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8-K - 8-K - CYNOSURE INCd920143d8k.htm

Exhibit 99.1

FOR IMMEDIATE RELEASE

Contact:

 

Timothy Baker

Scott Solomon

President, Chief Operating Officer and Chief Financial Officer

Vice President

Cynosure, Inc.

Sharon Merrill Associates

(978) 256-4200

(617) 542-5300

TBaker@cynosure.com

CYNO@investorrelations.com

Cynosure Announces First-Quarter 2015 Results;

Posts Record First-Quarter Revenue of $74.9 Million, Up 21 Percent from

Prior Year

First-Quarter Highlights:

 

    North America product revenue growth of 45 percent

 

    Non-GAAP earnings of $0.15 per share; GAAP earnings break-even

 

    Cash and investments of $126.6 million at March 31, 2015

Westford, MA – May 5, 2015 – Cynosure, Inc. (Nasdaq: CYNO), which designs, manufactures and markets medical devices for aesthetic procedures and precision surgical applications worldwide, today reported financial results for the three months ended March 31, 2015.

“Cynosure delivered 21 percent year-over-year top-line growth in the first quarter, reflecting higher laser revenue in North America, which was up 45 percent from the same period last year,” said Michael Davin, Cynosure’s Chairman and Chief Executive Officer. “While we believe our international performance was temporarily affected by external factors including economic weakness in Europe and unfavorable currency movements, these were more than offset by our strong domestic results. We also continue to advance the development of new products that expand and diversify our business.

“We are expanding our leadership in the non-invasive aesthetic market with the development of new technology, including our new non-invasive body contouring product, which is designed to eliminate fat by disrupting adipose tissue,” Davin said. “Our 510(k) for this device was submitted to the U.S. Food and Drug Administration in January, and pending regulatory clearance we are targeting launch later in the second half of 2015. Our 510(k) submission is supported by clinical data in multicenter studies from approximately 100 subjects. Researchers saw a statistically significant reduction in adipose layer thickness six and 12 weeks post-treatment. In a separate pilot clinical study, our hyperthermic lipolysis technique compared favorably with cryolipolysis in average fat reduction at three and six months post-treatment.


“We’ve also made good progress in building the marketing foundation for MonaLisa Touch™, our first product specifically for women’s health and wellness,” Davin said. “After securing exclusive North American distribution rights to the product, we recently completed hiring 13 specialty sales reps to market MonaLisa Touch to physicians. Through a physician marketing strategy that includes trade shows, workshops and webinars, we are driving awareness about the availability of the MonaLisa Touch treatment and generating interest in the product from a number of key opinion leaders. The initial response in the marketplace has been positive.”

First-Quarter 2015 Financial Results

Revenue was $74.9 million, an increase of 21 percent from the prior-year period. Product revenue in North America grew 45 percent to $31.3 million. International product revenue was $25.2 million, down 10 percent year-over-year due in part to a $1.7 million decrease based on unfavorable foreign currency exchange rates. Revenue from parts, service, disposables and royalty revenues increased 50 percent to $18.4 million, which included the final $3 million payment due under a previously disclosed settlement agreement with Tria Beauty.

Operating income was $2.1 million, up 53 percent year-over-year. On a non-GAAP basis, excluding acquisition costs and amortization of intangibles, income from operations was $5.1 million, up 4 percent from the first quarter of 2014.

On a GAAP basis, the Company reported break-even net income for the first quarter of 2015, or $0.00 per share, compared with net income of $0.7 million, or $0.03 per diluted share, for the prior-year period. GAAP earnings included a $1.7 million unrealized loss on foreign currency and a $0.1 million unrealized gain on foreign currency for the 2015 and 2014 periods, respectively.

Excluding acquisition costs, amortization of intangibles and unrealized foreign exchange impact, non-GAAP net income for the first quarter of 2015 was $3.3 million, or $0.15 per diluted share, compared with $3.2 million, or $0.14 per diluted share, for the first quarter of 2014, primarily reflecting increased investments in sales and marketing associated with new products and the hiring of a specialty sales force for MonaLisa Touch in the first quarter of this year.


Cash and investments at March 31, 2015 was $126.6 million, compared with $133.4 million at year-end 2014.

Business Outlook

“Our commitment to invest in innovation, develop unique new products and capitalize on new market opportunities continues to produce positive results for Cynosure,” Davin said. “With the rollout of our new 532 nm laser delivery system for PicoSure® announced in February, the momentum of MonaLisa Touch and, pending regulatory clearance, the anticipated launch of our new non-invasive technology for fat removal, we look forward to a strong and successful year.”

First-Quarter Financial Results Conference Call

In conjunction with the announcement of its first-quarter financial results, Cynosure will host a conference call for investors and analysts at 9:00 a.m. ET today. On the call, Michael Davin and Timothy Baker, the Company’s President, Chief Operating Officer and Chief Financial Officer, will discuss Cynosure’s financial results and provide a business overview. Those who wish to listen to the conference call webcast should visit the “Investors” section of the Company’s website at www.cynosure.com. The live call can also be accessed by dialing (877) 709-8155 or (201) 689-8881. If you are unable to listen to the live call, the webcast will be archived for one year on the Company’s website.

About Cynosure, Inc.

Cynosure develops, manufactures, and markets aesthetic treatment systems that enable plastic surgeons, dermatologists and other medical practitioners to perform non-invasive and minimally invasive procedures to remove hair, treat vascular and benign pigmented lesions, remove multi-colored tattoos, revitalize the skin, liquefy and remove unwanted fat through laser lipolysis, reduce cellulite, clear nails infected by toe fungus, ablate sweat glands and improve vaginal health. Cynosure also markets radiofrequency energy sourced medical devices for precision surgical applications such as facial plastic and general surgery, gynecology, ear, nose, and throat procedures, ophthalmology, oral and maxillofacial surgery, podiatry and proctology. Cynosure’s product portfolio is composed of a broad range of energy sources including Alexandrite, diode, Nd: YAG, picosecond, pulse dye, Q-switched lasers, intense pulsed light and radiofrequency technology. Cynosure sells its products globally under the Cynosure, Palomar, ConBio and Ellman brand names through a direct sales force in the United States, Canada, Mexico, France, Morocco, Germany, Spain, the United Kingdom, Australia, China, Japan and Korea, and through international distributors in approximately 120 other countries. For corporate or product information, visit Cynosure’s website at www.cynosure.com.


Forward-Looking Statements

Any statements in this press release about future expectations, plans and prospects for Cynosure, Inc., including Cynosure’s expectations with respect to timing of product launches, as well as other statements containing the words “believes,” “look forward,” “anticipates,” “plans,” “expects,” “will” and similar expressions, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including the market price of Cynosure’s stock prevailing from time to time, the nature of other investment opportunities presented to the Company from time to time, the Company’s cash flows from operations, levels of demand for procedures performed with Cynosure products and for Cynosure products themselves, competition in the aesthetic laser industry, general business and economic conditions, effects of acquisitions that Cynosure has made or may make, Cynosure’s ability to develop and commercialize new products, Cynosure’s reliance on sole source suppliers, the inability to accurately predict the timing or outcome of regulatory decisions, and economic, market, technological and other factors discussed in Cynosure’s most recent Annual Report on Form 10-K, which is filed with the Securities and Exchange Commission. In addition, the forward-looking statements included in this press release represent Cynosure’s views as of the date of this press release. Cynosure anticipates that subsequent events and developments will cause its views to change. However, although Cynosure may elect to update these forward-looking statements at some point in the future, it specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Cynosure’s views as of any date subsequent to the date of this press release.


LOGO

Consolidated Statements of Income (Unaudited)

 

(In thousands, except per share data)

 

     Three Months Ended March 31,  
     2015     2014  

Revenues

   $ 74,912      $ 62,004   

Cost of revenues

     32,139        26,609   
  

 

 

   

 

 

 

Gross profit

  42,773      35,395   

Operating expenses

Selling and marketing

  25,696      20,122   

Research and development

  5,958      5,574   

Amortization of intangible assets acquired

  736      713   

General and administrative

  8,330      7,640   
  

 

 

   

 

 

 

Total operating expenses

  40,720      34,049   

Income from operations

  2,053      1,346   
  

 

 

   

 

 

 

Interest expense, net

  (402   (349

Other (expense) income, net

  (1,663   66   
  

 

 

   

 

 

 

(Loss) income before income taxes

  (12   1,063   

Income tax (benefit) provision

  (4   374   
  

 

 

   

 

 

 

Net (Loss) income

$ (8 $ 689   
  

 

 

   

 

 

 

Diluted net (loss) income per share

$ (0.00 $ 0.03   
  

 

 

   

 

 

 

Diluted weighted average shares outstanding

  21,664      22,568   
  

 

 

   

 

 

 

Basic net (loss) income per share

$ (0.00 $ 0.03   
  

 

 

   

 

 

 

Basic weighted average shares outstanding

  21,664      21,978   
  

 

 

   

 

 

 


LOGO

Condensed Consolidated Balance Sheet

 

(In thousands)

 

     March 31,
2015
     December 31,
2014
 
     (Unaudited)         

Assets:

     

Cash, cash equivalents and marketable securities

   $ 71,914       $ 75,131   

Short-term investments and related financial instruments

     24,585         32,055   

Accounts receivable, net

     45,311         42,524   

Inventories

     68,209         59,318   

Deferred tax asset, current portion

     17,144         17,228   

Prepaid expenses and other current assets

     10,580         9,629   
  

 

 

    

 

 

 

Total current assets

  237,743      235,885   

Property and equipment, net

  35,523      34,256   

Long-term marketable securities

  30,082      26,189   

Goodwill and intangibles, net

  157,149      159,347   

Other noncurrent assets

  1,966      2,047   
  

 

 

    

 

 

 

Total assets

$ 462,463    $ 457,724   
  

 

 

    

 

 

 

Liabilities and stockholders’ equity:

Accounts payable and accrued expenses

$ 65,937    $ 63,282   

Deferred revenue

  11,575      10,971   

Capital lease obligations

  135      137   
  

 

 

    

 

 

 

Total current liabilities

  77,647      74,390   

Capital lease obligations, net of current portion

  16,563      16,088   

Deferred revenue, net of current portion

  839      809   

Other long-term liabilities

  7,924      8,325   

Total stockholders’ equity

  359,490      358,112   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

$ 462,463    $ 457,724   
  

 

 

    

 

 

 


LOGO

To supplement our consolidated financial statements presented in accordance with GAAP, Cynosure uses non-GAAP gross profit, non-GAAP income from operations, non-GAAP net income and non-GAAP diluted net income per share. The presentation of this 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. The non-GAAP financial measures included in this press release exclude costs associated with the acquisitions and amortization of intangible assets acquired, as well as unrealized foreign exchange gains or losses for the three months ended March 31, 2015 and 2014. This exclusion may be different from, and therefore not comparable to, similar measures used by other companies.

Cynosure’s management believes that the non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding the acquisition-related costs, amortization and foreign exchange costs that may not be indicative of our core business operating results. Cynosure believes that both management and investors benefit from referring to the non-GAAP financial measures in assessing Cynosure’s performance and when planning, forecasting and analyzing future periods. The non-GAAP financial measures also facilitate management’s internal comparisons to Cynosure’s historical performance and our competitors’ operating results. Cynosure believes that the non-GAAP measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in our financial and operational decision making.

Reconciliation of GAAP Income Statement Measures to Non-GAAP Income Statement Measures (Unaudited)

 

(In thousands, except per share data)

 

     Three Months Ended March 31,  
     2015     2014  

Gross profit

   $ 42,773      $ 35,395   
  

 

 

   

 

 

 

Non-GAAP adjustments to gross profit:

Costs associated with amortization

  1,554      1,375   
  

 

 

   

 

 

 

Total Non-GAAP adjustments to gross profit

  1,554      1,375   
  

 

 

   

 

 

 

Non-GAAP Gross profit dollars

$ 44,327    $ 36,770   
  

 

 

   

 

 

 

Non-GAAP Gross profit percentage

  59.2   59.3
     Three Months Ended March 31,  
     2015     2014  

Income from operations

   $ 2,053      $ 1,346   
  

 

 

   

 

 

 

Non-GAAP adjustments to income from operations:

Costs associated with acquisitions and amortization

  3,046      3,557   
  

 

 

   

 

 

 

Total Non-GAAP adjustments to income from operations

  3,046      3,557   
  

 

 

   

 

 

 

Non-GAAP Income from operations

$ 5,099    $ 4,903   
  

 

 

   

 

 

 
     Three Months Ended March 31,  
     2015     2014  

Net (loss) income

   $ (8   $ 689   
  

 

 

   

 

 

 

Non-GAAP adjustments to net (loss) income:

Costs associated with acquisitions and amortization

  3,046      3,557   

Unrealized foreign exchange loss (gain)

  1,675      (73

Income tax effect of Non-GAAP adjustments

  (1,417   (990
  

 

 

   

 

 

 

Total Non-GAAP adjustments to net (loss) income

  3,304      2,494   
  

 

 

   

 

 

 

Non-GAAP net income

$ 3,296    $ 3,183   
  

 

 

   

 

 

 
     Three Months Ended March 31,  
     2015     2014  

Diluted net (loss) income per share

   $ (0.00   $ 0.03   
  

 

 

   

 

 

 

Costs associated with acquisitions and amortization

  0.14      0.15   

Unrealized foreign exchange loss (gain)

  0.07      (0.00

Income tax effect of Non-GAAP adjustments

  (0.06   (0.04
  

 

 

   

 

 

 

Total Non-GAAP adjustments to net (loss) income

  0.15      0.11   
  

 

 

   

 

 

 

Non-GAAP diluted net income per share

$ 0.15    $ 0.14   
  

 

 

   

 

 

 

Weighted average shares used to compute GAAP diluted net (loss) income per share

  21,664      22,568   
  

 

 

   

 

 

 

Weighted average shares used to compute Non-GAAP diluted net income per share

  22,123      22,568