Cynosure, Inc. (NASDAQ: CYNO) today announced financial results for the three months ended March 31, 2011.
Revenues for the first quarter of 2011 increased 16 percent to $21.9 million from $18.9 million in the same period of 2010. Net loss for the first quarter of 2011 was $1.9 million, or $0.15 per basic and diluted share, compared with a net loss of $2.8 million, or $0.22 per basic and diluted share, for the comparable period of 2010.
Gross profit for the three months ended March 31, 2011 was 55.2 percent of total revenues, compared with 57.2 percent for the same period of 2010. Results for the first quarter of 2011 included a one-time purchase accounting adjustment for the company's acquisition of the assets of Eleme Medical earlier this year. The purchase accounting adjustment, which related to the write-up of Eleme Medical's finished goods inventory sold during the quarter, had the effect of reducing Cynosure's 2011 first quarter gross profit by approximately 100 basis points.
Total operating expenses increased 5 percent to $13.9 million, or 64 percent of revenues, in the first quarter of 2011 from $13.3 million, or 71 percent of revenues, for the same period of 2010. Higher operating expenses in the 2011 period reflected higher research and development and sales and marketing costs associated with the company's new cellulite reduction platform, comprised of the new Cellulaze™ Cellulite Laser Workstation and SmoothShapes® XV.
"Laser product revenue increased 17 percent in the first quarter, as our North American direct sales force, European subsidiaries and international distributors all generated strong year-over-year results," said Cynosure President and Chief Executive Officer Michael Davin. "While we were pleased with our revenue performance, our gross profit was below our expectation for the quarter, primarily related to the purchase accounting adjustment."
"We continue to maintain a strong balance sheet, concluding the 2011 first quarter with cash, marketable securities and investments of $95.6 million, even with our $2.5 million cash acquisition of the Eleme Medical assets," Davin continued. "In addition, we generated positive cash flow from operations of $1.8 million, underscoring our focus on effectively managing operating expenses as we invested in product development initiatives related to our new cellulite reduction platform."
During the first quarter, Cynosure launched the non-invasive SmoothShapes XV system, which the company acquired as part of the asset purchase of Eleme Medical. SmoothShapes XV was introduced through Cynosure's direct sales force in North America, and its international distribution channel, including its direct subsidiaries in the European Union. In addition, Cynosure launched the Cellulaze™ Cellulite Laser Workstation in the European Community and established three Cellulaze clinical sites led by physician luminaries in the EU to train plastic surgeons and dermatologists on the use of the minimally invasive procedure. In the United States, the company's 510(k) application for marketing clearance of Cellulaze is undergoing review by the U.S. Food and Drug Administration.
- Two New Cellulaze Studies: Two U.S. clinical studies using the Cellulaze workstation were presented at the recent Annual Scientific Conference of the American Society for Laser Medicine and Surgery. A preliminary study of 10 patients concluded that a single treatment with Cellulaze improves the appearance of cellulite and that improvement persists for at least one year with minimal adverse effects. Another study of 15 subjects concluded that a sidelight three-dimensional optical fiber and 1440 nm Nd:YAG laser, which is used in Cellulaze, appeared to have long-lasting benefits in the treatment of cellulite. Significant improvement in cellulite was demonstrated in 68 percent of cases by photographic evaluation and 65 percent with Vectra 3D surface imaging.
- International Marketing Clearances: During the first quarter, the company announced the receipt of two key international marketing clearances: Health Canada issued a Medical Device License authorizing the SmoothShapes XV system to be marketed in Canada for the temporary reduction in the appearance of cellulite. In addition, the Korea Food and Drug Administration granted marketing approval for the Smartlipo Triplex™ system, the company's minimally invasive technology for fat removal and skin tightening.
Davin concluded, "Our financial position remains strong, and we are encouraged to see continuing top-line momentum. We are optimistic about the prospects for our business as we begin our European launch of Cellulaze and introduce SmoothShapes XV across our direct distribution channel. As our markets continue to slowly recover from the lingering effects of the recession, we believe Cynosure is well-positioned with a strong brand and broad suite of innovative products that deliver excellent outcomes for aesthetic patients."