SOURCE: Syneron Medical Ltd.

Syneron Medical Ltd.

August 11, 2011 07:40 ET

Syneron Reports Second Quarter 2011 Results

YOKNEAM, ISRAEL--(Marketwire - Aug 11, 2011) -

Record Revenue of $60.6 Million, With Net Profitability on a Non-GAAP Basis

PAD* Segment Operating Income of $3.2 Million, or 5.9% of Revenue

Syneron Medical Ltd. (NASDAQ: ELOS), the leading global aesthetic device company, today announced second quarter 2011 financial results for the three month period ended June 30, 2011.

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

  • Revenue of $60.6 million, up 24.1%
  • EBU** segment revenue of $6.1 million, growing to more than 10% of total revenue
  • International revenue of $39.7 million, up 29.9%
  • North America revenue of $20.9 million, up 14.5%
  • Non-GAAP gross margin of 52.0%, up from 48.9%
  • Non-GAAP net income of $0.2 million and non-GAAP earnings per share of $0.01, compared to a non-GAAP net loss of $3.7 million and a non-GAAP loss per share of $0.11 in the second quarter of 2010
  • PAD segment non-GAAP operating income of $3.2 million, compared to a loss of $1.7 million in the second quarter of 2010
  • Cash and investments portfolio of $212.2 million at June 30, 2011

Louis P. Scafuri, CEO of Syneron, commented, "During the second quarter we strengthened and expanded our industry leadership position and continued to gain market share. We benefitted from our innovative and diversified product portfolio, including the successful launch of the new GentleLASE PRO high speed hair removal system. Our strong top-line performance was coupled with continued prudent expense management, allowing us to deliver another quarter of strong operating profit in our Professional Aesthetic Device, or PAD, segment.

"Second quarter top-line results also benefitted from rapid growth of our Emerging Business Units, or EBU, which more than doubled on a sequential basis. This growth was driven by the ongoing international rollout of the mē home-use hair removal system, the launch of the Tända ZAP™ advanced acne clearing device and increased sales of our elure™ Advanced Skin Lightening products. We are very pleased with the strong growth and diversification provided by the EBU segment and expect that it will continue to play an increasingly important role in our overall business. In summary, we believe Syneron is best positioned in the Aesthetic market place to further advance our global market leadership."

Revenue: Second quarter 2011 revenue was $60.6 million, an increase of 24.1% compared to $48.8 million in second quarter 2010 and a 21.6% sequential increase over first quarter 2011. International revenue in second quarter 2011 was $39.7 million, an increase of 29.9% compared to $30.6 million in second quarter 2010 and an 18.9% sequential increase over first quarter 2011. Second quarter 2011 revenue in North America was $20.9 million, an increase of 14.5% compared to $18.2 million in second quarter 2010 and a 27.4% increase over first quarter 2011.

Non-GAAP Financial Highlights for the Second Quarter Ended June 30, 2011:

Gross Margin: Second quarter 2011 non-GAAP gross margin was 52.0%, compared to 48.9% in second quarter 2010 and 53.5% in first quarter 2011. The significant increase in non-GAAP gross margin compared to the second quarter of 2010 was primarily driven by higher sales mix of Syneron products and consumables, which benefited from increased cross selling and higher production and sales volume. The sequential decline in non-GAAP gross margin was mainly due to the penetration phase of the mē home-use hair removal system into new European markets and stronger Candela sales to distributors.

Operating Income (loss): Second quarter 2011 non-GAAP operating income was $0.3 million, compared to a non-GAAP operating loss of $3.3 million in second quarter 2010. Second quarter 2011 non-GAAP operating income represented 0.5% of revenue in the quarter, compared to a non-GAAP operating loss of 6.8% of revenue in second quarter 2010.

The significant improvement in non-GAAP operating income (loss) was primarily driven by the increase in gross margin and operational efficiency and cost cutting measures implemented since the first quarter 2010.

Net Income (loss): Second quarter non-GAAP 2011 net income was $0.2 million, compared to a non-GAAP net loss of $3.7 million in second quarter 2010.

Earnings (loss) Per Share: Second quarter 2011 non-GAAP earnings per share (basic and diluted) was $0.01, compared to a non-GAAP loss per share of $0.11 in second quarter 2010.

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

  • Income from a re-valuation of contingent liabilities related to the Company's previous acquisitions of $3.1 million
  • Amortization of acquired intangible assets of $2.1 million
  • Stock-based compensation of $0.9 million
  • Post acquisition severance payment of $0.8 million
  • Other one-time charges and non-recurring costs of $0.7 million

GAAP Financial Highlights for the Second Quarter Ended June 30, 2011:

Gross Margin: Second quarter 2011 gross margin was 50.3%, compared to 47.2% in second quarter 2010 and 51.4% in first quarter 2011. The significant increase in GAAP gross margin compared to the second quarter of 2010 was primarily driven by higher sales mix of Syneron products and consumables, which benefited from increased cross selling and higher production and sales volume. The sequential decline in GAAP gross margin was mainly due to the penetration phase of the mē home-use hair removal system into new European markets and stronger Candela sales to distributors.

Operating loss: Second quarter 2011 operating loss was $1.1 million, compared to an operating loss of $6.5 million in second quarter 2010.

The significant improvement in operating loss was primarily driven by the increase in gross margin and operational efficiency and cost cutting measures implemented since first quarter 2010.

Net loss: Second quarter 2011 net loss was $0.3 million, compared to a net loss of $6.2 million in second quarter of 2010.

Loss Per Share: Second quarter 2011 loss per share was $0.01, compared to a loss per share of $0.18 in second quarter 2010.

Cash Position: As of June 30, 2011, cash and cash equivalents, including short-term and long-term bank deposits and investments in marketable securities, were $212.2 million.

Asaf Alperovitz, Chief Financial Officer of Syneron, commented, "Second quarter PAD operating margin remained strong despite increased sales and marketing efforts to support the launch of our GentleLASE PRO. On a consolidated basis, the positive PAD results allowed us to achieve our third consecutive quarter of non-GAAP profitability. The year-over-year improvement in gross margin was driven by a higher mix of Syneron products and continued procedure growth with our systems that utilize consumable components. The sequential decrease in gross margin was mainly a result of increased sales contribution from the EBU segment, which currently has margins below the overall average, primarily due to the penetration phase of our mē home-use hair removal system into new European markets, where we sell to our distribution partners. We view the growing contribution from the EBU segment as a positive indicator of its growth potential and will continue to invest in expanding this business."

Unaudited Non-GAAP segment results for the three months ended June 30, 2011 and 2010 (in thousands):

For the
three-months ended
June 30, % of June 30, % of % of
2011 Revenues 2010 Revenues Change
Revenue
Professional Aesthetic Devices $ 54,469 89.9% $ 47,875 98.1% 13.8%
Emerging Business Units 6,115 10.1% 928 1.9% 558.9%
Total revenues $ 60,584 100.0% $ 48,803 100.0% 24.1%
Operating income (loss)
Professional Aesthetic Devices $ 3,235 5.9% $ (1,735 ) -3.6% -286.5%
Emerging Business Units (2,951 ) -48.3% (1,607 ) -173.2% 83.6%
Total operating income (loss) $ 284 0.5% $ (3,342 ) -6.8% -108.5%

Unaudited GAAP segment results for the three months ended June 30, 2011 and 2010 (in thousands):

For the
three-months ended
June 30, % of June 30, % of % of
2011 Revenues 2010 Revenues Change
Revenue
Professional Aesthetic Devices $ 54,439 89.9% $ 47,701 98.1% 14.1%
Emerging Business Units 6,115 10.1% 928 1.9% 558.9%
Total revenues $ 60,554 100.0% $ 48,629 100.0% 24.5%
Operating loss
Professional Aesthetic Devices $ 1,906 3.5% $ (4,912 ) -10.3% -138.8%
Emerging Business Units (3,016 ) -49.3% (1,607 ) -173.2% 87.7%
Total operating loss $ (1,110 ) -1.8% $ (6,519 ) -13.4% -83.0%

Use of Non-GAAP Measures
This press release provides financial measures for gross 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 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 second 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 "Q2 2011 Results Web Cast."

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: 84051695.

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.

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

**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 the Company's strategic home-use device partnership with Procter & Gamble and Fluorinex teeth whitening and fluorination.

Syneron Medical Ltd.
Unaudited Condensed Consolidated Statements of Loss
(in thousands, except per share data)
For the For the
three-months ended six-months ended
June 30, June 30, June 30, June 30,
2011 2010 2011 2010
Revenues $ 60,554 $ 48,629 $ 110,337 $ 91,631
Cost of revenues 30,096 25,667 54,290 53,836
Gross profit 30,458 22,962 56,047 37,795
Operating expenses:
Sales and marketing 17,730 14,477 31,705 35,300
General and administrative 8,072 7,949 15,326 22,707
Research and development 8,156 6,721 14,524 13,751
Other expenses (income), net (2,390 ) 334 (1,791 ) 2,426
Total operating expenses 31,568 29,481 59,764 74,184
Loss from operations (1,110 ) (6,519 ) (3,717 ) (36,389 )
Other income:
Financial Income, net 416 162 750 325
Other income (expenses) - (250 ) 24 (363 )
Total other income 416 (88 ) 774 (38 )
Loss before taxes on income (tax benefit) (694 ) (6,607 ) (2,943 ) (36,427 )
Taxes on income (tax benefit) 54 (3 ) 524 (6,206 )
Loss from operations before non-controlling interest (748 ) (6,604 ) (3,467 ) (30,221 )
Net loss attributable to non-controlling interest 464 429 806 1,555
Net loss attributable to Syneron shareholders $ (284 ) $ (6,175 ) $ (2,661 ) $ (28,666 )
Loss per share:
Basic and Diluted
Loss from operations before non-controlling interest $ (0.02 ) $ (0.19 ) $ (0.10 ) $ (0.88 )
Net loss attributable to non-controlling interest 0.01 0.01 0.02 0.05
Net loss attributable to Syneron shareholders $ (0.01 ) $ (0.18 ) $ (0.08 ) $ (0.83 )
Weighted average shares outstanding:
Basic and Diluted 35,152 34,439 35,035 34,233
Syneron Medical Ltd.
Condensed Consolidated Balance Sheets
(in thousands)
June 30, December 31,
2011 2010
(unaudited) (audited)
Assets
Current assets:
Cash and cash equivalents $ 62,804 $ 63,821
Short-term bank deposits 16,507 1,192
Available-for-sale marketable securities 118,275 114,799
Accounts receivable, net 47,891 42,440
Other current assets 13,266 13,868
Inventories, net 23,882 22,720
Total current assets 282,625 258,840
Non-current assets:
Severance pay fund 383 334
Long-term deposits and others 3,421 2,744
Long-term available-for-sale marketable securities 13,466 37,721
Investments in affiliated companies 7,969 7,969
Property and equipment, net 4,306 4,029
Intangible assets, net 35,687 39,639
Goodwill 18,601 18,579
Deferred taxes 4,722 4,930
Total non-current assets 88,555 115,945
Total assets $ 371,180 $ 374,785
Liabilities and Stockholders' Equity
Current liabilities:
Short term bank credit $ - $ 2,737
Accounts payable 16,442 16,644
Deferred Revenues 14,956 14,941
Other accounts payable and accrued expenses 37,715 38,191
Total current liabilities 69,113 72,513
Non-current liabilities:
Contingent consideration liability 8,824 11,365
Deferred Revenues 4,474 4,528
Warranty Accruals 605 1,074
Accrued severance pay 601 554
Deferred taxes 5,715 6,215
Total non-current liabilities 20,219 23,736
Stockholders' equity: 281,848 278,536
Total liabilities and stockholders' equity $ 371,180 $ 374,785
Syneron Medical Ltd.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
For the six months ended:
June 30, June 30,
2011 2010
Cash flows from operating activities:
Net loss before non-controlling interest $ (3,467 ) $ (30,221 )
Adjustments to reconcile net loss to net cash used by operating activities:
Share-based compensation 1,524 1,579
Depreciation and amortization 5,164 4,778
Impairments of available-for-sale marketable securities and other intangible assets - 1,594
Realized loss, changes in accrued interest and amortization of premium (discount) on marketable securities (509 ) 478
Revaluation of contingent liability (2,541 ) 914
Changes in operating assets and liabilities
Accounts receivable (4,817 ) 2,754
Inventories (787 ) 9,612
Other current assets 641 (1,008 )
Deferred taxes (257 ) 262
Accrued severance pay, net (2 ) 7
Accounts payable (255 ) 6,869
Deferred revenue (39 ) (2,162 )
Accrued warranty costs (418 ) (618 )
Other accrued liabilities (727 ) 5,698
Net cash provided by (used in) operating activities (6,490 ) 536
Cash flows from investing activities:
Purchases of property and equipment (1,339 ) (755 )
Investments in long-term deposits and others (770 ) -
Proceeds from the sale or maturity of available-for-sale marketable securities 61,235 131,240
Purchase of available-for-sale marketable securities (39,798 ) (94,610 )
Investments in short-term deposits, net (15,238 ) -
Net cash received from acquisition of subsidiary - 22,533
Other investing activities (22 ) (1,219 )
Net cash provided by investing activities 4,068 57,189
Cash flows from financing activities:
Repayment of short term bank credit (2,737 ) -
Proceeds from exercise of stock options 3,745 631
Net cash provided by financing activities 1,008 631
Effect of exchange rates on cash and cash equivalents 397 (800 )
Net increase (decrease) in cash and cash equivalents (1,017 ) 57,556
Cash and cash equivalents at beginning of period 63,821 24,372
Cash and cash equivalents at end of period $ 62,804 $ 81,928
Syneron Medical Ltd.
Unaudited Non-GAAP Financial Measures and Reconciliation
(in thousands, except per share data)
For the For the
three-months ended six-months ended
June 30, June 30, June 30, June 30,
2011 2010 2011 2010
GAAP operating loss $ (1,110 ) $ (6,519 ) $ (3,717 ) $ (36,389 )
Stock-based compensation 854 797 1,524 1,579
Amortization of intangible assets 2,036 1,549 3,979 3,047
Merger, restructuring and other non-recurring items, net (1,496 ) 831 (888 ) 22,418
Non-GAAP operating income (loss) $ 284 $ (3,342 ) $ 898 $ (9,345 )
GAAP net loss attributable to Syneron shareholders $ (284 ) $ (6,175 ) $ (2,661 ) $ (28,666 )
Stock-based compensation 854 797 1,524 1,579
Amortization of intangible assets 2,036 1,549 3,979 3,047
Merger, restructuring and other non-recurring items, net (1,496 ) 831 (888 ) 22,418
Income tax adjustments (901 ) (703 ) (1,515 ) (7,442 )
Non-GAAP net income (loss) attributable to Syneron shareholders $ 209 $ (3,701 ) $ 439 $ (9,064 )
Income (Loss) per share:
Basic
GAAP loss per share from operations before non-controlling interest $ (0.01 ) $ (0.18 ) $ (0.08 ) $ (0.84 )
Stock-based compensation 0.02 0.02 0.04 0.05
Amortization of intangible assets 0.06 0.05 0.11 0.09
Merger, restructuring and other non-recurring costs (0.04 ) 0.02 (0.03 ) 0.65
Income tax adjustments (0.03 ) (0.02 ) (0.04 ) (0.22 )
Non-GAAP income (loss) per share from operations $ 0.01 $ (0.11 ) $ 0.01 $ (0.26 )
Diluted
GAAP loss per share from operations $ (0.01 ) $ (0.18 ) $ (0.07 ) $ (0.84 )
Stock-based compensation 0.02 0.02 0.04 0.05
Amortization of intangible assets 0.06 0.05 0.11 0.09
Merger, restructuring and other non-recurring costs (0.04 ) 0.02 (0.02 ) 0.65
Income tax adjustments (0.03 ) (0.02 ) (0.04 ) (0.22 )
Non-GAAP income (loss) per share from operations $ 0.01 $ (0.11 ) $ 0.01 $ (0.26 )
Weighted average shares outstanding:
Basic 35,152 34,023 35,035 34,233
Diluted 35,916 34,023 35,842 34,233

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