australia, China, Japan, and Hong Kong and distributors worldwide. Additional information can be found at www.syneron.com.

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
Any statements contained in this document regarding future expectations, beliefs, goals, plans or prospects constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Further, any statements that are not statements of historical fact (including statements containing "believes," "anticipates," "plans," "expects," "may," "will," "would," "intends," "estimates" and similar expressions) should also be considered to be forward-looking statements. There are a number of important factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including the risk that the businesses of Syneron and Candela may not be integrated successfully; the risk that the merger transaction with Candela may involve unexpected costs or unexpected liabilities; the risk that synergies from the merger transaction may not be fully realized or may take longer to realize than expected; the risk that disruptions from the merger transaction make it more difficult to maintain relationships with customers, employees, or suppliers; as well as the risks set forth in Syneron Medical Ltd.'s most recent Annual Report on Form 20-F, and the other factors described in the filings that Syneron Medical Ltd. makes with the SEC from time to time. If one or more of these factors materialize, or if any underlying assumptions prove incorrect, Syneron Medical Ltd.'s actual results, performance or achievements may vary materially from any future results, performance or achievements expressed or implied by these forward-looking statements.

In addition, the statements in this document reflect the expectations and beliefs of Syneron Medical Ltd. as of the date of this document. Syneron Medical Ltd. anticipates that subsequent events and developments will cause its expectations and beliefs to change. However, while Syneron Medical Ltd. may elect to update these forward-looking statements publicly in the future, it specifically disclaims any obligation to do so. The forward-looking statements of Syneron Medical Ltd. do not reflect the potential impact of any future dispositions or strategic transactions that may be undertaken. These forward-looking statements should not be relied upon as representing Syneron Medical Ltd.'s views as of any date after the date of this document.

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

1 PAD: Professional Aesthetic Device segment, which includes the results of the Syneron and Candela device businesses.

2 EBU: Emerging Business Units. Products in the EBU include mē home-use hair removal system, elure Advanced Skin Lightening products, Tända LED systems, Light Instruments' dental laser devices along with pipeline products that include Fluorinex teeth whitening and fluorination.

Syneron Medical Ltd.
Unaudited Condensed Consolidated Statements of Income (Loss)
(in thousands, except per share data)
For the three-months ended For the twelve-months ended
December 31, December 31, December 31, December 31,
2011 2010 2011 2010
Revenues $ 61,011 $ 53,456 $ 228,321 $ 189,528
Cost of revenues (*) 28,517 24,761 109,203 98,631
Gross profit 32,494 28,695 119,118 90,897
Operating expenses:
Sales and marketing (*) 19,798 14,944 69,433 65,897
General and administrative 7,979 6,612 33,730 36,103
Research and development 6,783 6,414 28,334 26,837
Other expenses (income), net 2,885 (7,312 ) 33,277 (4,538 )
Total operating expenses 37,445 20,658 164,774 124,299
Income (Loss) from operations (4,951 ) 8,037 (45,656 ) (33,402 )
Other income:
Financial Income, net 127 419 1,015 717
Other income - 110 35 240
Total other income 127 529 1,050 957
Income (Loss) before taxes on income (tax benefit) (4,824 ) 8,566 (44,606 ) (32,445 )
Taxes on income (tax benefit) 121 427 3,944 (5,110 )
Income (Loss) before non-controlling interest (4,945 ) 8,139 (48,550 ) (27,335 )
Net loss attributable to non-controlling interest 104 244 955 1,799
Net income (loss) attributable to Syneron shareholders $ (4,841 ) $ 8,383 $ (47,595 ) $ (25,536 )
(*) Reclassified
Income (Loss) per share:
Basic
Income (Loss) before non-controlling interest $ (0.14 ) $ 0.24 $ (1.38 ) $ (0.79 )
Net loss attributable to non-controlling interest - 0.01 0.03 0.05
Net income (loss) attributable to Syneron shareholders $ (0.14 ) $ 0.25 $ (1.35 ) $ (0.74 )
Diluted
Income (Loss) before non-controlling interest $ (0.14 ) $ 0.23 $ (1.38 ) $ (0.79 )
Net loss attributable to non-controlling interest - 0.01 0.03 0.05
Net Income (loss) attributable to Syneron shareholders $ (0.14 ) $ 0.24 $ (1.35 ) $ (0.74 )
Weighted average shares outstanding:
Basic 35,307 34,533 35,158 34,369
Diluted 35,307 34,998 35,158 34,369
Syneron Medical Ltd.
Condensed Consolidated Balance Sheets
(in thousands)
December 31, December 31,
2011 2010
(unaudited) (audited)
Assets
Current assets:
Cash and cash equivalents $ 62,319 $ 63,821
Short-term bank deposits 23,771 1,192
Available-for-sale marketable securities 70,463 114,799
Trade receivable, net 43,300 42,440
Other accounts receivables and prepaid expenses 14,428 13,868
Inventories, net 31,169 22,720
Total current assets 245,450 258,840
Long-term assets:
Severance pay fund 295 334
Long-term deposits and others 2,118 2,744
Long-term available-for-sale marketable securities 15,590 37,721
Investments in affiliated companies 200 7,969
Property and equipment, net 4,155 4,029
Intangible assets, net 31,813 39,639
Goodwill 18,867 18,579
Deferred taxes 4,523 4,930
Total long-term assets 77,561 115,945
Total assets $ 323,011 $ 374,785
Liabilities and Stockholders' Equity
Current liabilities:
Short term bank credit $ 1,082 $ 2,737
Accounts payable 21,094 16,644
Deferred Revenues 11,550 14,941
Other accounts payable and accrued expenses 38,504 38,191
Total current liabilities 72,230 72,513
Long-term liabilities:
Contingent consideration liability 2,535 11,365
Deferred Revenues 4,112 4,528
Warranty Accruals 564 1,074
Accrued severance pay 496 554
Deferred taxes 5,182 6,215
Total long-term liabilities 12,889 23,736
Stockholders' equity: 237,892 278,536
Total liabilities and stockholders' equity $ 323,011 $ 374,785
Syneron Medical Ltd.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
For the twelve months ended:
December 31, December 31,
2011 2010
Cash flows from operating activities:
Net loss before non-controlling interest $ (48,550 ) $ (27,335 )
Adjustments to reconcile net loss to net cash
Share-based compensation 3,400 3,196
Depreciation and amortization 10,348 9,381
Impairments of available-for-sale marketable securities and other intangible assets 123 1,438
Realized loss, changes in accrued interest and amortization of premium (discount) on marketable securities 1,565 716
Impairment of investment in affiliated company 9,387 850
Bargain purchase price related to acquisition of a subsidiary - (8,525 )
Revaluation of contingent liability (8,830 ) 1,625
Changes in operating assets and liabilities
Trade receivable, net (2,833 ) 2,445
Inventories, net (8,581 ) 13,180
Other accounts receivables (981 ) 9,667
Deferred taxes (182 ) (3,339 )
Accrued severance pay, net (19 ) 136
Accounts payable 4,467 4,201
Deferred revenue (3,852 ) (3,770 )
Accrued warranty accruals (299 ) 199
Other accrued liabilities 140 (6,187 )
Net cash used in operating activities (44,697 ) (2,122 )
Cash flows from investing activities:
Purchases of property and equipment (2,116 ) (887 )
Investments in long-term deposits and others 326 -
Proceeds from the sale or maturity of available-for-sale marketable securities 148,612 213,681
Purchase of available-for-sale marketable securities (83,584 ) (186,414 )
Investments in short-term deposits, net (22,579 ) (192 )
Investments in affiliated and other companies - (9,169 )
Acquisition of shares held by non-controlling shareholders of a subsidiary (761 ) -
Net cash received from acquisition of subsidiary 245 21,427
Other investing activities (55 ) 367
Net cash provided by investing activities 40,088 38,813
Cash flows from financing activities:
Repayment of short term bank credit, net (1,655 ) -
Proceeds from exercise of stock options 4,054 1,932
Net cash provided by financing activities 2,399 1,932
Effect of exchange rates on cash and cash equivalents 708 826
Net increase (decrease) in cash and cash equivalents (1,502 ) 39,449
Cash and cash equivalents at beginning of period 63,821 24,372
Cash and cash equivalents at end of period $ 62,319 $ 63,821
Syneron Medical Ltd.
Unaudited Non-GAAP Financial Measures and Reconciliation
(in thousands, except per share data)
For the three-months ended For the twelve-months ended
December 31, December 31, December 31, December 31,
2011 2010 2011 2010
GAAP operating income (loss) $ (4,951 ) $ 8,037 $ (45,656 ) $ (33,402 )
Legal settlement costs - - 33,900 -
Stock-based compensation 947 692 3,400 3,196
Amortization of intangible assets 1,920 2,019 7,936 6,668
Merger, restructuring and other non-recurring items, net 4,237 (6,726 ) 4,717 17,723
Non-GAAP operating income (loss) $ 2,153 $ 4,022 $ 4,297 $ (5,815 )
GAAP net income (loss) attributable to Syneron shareholders $ (4,841 ) $ 8,383 $ (47,595 ) $ (25,536 )
Legal settlement costs - - 33,900 -
Stock-based compensation 947 692 3,400 3,196
Amortization of intangible assets 1,920 2,019 7,936 6,668
Merger, restructuring and other non-recurring items, net 4,237 (6,726 ) 4,717 17,723
Income tax adjustments (1,195 ) (760 ) 117 (8,983 )
Non-GAAP net income (loss) attributable to Syneron shareholders $ 1,068 $ 3,608 $ 2,475 $ (6,932 )
Income (Loss) per share:
Basic
GAAP net income (loss) attributable to Syneron shareholders $ (0.14 ) $ 0.24 $ (1.35 ) $ (0.74 )
Legal settlement costs - - 0.96 -
Stock-based compensation 0.03 0.02 0.10 0.09
Amortization of intangible assets 0.05 0.06 0.23 0.19
Merger, restructuring and other non-recurring costs 0.12 (0.20 ) 0.13 0.52
Income tax adjustments (0.03 ) (0.02 ) 0.00 (0.26 )
Non-GAAP net income (loss) per share attributable to Syneron shareholders $ 0.03 $ 0.10 $ 0.07 $ (0.20 )
Diluted
GAAP net income (loss) attributable to Syneron shareholders $ (0.14 ) $ 0.24 $ (1.32 ) $ (0.74 )
Legal settlement costs - - 0.94 -
Stock-based compensation 0.03 0.02 0.09 0.09
Amortization of intangible assets 0.05 0.06 0.22 0.19
Merger, restructuring and other non-recurring costs 0.12 (0.20 ) 0.13 0.52
Income tax adjustments (0.03 ) (0.02 ) 0.00 (0.26 )
Non-GAAP net income (loss) per share attributable to Syneron shareholders $ 0.03 $ 0.10 $ 0.07 $ (0.20 )
Weighted average shares outstanding:
Basic 35,307 34,533 35,158 34,369
Diluted 35,854 35,279 35,946 34,369

Contact Information

  • Syneron Contacts:

    Asaf Alperovitz
    Chief Financial Officer
    + 972 73 244 2283
    Email: Email Contact

    Zack Kubow
    The Ruth Group
    646-536-7020
    Email: Email Contact