PhotoMedex third quarter 2013 revenues decrease 19% to $45.9 million

PhotoMedex, Inc. (NASDAQ:PHMD) today reported financial results for the three and nine months ended September 30, 2013.

Revenues for the third quarter of 2013 were $45.9 million, a decrease of 19.0% compared with revenues for the third quarter of 2012 of $56.7 million. The decline in revenues was primarily due to no consumer sales to the Company's distributor in Japan in the third quarter of 2013 as this distributor implemented a change to its business model that affected most of the manufacturers it represents to retail channels, and determined to reduce inventory levels to mitigate investment risk during this transition. According to third-party data, no!no! product sales in Japan at the retail level during the third quarter of 2013 were comparable to the third quarter of 2012. Also contributing to the decline in revenues was the scheduling of a Home Shopping Network 24-hour event in the fourth quarter of 2013 that occurred in the third quarter of 2012. Had the revenue contributions from these two events remained at the second quarter levels, the third quarter revenues would have been approximately $13 million higher.

Management expects revenues for the fourth quarter of 2013 to be more than $55 million without any expected contribution from Japan.

Net income for the third quarter of 2013 was $0.9 million or $0.04 per diluted per share, which included $1.2 million in stock-based compensation expense and $1.6 million in depreciation and amortization expense. This compares with net income for the third quarter of 2012 of $7.5 million or $0.35 per diluted share, which included $1.5 million in stock-based compensation expense and $1.4 million in depreciation and amortization expense.

Revenues for the nine months ended September 30, 2013 were $161.2 million, a decrease of 2.8% compared with revenues for the nine months ended September 30, 2012 of $165.9 million.

Net income for the nine months ended September 30, 2013 was $15.2 million or $0.74 per diluted per share, which included $3.8 million in stock-based compensation expense and $4.5 million in depreciation and amortization expense. This compares with net income for the nine months ended September 30, 2012 of $16.6 million or $0.83 per diluted share, which included $4.8 million in stock-based compensation expense and $4.2 million in depreciation and amortization expense.

As of September 30, 2013 the Company had cash and cash equivalents of $49.0 million or $2.39 per diluted share, compared with $62.3 million as of December 31, 2012. During the third quarter of 2013 the Company repurchased 846,924 shares of its common stock under its Share Repurchase program at an average price of $16.05 per share, for a total of $13.6 million. Since the beginning of the year, the Company has repurchased 1,171,682 shares of its common stock for a total of $19.0 million, and has $25.2 million remaining available to repurchase shares under the $55 million board authorized program.

Dr. Dolev Rafaeli, PhotoMedex CEO, commented, "While a change in business model at our distributor in Japan impacted orders for the no!no! during the quarter, we are pleased that product demand from Japanese consumers held steady. In addition, a major beauty event on HSN that occurred in last year's third quarter will take place this year in the fourth quarter. At this event last year, we sold a record number of no!no! products and we are looking forward to a similarly strong reception in December when we will offer the no!no! Pro, which has a higher average selling price.

"During the quarter we acquired a Brazilian distributor and subsequently launched the no!no! brand and recorded our first sales. Retail advertising in Brazil began last week, and we are excited to begin ramping up this next major phase of our growth strategy," Dr. Rafaeli continued. "We continued to make progress in Germany with our no!no! brand and are on track to meet our expectations for 2014. Sales to Bed Bath & Beyond in the U.S. were as expected and in the coming months they will be upgrading from the no!no! Plus to the higher-priced 8800. Neova® consumer revenues were up more than five-fold over the prior year as testament to the success of our marketing platform."

Dr. Rafaeli added, "XTRAC® was a particularly bright spot during the quarter, with treatment revenues up more than 90% over the prior year. We have been running advertising spots on national cable TV with heavier concentration in certain major metropolitan areas, and are seeing conversion rates of appointments scheduled through our call center running as high as 87%. We expect record revenues for XTRAC in the fourth quarter to exceed $5.0 million."

SOURCE PhotoMedex, Inc.