CONTACTS: | PhotoMedex, Inc. |
| Lippert/Heilshorn & Associates, Inc. | Dennis McGrath, CFO |
| Kim Sutton Golodetz (investors) | |
| 212-838-3777 | |
Kgolodetz@lhai.com | |
| Bruce Voss, 310-691-7100 | |
Bvoss@lhai.com | |
PHOTOMEDEX REPORTS 2006 FOURTH QUARTER AND FULL YEAR RESULTS
MONTGOMERYVILLE, Pa. - March 1, 2007 - PhotoMedex, Inc. (NASDAQ: PHMD) today announced financial and operating results for the three and 12 months ended December 31, 2006. Financial highlights of the 2006 fourth quarter include:
| · | XTRAC® procedures up 51% from the prior-year fourth quarter and up 15% sequentially |
| · | XTRAC® revenues up 63% from the prior-year fourth quarter |
| · | XTRAC® gross profit up 85% from the prior-year fourth quarter |
| · | Dermatology division revenues up 37% from the prior-year fourth quarter |
| · | Total revenues up 11.3% to $8,593,425, from $7,722,166 in the fourth quarter of 2005. |
“Our dermatology business continues to achieve steady sales growth, which supported expansion of our sales force in both the ProCyte and XTRAC segments. We also have established a clinical specialist team to enhance and enable further growth in this business,” said Jeffrey O’Donnell, PhotoMedex President and CEO. “We believe that this new infrastructure will allow us to sustain the momentum we created in 2006 throughout 2007. More specifically, we believe that our new field infrastructure will achieve XTRAC sales growth in 2007 consistent with the 60% growth of 2006 and will be able to handle accelerated growth that could be generated through beneficial market dynamics such as additional insurance acceptance of the XTRAC excimer laser for the treatment of psoriasis. We anticipate that 2007 total revenues will increase 15% to 20% compared with 2006.”
Mr. O’Donnell added, “PhotoMedex had a strong showing at the 65th Annual American Academy of Dermatology Conference in Washington, D.C., last month, our most important medical conference of the year. Copper Peptide was featured in one skincare products presentation and the XTRAC for treatment of psoriasis was featured in eight podium presentations. We received more than 300 strong leads from physicians attending the conference, which we are currently in the process of following up. I was very pleased with the excitement and interest created at the conference by the key opinion leader physicians who made podium presentations on their clinical results with the XTRAC laser system.”
The net loss for the fourth quarter of 2006 was $2,109,169, or $0.04 per share, compared with a net loss for the fourth quarter of 2005 of $797,381, or $0.02 per share. The 2006 fourth quarter net loss included non-cash charges for stock-based compensation expense of $189,059 and depreciation and amortization of $1,097,358. The 2005 fourth quarter net loss included depreciation and amortization of $988,042; there was no stock-based compensation expense recorded in the 2005 fourth quarter because the adoption of the new accounting standard FAS 123R occurred on January 1, 2006. A reconciliation of non-GAAP financial measures to GAAP financial measures, and a presentation of the most directly comparable GAAP financial measures is included below under Non-GAAP Measures.
Revenues for the year ended December 31, 2006 were $33,189,877, compared with revenues for the year ended December 31, 2005 of $28,384,506, an increase of 16.9%.
The net loss for 2006 was $7,492,397, or $0.14 per share, compared with a net loss for 2005 of $3,936,044, or $0.08 per share. The 2006 net loss included non-cash charges for stock-based compensation expense of $1,437,170 and depreciation and amortization of $4,199,047. The 2005 net loss included depreciation and amortization of $3,217,200; there was no stock-based compensation expense recorded in 2005.
As of December 31, 2006, the Company had cash and cash equivalents of $12,885,742, including restricted cash of $156,000.
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 net loss and non-GAAP loss 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 information due to the adoption of the new accounting standard FAS 123R.
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 that exclude stock-based compensation expense 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 December 31, | | | Year Ended December 31, | |
Net Loss (as reported) | | $ | (2,109,169 | ) | $ | (797,381 | ) | $ | (7,492,397 | ) | $ | (3,936,044 | ) |
| Adjustments: | | | | | | | | | | | | | |
| Stock-based compensation expense | | | 189,059 | | | - | | | 1,437,170 | | | - | |
| Depreciation and amortization expense | | | 1,097,358 | | | 988,042 | | | 4,199,047 | | | 3,217,200 | |
| Other non-cash charges | | | 18,692 | | | 227,299 | | | 129,058 | | | 586,300 | |
| Other income from Settlement of subordinated notes | | | - | | | - | | | | | | (244,988 | ) |
| Other income from Legal settlement | | | - | | | (1,500,000 | ) | | - | | | (1,500,000 | ) |
| Total adjustments | | | 1,305,109 | | | (284,659 | ) | | 5,765,275 | | | 2,058,512 | |
Non-GAAP adjusted income (loss) | | $ | (804,060 | ) | $ | (1,082,040 | ) | $ | (1,727,122 | ) | $ | (1,877,532 | ) |
| | | | | | | | | | | | | | |
| Shares used in computing basic and diluted net loss per share | | | 59,239,878 | | | 51,322,000 | | | 54,188,914 | | | 48,786,109 | |
| | | | | | | | | | | | | | |
| Non-GAAP adjusted loss per share | | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.03 | ) | $ | (0.03 | ) |
Achievements:
The following were among the more notable achievements in 2006:
Reimbursement:
| · | Blue Cross Blue Shield of Florida, with 3.8 million health plan members, adopted XTRAC reimbursement |
| · | Pennsylvania Independence Blue Cross, with 3.5 million medical members, implemented XTRAC reimbursement |
| · | Highmark Blue Cross, with 4.1 million members, implemented XTRAC reimbursement |
| · | Initiated a clinical trial for severe psoriasis using the XTRAC at the University of California, San Francisco |
Financial:
| · | Completed private placement of Company securities raising $11.4 million in net proceeds |
| · | Awarded national contract to provide Surgical Services to more than 200 hospitals |
| · | Ranked No. 1 by Institutional Shareholder Services in Corporate Governance Practices in Philadelphia Region |
| · | Presented at 6 investment banking conferences |
Operations:
| · | Expanded XTRAC sales organization |
| · | Added XTRAC clinical specialists to organization |
| · | Launched new corporate web site |
New Product Development and Licensing:
| · | Issued new U.S. patent for XTRAC hand-piece |
| �� | Licensed vitiligo patent from Mt. Sinai School of Medicine |
| · | Launched VTRAC, an international lamp-based UVB phototherapy system |
| · | Launched the Diode laser system and reached significant revenue milestones |
Conference Call
PhotoMedex will hold a conference call to discuss the Company's fourth quarter and full year 2006 results today, Thursday, March 1, 2007 at 4:30 p.m. Eastern Time. To participate in the conference call, dial 800-811-8824 (and confirmation code # 9818542) approximately 5 to 10 minutes prior to the scheduled start time. If you are unable to participate, a digital replay of the call will be available from Thursday, March 1, from 7:30 p.m. ET until midnight on Wednesday, March 14, by dialing 888-203-1112 and using confirmation code # 9818542.
A live broadcast of the PhotoMedex, Inc.'s quarterly conference call will be available online with accompanying slide presentation 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 call at those sites.
About PhotoMedex
PhotoMedex is engaged in the development of proprietary excimer laser and fiber optic systems and techniques directed toward dermatological applications, with FDA clearance to market the XTRAC® laser system for the treatment of psoriasis, vitiligo, atopic dermatitis and leukoderma. In addition, the Company provides contract medical procedures to hospitals, surgi-centers and doctors' offices, offering a wide range of products and services across multiple specialty areas, including dermatology, urology, gynecology, orthopedics, and other surgical specialties. The Company is a leader in the development, manufacturing and marketing of medical laser products and services. In addition, as a result of the merger with ProCyte, PhotoMedex now develops and markets products based on its patented, clinically proven Copper Peptide technology for skin health, hair care and wound care. PhotoMedex sells directly to dermatologists, plastic and cosmetic surgeons, spas and salons and through licenses with strategic partners into the consumer market, including a long-term worldwide license agreement with Neutrogena®, a Johnson & Johnson company. ProCyte brands include Neova®, Ti-Silc®, VitalCopper®, Simple Solutions® and AquaSanté®.
SAFE HARBOR STATEMENT
Some paragraphs of this press release, particularly those describing PhotoMedex' strategies, contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1993, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. While PhotoMedex is working to achieve those goals and strategies, actual results could differ materially from those projected in the forward-looking statements as a result of a number of factors, including difficulties in marketing its products and services, need for capital, competition from other companies and other factors, any of which could have an adverse effect on the business plans of PhotoMedex, its reputation in the industry or its expected financial return from operations. Factors such as these could have an adverse effect on PhotoMedex' results of operations. In light of significant uncertainties inherent in forward-looking statements included herein, the inclusion of such statements should not be regarded as a representation by PhotoMedex and its subsidiaries that they will achieve such forward-looking statements.
-- Financial Statements follow --
| |
| CONSOLIDATED STATEMENTS OF OPERATIONS | |
| (Unaudited) | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | Three Months Ended December 31, | | Year Ended December 31, | |
| | | 2006 | | 2005 | | 2006 | | 2005 * | |
| | | | | | | | | | |
| Revenues | | $ | 8,593,425 | | $ | 7,722,166 | | $ | 33,189,877 | | $ | 28,384,506 | |
| | | | | | | | | | | | | | |
| Cost of Sales | | | 4,880,826 | | | 4,517,561 | | | 18,471,850 | | | 15,675,505 | |
| Gross profit | | | 3,712,599 | | | 3,204,605 | | | 14,718,027 | | | 12,709,001 | |
| | | | | | | | | | | | | | |
| Operating expenses: | | | | | | | | | | | | | |
| Selling, general and administrative | | | 5,476,015 | | | 4,532,729 | | | 20,682,056 | | | 16,477,322 | |
| Research and development and engineering | | | 242,155 | | | 308,116 | | | 1,006,600 | | | 1,127,961 | |
| | | | 5,718,170 | | | 4,840,845 | | | 21,688,656 | | | 17,605,283 | |
| Loss from operations before other income and | | | | | | | | | | | | | |
| interest expense, net | | | (2,005,571 | ) | | (1,636,240 | ) | | (6,970,629 | ) | | (4,896,282 | ) |
| | | | | | | | | | | | | | |
| Other income | | | - | | | 968,882 | | | - | | | 1,302,537 | |
| Interest expense, net | | | (103,598 | ) | | (130,023 | ) | | (521,768 | ) | | (342,299 | ) |
| | | | | | | | | | | | | | |
| Net loss | 1 | $ | (2,109,169 | ) | $ | (797,381 | )1 | $ | (7,492,397 | ) | $ | (3,936,044 | ) |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Basic and diluted net loss per share | | $ | (0.04 | ) | $ | (0.02 | ) | $ | (0.14 | ) | $ | (0.08 | ) |
| | | | | | | | | | | | | | |
| Shares used in computing basic and diluted | | | | | | | | | | | | | |
| net loss per share | | | 59,239,878 | | | 51,322,000 | | | 54,188,914 | | | 48,786,109 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
1 Includes Depreciation and Amortization | | $ | 1,097,358 | | $ | 988,042 | | $ | 4,199,047 | | $ | 3,217,200 | |
| | | | | | | | | | | | | | |
Share-based compensation expense | | $ | 189,059 | | | - | | $ | 1,437,170 | | | - | |
