Syneron Medical Ltd. (NASDAQ: ELOS), a leading global aesthetic device company, today announced financial results for the three month period ended September 30, 2015.
Third Quarter 2015 and Recent Non-GAAP Highlights:
- Revenue of $62.1 million, compared to $60.3 million in the third quarter 2014, up 3% year-over-year, or 8% in constant currency
- North American product sales grew 15% year-over-year
- Non-GAAP gross margin of 57.0%, or 58.9% in constant currency, compared to 55.6% in Q3 2014
- Non-GAAP net income of $0.9 million, or $0.03 per share, compared to $0.9 million and $0.03 per share in Q3 2014
- Repurchased $4.4 million of common stock during third quarter; Board of Directors approved acceleration of share repurchase program
Amit Meridor, Chief Executive Officer of Syneron Medical, said, "We achieved a fourth consecutive quarter of double digit product revenue growth in North America and strong growth in the Asia Pacific region. However, our overall growth was tempered by two factors: the loss of a CoolTouch OEM customer and weakness in the EMEA region. The loss of the CoolTouch OEM customer was the result of an unforeseen change in ownership, which impacted revenue by approximately $2 million because they immediately discontinued their contract and planned deliveries for the quarter. Given this development, we are evaluating alternatives for the CoolTouch OEM business. The weakness in the EMEA region was due to increased seasonality, a weak economic environment, as well as market conditions that are driving pricing pressure and our decision to protect margins and maintain pricing discipline in this region. EMEA revenue was down $3.3 million in the quarter, an 18% year-over-year decline, or 11% in constant currency.
"As to our key growth drivers, UltraShape™ revenue amounted to $4.5 million, including 42 systems sold and strong double-digit sequential growth of per procedure Focal Treatment Zones (FTZ) leading to $1.1 million, or 24% of total UltraShape revenue for the quarter. PicoWay® revenue amounted to $4.1 million, with continued momentum with Korean MFDS regulatory clearance in July followed by international launch of the PicoWay Resolve™ dual wavelength fractional modality in October. Profound sales during the first full quarter of our launch were approximately three quarters of a million dollars and our momentum with this innovative product line in the market is strong. This progress with our key products contributed to the improvement in our gross margin. Looking forward, into Q4 2015 and 2016, we believe Syneron has several growth opportunities with our strong product portfolio and pipeline. Accordingly, subject to legal restrictions, we plan to accelerate our share repurchase activities as we continue to execute on our strategic initiatives."
Non-GAAP Financial Highlights for the Third Quarter Ended September 30, 2015:
Gross Margin for the third quarter 2015 was 57.0%, or 58.9% in constant currency, compared to 55.6% in the third quarter 2014. The year-over-year improvement in constant currency gross margin reflects favorable geographic mix, and double digit product growth, particularly in North America and Asia Pacific, including the newly introduced high margin UltraShape in North America and PicoWay products worldwide.
Operating Income for the third quarter 2015 was $1.3 million, or $2.4 million in constant currency, compared to $2.6 million in the third quarter 2014. This reflects the Company's investments in sales and marketing expenses related to the significant expansion of the Company's North American sales force, including the establishment of a dedicated body shaping team.
Net Income and Earnings Per Share in the third quarter 2015 was $0.9 million, or $0.03 per share, compared to net income of $0.9 million, or $0.03 per share in the third quarter 2014.
Net income and earnings per share for the third quarter 2015 are adjusted to exclude the following items, which are detailed in the Company's financial tables presented at the end of this press release:
- Impairment of intangible assets and goodwill of $5.6 million.
- Amortization of acquired intangible assets of $1.5 million.
- Stock-based compensation expense of $1.0 million.
- Income tax benefit of $0.9 million.
- Non recurring legal fees of $0.3 million.
GAAP Financial Highlights for the Third Quarter Ended September 30, 2015:
Gross Margin for the third quarter 2015 was 55.3%, compared to 53.6% in the third quarter 2014. The year-over-year improvement in gross margin reflects favorable geographic mix, and double digit product growth, particularly in North America and Asia Pacific, including the newly introduced high margin UltraShape in North America and PicoWay products worldwide.
Operating Loss for the third quarter 2015 was $7.1 million, compared to $1.1 million in the third quarter 2014. This reflects the Company's investments in sales and marketing expenses related to the significant expansion of the Company's North American sales force, including the establishment of a dedicated body shaping team. It also includes $5.6 million of intangible asset and goodwill impairment related to the CoolTouch subsidiary.
Net Loss and Loss Per Share in the third quarter 2015 was $6.5 million, or $0.18 per share, compared to $2.3 million, or $0.06 per share in the third quarter 2014.
Cash Position: As of September 30, 2015, the Company's overall cash position, including cash, short-term bank deposits and marketable securities, amounted to $79.5 million, compared to $92.3 million as of June 30, 2015. Cash use in the third quarter 2015 included investments in inventory to support growth and increased working capital. The reduction in cash position also included the repurchase of 463,004 shares of Syneron common stock during the third quarter 2015 at an average price of $9.47 for $4.4 million under the Company's previously authorized $20 million share repurchase program. Since December 2014, the Company has repurchased a total of 894,671 shares at an average price of $10.36 for $9.4 million under this program.
Use of Non-GAAP Measures
This press release provides financial measures for gross margin, operating income (loss), net income (loss) and earnings (loss) per share, which exclude expenses related to amortization of acquired intangible assets, stock-based compensation expense, re-measurement of contingent consideration fair value, impairment of intangible assets and goodwill, Fair Market Value (FMV) adjustment, tax benefit, changes in foreign currency exchange rates and non-recurring legal fee, 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 ongoing operational results, 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 non-GAAP measures when evaluating the business internally and, therefore, believes 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. Constant currency results assume foreign revenues, gross profit and operating income (loss) are translated from foreign currencies to the U.S. dollar, at rates consistent with those in the prior year.
SOURCE Syneron Medical Ltd.