SOURCE: ZELTIQ Aesthetics, Inc.

ZELTIQ Aesthetics, Inc.

March 03, 2015 16:05 ET

ZELTIQ Announces Fourth Quarter and Full Year 2014 Financial Results

Full Year 2014 Revenue of $174.5 million, Up 56% Year-Over-Year; Increases Full Year 2015 Revenue Guidance to $230 - $235 Million, ~35% Year-Over-Year; Received FDA Clearance to Perform CoolSculpting® at Lower Temperatures; Announced Launch of New CoolSmooth PRO™ Applicator

PLEASANTON, CA--(Marketwired - Mar 3, 2015) -

  • Full year 2014 Adjusted EBITDA margin of 7.6%, versus -9.8% in 2013
  • Full year 2014 net income of $1.5 million, or $0.04 per share, compared to net loss of $19.3 million, or ($0.53) per share in 2013
  • Fourth quarter revenue of $50.8 million, up 42% year-over-year
  • Company record of 354 systems shipped in Q4 2014, compared to 263 systems in Q4 2013, bringing total system installed base to 3,176 systems
  • 173,895 revenue cycles shipped in Q4 2014, up 59% compared to Q4 2013

ZELTIQ® (NASDAQ: ZLTQ), a medical technology company focused on developing and commercializing products utilizing its proprietary controlled-cooling technology platform, today announced financial results for the fourth quarter and full year 2014.

Mark Foley, President and Chief Executive Officer, said, "I am very pleased with the sustained momentum we are experiencing in the marketplace as evidenced by our record system placements, strong year-over-year utilization trends and our first full year of profitability. Additionally, I am very proud of our organization's ability to accelerate our year-over-year growth rate, off of a larger revenue base, and our fourth quarter results reflect the success we are having in penetrating and growing the large, non-invasive fat reduction market. It is worth noting that after our January pre-announcement of preliminary results, we booked a non-cash, reduction of revenue of approximately $833,000 related to consulting customer equity awards granted in both 2013 and 2014. This entire reclassification was booked in the fourth quarter and without this adjustment, our revenue results were in line with our prior pre-announcement while our profitability came in above expectations. In addition to our strong financial results, we received FDA clearance to perform our CoolSculpting procedure at colder temperatures, which we believe will enhance efficacy, significantly reduce treatment times and further enhance the value we offer to both physicians and patients for years to come. In conjunction with this FDA clearance, we announced our plans to launch a new applicator, CoolSmooth PRO™, which is a next generation surface applicator designed to enable significantly shorter treatment times and includes an improved strapping system. Currently, we plan to launch this new applicator in Q2 of this year."

Mr. Foley continued, "As I look into 2015 and beyond, we are very well positioned to continue to grow our market leadership position. With an expanded and fully trained sales and marketing organization, increased investment in brand awareness, the opening of our East Coast CoolSculpting University and a greater focus on our international markets, we remain very excited about the opportunity ahead. Also, through the pioneering and innovative efforts of our R&D organization, we are continuing to deliver significant enhancements to our cooling platform and are making encouraging progress on new initiatives. Later this year, we plan to introduce another new applicator, CoolMini™, which is designed to treat smaller fat pockets and the submental, or chin fat, area. Our multi-year outlook for robust revenue growth with improving profitability remains intact and we have just entered the next phase of our ongoing relationship with a national aesthetic chain. In light of this recent development, we are increasing full year 2015 revenue guidance in the range of $230 million to $235 million which would represent approximately 35% year-over-year growth."

Fourth Quarter Financial Review
Total revenue for the fourth quarter 2014 was $50.8 million, consisting of $28.4 million of system revenue and $22.4 million of consumable revenue. This compares to total revenue of $35.8 million, consisting of $21.4 million of system revenue and $14.4 million of consumable revenue for the fourth quarter 2013. Total revenue cycles shipped increased 59% to 173,895 for the fourth quarter 2014, compared to 109,170 for the fourth quarter 2013.

Gross profit was $35.9 million, or 71% of revenue, for the fourth quarter 2014, compared to gross profit of $25.1 million, or 70% of revenue, for the fourth quarter 2013. Operating expenses for the fourth quarter 2014 were $34.3 million, compared to $30.4 million for the fourth quarter 2013.

Income from operations for the fourth quarter 2014 was $1.6 million, compared to a loss from operations of $5.3 million for the fourth quarter 2013. Net income for the fourth quarter 2014 was $1.3 million, or $0.03 per share, compared to a net loss of $5.4 million for the fourth quarter 2013, or ($0.15) per share. Weighted average diluted shares outstanding was 41.4 million for the fourth quarter 2014, compared to weighted average basic shares outstanding of 36.7 million for the fourth quarter 2013. 

On a non-GAAP basis, ZELTIQ reported adjusted EBITDA of positive $4.4 million, or 8.7% of revenue, for the fourth quarter 2014, compared to negative $2.3 million, or -6.4% of revenue, for the fourth quarter 2013.

Cash and cash equivalents, short-term investments, and long-term investments were $49.7 million as of December 31, 2014 compared to $56.1 million as of December 31, 2013, and $48.1 million as of September 30, 2014.

Full Year Financial Review
Total revenue for the full year 2014 was $174.5 million, consisting of $93.0 million of system revenue and $81.5 million of consumable revenue. This compares to total revenue of $111.6 million, consisting of $61.4 million of system revenue and $50.3 million of consumable revenue for the full year 2013. Total revenue cycles shipped increased 64% to 625,186 for the full year 2014, compared to 382,247 for the full year 2013.

Gross profit was $124.4 million, or 71% of revenue, for the full year 2014, compared to gross profit of $77.4 million, or 69% of revenue, for the full year 2013. Operating expenses for the full year 2014 were $122.3 million, compared to $96.8 million for the full year 2013.

Income from operations for the full year 2014 was $2.1 million, compared to a loss from operations of $19.3 million for the full year 2013. Net income for the full year 2014 was $1.5 million, or $0.04 per share, compared to a net loss of $19.3 million for the full year 2013, or ($0.53) per share. Weighted average diluted shares outstanding was 41.0 million for the full year 2014, compared to weighted average basic shares outstanding of 36.2 million for the full year 2013. 

On a non-GAAP basis, ZELTIQ reported adjusted EBITDA of $13.3 million, or 7.6% of revenue, for the full year 2014, compared to negative $11.0 million, or -9.8% of revenue, for the full year 2013.

Full Year 2015 Financial Guidance
ZELTIQ is providing financial guidance for the full year 2015, as follows:

  • Revenue guidance in the range of $230 million to $235 million
  • Consumable revenue of approximately 50% of total revenue
  • Gross profit margin of approximately 71% of total revenue
  • Operating expenses of approximately 70% to 71% of total revenue
  • Stock-based compensation, depreciation, and amortization expense of approximately 7% of total revenue
  • Adjusted EBITDA margin in the range of 7% to 8% of total revenue

Additional information regarding ZELTIQ's results and guidance can be found in ZELTIQ's Supplemental Financial and Operational Information schedule by CLICKING HERE or by visiting the Investor Relations section of ZELTIQ's website at www.zeltiq.com.

Use of Non-GAAP Financial Measures
ZELTIQ has supplemented its GAAP net income (loss) with a non-GAAP measure of Adjusted EBITDA. Management believes that this non-GAAP financial measure provides useful supplemental information to management and investors regarding the performance of ZELTIQ, facilitates a more meaningful comparison of results for current periods with previous operating results, and assists management in analyzing future trends, making strategic and business decisions and establishing internal budgets and forecasts. A reconciliation of non-GAAP Adjusted EBITDA to GAAP net income (loss) in the most directly comparable GAAP measure is provided in the schedule below.

There are limitations in using this non-GAAP financial measure because it is not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. This non-GAAP financial measure should not be considered in isolation or as a substitute for GAAP financial measures. Investors and potential investors should consider non-GAAP financial measures only in conjunction with the ZELTIQ's consolidated financial statements prepared in accordance with GAAP and the reconciliations of the non-GAAP financial measure provided in the schedule below.

Conference Call
ZELTIQ will hold a conference call today at 1:30 p.m. PT / 4:30 p.m. ET to discuss the results. The dial-in numbers are (877) 280-7291 for domestic callers and (707) 287-9361 for international callers. A live webcast of the conference call will be available online from the investor relations page of ZELTIQ's corporate website at www.coolsculpting.com.

A replay of the webcast will remain available on ZELTIQ's website, www.coolsculpting.com, until ZELTIQ releases its first quarter 2015 financial results. In addition, a telephonic replay of the call will be available until March 10, 2015. The replay dial-in numbers are (855) 859-2056 for domestic callers and (404) 537-3406 for international callers. Please use the replay conference ID number 83968216.

About ZELTIQ® Aesthetics
ZELTIQ is a medical technology company focused on developing and commercializing products utilizing its proprietary controlled-cooling technology platform. ZELTIQ's first commercial product, the CoolSculpting® System, is designed to selectively reduce stubborn fat bulges. CoolSculpting is based on the scientific principle that fat cells are more sensitive to cold than the overlying skin and surrounding tissues. It utilizes patented technology of precisely controlled cooling to reduce the temperature of fat cells in the treated area, which is intended to cause fat cell elimination through a natural biological process known as apoptosis. ZELTIQ developed CoolSculpting to safely, noticeably, and measurably reduce the fat layer.

Forward-Looking Statements
The statements made in this press release regarding ZELTIQ's belief that FDA clearance to perform CoolSculpting procedures at colder temperatures will enhance efficacy, significantly reduce treatment times and further enhance the value ZELTIQ offers to both physicians and patients, its plans to launch CoolSmooth PRO™ including the timing thereof, ZELTIQ'S belief that it is well positioned to continue to grow its market leadership position, ZELTIQ'S plans to introduce CoolMini™, ZELTIQ's outlook for revenue growth and improving profitability and its financial projections for 2015 and the statements under the caption "Full Year 2015 Financial Guidance," are forward-looking statements. The words "believe," "plan", 'continuing," "will", and "guidance" and similar words that denote future events or results identify these forward-looking statements. You should not place undue reliance on these forward-looking statements because they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond ZELTIQ's control and that could materially affect ZELTIQ's actual business operations and financial performance and condition. Factors that could cause actual results to differ from those contemplated by these forward-looking statements include, but are not limited to: less than anticipated growth in the number of physicians electing to purchase CoolSculpting Systems; patient demand for CoolSculpting procedures may be lower than ZELTIQ expects; product or procedure announcements by competitors may decrease demand for CoolSculpting procedures; ZELTIQ may incorrectly estimate or control its future expenditures; ZELTIQ's sales and marketing plans may fail to increase sales as ZELTIQ expects; technical difficulties may arise in the completion of development of CoolSmooth PRO™ and/or CoolMini™; patients or physicians may not view the benefits of CoolSculpting procedures at colder temperatures to be the same as ZELTIQ does; as well as those other risks and uncertainties set forth in ZELTIQ's Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, filed with the SEC on October 28, 2014. These forward-looking statements speak only as of the date of this press release. ZELTIQ expressly disclaims any obligation to update information contained in these forward-looking statements whether as a result of new information, future events or otherwise.

         
ZELTIQ Aesthetics, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
         
    December 31,
2014
  December 31,
2013
ASSETS            
CURRENT ASSETS:            
  Cash and cash equivalents   $ 28,649   $ 25,798
  Short-term investments     16,286     18,840
  Accounts receivable, net     21,472     10,221
  Inventory     15,536     8,406
  Prepaid expenses and other current assets     7,060     4,368
    Total current assets     89,003     67,633
  Long-term investments     4,805     11,442
  Restricted cash     560     331
  Property and equipment, net     3,724     2,158
  Intangible asset, net     5,780     6,481
  Other assets     33     9
    Total assets   $ 103,905   $ 88,054
             
LIABILITIES AND STOCKHOLDERS' EQUITY            
CURRENT LIABILITIES:            
  Accounts payable   $ 5,824   $ 5,165
  Accrued liabilities     21,450     18,364
  Deferred revenue     5,069     1,674
  Current portion of capital lease obligations     120     -
    Total current liabilities     32,463     25,203
Long-term capital lease obligations, less current portion     262     -
Other non-current liabilities     661     275
  Total liabilities   $ 33,386   $ 25,478
STOCKHOLDERS' EQUITY:            
    Total stockholders' equity     70,519     62,576
    Total liabilities and stockholders' equity   $ 103,905   $ 88,054
             
             
             
ZELTIQ Aesthetics, Inc.  
Condensed Consolidated Statement of Operations  
(In thousands, except share and per share data)  
(Unaudited)  
                         
    Three Months Ended     Year Ended  
    December 31,     December 31,     December 31,     December 31,  
    2014     2013     2014     2013  
Revenue   $ 50,772     $ 35,841     $ 174,478     $ 111,626  
Cost of revenue     14,833       10,727       50,064       34,189  
  Gross profit     35,939       25,114       124,414       77,437  
Operating expenses:                                
  Research and development     5,335       5,187       18,196       17,090  
  Sales and marketing     23,325       20,531       83,579       63,185  
  General and administrative     5,672       4,701       20,515       16,510  
    Total operating expenses     34,332       30,419       122,290       96,785  
Income (loss) from operations     1,607       (5,305 )     2,124       (19,348 )
Interest income, net     16       20       63       80  
Other (expense) income, net     (88 )     (59 )     (425 )     103  
Income (loss) before income taxes     1,535       (5,344 )     1,762       (19,165 )
Income tax expense     218       61       231       140  
Net income (loss)     1,317       (5,405 )     1,531       (19,305 )
Net income (loss) per share, basic   $ 0.03     $ (0.15 )   $ 0.04     $ (0.53 )
Weighted average shares of common stock outstanding used in computing net income (loss) per share, basic     37,958,395       36,686,053       37,563,590       36,209,051  
Net income (loss) per share, diluted   $ 0.03     $ (0.15 )   $ 0.04     $ (0.53 )
Weighted average shares of common stock outstanding used in computing net income (loss) per share, diluted     41,434,178       36,686,053       40,996,972       36,209,051  
                                 
                                 
                                 
ZELTIQ Aesthetics, Inc.  
Condensed Consolidated Statement of Cash Flows  
(In thousands)  
(Unaudited)  
    Year Ended  
    December 31,     December 31,  
    2014     2013  
CASH FLOWS FROM OPERATING ACTIVITIES:                
Net income (loss)   $ 1,531     $ (19,305 )
Adjustments to reconcile net income (loss) to net cash used in operating activities:                
  Depreciation and amortization     1,824       1,729  
  Stock-based compensation *     9,383       6,660  
  Deferred income taxes     (19 )     19  
  Amortization (accretion) of investment premium (discount), net     221       343  
  Provision for (recovery from) doubtful accounts receivable     324       (12 )
  Provision for excess and obsolete inventory     853       262  
  Loss on disposal and write-off of property and equipment     46       2  
  Changes in operating assets and liabilities:                
    Accounts receivable     (11,219 )     (3,064 )
    Inventory     (6,898 )     2,225  
    Prepaid expenses and other assets     (2,419 )     (693 )
    Deferred revenue, net of deferred costs     2,908       267  
    Accounts payable, accrued and other non-current liabilities     2,609       7,486  
    Net cash used in operating activities     (856 )     (4,081 )
CASH FLOWS FROM INVESTING ACTIVITIES:                
  Purchase of investments     (13,444 )     (31,591 )
  Proceeds from sale of investments     1,000       11,143  
  Proceeds from maturity of investments     21,393       25,528  
  Purchase of property and equipment     (2,340 )     (834 )
  Change in restricted cash     (252 )     138  
    Net cash provided by investing activities     6,357       4,384  
CASH FLOWS FROM FINANCING ACTIVITIES:                
  Proceeds from issuance of common stock upon exercise of stock options     4,319       3,438  
  Tax payments related to shares withheld for vested restricted stock units     (6,594 )     (876 )
  Tax effect of employee stock plans     87       -  
    Net cash (used in) provided by financing activities     (2,188 )     2,562  
Effect of exchange rate on cash and cash equivalents     (462 )     57  
NET INCREASE IN CASH AND CASH EQUIVALENTS     2,851       2,922  
CASH AND CASH EQUIVALENTS-Beginning of period     25,798       22,876  
CASH AND CASH EQUIVALENTS-End of period   $ 28,649     $ 25,798  
                 
*Stock-based compensation expense includes $833 recorded in Q4 2014 as a reduction to revenue for equity grants to a customer made in 2013 and 2014  
                 
                 
                 
ZELTIQ Aesthetics, Inc.  
Reconciliation of Net Income (Loss) to Adjusted Earnings Before Interest, Taxes, Depreciation,  
Amortization and Stock-Based Compensation (Adjusted EBITDA)  
(In thousands, except for percentages)  
(Unaudited)  
                         
    Three Months Ended     Year Ended  
    December 31,     December 31,     December 31,     December 31,  
Dollars   2014     2013     2014     2013  
Net income (loss), as reported   $ 1,317     $ (5,405 )   $ 1,531     $ (19,305 )
                                 
Adjustments to net income (loss):                                
  Interest income and other (expense) income, net     72       39       362       (183 )
  Income tax expense     218       61       231       140  
  Depreciation and amortization     474       458       1,824       1,729  
  Stock-based compensation expense *     2,354       2,563       9,383       6,660  
    Total adjustments to net income (loss)     3,118       3,121       11,800       8,346  
                                 
Adjusted EBITDA   $ 4,435     $ (2,284 )   $ 13,331     $ (10,959 )
                                 
                                 
      Three Months Ended       Year Ended  
      December 31,       December 31,       December 31,       December 31,  
As a Percentage of Revenue     2014       2013       2014       2013  
Net income (loss), as reported     2.6 %     -15.1 %     0.9 %     -17.3 %
                                 
Adjustments to net income (loss):                                
  Interest income and other (expense) income, net     0.2 %     0.1 %     0.2 %     -0.1 %
  Income tax expense     0.4 %     0.1 %     0.1 %     0.1 %
  Depreciation and amortization     0.9 %     1.3 %     1.0 %     1.5 %
  Stock-based compensation expense *     4.6 %     7.2 %     5.4 %     6.0 %
    Total adjustments to net income (loss)     6.1 %     8.7 %     6.7 %     7.5 %
                                 
Adjusted EBITDA Margin     8.7 %     -6.4 %     7.6 %     -9.8 %
                                 
*Stock-based compensation expense includes $833 recorded in Q4 2014 as a reduction to revenue for equity grants to a customer made in 2013 and 2014