Exhibit 99.1
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| |
NEWS RELEASE for August 3, 2006 at 4:00 pm EDT |
| |
Contact: | Allen & Caron | PhotoMedex, Inc. |
| Matt Clawson (investors) | Dennis McGrath, CFO |
| 949-474-4300 | 215-619-3287 |
| matt@allencaron.com | info@photomedex.com |
PHOTOMEDEX ANNOUNCES SECOND QUARTER 2006 RESULTS
XTRAC® Procedures Increase by 55% from Prior Year Second Quarter
Sequentially Company Gross Profit Increases 19%; Bottom Line Improves 43%
MONTGOMERYVILLE, PA – August 3, 2006 -- PhotoMedex, Inc. (NASDAQ: PHMD) today announced the results of its operations for the second quarter ended June 30, 2006. Revenues for the second quarter ended June 30, 2006 were $8,223,743, as compared to the revenues for the second quarter ended June 30, 2005 of $8,055,173.
XTRAC® procedures billed in this year’s second quarter increased 55 percent from 2005 second quarter levels. On a sequential basis, in the second quarter of 2006, XTRAC® revenue rose 25 percent from the levels reported in the first quarter of 2006.
Jeffrey O’Donnell, PhotoMedex CEO and President, commented, “We are encouraged by continued growth in XTRAC procedures in this year’s second quarter. Our marketing efforts are having a positive impact in our target areas, and with increased production levels, our margins have improved as planned. We are pleased with the progress made in the second quarter and are confident that we are on track to achieve our income prior to non-cash charges goal for the year.”
The net loss for the quarter ended June 30, 2006 was $1,339,931, or $(0.03) per fully diluted share, compared to a net loss for the second quarter of 2005 of $660,651, or $(0.01) per fully diluted share. This year’s second quarter net loss included charges for stock-based compensation expense of $431,768 and depreciation and amortization of $1,037,416. Last year’s second quarter loss included depreciation and amortization of $806,358. There was no employee stock-based compensation expense recorded for the three months ended June 30, 2005 because the adoption of the new accounting standard FAS 123R occurred on January 1, 2006. A reconciliation of non-GAAP financial measures used in this news release to GAAP financial measures, and a presentation of the most directly comparable GAAP financial measures is included below in the section on non-GAAP Measures.
Revenues for the six months ended June 30, 2006 were $16,304,905, as compared to the revenues for the six months ended June 30, 2005 of $13,038,505.
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PHOTOMEDEX ANNOUNCES SECOND QUARTER 2006 RESULTS
Page 2-2-2
The net loss for the six months ended June 30, 2006 was $3,690,192, or $(0.07) per fully diluted share, compared to a net loss for the first six months of last year of $1,788,763, or $(0.04) per fully diluted share. This year’s net loss included charges for stock-based compensation expense of $898,559 and depreciation and amortization of $2,054,511. Last year’s loss for the first six months included depreciation and amortization of $1,332,754. There was no employee stock-based compensation expense recorded for the six months ended June 30, 2005.
As of June 30, 2006, the Company had cash and cash equivalents of $4,300,509, including restricted cash of $168,167.
Non-GAAP Measures
To supplement PhotoMedex’s consolidated financial statements presented in accordance with GAAP, PhotoMedex has begun providing certain non-GAAP measures of financial performance. These non-GAAP measures include non-GAAP net loss and non-GAAP loss per fully diluted 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 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 its 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:
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PHOTOMEDEX ANNOUNCES SECOND QUARTER 2006 RESULTS
Page 3-3-3
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| For the three months ended June 30, |
| For the six months ended June 30, |
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| 2006 |
| 2005 |
| 2006 |
| 2005 |
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Net loss |
| $ | (1,339,931 | ) | $ | (660,651 | ) | $ | (3,690,192 | ) | $ | (1,788,763 | ) |
Adjustments |
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Stock-based compensation per FAS 123R |
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| 431,768 |
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| — |
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| 898,559 |
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| — |
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Depreciation and amortization |
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| 1,037,416 |
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| 806,358 |
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| 2,054,511 |
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| 1,332,754 |
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Other non-cash charges |
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| 14,718 |
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| 91,937 |
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| 87,682 |
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| 263,548 |
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Total adjustments |
| $ | 1,483,902 |
| $ | 898,295 |
| $ | 3,040,752 |
| $ | 1,596,302 |
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Non-GAAP adjusted income (loss) |
| $ | 143,971 |
| $ | 237,644 |
| $ | (649,440 | ) | $ | (192,461 | ) |
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Shares used in computing basic and fully diluted net loss per share |
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| 52,622,189 |
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| 50,859,562 |
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| 52,399,143 |
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| 46,322,904 |
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Non-GAAP adjusted loss per fully diluted share |
| $ | 0.003 |
| $ | 0.005 |
| $ | (0.012 | ) | $ | (0.004 | ) |
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Conference Call and Webcast Details
PhotoMedex will hold a conference call to discuss the Company’s second quarter 2006 results on Thursday, August 3 at 4:30 p.m. Eastern Daylight Savings Time.
To participate in the conference call, dial 877.502.9274 (and confirmation code # 4045966) 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, August 3, from 7:30 p.m. ET until midnight on Wednesday, August 16, by dialing 888.203.1112 and using confirmation code # 4045966.
The live broadcast of PhotoMedex’s quarterly conference call will be available online with an 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 approval 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®.
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PHOTOMEDEX ANNOUNCES SECOND QUARTER 2006 RESULTS
Page 4-4-4
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.
TABLES FOLLOW
PHOTOMEDEX ANNOUNCES SECOND QUARTER 2006 RESULTS
Page 5-5-5
PHOTOMEDEX, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
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| Three Months Ended June 30, |
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| Six Months Ended June 30, |
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| 2006 |
| 2005 |
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| 2006 |
| 2005 * |
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Revenues |
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| $ | 8,223,743 |
| $ | 8,055,173 |
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| $ | 16,304,905 |
| $ | 13,038,505 |
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Cost of sales |
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| 4,224,190 |
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| 4,222,190 |
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| 8,932,088 |
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| 6,854,558 |
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Gross profit |
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| 3,999,553 |
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| 3,832,983 |
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| 7,372,817 |
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| 6,183,947 |
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Operating expenses: |
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Selling, general and administrative |
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| 2 |
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| 4,946,458 |
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| 4,197,443 |
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| 10,306,636 |
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| 7,418,419 |
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Research and development and engineering |
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| 255,179 |
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| 327,939 |
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| 497,383 |
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| 514,910 |
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| 5,201,637 |
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| 4,525,382 |
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| 10,804,019 |
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| 7,933,329 |
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Loss from continuing operations before interest expense, net |
|
|
|
|
| (1,202,084 | ) |
| (692,399 | ) |
|
|
|
| (3,431,202 | ) |
| (1,749,382 | ) |
Other income |
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|
|
|
| — |
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| 88,667 |
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|
|
|
| — |
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| 88,667 |
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Interest expense, net |
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|
| (137,847 | ) |
| (56,919 | ) |
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| (258,990 | ) |
| (128,048 | ) |
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Net loss |
|
| 1, 2 |
| $ | (1,339,931 | ) | $ | (660,651 | ) |
| 1 |
| $ | (3,690,192 | ) | $ | (1,788,763 | ) |
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Basic and diluted net loss per share |
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| $ | (0.03 | ) | $ | (0.01 | ) |
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| $ | (0.07 | ) | $ | (0.04 | ) |
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Shares used in computing basic and diluted net loss per share |
|
|
|
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| 52,622,189 |
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| 50,859,562 |
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| 52,399,143 |
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| 46,322,904 |
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1 Includes depreciation and amortization |
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| $ | 1,037,416 |
| $ | 806,358 |
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| $ | 2,054,511 |
| $ | 1,332,754 |
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2 Includes share-based compensation expense |
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| $ | 431,768 |
| $ | — |
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| $ | 898,559 |
| $ | — |
|
* PhotoMedex, Inc. acquired ProCyte Corporation (“ProCyte”) on March 18, 2005 and, as such, the operating results of ProCyte for the six months ended June 30, 2005 include activity from ProCyte from March 19, 2005 through June 30, 2005. |
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PHOTOMEDEX ANNOUNCES SECOND QUARTER 2006 RESULTS
Page 6-6-6
PHOTOMEDEX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
|
| June 30, |
| December 31, |
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Assets |
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Cash and cash equivalents |
| $ | 4,300,509 |
| $ | 5,609,967 |
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Accounts receivable, net |
|
| 4,864,419 |
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| 4,651,080 |
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Inventories |
|
| 8,162,387 |
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| 8,047,444 |
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Other current assets |
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| 1,146,040 |
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| 621,372 |
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Property and equipment, net |
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| 7,660,217 |
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| 7,044,713 |
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Intangibles and other assets |
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| 23,321,983 |
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| 22,701,030 |
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Total Assets |
| $ | 49,455,555 |
| $ | 48,675,606 |
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Liabilities and Stockholders’ Equity |
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Accounts payable and accrued liabilities |
| $ | 5,736,808 |
| $ | 5,171,387 |
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Other current liabilities |
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| 773,032 |
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| 670,740 |
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Bank and lease notes payable |
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| 6,389,089 |
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| 4,416,451 |
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Stockholders’ equity |
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| 36,556,626 |
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| 38,417,028 |
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Total Liabilities and Stockholders’ Equity |
| $ | 49,455,555 |
| $ | 48,675,606 |
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PHOTOMEDEX ANNOUNCES SECOND QUARTER 2006 RESULTS
Page 7-7-7
PHOTOMEDEX, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
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| Three Months Ended June 30, |
| Six Months Ended June 30, |
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| 2006 |
| 2005 |
| 2006 |
| 2005 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net loss |
| $ | (1,339,931 | ) | $ | (660,651 | ) | $ | (3,690,192 | ) | $ | (1,788,763 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
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| 1,037,416 |
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| 806,358 |
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| 2,054,511 |
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| 1,332,754 |
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Stock-based compensation expense related to employee options and restricted stock |
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| 431,768 |
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| — |
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| 898,559 |
|
| — |
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Provision for bad debts |
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| — |
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| 108,712 |
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| 58,246 |
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| 276,124 |
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Other |
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| 14,718 |
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| (16,775 | ) |
| 29,436 |
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| (12,576 | ) |
Changes in assets and liabilities: |
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(Increase) decrease in: |
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Accounts receivables |
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| (126,936 | ) |
| 90,926 |
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| (271,585 | ) |
| 232,694 |
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Inventories |
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| (556,675 | ) |
| 181,735 |
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| (27,785 | ) |
| (587,401 | ) |
Prepaid expenses and other assets |
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| 273,813 |
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| 243,184 |
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| 367,049 |
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| 435,313 |
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Increase (decrease) in: |
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Accounts payable & other accrued expenses |
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| (581,158 | ) |
| (1,676,471 | ) |
| 150,078 |
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| (2,416,410 | ) |
Deferred revenues |
|
| 64,615 |
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| (23,074 | ) |
| 170,707 |
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| (105,757 | ) |
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Net cash used in operating activities |
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| (782,370 | ) |
| (946,056 | ) |
| (260,976 | ) |
| (2,634,022 | ) |
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
| (1,042,222 | ) |
| (1,446,288 | ) |
| (2,132,755 | ) |
| 3,789,271 |
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
| 498,622 |
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| 617,743 |
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| 1,123,037 |
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| 473,249 |
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NET INCREASE IN CASH |
|
| (1,325,970 | ) |
| (1,774,601 | ) |
| (1,270,694 | ) |
| 1,628,498 |
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CASH, AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
|
| 5,458,312 |
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| 7,287,916 |
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| 5,403,036 |
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| 3,884,817 |
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CASH, AND CASH EQUIVALENTS, END OF PERIOD |
|
| 4,132,342 |
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| 5,513,315 |
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| 4,132,342 |
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| 5,513,315 |
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RESTRICTED CASH |
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| 168,167 |
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| 206,802 |
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| 168,167 |
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| 206,802 |
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TOTAL |
| $ | 4,300,509 |
| $ | 5,720,117 |
| $ | 4,300,509 |
| $ | 5,720,117 |
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PHOTOMEDEX ANNOUNCES SECOND QUARTER 2006 RESULTS
Page 8-8-8
The following table compares unaudited XTRAC® domestic treatment activity and revenues for the last ten quarters:
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| (000’s) |
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| (000’s) |
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| (000’s) |
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Quarterly Treatments |
| Billed |
| Unbilled |
| Deferred |
| Recognized |
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| $ |
| tx# |
| Rate/tx |
| tx# |
| $ |
| tx# |
| $ |
| tx# |
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2Q06 |
|
| 22,844 |
| $ | 1,409.8 |
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| 21,365 |
| $ | 65.99 |
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| 1,479 |
| $ | (82 | ) |
| (1,237 | ) | $ | 1,328.2 |
|
| 21,607 |
|
1Q06 |
|
| 19,933 |
| $ | 1,220.8 |
|
| 18,760 |
| $ | 65.07 |
|
| 1,173 |
| $ | (161 | ) |
| (2,476 | ) | $ | 1,059.6 |
|
| 17,457 |
|
4Q05 |
|
| 17,015 |
| $ | 1,020.0 |
|
| 15,264 |
| $ | 66.82 |
|
| 1,751 |
| $ | (64 | ) |
| (984 | ) | $ | 956.0 |
|
| 16,031 |
|
3Q05 |
|
| 15,690 |
| $ | 916.0 |
|
| 13,876 |
| $ | 66.01 |
|
| 1,814 |
| $ | 103 |
|
| 1,556 |
| $ | 1,018.7 |
|
| 17,246 |
|
2Q05 |
|
| 15,503 |
| $ | 901.0 |
|
| 13,811 |
| $ | 65.24 |
|
| 1,692 |
| $ | (12 | ) |
| (187 | ) | $ | 889.0 |
|
| 15,316 |
|
1Q05 |
|
| 12,418 |
| $ | 750.0 |
|
| 11,304 |
| $ | 66.35 |
|
| 1,114 |
| $ | (116 | ) |
| (1,753 | ) | $ | 634.0 |
|
| 10,665 |
|
4Q04 |
|
| 14,499 |
| $ | 846.0 |
|
| 12,640 |
| $ | 66.93 |
|
| 1,859 |
| $ | 194 |
|
| 2,760 |
| $ | 1,040.0 |
|
| 17,259 |
|
3Q04 |
|
| 13,841 |
| $ | 840.0 |
|
| 12,672 |
| $ | 66.29 |
|
| 1,169 |
| $ | 105 |
|
| 1,597 |
| $ | 945.0 |
|
| 15,438 |
|
2Q04 |
|
| 12,688 |
| $ | 821.0 |
|
| 11,878 |
| $ | 69.12 |
|
| 810 |
| $ | (102 | ) |
| (1,472 | ) | $ | 719.0 |
|
| 11,216 |
|
1Q04 |
|
| 10,737 |
| $ | 675.0 |
|
| 9,647 |
| $ | 69.97 |
|
| 1,090 |
| $ | (125 | ) |
| (1,775 | ) | $ | 550.0 |
|
| 8,962 |
|
# # # #