PhotoMedex Reports First Quarter 2013 Financial Results

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PhotoMedex Reports First Quarter 2013 Financial Results

Revenues increased 14% over the same period in 2012, diluted EPS increased 31% to $0.34

MONTGOMERYVILLE, Pa.--(BUSINESS WIRE)-- PhotoMedex, Inc. (Nasdaq: PHMD) today reported financial results for the three months ended March 31, 2013. Financial highlights of the 2013 first quarter include:

  • Revenues of $57.2 million, an increase of 14% compared with the prior-year first quarter and an increase of 4% sequentially
  • Consumer revenues of $49.0 million, an increase of 16% compared with the prior-year first quarter and an increase of 6% sequentially
  • Direct-to-consumer channel revenues of $31.7 million, an increase of 1% compared with the prior-year first quarter and an increase of 6% sequentially
  • Global retail and home shopping channel revenues of $12.0 million, an increase of 101% compared with the prior-year first quarter and a decrease of 3% sequentially
  • Distributor consumer channel revenues of $5.3 million, an increase of 13% compared with the prior-year first quarter and an increase of 41% sequentially
  • XTRAC® adjusted treatment revenues of $3.2 million, an increase of 73% compared with the prior-year first quarter and an increase of 22% sequentially
  • XTRAC® recurring revenue U.S. installed base of 401 at quarter end, an increase of 51 placements during the quarter, including 27 on the Comeback program of previously sold systems
  • NEOVA® skin care revenues of $2.2 million, an increase of 3% compared with the prior-year first quarter and an increase of 14% sequentially
  • Gross profit of $45.4 million, an increase of 16% compared with the first quarter of 2012
  • Gross margin of 79.3% compared with 77.7% in the prior-year first quarter
  • Pre-tax income of $9.7 million, an increase of 91% compared with the prior-year first quarter and an increase of 45% sequentially
  • Earnings per diluted share of $0.34, an increase of 31%, compared with the prior-year first quarter and an increase of 21% sequentially
  • Non-GAAP adjusted income of $12.5 million or $0.59 per diluted share, representing increases of 49% and 34%, respectively, compared with the prior-year first quarter and increases of 31% and 31%, respectively, sequentially

Reported Financial Results

Revenues for the first quarter of 2013 were $57.2 million, an increase of 14% compared with revenues for the first quarter of 2012 of $50.3 million.

Net income for the first quarter of 2013 was $7.2 million, or $0.34 per diluted per share, which included $1.3 million in stock-based compensation expense and $1.4 million in depreciation and amortization expenses. This compares with net income for the first quarter of 2012 of $4.9 million, or $0.26 per diluted share, which included $1.8 million in stock-based compensation expense and $1.3 million in depreciation and amortization expenses.

PhotoMedex repurchased no shares of its common stock during the first quarter of 2013.

As of March 31, 2013 the Company had cash and cash equivalents of $63.5 million or $3.00 per diluted share, compared with $62.3 million as of December 31, 2012. Current assets included $24.3 million in accounts receivable, compared with $19.1 million as of December 31, 2012. The increase in accounts receivables was largely related to the impact of the timing of shipments related to a television home shopping special event in the first quarter, which were collected in the second quarter.

Management expects revenues for the second quarter of 2013 to exceed $59 million.

Dr. Dolev Rafaeli, PhotoMedex CEO, commented, "The rapid growth we have achieved the past few years continued during the first quarter and, importantly, featured an improvement in gross margin led by a 16% increase in consumer revenues, particularly from our no!no!™ products. No!no! is now available in most every Bed Bath and Beyond store across the U.S. and we are pleased with the initial sales ramp. We have also had strong responses to our Spanish-language advertisements in the U.S. and our marketing of no!no! Men. In addition we achieved substantial sales increases in Neova® skin care products from upselling no!no! customers at our call centers.

"Geographic expansion holds particular promise for PhotoMedex as we prepare to launch no!no! in Brazil and further develop the German and Korean markets. We are very excited about the sales potential in these geographies going into the second half of the year."

Dr. Rafaeli added, "XTRAC adjusted treatment revenues were up 73% compared with the first quarter of 2012 as our direct-to-patient advertising is having a clear impact. We've initiated television and radio advertising in six new areas of the country and we plan additional rollouts of advertising in new markets throughout the year."

A reconciliation of non-GAAP financial measures to GAAP financial measures, and a presentation of the most directly comparable GAAP financial measures are included below.

Non-GAAP Measures

To supplement PhotoMedex's consolidated financial statements presented in accordance with GAAP, PhotoMedex provides certain non-GAAP measures of financial performance. These non-GAAP measures include non-GAAP adjusted income and non-GAAP adjusted income per share.

PhotoMedex's reference to these non-GAAP measures should be considered in addition to results prepared under current accounting standards, but are not a substitute for, nor superior to, GAAP results. These non-GAAP measures are provided to enhance investors' overall understanding of PhotoMedex's current financial performance and to provide further information for comparative purposes.

Specifically, the Company believes the non-GAAP measures provide useful information to both management and investors by isolating certain expenses, gains and losses that may not be indicative of the Company's core operating results and business outlook. In addition, PhotoMedex believes non-GAAP measures enhance the comparability of results against prior periods. Reconciliation to the most directly comparable GAAP measure of all non-GAAP measures included in this press release is as follows:

   

(Unaudited)

 
Three Months Ended Mar 31,
(ooo's) except per share amounts2013 2012
 
Net income as reported$7,212$4,857
Adjustments:
Depreciation and amortization expense1,4431,332
Interest expense, net5189
Income tax expense 2,511 240
 
EBITDA$11,171$6,618
 
Stock-based compensation expense 1,290 1,753
 
Non-GAAP adjusted income$12,461$8,371
Fully diluted shares outstanding at March 3121,14818,876
Non-GAAP adjusted income per share$0.59$0.44
 

Conference Call

PhotoMedex will hold a conference call to discuss the Company's first quarter 2013 results and answer questions today, May 8, 2013 beginning at 11:00 a.m. Eastern time.

To participate in the conference call, dial toll free 888-686-9681 or International/toll 913-312-1467 (and confirmation code # 7662001) approximately five to 10 minutes prior to the scheduled start time. For the convenience of our Israeli participants, a local/toll free number (1-80-925-8350) has been set up (the confirmation code remains the same # 7662001). If you are unable to participate, a digital replay of the call will be available from Wednesday, May 8, 2013 from 2:00 p.m. ET to Wednesday, May 22, 2013 at 2:00 p.m. ET, by dialing toll free 888-203-1112 or International/toll 719-457-0820 (Israeli participants may dial 1-80-924-6038) and using confirmation code # 7662001.

The live broadcast of PhotoMedex, Inc.'s quarterly conference call will be available online by going to www.photomedex.com and clicking on the link to Investor Relations, and at www.streetevents.com. The online replay will be available shortly after the conclusion of the call at those sites.

About PhotoMedex

PhotoMedex is a global skin health company providing integrated disease management and aesthetic solutions to dermatologists, professional aestheticians and consumers. The company provides proprietary products and services that address skin diseases and conditions including psoriasis, vitiligo, acne, actinic keratosis (a precursor to certain types of skin cancer) and photo damage. Its experience in the physician market provides the platform to expand its skin health solutions to spa markets, as well as traditional retail, online and infomercial outlets for home-use products. As a result of its December 2011 merger with Radiancy Inc., PhotoMedex has added a range of home-use devices under the no!no!™ brand, for various indications including hair removal, acne treatment and skin rejuvenation. The company also offers a professional product line for acne clearance, skin tightening, psoriasis care and hair removal sold to physician clinics and spas.

SAFE HARBOR STATEMENT

Some portions of the conference call, particularly those describing PhotoMedex' strategies, operating expense reductions and business plans will contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks, uncertainties and other factors.All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including any statements of the plans, strategies and objectives of management for future operations; any statements regarding product development, product extensions, product integration or product marketing; any statements regarding continued compliance with government regulations, changing legislation or regulatory environments; any statements of expectation or belief and any statements of assumptions underlying any of the foregoing. In addition, there are risks and uncertainties related to successfully integrating the products and employees of the Company and Radiancy, as well as the ability to ensure continued regulatory compliance, performance and/or market growth.These risks, uncertainties and other factors, and the general risks associated with the businesses of the Company described in the reports and other documents filed with the SEC, could cause actual results to differ materially from those referred to, implied or expressed in the forward-looking statements.The Company cautions readers not to rely on these forward-looking statements.All forward-looking statements are based on information currently available to the Company and are qualified in their entirety by this cautionary statement.The Company anticipates that subsequent events and developments will cause its views to change.The information contained in this conference call speaks as of the date hereof and the Company has or undertakes no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.

   

PHOTOMEDEX, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

 
Three Months Ended March 31,
(ooo's) except per share amounts2013 2012
 
Revenues$57,216$50,273
 
Cost of revenues 11,866  11,234 
 
Gross profit 45,350  39,039 
 
Operating expenses:
Selling and marketing29,32625,835
General and administrative5,6597,119
Research and development and engineering 773  758 
35,75833,712
Operating income9,5925,327
Interest and other financing income (expense), net 131  (230)
 
Income before taxes expense9,7235,097
 
Income tax (expense) benefit (2,511) (240)
 
Net income 1$7,212 $4,857 
 
Net income per share:
Basic$0.35$0.26
Diluted$0.34$0.26
 
Shares used in computing net income per share:
Basic20,67818,340
Diluted21,14818,876
 
1 Includes: depreciation and amortization1,4431,332
 
Share-based compensation expense1,2901,753
 
 
PHOTOMEDEX, INC.
CONSOLIDATED STATEMENTS OF REVENUES

(UNAUDITED)

     
For the three months ended:
March 31, 2013December 31, 2012March 31, 2012
Consumer:
Direct$31,722$29,997$31,516
Distributors5,2913,7634,693
Retailer and home shopping channels 12,047  12,362 5,992 
sub-total49,06046,12242,201
 
Physician Recurring
XTRAC treatments3,1592,5831,824
Less: XTRAC incremental deferred revenue(590)29(145)
Skin care2,2261,9492,165
Other 1,160  1,255 1,229 
sub-total5,9555,8165,073
 
Professional2,2012,8522,999
   
Total Revenues$57,216 $54,790$50,273 
 
   
PHOTOMEDEX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
 
 
March 31, 2013December 31, 2012
Assets
Cash, cash equivalents, and short-term investments$63,509$62,348
Accounts receivable, net24,28119,064
Inventories21,48322,467
Other current assets28,15532,294
Property and equipment, net7,7446,759
Other non-current assets 66,358 68,958
Total Assets$211,530$211,890
 
Liabilities and Stockholders' Equity
Accounts payable and accrued liabilities$26,432$34,618
Other current liabilities6,6485,259
Bank and lease notes payable593619
Other liabilities3,8284,067
Stockholders' equity 174,029 167,327
Total Liabilities and Stockholders' Equity$211,530$211,890
 
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PHOTOMEDEX, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)

 

For the Three Months
Ended

March 31,

    2013    

 

    2012    

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income$7,212$4,857
 
Adjustments to reconcile net income to net cash provided by operating activities--
Depreciation and amortization1,4431,332
Provision for doubtful accounts1,046714
Deferred income taxes5232,027
Stock-based compensation1,2901,753
Changes in assets and liabilities:
(Increase) decrease in--
Current Assets(1,596)(8,598)
Current liabilities (6,854) 6,063 
Net cash provided by operating activities 3,064  8,148 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Lasers placed in service(1,220)(366)
Purchases of PP&E, net(211)(96)
Other (58) (70)
Net cash used in investing activities (1,489) (532)
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of options/issuance of securities13125
Repayments of debt (213) (737)
Net cash used in financing activities (200) (612)
 
Effect of exchange rate changes on cash (214