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
--------- --------- --------- ---------
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
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