Exhibit 99.1
PhotoMedex Reports Third Quarter 2013 Financial Results
Conference Call Begins Today at 11:00 a.m. Eastern Time
MONTGOMERYVILLE, Pa.--(BUSINESS WIRE)--November 6, 2013--PhotoMedex, Inc. (NASDAQ:PHMD) today reported financial results for the three and nine months ended September 30, 2013.
Revenues for the third quarter of 2013 were $45.9 million, a decrease of 19.0% compared with revenues for the third quarter of 2012 of $56.7 million. The decline in revenues was primarily due to no consumer sales to the Company’s distributor in Japan in the third quarter of 2013 as this distributor implemented a change to its business model that affected most of the manufacturers it represents to retail channels, and determined to reduce inventory levels to mitigate investment risk during this transition. According to third-party data, no!no! product sales in Japan at the retail level during the third quarter of 2013 were comparable to the third quarter of 2012. Also contributing to the decline in revenues was the scheduling of a Home Shopping Network 24-hour event in the fourth quarter of 2013 that occurred in the third quarter of 2012. Had the revenue contributions from these two events remained at the second quarter levels, the third quarter revenues would have been approximately $13 million higher.
Management expects revenues for the fourth quarter of 2013 to be more than $55 million without any expected contribution from Japan.
Net income for the third quarter of 2013 was $0.9 million or $0.04 per diluted per share, which included $1.2 million in stock-based compensation expense and $1.6 million in depreciation and amortization expense. This compares with net income for the third quarter of 2012 of $7.5 million or $0.35 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 nine months ended September 30, 2013 were $161.2 million, a decrease of 2.8% compared with revenues for the nine months ended September 30, 2012 of $165.9 million.
Net income for the nine months ended September 30, 2013 was $15.2 million or $0.74 per diluted per share, which included $3.8 million in stock-based compensation expense and $4.5 million in depreciation and amortization expense. This compares with net income for the nine months ended September 30, 2012 of $16.6 million or $0.83 per diluted share, which included $4.8 million in stock-based compensation expense and $4.2 million in depreciation and amortization expense.
As of September 30, 2013 the Company had cash and cash equivalents of $49.0 million or $2.39 per diluted share, compared with $62.3 million as of December 31, 2012. During the third quarter of 2013 the Company repurchased 846,924 shares of its common stock under its Share Repurchase program at an average price of $16.05 per share, for a total of $13.6 million. Since the beginning of the year, the Company has repurchased 1,171,682 shares of its common stock for a total of $19.0 million, and has $25.2 million remaining available to repurchase shares under the $55 million board authorized program.
Dr. Dolev Rafaeli, PhotoMedex CEO, commented, “While a change in business model at our distributor in Japan impacted orders for the no!no! during the quarter, we are pleased that product demand from Japanese consumers held steady. In addition, a major beauty event on HSN that occurred in last year’s third quarter will take place this year in the fourth quarter. At this event last year, we sold a record number of no!no! products and we are looking forward to a similarly strong reception in December when we will offer the no!no! Pro, which has a higher average selling price.
“During the quarter we acquired a Brazilian distributor and subsequently launched the no!no! brand and recorded our first sales. Retail advertising in Brazil began last week, and we are excited to begin ramping up this next major phase of our growth strategy,” Dr. Rafaeli continued. “We continued to make progress in Germany with our no!no! brand and are on track to meet our expectations for 2014. Sales to Bed Bath & Beyond in the U.S. were as expected and in the coming months they will be upgrading from the no!no! Plus to the higher-priced 8800. Neova® consumer revenues were up more than five-fold over the prior year as testament to the success of our marketing platform.”
Dr. Rafaeli added, “XTRAC® was a particularly bright spot during the quarter, with treatment revenues up more than 90% over the prior year. We have been running advertising spots on national cable TV with heavier concentration in certain major metropolitan areas, and are seeing conversion rates of appointments scheduled through our call center running as high as 87%. We expect record revenues for XTRAC in the fourth quarter to exceed $5.0 million.”
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.
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 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 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:
| |
(Unaudited) |
| |
| | | | Three Months Ended September 30, | | | Nine Months Ended September 30, |
| (ooo's) except per share amounts | | | | 2013 | | | 2012 | | | 2013 | | | 2012 |
| | | | | | | | | | | | | |
| Net Income as reported | | | | $ | 886 | | | | $ | 7,525 | | | | $ | 15,192 | | | $ | 16,595 |
| | | | | | | | | | | | | |
| Adjustments: | | | | | | | | |
| Depreciation and amortization expense | | | | | 1,551 | | | | | 1,405 | | | | | 4,510 | | | | 4,176 |
| Interest expense, net | | | | | 1 | | | | | (6 | ) | | | | 10 | | | | 401 |
| Income tax expense (benefit) | | | | | (1,336 | ) | | | | 2,500 | | | | | 3072 | | | | 3,606 |
| | | | | | | | | | | | | |
| EBITDA | | | | $ | 1,102 | | | | $ | 11,424 | | | | $ | 22,784 | | | $ | 24,778 |
| | | | | | | | | | | | | |
| Stock-based compensation expense | | | | | 1,211 | | | | | 1,529 | | | | | 3,795 | | | | 4,817 |
| | | | | | | | | | | | | |
| Non-GAAP adjusted income | | | | $ | 2,313 | | | | $ | 12,953 | | | | $ | 26,579 | | | $ | 29,595 |
Common shares outstanding at | | | | | | | | | | | | | | | | | | | |
September 30, 2013 | | | | | 20,441 | | | | | 20,441 | | | | | 20,441 | | | | 21,477 |
| |
| Non-GAAP adjusted income per share | | | | $ | 0.11 | | | | $ | 0.63 | | | | $ | 1.30 | | | $ | 1.38 |
| |
Conference Call
PhotoMedex will hold a conference call to discuss the Company’s third quarter 2013 results and answer questions today, November 6, 2013 beginning at 11:00 a.m. Eastern time.
To participate in the conference call, dial toll-free 888-452-4023 or International/toll 719-457-2664 (and confirmation code # 5129582). For the convenience of our participants in Israel, a local/toll-free number (1-80-924-5906) has been set up (the confirmation code remains the same # 5129582). If you are unable to participate, a digital replay of the call will be available from Wednesday, November 6, from 2:00 p.m. ET to Wednesday, November 20, 2013 at 2:00 p.m. ET, 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 # 5129582.
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.
About PhotoMedex
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 --
| |
PHOTOMEDEX, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED) |
| |
| | | | Three Months Ended Sept. 30, | | | Nine Months Ended Sept. 30, |
| (ooo's) except per share amounts | | | | 2013 | | | 2012 | | | 2013 | | | 2012 |
| | | | | | | | | | | | | |
| Revenues | | | | $ | 45,893 | | | | $ | 56,681 | | | | $ | 161,174 | | | $ | 165,860 | |
| | | | | | | | | | | | | |
| Cost of revenues | | | | | 9,066 | | | | | 11,281 | | | | | 32,322 | | | | 34,870 | |
| Gross profit | | | | | 36,827 | | | | | 45,400 | | | | | 128,852 | | | | 130,990 | |
| | | | | | | | | | | | | |
| Operating expenses: | | | | | | | | | | | | | |
| Selling and marketing | | | | | 30,973 | | | | | 28,285 | | | | | 90,767 | | | | 85,188 | |
| General and administrative | | | | | 5,972 | | | | | 6,231 | | | | | 17,899 | | | | 22,593 | |
| Research and development and engineering | | | | | 805 | | | | | 628 | | | | | 2,392 | | | | 2,146 | |
| | | | | 37,750 | | | | | 35,144 | | | | | 111,058 | | | | 109,927 | |
| Operating income (loss) | | | | | (923 | ) | | | | 10,256 | | | | | 17,794 | | | | 21,063 | |
| Interest and other financing income (expense), net | | | | | 473 | | | | | (231 | ) | | | | 470 | | | | (862 | ) |
| | | | | | | | | | | | | |
| Income (loss) before taxes expense | | | | | (450 | ) | | | | 10,025 | | | | | 18,264 | | | | 20,201 | |
| | | | | | | | | | | | | |
| Income tax expense (benefit) | | | | | (1,336 | ) | | | | 2,500 | | | | | 3,072 | | | | 3,606 | |
| | | | | | | | | | | | | |
| Net income 1 | | | | $ | 886 | | | | $ | 7,525 | | | | $ | 15,192 | | | $ | 16,595 | |
| | | | | | | | | | | | | |
| Net income per share: | | | | | | | | | | | | | |
| Basic | | | | $ | 0.04 | | | | $ | 0.35 | | | | $ | 0.74 | | | $ | 0.83 | |
| Diluted | | | | $ | 0.04 | | | | $ | 0.35 | | | | $ | 0.72 | | | $ | 0.81 | |
| | | | | | | | | | | | | |
| Shares used in computing net income per share: | | | | | | | | | | | | | |
| Basic | | | | | 19,983 | | | | | 21,206 | | | | | 20,518 | | | | 20,001 | |
| Diluted | | | | | 20,441 | | | | | 21,753 | | | | | 20,977 | | | | 20,549 | |
| | | | | | | | | | | | | |
| 1 Includes: depreciation and amortization | | | | | 1,551 | | | | | 1,405 | | | | | 4,510 | | | | 4,176 | |
| Share-based compensation expense | | | | | 1,211 | | | | | 1,529 | | | | | 3,795 | | | | 4,817 | |
| |
| |
| PHOTOMEDEX, INC. |
| CONSOLIDATED STATEMENTS OF REVENUES |
(UNAUDITED) |
| |
| | | | For the Three Months Ended |
| | | | | September 30, 2013 | | | June 30, 2013 | | | September 30, 2012 |
| Consumer: | | | | | | | | | | |
| Direct | | | | $ | 29,351 | | | $ | 30,320 | | | $ | 30,001 |
| Distributors | | | | | 1,232 | | | | 8,435 | | | | 9,388 |
| Retailer and home shopping channels | | | | | 6,327 | | | | 9,918 | | | | 10,249 |
| sub-total | | | | | 36,910 | | | | 48,673 | | | | 49,638 |
| | | | | | | | | | |
| Physician Recurring | | | | | | | | | | |
| XTRAC treatments | | | | | 4,200 | | | | 4,024 | | | | 2,173 |
| Skin care | | | | | 1,882 | | | | 2,142 | | | | 1,907 |
| Other | | | | | 1,277 | | | | 1,210 | | | | 1,041 |
| sub-total | | | | | 7,359 | | | | 7,376 | | | | 5,121 |
| | | | | | | | | | |
| Professional | | | | | 1,624 | | | | 2,016 | | | | 1,922 |
| | | | | | | | | | |
| Total Revenues | | | | $ | 45,893 | | | $ | 58,065 | | | $ | 56,681 |
| |
| |
| PHOTOMEDEX, INC. |
| CONDENSED CONSOLIDATED BALANCE SHEETS |
| (UNAUDITED) |
| | | | | | | |
| | | | | | | |
| | | | September 30, 2013 | | | December 31, 2012 |
| Assets | | | | | | | |
| Cash, cash equivalents, and short-term investments | | | | $ | 48,951 | | | $ | 62,348 |
| Accounts receivable, net | | | | | 21,510 | | | | 19,064 |
| Inventories | | | | | 27,633 | | | | 22,467 |
| Other current assets | | | | | 31,759 | | | | 32,294 |
| Property and equipment, net | | | | | 10,001 | | | | 6,759 |
| Other non-current assets | | | | | 64,937 | | | | 68,958 |
| Total Assets | | | | $ | 204,791 | | | $ | 211,890 |
| | | | | | | |
| Liabilities and Stockholders' Equity | | | | | | | |
| Accounts payable and accrued liabilities | | | | $ | 27,510 | | | $ | 34,618 |
| Other current liabilities | | | | | 6,304 | | | | 5,259 |
| Bank and lease notes payable | | | | | 154 | | | | 619 |
| Other liabilities | | | | | 3,376 | | | | 4,067 |
| Stockholders' equity | | | | | 167,447 | | | | 167,327 |
| Total Liabilities and Stockholders' Equity | | | | $ | 204,791 | | | $ | 211,890 |
| |
| |
PHOTOMEDEX, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED) |
| |
| | | | For the Nine Months Ended |
| | | | September 30, |
| | | | | 2013 | | | 2012 |
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | |
| Net income | | | | $ | 15,192 | | | | $ | 16,595 | |
| | | | | | | |
| Adjustments to reconcile net income to net cash provided by operating activities- | | | | | | | |
| Depreciation and amortization | | | | | 4,510 | | | | | 4,176 | |
| Provision for doubtful accounts | | | | | 3,428 | | | | | 3,404 | |
| Deferred income taxes | | | | | 3,438 | | | | | (332 | ) |
| Stock-based compensation | | | | | 3,795 | | | | | 4,817 | |
| Changes in assets and liabilities: | | | | | | | |
| (Increase) decrease in-- | | | | | | | |
| Current Assets | | | | | (11,897 | ) | | | | (23,647 | ) |
| Current liabilities | | | | | (7,062 | ) | | | | 6,018 | |
| Net cash provided by operating activities | | | | | 11,404 | | | | | 11,031 | |
| | | | | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | |
| Proceeds (investment) in short-term deposits | | | | | (481 | ) | | | | (18,000 | ) |
| Lasers placed in service | | | | | (4,430 | ) | | | | (2,129 | ) |
| Purchases of PP&E, net | | | | | (710 | ) | | | | (277 | ) |
| Other | | | | | (104 | ) | | | | (34 | ) |
| Net cash used in investing activities | | | | | (5,725 | ) | | | | (20,440 | ) |
| | | | | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | |
| Proceeds from exercise of options/issuance of securities | | | | | (18,959 | ) | | | | 32,458 | |
| Repayments of debt | | | | | (652 | ) | | | | (2,457 | ) |
| Net cash (used in) provided by financing activities | | | | | (19,611 | ) | | | | 30,001 | |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH | | | | | 54 | | | | | (334 | ) |
| NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | | | | | (13,878 | ) | | | | 20,258 | |
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | | | | | 44,348 | | | | | 16,549 | |
| | | | | | | |
| CASH AND CASH EQUIVALENTS, END OF PERIOD | | | | $ | 30,470 | | | | $ | 36,807 | |
| | | | | | | |
| | | | | | | |
| Supplemental information: | | | | $ | 6,582 | | | | $ | 11,190 | |
| Cash paid for income taxes | | | | $ | 13 | | | | $ | 77 | |
| Cash paid for interest | | | | | | | |
| |
CONTACT:
LHA
Kim Sutton Golodetz, 212-838-3777
Kgolodetz@lhai.com
or
Bruce Voss, 310-691-7100
Bvoss@lhai.com
@LHA_IR_PR
or
PhotoMedex, Inc.
Dennis McGrath, 215-619-3287
Chief Financial Officer
info@photomedex.com
