PhotoMedex Reports Second Quarter 2013 Financial Results
Net Income Up 68%, Diluted EPS Up 70%, XTRAC Revenues Up 104%
Gross Margin Expands in all Business Segments
Board Authorizes Additional $30 Million Share Repurchase Program
MONTGOMERYVILLE, Pa.--(BUSINESS WIRE)-- PhotoMedex, Inc. (Nasdaq: PHMD) today reported financial results for the three and six months ended June 30, 2013. Financial highlights of the 2013 second quarter and first half include:
First half 2013 revenues of $115.3 million, an increase of 5.6% compared with the prior-year first half, net income of $14.3 million, an increase of 57.7%, and diluted EPS of $0.68, an increase of 51.1%
Second quarter 2013 revenues of $58.1 million, a decrease of 1.4% compared with the prior-year second quarter and an increase of 1.5% sequentially
XTRAC® treatment revenues of $4.0 million, an increase of 103.5% compared with the prior-year second quarter and an increase of 56.6% sequentially
XTRAC® recurring revenue U.S. installed base of 446 at quarter end, an increase of 45 placements during the quarter, including 22 on the Comeback program of previously sold systems
NEOVA® skin care revenues of $3.1 million, including $1.0 million of NEOVA® consumer revenues, an increase of 42.1% compared with the prior-year second quarter and an increase of 7.8% sequentially
Consumer revenues of $48.7 million, a decrease of 3.5% compared with the prior-year second quarter and a decrease of 0.8% sequentially
Direct-to-consumer channel revenues of $30.3 million, a decrease of 10.0% compared with the prior-year second quarter and a decrease of 4.4% sequentially
Global retail and home shopping channel revenues of $9.9 million, an increase of 1.6% compared with the prior-year second quarter and a decrease of 17.7% sequentially
Distributor consumer channel revenues of $8.4 million, an increase of 20.4% compared with the prior-year second quarter and an increase of 59.4% sequentially
Gross profit of $46.7 million, an increase of 0.3% compared with the prior-year second quarter
Gross margin of 80.4%, compared with 79.0% in the prior-year second quarter
Pre-tax income of $9.0 million, an increase of 77.0% compared with the prior-year second quarter
Earnings per diluted share of $0.34, an increase of 70.0% compared with the prior-year second quarter
Net income of $7.1 million, an increase of 68.4% compared with the prior-year second quarter
Non-GAAP adjusted income of $11.8 million or $0.56 per diluted share, an increase of 43.6%, compared with the prior-year second quarter
Board of Directors authorized an additional $30 million common stock share repurchase program
Reported Financial Results
Revenues for the second quarter of 2013 were $58.1 million, a decrease of 1.4% compared with revenues for the second quarter of 2012 of $58.9 million.
Net income for the second quarter of 2013 was $7.1 million or $0.34 per diluted per share, which included $1.3 million in stock-based compensation expense and $1.5 million in depreciation and amortization expense. This compares with net income for the second quarter of 2012 of $4.2 million or $0.20 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 six months ended June 30, 2013 were $115.3 million, an increase of 5.6% compared with revenues for the six months ended June 30, 2012 of $109.2 million.
Net income for the six months ended June 30, 2013 was $14.3 million or $0.68 per diluted per share, which included $2.6 million in stock-based compensation expense and $3.0 million in depreciation and amortization expense. This compares with net income for the six months ended June 30, 2012 of $9.1 million or $0.45 per diluted share, which included $3.3 million in stock-based compensation expense and $2.8 million in depreciation and amortization expense.
As of June 30, 2013 the Company had cash and cash equivalents of $62.5 million or $2.97 per diluted share, compared with $62.3 million as of December 31, 2012. During the second quarter the Company repurchased 324,758 shares of its common stock in the open market at an average price of $16.53 per share, for a total of $5.4 million. Current assets included $28.6 million in accounts receivable, compared with $19.1 million as of December 31, 2012. The increase in accounts receivables was largely due to the timing of $5.2 million of second quarter shipments related to television home shopping special events in Europe and North America, as well as a $5.3 million site letter of credit not collected until after the quarter had ended.
Management expects revenues for the third quarter of 2013 to be in line with second quarter 2013 revenues.
Dr. Dolev Rafaeli, PhotoMedex CEO, commented, "We are pursuing the next major phase of our growth strategy through expansion of the no!no! brand into Brazil and continued ramp-up in Germany, while building the domestic XTRAC business to critical mass by expanding our patient marketing campaigns and installed base of systems. XTRAC advertising has now been rolled out nationally. Our second quarter XTRAC revenues, which more than doubled over the prior year, show the successful execution of our plan."
Dr. Rafaeli added, "We are very pleased with the earnings and cash flow we have been consistently generating, and with our ability to increase or decrease our media spend as warranted by market conditions and with a focus on driving profitability. During the quarter our U.S. consumer revenues were impacted by the attack during the Boston Marathon and by the tornados in Oklahoma, which muted the response to our domestic consumer advertising programs as our target customers were engaged with these events yet our advertising expenditures had already been committed. Our efforts to cross-sell the Neova skincare line to the consumer market have been very successful, with sales of more than $1.0 million this quarter representing a 10-fold increase in one year."
Share Repurchase Expanded
Last year on August 18, 2012 the Company announced that its Board of Directors authorized the repurchase of its common shares on the open market during the ensuing 12 months. It is expected that by the 2013 anniversary date of this program, the Company will have fulfilled the $25 million limit under this program. Consequently, the Board of Directors has authorized an additional $30 million share repurchase program of its common shares in the open market over the next 12 months, at such times and prices as determined appropriate by the Company's management in collaboration with the Board of Directors. The shares will be purchased with cash on hand.
"The expansion of our share repurchase program by a further $30 million is reflective of the confidence we have in the growth of PhotoMedex, our ability to generate free cash flow and our commitment to building shareholder value," Dr. Rafael concluded.
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.
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:
Three Months Ended June 30,
Six Months Ended June 30,
(ooo's) except per share amounts
Net income as reported
Depreciation and amortization expense
Interest expense, net
Income tax expense
Stock-based compensation expense
Non-GAAP adjusted income
Fully diluted shares outstanding at June 30
Non-GAAP adjusted income per share
PhotoMedex will hold a conference call to discuss the Company's second quarter 2013 results and answer questions today, August 7, 2013 beginning at 11:00 a.m. Eastern time.
To participate in the conference call, dial toll-free 800-894-5910 or International/toll 785-424-1052 (and confirmation code # 5523007). For the convenience of participants in Israel, a local/toll-free number (1-80-925-6145) has been set up (the confirmation code remains the same # 5523007). If you are unable to participate, a replay of the call will be available from 2:00 p.m. Eastern time Wednesday, August 7 to 2:00 p.m. Eastern time Wednesday, August 21 by dialing toll-free 888-203-1112 or International/toll 719-457-0820 (participants in Israel may dial 1-80-924-6038) and using confirmation code # 5523007.
The live broadcast of PhotoMedex, Inc.'s quarterly conference call will be available in the Investor Relations section of www.photomedex.com, and at www.streetevents.com. The online replay will be available shortly after the conclusion of the call.
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.
-- Financial Statements follow --
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended June 30,
Six Months Ended June 30,
(ooo's) except per share amounts
Cost of revenues
Selling and marketing
General and administrative
Research and development and engineering
Interest and other financing income (expense), net
Income before taxes expense
Income tax expense (benefit)
Net income 1
Net income per share:
Shares used in computing net income per share:
1 Includes: depreciation and amortization
Share-based compensation expense
CONSOLIDATED STATEMENTS OF REVENUES
For the Three Months ended: