Lumenis (LUME) 6-K Lumenis Ltd. Reports Third Quarter Financial Results

Exhibit 99.1

Lumenis Ltd. Reports Third Quarter Financial Results

Revenue growth of 9.4% - 9th consecutive quarter of year-over-year growth

Yokneam, Israel– November 11, 2014 – Lumenis Ltd., the world's largest medical laser company for surgical, ophthalmic and aesthetic applications, today announced third quarter 2014 financial results.

Third Quarter 2014 Summary:

· Revenues of $74.2 million, up 9.4% year-over-year

· Adjusted EBITDA of $10.2 million, 13.7% of revenues, up 16.4% year-over-year

· Non-GAAP Net Income of $6.0 million, up 4.2% year-over-year. GAAP Net Income of $5.5 million

· Non-GAAP Net Income per diluted share of $0.17

· $1.0 million net cash flow generated from ongoing business activities (1) in the 3-month period ending September 30, 2014

“Our strategy of developing and commercializing innovative new products continues to demonstrate results as we posted our third consecutive quarter of over 9% revenue growth and new products generated over 15% of product revenues,” said Mrs. Tzipi Ozer-Armon, Chief Executive Officer.  “In our Aesthetics business specifically, strong demand for our new products, ResurFX for non-ablative skin resurfacing and the LightSheer Desire for next generation hair removal, helped generate high double-digit revenue growth. We remain committed to achieving long term, sustainable, and profitable growth and I am confident that our innovative portfolio of existing products and our strong product pipeline will allow us to achieve this objective.”

Third Quarter 2014 Financial Results

Total revenue in the third quarter of 2014 was $74.2 million, an increase of 9.4% compared to revenue of $67.8 million last year. On a constant currency basis, total revenue increased 10% year-over-year. Product revenue was $60.8 million, an increase of 10.4% compared to product revenue of $55.0 million last year. Service revenue was $13.4 million, an increase of 4.7% compared to service revenue of $12.8 million last year. Total revenue growth was driven by growth in our Aesthetics and Surgical segments, partially offset by declines in our Ophthalmic segment. By geography, Asia Pacific (APAC) and Europe, the Middle East and Africa (EMEA) posted strong growth. In the Americas, performance was almost flat while Japan declined compared to last year.

Gross profit in the third quarter of 2014 was $39.7 million, an increase of $2.4 million, or 6.3%, compared to $37.3 million last year. Third quarter 2014 GAAP gross margin decreased 150 basis points to 53.5%, compared to 55.0% last year. The decline is mainly attributed to product mix.

On a GAAP Basis:

Third quarter 2014 GAAP operating expenses were $32.5 million, an increase of $1.8 million, or 5.9%, compared to operating expenses of $30.7 million last year. The increase in operating expenses year-over-year was mainly driven by increased sales and marketing and general and administrative expenses, offset partially by lower R&D expense compared to last year.

(1)   Net cash flow generated from ongoing business activities includes cash flow from operating and investing activities as well as foreign currency translation adjustments related to cash and cash equivalents in the period, excluding a total of $0.2 million IPO related payments.

Third quarter 2014 GAAP operating income was $7.1 million, an increase of $0.5 million, or 8.4%, compared to GAAP operating income of $6.6 million last year. Third quarter 2014 GAAP operating margin was 9.6%, compared to 9.7% last year.

Third quarter 2014 GAAP net income was $5.5 million, an increase of $2.1 million, compared to $3.4 million last year.  GAAP net income per diluted share was $0.15 in the third quarter of 2014 compared to $0.11 last year, based on 35.8 million and 30.0 million diluted shares outstanding respectively.

On a Non-GAAP Basis:

Third quarter 2014 Non-GAAP operating income was $8.0 million, an increase of $0.8 million, or 11.7%, compared to Non-GAAP operating income of $7.2 million last year. Third quarter 2014 Non-GAAP operating margin was 10.8%, compared to 10.6% last year. Third quarter of 2014, Non-GAAP operating income excludes $0.7 million related to stock based compensation expense and $0.2 million related to litigation expenses.

Third quarter 2014 Adjusted EBITDA was $10.2 million, an increase of $1.5 million, or 16.4%, compared to $8.7 million last year.  Adjusted EBITDA margin was 13.7% of revenues compared to 12.9% last year.

Third quarter 2014 Non-GAAP net income was $6.0 million, an increase of $0.3 million, or 4.2%, compared to $5.7 million last year. In addition to the above mentioned adjustments to operating income, third quarter Non-GAAP net income excludes revaluation income of embedded derivatives of approximately $0.5 million in 2014.

Non-GAAP net income per diluted share was $0.17 in the third quarter of 2014 compared to $0.19 last year based on 35.8 million and 30.2 million diluted shares outstanding respectively.

Cash and cash equivalents were $99.1 million as of September 30, 2014 compared to $42.8 million as of December 31, 2013. The increase in cash and cash equivalents is primarily due to net proceeds related to our IPO and shares options proceeds, $8.9 million cash flow generated from ongoing business activities, partially offset by cash payments to Bank Hapoalim of $15.0 million related to annual loan repayment and $6.0 million related to the completion of the IPO and achievement of a profitability milestone as well as to additional IPO-related payments of$1.2 million.

Updated Full Year 2014 Financial Guidance

For the full year ended December 31, 2014, we expect to report:

·     Revenue in a range of $285 to $287 million, representing an increase of 7% to 8% year-over-year. This compares to a range of $284 million to $287 million previously.

·     Adjusted EBITDA in a range of $29.6 to $30.6 million, representing an increase of 14% to 18% year-over-year.  This compares to a range of $29.1 million to $30.6 million previously.

·     Non-GAAP Net Income in a range of $18.1 to $19.6 million, representing an increase of 22% to 32% year-over-year, and Non-GAAP EPS of $0.51 to $0.55.

Conference Call

Lumenis will host a conference call on Tuesday, November 12, 2014 at 5:00 p.m. Eastern Time to discuss its third quarter 2014 financial results. The call will be concurrently webcast. To listen to the conference call on your telephone, please dial the following numbers approximately ten minutes prior to the start of the call: 888-455-2296 for callers based in the United States, 1 80 924 5906 for callers based in Israel and 719-325-2458 for callers based in all other countries. The reservation code for the call is 7078121.  Please dial in approximately ten minutes prior to start time. To access the live audio webcast or subsequent archived recording, visit the Investor Relations section of Lumenis’ website at http://investor.lumenis.com. A telephone replay of the call will be available for 14 days following the call. To listen to the replay, please dial 888-203-1112 for United States-based callers and 719-457-0820 for international callers. The reservation code is 7078121. A replay of the webcast will be available on the investor relations page of the company's website.

About Lumenis

Lumenis is a global leader in the field of minimally-invasive clinical solutions for the Surgical, Ophthalmology and Aesthetic markets, and is a world-renowned expert in developing and commercializing innovative energy-based technologies, including Laser, Intense Pulsed Light (IPL) and Radio-Frequency (RF). For nearly 50 years, Lumenis' ground-breaking products have redefined medical treatments and have set numerous technological and clinical gold-standards.  Lumenis has successfully created solutions for previously untreatable conditions, as well as designed advanced technologies that have revolutionized existing treatment methods in each and every one of the verticals we operate in. Our drive for innovation stems from an uncompromising commitment to improving the health and well-being of our patients; addressing new and growing needs of aging populations; and in offering medical professionals cutting-edge solutions that fit seamlessly into the health-economics environment of the 21st century. The world over, we bring Energy to Healthcare. For more information visit: www.lumenis.com

Forward-Looking Statements

Information provided in this press release may contain statements relating to current expectations, estimates, forecasts and projections about future events that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include but are not limited to the Company's plans, objectives and expectations for future operations, including its projected results of operations. Forward-looking statements are often characterized by the use of forward-looking terminology such as “may,” “will,” “expect,” “anticipate,” “estimate,” “continue,” “believe,” “should,” “intend,” “plan,” “project” or other similar words, but are not the only way these statements are identified. These forward-looking statements are based upon our management's current estimates and projections of future results or trends. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including those risks discussed under the heading "Risk Factors" in our most recent Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission. These forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

LUMENIS LTD. AND SUBSIDIARIES

Total Revenue, By Geography

(unaudited)

(USD$, thousands)	Three Months Ended September 30,							Nine Months Ended September 30,
	2014		2013		Change			2014		2013		Change
Americas		23,710		23,853		(0.6	)%		67,227		67,660		(0.6	)%
APAC		27,389		22,962		19.3	%		73,035		63,177		15.6	%
EMEA		14,129		11,133		26.9	%		41,620		33,584		23.9	%
Japan		8,964		9,893		(9.4	)%*		30,605		29,841		2.6	%
Total Revenues		74,192		67,841		9.4	%		212,487		194,262		9.4	%
(*) -5.2% on a constant currency basis
LUMENIS LTD. AND SUBSIDIARIES
Total Revenue, By Segment
(unaudited)
(USD$, thousands)	Three Months Ended September 30,							Nine Months Ended September 30,
		2014		2013	Change				2014		2013	Change
Aesthetic		30,892		25,457		21.3	%		88,940		72,938		21.9	%
Surgical		28,215		26,038		8.4	%		79,583		75,907		4.8	%
Ophthalmic		15,085		16,346		(7.7	)%**		43,964		45,417		(3.2	)%
Total Revenues		74,192		67,841		9.4	%		212,487		194,262		9.4	%
(**) -6.4% on a constant currency basis

LUMENIS LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
U.S. dollars in thousands (except per share data)	2014		2013		2014		2013
Revenues:
Products	$	60,785	$	55,041	$	172,287	$	155,500
Services		13,407		12,800		40,200		38,762
Total Revenues		74,192		67,841		212,487		194,262
Cost of Revenues
Products		27,632		24,219		79,068		70,655
Services		6,892		6,306		20,090		20,303
Total cost of Revenues		34,524		30,525		99,158		90,958
Gross profit		39,668		37,316		113,329		103,304
Operating expenses:
Research and development, net		5,066		5,787		16,316		16,207
Selling and marketing		21,706		19,596		65,403		59,661
General and administrative (**)		5,764		5,351		17,780		14,814
Legal settlement, net		-		-		-		(6,692	)
Total Operating expenses		32,536		30,734		99,499		83,990
Operating  income:		7,132		6,582		13,830		19,314
Financial expenses, net		847		2,645		1,753		4,478
IPO related Bank Cash Fee		-		-		4,000		-
Total Financial Expenses		847		2,645		5,753		4,478
Tax expenses		761		569		2,172		2,145
Net Income	$	5,524	$	3,368	$	5,905	$	12,691
Net income per common shares:
Basic	$	0.15	$	0.12	$	0.17	$	0.44
Diluted	$	0.15	$	0.11	$	0.17	$	0.43
Weighted-average common shares outstanding:
Basic		35,705,211		28,982,409		34,071,931		28,982,338
Diluted		35,825,320		30,007,295		34,621,101		29,628,863

(**) General and administrative expenses for the nine months ended September 30, 2014, include IPO related expenses in the amount of $1,194.

LUMENIS LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30,		December 31,
U.S. dollars in thousands	2014		2013
ASSETS
Cash and cash equivalents	$	99,127	$	42,811
Trade receivables (net of allowance for doubtful accounts of $2,210 and $2,690 at September 30, 2014 and December 31, 2013, respectively).		44,557		42,867
Prepaid Expenses and other receivables		10,177		10,194
Inventories		41,491		36,075
Total Current Assets		195,352		131,947
Finished goods used in operations, net		6,090		4,793
Property and equipment, net		8,771		8,094
Goodwill		50,217		50,217
Severance pay fund		3,204		3,875
Other assets		7,094		7,519
Total Long-term assets		75,376		74,498
TOTAL ASSETS	$	270,728	$	206,445
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Restructured debt		17,004		17,493
Trade payables		30,600		24,553
Other accounts payable and accrued expenses		37,264		39,413
Deferred revenues and customers advances		20,609		19,057
Total current liabilities		105,477		100,516
Restructured debt		35,567		52,024
Accrued post-employment benefits		8,068		8,906
Deferred revenues		8,109		8,144
Other liabilities		19,085		19,155
Total long-term liabilities		70,829		88,229
TOTAL LIABILITIES		176,306		188,745
SHAREHOLDERS' EQUITY		94,422		17,700
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	270,728	$	206,445

LUMENIS LTD. AND SUBSIDIARIES

 Consolidated Statements of Cash Flows

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
U.S. dollars in thousands	2014			2013			2014			2013
Cash flows from operating activities:
Net income	$	5,524		$	3,368		$	5,905		$	12,691
Adjustments required to reconcile income to net cash  provided by operating activities:
Depreciation and amortization		2,124			1,771			5,321			4,483
Compensation related to employees stock option plan		666			570			2,109			1,390
Adjustments related to restructured debt		(810	)		677			1,558			(606	)
Revaluation of financial assets and other, net		484			(76	)		607			193
Deferred income taxes, net		202			298			659			877
Decrease (increase) in trade receivables, net		669			1,150			(2,167	)		(5,023	)
Decrease (increase) in inventories and finished goods used in operations		(1,831	)		(378	)		(10,231	)		285
Increase in prepaid expenses and other receivables		(1,366	)		(613	)		(381	)		(1,028	)
Increase (decrease) in trade payables		(3,150	)		78			5,859			6,251
Increase (decrease) in other accounts payables and accrued expenses (including short and long-term deferred revenues and customer advances)		465			(719	)		(3,762	)		2,291
Increase (decrease) in accrued post-employment benefits, net		(63	)		109			90			232
Increase (decrease) in other long term liabilities		(377	)		369			(11	)		1,235
Net cash provided by operating activities		2,537			6,604			5,556			23,271
Cash flows from investing activities:
Purchase of property and equipment		(893	)		(1,039	)		(3,049	)		(2,549	)
Investment in short & Long term bank deposits		(234	)		-			(344	)		-
Proceeds from maturity of short & Long term bank deposits		78			-			86			159
Net cash used in investing activities		(1,049	)		(1,039	)		(3,307	)		(2,390	)
Cash flows from financing activities:
Issuance of share capital, net		(521	)		-			67,295			-
Proceeds from exercise of share options		2,238			-			2,273			12
Repayments of long-term loans from bank		(15,000	)		(10,266	)		(15,000	)		(10,266	)
Net cash provided by (used in) financing activities		(13,283	)		(10,266	)		54,568			(10,254	)
Foreign currency translation adjustments related to Cash and cash equivalents		(726	)		439			(501	)		143
Increase (decrease) in cash and cash equivalents		(12,521	)		(4,262	)		56,316			10,770
Cash and cash equivalents at the beginning of the period		111,648			42,135			42,811			27,103
Cash and cash equivalents at the end of the period	$	99,127		$	37,873		$	99,127		$	37,873
Supplemental information and disclosures of non-cash investing and financing activities:
Issuance costs by utilizing prepayments		-			-			311			-
Purchase of property and equipment		254			-			254			-
Receivables for options exercised		371			-			371			-

Use of Non-GAAP Financial Measures:

The Company has presented the following non-GAAP financial measures in this press release: non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, adjusted EBITDA, non- GAAP net income per share and adjusted EBITDA margin.  The Company defines non-GAAP operating income as its reported operating income (GAAP) excluding stock-compensation expense, one-time charges and other non-recurring operating costs and expenses. The Company defines adjusted EBITDA as its non-GAAP net income before financial expenses, net, taxes on income, and excluding depreciation and amortization expense. The Company defines its non-GAAP net income to exclude non-recurring or unusual expenses.

LUMENIS LTD. AND SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP results

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
(U.S. dollars in thousands)	2014			2013			2014			2013
Table of Reconciliation from GAAP Gross Profit to Non-GAAP Gross Profit
GAAP Gross Profit	$	39,668		$	37,316		$	113,329		$	103,304
Stock-based compensation		39			27			121			99
Non-recurring items		-			(185	)		-			(185	)
Non-GAAP Gross Profit	$	39,707		$	37,158		$	113,450		$	103,218
Table of Reconciliation from GAAP Operating Income to Non-GAAP Operating Income and Adjusted EBITDA
GAAP Operating Income	$	7,132		$	6,582		$	13,830		$	19,314
Stock-based compensation		666			570			2,109			1,390
Legal settlement		250			-			250			(6,977	)
IPO related expenses		-			-			1,194			-
Other Non-recurring items		-			54			-			145
Non GAAP Operating Income		8,048			7,206			17,383			13,872
Depreciation and Amortization		2,124			1,532			5,321			4,244
Adjusted EBITDA (Non-GAAP)	$	10,172		$	8,738		$	22,704		$	18,116
Table of Reconciliation from GAAP Net Income to Non-GAAP Net Income
GAAP Net Income	$	5,524		$	3,368		$	5,905		$	12,691
Stock-based compensation		666			570			2,109			1,390
Legal settlements		250			-			250			(6,977	)
IPO related expenses		-			-			1,194			-
One-time payment to Bank Hapoalim BM		-			1,397			4,000			1,397
Revaluation of embedded derivatives and other non-recurring items		(487	)		377			(598	)		929
Non-GAAP Net Income	$	5,953		$	5,712		$	12,860		$	9,430
Table Comparing GAAP Diluted Net Income Per common Share to Non-GAAP Diluted Net Income Per Common Share
GAAP diluted net income per common share	$	0.15		$	0.11		$	0.17		$	0.43
Non-GAAP diluted net income per common share	$	0.17		$	0.19		$	0.37		$	0.32
Shares used in computing GAAP diluted net income per common share		35,825,320			30,007,295			34,621,101			29,628,863
Shares used in computing Non-GAAP diluted net income per common share		35,840,567			30,243,638			34,683,111			29,786,477