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8-K - LIVE FILING - BIOLASE, INC | htm_53480.htm |
BIOLASE REPORTS 2016 FIRST QUARTER RESULTS
IRVINE, CA (May 9, 2016) BIOLASE, Inc. (NASDAQ:BIOL), the global leader in dental lasers, today reported its financial results for the first quarter ended March 31, 2016.
Selected First Quarter 2016 Highlights with Comparisons to First Quarter Include:
Worldwide revenue of $11.0 million increased $0.2 million, or 1.4%, with a 7.9% increase in U.S. sales, offset by a 6.4% decrease internationally.
| WaterLase® revenue increased 11.3% in the U.S., decreased by 7.5% internationally. |
| Quarterly average selling price of flagship WaterLase® iPlus continued to increase. |
| Worldwide imaging revenue of $0.7 million increased $0.4 million, or 102.9%. |
Operating loss narrowed more than 28.0%, excluding effect of a favorable one-time 2015 legal settlement. |
| Gross margin of 33.1%, up 350 basis points due to increased pricing and geographic sales mix. |
| Operating expenses decreased 13.5% adjusted for one-time legal settlement in 2015. |
Cash used in operations of $4.8 million, down 35.5%.
President and CEO Harold Flynn, Jr., stated, Considering having come out of a very strong fourth quarter, a year-over-year headwind given that the first quarter of 2016 is without the international sales impact of the biennial International Dental Show in Europe, and the first quarter being seasonally lower for BIOLASE and dental capital sales generally, our modest single digit growth is understandable, but not a cause for celebration. We had growth in the U.S. offset by declines internationally. I am encouraged by our continued improvement in our WaterLase business in the U.S. including continued gains in pricing helping to expand our margins. We need to continue to improve our commercial execution globally and achieve double digit sales growth year-over-year on a consistent basis, and we have a solid plan to do so.
We clearly made good progress on narrowing our operating losses and reducing our cash burn rate by 35.1% year-over-year, especially when excluding the favorable impact of the legal settlement during the first quarter of 2015, Flynn added. We managed to significantly lower spending, while maintaining key investments in our future as we continued to make good progress on new product development with expected launches within the next several quarters.
Flynn noted that BIOLASE also made two important additions to its executive leadership team just after the end of the first quarter. Michael Roux was appointed our Vice President of Marketing, and Matthew Wilson was appointed its Vice President of Human Resources. Michael and Matt are already making meaningful contributions, and I expect them both to have significant positive impacts on BIOLASEs culture and performance for years to come, Flynn said.
First Quarter Results
Net Revenue. Net revenue for the first quarter of 2016 was $11.0 million, as compared to net
revenues of $10.9 million for the first quarter of 2015. The year-over-year increase of 1.4% was
driven by an increase in U.S. WaterLase sales and increases in domestic sales of imaging systems
and services, partially offset by slower international laser sales and domestic consumable sales.
Gross Profit. Gross margin typically fluctuates with product and regional mix, selling prices, product costs and revenue levels. Gross margin for the first quarter of 2016 was 33.1%, as compared to 29.6% in the first quarter 2015. The 350 basis points increase reflected a larger mix of domestic sales, which typically have higher product margins due to higher pricing.
Operating Expenses. Total operating expenses in the first quarter of 2016 were $8.0 million, as compared to $8.5 million in the first quarter of 2015. The year-over-year decrease was primarily driven by a $750 thousand decrease in Sales and Marketing and General and Administrative payroll and consulting related expenses, a $275 thousand decrease in patent and legal expenses, and a $268 thousand decrease in media, advertising, and printing expenses, partially offset by a $731 thousand increase in legal settlement realized in the first quarter 2015, which resulted in a credit to operating expenses associated with the recovery of prior legal expenses.
Net Loss. Net loss for the first quarter of 2016 was $4.3 million, or a $0.07 loss per share, as compared to a net loss of $5.4 million, or a $0.09 loss per share, for the first quarter of 2015. The decrease in net loss is attributed to overall business improvements including a $155 thousand increase in net revenue, a $279 thousand reduction in cost of revenue, and a $512 thousand decrease in operating expenses.
After adding back the first quarters net interest income of $17 thousand, removing the income tax provision of $40 thousand, non-cash depreciation and amortization expenses of $212 thousand and non-cash stock-based compensation of $834 thousand, the non-GAAP net loss for the first quarter of 2016 totaled $3.2 million, or a loss of $0.06 per share, compared with a non-GAAP net loss of $4.5 million, or a loss of $0.08 per share, during the first quarter of 2015.
Chief Financial Officer David Dreyer added, while BIOLASE still has a ways to go in terms of returning to growth and profitability, the first quarters results confirm that BIOLASE still offers the best quality laser systems available on the dental market. Our recent efforts re-prioritizing our attention on providing customer service, technical support, training and education, and of course ensuring quality in all of our products are all putting BIOLASE back on course as the leader of the world wide dental laser marketplace.
Liquidity and Capital Resources
As of March 31, 2016, BIOLASE had approximately $16.6 million in working capital. Cash and
restricted cash equivalents at the end of the first quarter 2016 were $6.8 million, as compared to
$11.9 million on December 31, 2015. Net accounts receivable totaled $10.1 million at March 31,
2016, as compared to $8.9 million at December 31, 2015.
Chief Financial Officer David Dreyer commented, Preserving our cash continues to be a top priority for management, and while the first quarters cash usage was as expected given our Sales, we have been aware that we need to supplement our available cash resources to continue making our forward progress both commercially as well as with our new product development. We are in discussions with several private equity firms regarding debt financing which would supplement our cash position as we ramp up commercially, develop and launch new products, and progress towards cash flow neutrality.
Conference Call
As previously announced, the Company will host a conference call today at 4:30 p.m. Eastern Time to
discuss its operating results for the fourth quarter and year ended March 31, 2016, and to answer
questions. To listen to the conference call live via telephone, dial 1-877-407-4019 from
the U.S. or, for international callers, dial 1-201-689-8337, approximately 10 minutes before the
start time. To listen to the conference call live via the Internet, visit the Investors section of
the BIOLASE website at www.biolase.com.
About BIOLASE, Inc.
BIOLASE, Inc. is a medical device company that develops, manufactures, markets, and sells laser
systems in dentistry and medicine and also markets, sells, and distributes dental imaging
equipment, including digital x-rays and CAD/CAM scanners. BIOLASEs products are focused on
technologies that advance the practice of dentistry to both the dentist and their patients. The
Companys proprietary laser products incorporate approximately 250 patented and 90 patent-pending
technologies designed to provide biologically clinically superior performance with less pain and
faster recovery times. Its innovative products provide cutting-edge technology at competitive
prices to deliver the best results for dentists and patients. BIOLASEs principal products are
revolutionary dental laser systems that perform a broad range of dental procedures, including
cosmetic and complex surgical applications, and a full line of dental imaging equipment. BIOLASE
has sold approximately 31,200 laser systems to date in over 90 countries around the world. Laser
products under development address the Companys core dental market and other adjacent medical and
consumer markets.
For updates and information on WaterLase® iPlus and laser dentistry, find BIOLASE online at www.biolase.com, Facebook at www.facebook.com/biolase, Twitter at www.twitter.com/biolaseinc, LinkedIn at www.linkedin.com/company/biolase, Instagram at www.instagram.com/biolaseinc, and YouTube at www.youtube.com/biolasevideos.
BIOLASE® and WaterLase® are registered trademarks of BIOLASE, Inc.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Statements contained in this press release that refer to BIOLASEs estimated or anticipated future
results or other non-historical facts are forward-looking statements, as are any statements in this
press release concerning prospects related to BIOLASEs strategic initiatives and anticipated
financial performance. Forward-looking statements can also be identified through the use of words
such as anticipates, expects, intends, plans, believes, seeks, estimates, may,
will, and variations of these words or similar expressions. Readers are cautioned not to place
undue reliance on these forward-looking statements, which reflect BIOLASEs current expectations
regarding future benefits of cost-saving measures and speak only as of the date of this release.
Actual results may differ materially from BIOLASEs current expectations depending upon a number of
factors affecting BIOLASEs business. These factors include, among others, adverse changes in
general economic and market conditions, competitive factors including but not limited to pricing
pressures and new product introductions, uncertainty of customer acceptance of new product
offerings and market changes, risks associated with managing the growth of the business, and those
other risks and uncertainties that are described, from time-to-time, in the Risk Factors section
of BIOLASEs annual and quarterly reports filed with the SEC. BIOLASE does not undertake any
responsibility to revise or update any forward-looking statements contained in this press release.
Cautionary Statement regarding Forward-Looking Statements
Statements contained in this press release that refer to BIOLASEs estimated or anticipated future
results or other non-historical facts are forward-looking statements, as are any statements in this
press release concerning BIOLASEs strategic initiatives, anticipated financial performance and
product launches.
For further information, please contact:
BIOLASE, Inc. | DresnerAllenCaron | |
David Dreyer Chief Financial Officer |
Rene Caron (Investors) 949-474-4300 |
ddreyer@biolase.com rcaron@dresnerallencaron.com
888-424-6527 | Len Hall (Media) 949-474-4300 lhall@dresnerallencaron.com |
|
(Financial Tables Follow)
BIOLASE, INC. | ||||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||
(unaudited, in thousands, except per share data) | ||||||||||||||||||
Three Months Ended | ||||||||||||||||||
March 31 | ||||||||||||||||||
2016 | 2015 | |||||||||||||||||
Products and services revenue
|
$ | 10,979 | $ | 10,751 | ||||||||||||||
License fees and royalty revenue
|
31 | 104 | ||||||||||||||||
Net revenue
|
11,010 | 10,855 | ||||||||||||||||
Cost of revenue
|
7,366 | 7,645 | ||||||||||||||||
Gross profit
|
3,644 | 3,210 | ||||||||||||||||
Operating expenses:
|
||||||||||||||||||
Sales and marketing
|
3,804 | 4,754 | ||||||||||||||||
General and administrative
|
2,267 | 2,587 | ||||||||||||||||
Engineering and development
|
1,886 | 1,803 | ||||||||||||||||
Excise tax
|
| 56 | ||||||||||||||||
Patent infringement legal settlement
|
| (731 | ) | |||||||||||||||
Total operating expenses
|
7,957 | 8,469 | ||||||||||||||||
Loss from operations
|
(4,313 | ) | (5,259 | ) | ||||||||||||||
Gain (loss) on foreign currency transactions
|
71 | (130 | ) | |||||||||||||||
Interest income (expense), net
|
17 | | ||||||||||||||||
Non-operating loss, net
|
88 | (130 | ) | |||||||||||||||
Loss before income tax provision
|
(4,225 | ) | (5,389 | ) | ||||||||||||||
Income tax provision
|
40 | 47 | ||||||||||||||||
Net loss
|
$ | (4,265 | ) | $ | (5,436 | ) | ||||||||||||
Net loss per share:
|
||||||||||||||||||
Basic
|
$ | (0.07 | ) | $ | (0.09 | ) | ||||||||||||
Diluted
|
$ | (0.07 | ) | $ | (0.09 | ) | ||||||||||||
Shares used in the calculation of net loss per share:
|
||||||||||||||||||
Basic
|
58,228 | 58,145 | ||||||||||||||||
Diluted
|
58,228 | 58,145 | ||||||||||||||||
BIOLASE, INC. | ||||||||||||||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||
March 31 | December 31 | |||||||||||||||||||
- | - | |||||||||||||||||||
2016 | 2015 | |||||||||||||||||||
- | - | - | ||||||||||||||||||
unaudited | audited | |||||||||||||||||||
ASSETS
|
||||||||||||||||||||
Current assets:
|
||||||||||||||||||||
Cash and cash equivalents
|
$ | 6,627 | $ | 11,699 | ||||||||||||||||
Restricted cash equivalent
|
200 | 200 | ||||||||||||||||||
Accounts receivable, less allowance of $1,686 in 2016 and $1,765 in 2015 |
10,106 |
8,948 |
||||||||||||||||||
Inventory, net
|
12,567 | 12,566 | ||||||||||||||||||
Prepaid expenses and other current assets
|
1,609 | 1,387 | ||||||||||||||||||
Total current assets
|
31,109 | 34,800 | ||||||||||||||||||
Property, plant and equipment, net
|
3,791 | 3,727 | ||||||||||||||||||
Intangible assets, net
|
37 | 51 | ||||||||||||||||||
Goodwill
|
2,926 | 2,926 | ||||||||||||||||||
Other assets
|
556 | 747 | ||||||||||||||||||
Total assets
|
$ | 38,419 | $ | 42,251 | ||||||||||||||||
LIABILITIES AND STOCKHOLDERS EQUITY
|
||||||||||||||||||||
Current liabilities:
|
||||||||||||||||||||
Accounts payable
|
$ | 6,971 | $ | 5,960 | ||||||||||||||||
Accrued liabilities
|
4,529 | 5,906 | ||||||||||||||||||
Customer deposits
|
131 | 85 | ||||||||||||||||||
Deferred revenue, current portion
|
2,915 | 3,155 | ||||||||||||||||||
Total current liabilities
|
14,546 | 15,106 | ||||||||||||||||||
Deferred income taxes, net
|
753 | 738 | ||||||||||||||||||
Deferred revenue, long-term
|
112 | 142 | ||||||||||||||||||
Capital lease obligation, long-term
|
117 | 159 | ||||||||||||||||||
Warranty accrual, long-term
|
973 | 843 | ||||||||||||||||||
Other liabilities, long-term
|
325 | 338 | ||||||||||||||||||
Total liabilities
|
16,826 | 17,326 | ||||||||||||||||||
Stockholders equity:
|
||||||||||||||||||||
Preferred stock, par value $0.001
|
| | ||||||||||||||||||
Common stock, par value $0.001
|
58 | 58 | ||||||||||||||||||
Additional paid-in capital
|
189,456 | 188,622 | ||||||||||||||||||
Accumulated other comprehensive loss
|
(702 | ) | (801 | ) | ||||||||||||||||
Accumulated deficit
|
(167,219 | ) | (162,954 | ) | ||||||||||||||||
Total stockholders equity
|
21,593 | 24,925 | ||||||||||||||||||
Total liabilities and stockholders equity
|
$ | 38,419 | $ | 42,251 | ||||||||||||||||
BIOLASE, INC. | ||||||||||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
March 31 | ||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||
Cash Flows from Operating Activities: |
||||||||||||||||||||
Net loss |
$ | (4,265 | ) | $ | (5,436 | ) | ||||||||||||||
Adjustments to reconcile net loss to net cash and
cash equivalents used in operating activities: |
||||||||||||||||||||
Depreciation and amortization |
212 | 158 | ||||||||||||||||||
Provision (recovery) for bad debts, net |
(15 | ) | 53 | |||||||||||||||||
Stock-based compensation |
834 | 700 | ||||||||||||||||||
Deferred income taxes |
15 | 15 | ||||||||||||||||||
Earned interest income, net |
(16 | ) | | |||||||||||||||||
Changes in operating assets and liabilities: |
||||||||||||||||||||
Restricted cash |
| (200 | ) | |||||||||||||||||
Accounts receivable |
(1,126 | ) | (860 | ) | ||||||||||||||||
Inventory |
(1 | ) | (664 | ) | ||||||||||||||||
Prepaid expenses and other current assets |
(31 | ) | (677 | ) | ||||||||||||||||
Customer deposits |
46 | 64 | ||||||||||||||||||
Accounts payable and accrued liabilities |
(155 | ) | (1,090 | ) | ||||||||||||||||
Deferred revenue |
(270 | ) | 535 | |||||||||||||||||
Net cash and cash equivalents used in operating activities |
(4,772 | ) | (7,402 | ) | ||||||||||||||||
Cash Flows from Investing Activities: |
||||||||||||||||||||
Purchases of property, plant, and equipment |
(343 | ) | (228 | ) | ||||||||||||||||
Net cash and cash equivalents used in investing activities |
(343 | ) | (228 | ) | ||||||||||||||||
Cash Flows from Financing Activities: |
||||||||||||||||||||
Principal payments under capital lease obligation |
(43 | ) | | |||||||||||||||||
Deposit on capital lease |
| (42 | ) | |||||||||||||||||
Proceeds from exercise of stock options and warrants |
| 44 | ||||||||||||||||||
Net cash and cash equivalents provided by financing activities |
(43 | ) | 2 | |||||||||||||||||
Effect of exchange rate changes |
86 | (193 | ) | |||||||||||||||||
Decrease in cash and cash equivalents |
(5,072 | ) | (7,821 | ) | ||||||||||||||||
Cash and cash equivalents, beginning of period |
11,699 | 31,560 | ||||||||||||||||||
Cash and cash equivalents, end of period |
$ | 6,627 | $ | 23,739 | ||||||||||||||||
Supplemental cash flow disclosure Cash Paid: |
||||||||||||||||||||
Interest paid |
$ | 1 | $ | | ||||||||||||||||
Income taxes paid |
$ | 33 | $ | 37 | ||||||||||||||||
Supplemental cash flow disclosure Non-cash: |
||||||||||||||||||||
Assets acquired under capital lease |
$ | | $ | 383 | ||||||||||||||||
Accrued capital expenditures and tenant improvement allowance |
$ | 70 | $ | 21 |
In addition to the financial information prepared in conformity with generally accepted accounting principles in the United States (GAAP), we provide certain historical non-GAAP financial information. Management believes that these non-GAAP financial measures assist investors in making comparisons of period-to-period operating results and that, in some respects, these non-GAAP financial measures are more indicative of the Companys ongoing core operating performance than their GAAP equivalents.
Non-GAAP net loss is defined as net loss before interest, taxes, depreciation and amortization, stock-based compensation, other equity instruments, and other non-cash compensation. Management uses non-GAAP net loss in its evaluation of the Companys core results of operations and trends between fiscal periods and believes that these measures are important components of its internal performance measurement process. Therefore, investors should consider non-GAAP financial measures in addition to, and not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. Further, the non-GAAP financial measures presented by the Company may be different from similarly named non-GAAP financial measures used by other companies.
BIOLASE, INC. | ||||||||||||||||||||||||
Reconciliation of GAAP Net Loss to Non-GAAP Net Loss | ||||||||||||||||||||||||
(unaudited, in thousands, except per share data) | ||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||
March 31 | ||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||
GAAP net loss |
$ | (4,265 | ) | $ | (5,436 | ) | ||||||||||||||||||
Adjustments: |
||||||||||||||||||||||||
Interest (income) expense, net |
(17 | ) | | |||||||||||||||||||||
Income tax provision |
40 | 47 | ||||||||||||||||||||||
Depreciation and amortization expense |
212 | 158 | ||||||||||||||||||||||
Stock-based compensation, other equity instruments,
and other non-cash compensation expense |
834 | 700 | ||||||||||||||||||||||
Non-GAAP net loss |
$ | (3,196 | ) | $ | (4,531 | ) | ||||||||||||||||||
GAAP net loss per share, basic and diluted |
$ | (0.07 | ) | $ | (0.09 | ) | ||||||||||||||||||
Adjustments: |
||||||||||||||||||||||||
Interest (income) expense, net |
(0.00 | ) | 0.00 | |||||||||||||||||||||
Income tax provision |
0.00 | 0.00 | ||||||||||||||||||||||
Depreciation and amortization expense |
0.00 | 0.00 | ||||||||||||||||||||||
Stock-based compensation, other equity instruments,
and other non-cash compensation expense |
0.01 | 0.01 | ||||||||||||||||||||||
Non-GAAP net loss per share, basic and diluted |
$ | (0.06 | ) | $ | (0.08 | ) | ||||||||||||||||||
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