SYNERON MEDICAL LTD. IRVINE, Calif., May 17, 2017 /PRNewswire/ -- Syneron Medical Ltd. (NASDAQ: ELOS), a leading global aesthetic device company, today announced financial results for the three month period ended March 31, 2017.
First Quarter 2017 Financial Highlights:
-- Revenue of $66.9 million, down 2.6% year-over-year
-- Product revenue down 4.2% year-over-year
-- International product revenue grew 7.7% year-over-year while North
America product revenue declined 31.7% year-over-year as a result of the
sales force reorganization
-- Revenue from emerging products(1), which represent the Company's
strategic growth drivers, grew 3.5% year-over-year to $14.1 million
-- GAAP net loss per share of $(0.14), compared to GAAP net loss per share
of $(0.01) in first quarter of 2016
-- Non-GAAP net loss per share of $(0.05), compared to Non-GAAP net income
per share of $0.04 in first quarter of 2016
-- Cash position as of March 31, 2017 of $78.8 million with no debt
Amit Meridor, Chief Executive Officer of Syneron Medical, said, "During the first quarter, our revenue declined due to lower product revenue in North America, primarily due to our sales force reorganization in North America, which has caused some short-term disruption in order to position the business for long-term growth. This disruption also impacted our emerging products, with growth slowing to 4% and representing 21% of total revenue in the quarter. We also had a decline in EMEA product revenue of 13% due to challenges with some of our subsidiaries in countries where we sell direct. These headwinds were partially offset by continued strong double-digit product revenue growth of 18% in the Asia-Pacific region. Late in the quarter, we received CE Mark for CO2RE Intima, making it the first in-office laser procedure now CE marked for the treatment of vaginal atrophy and rejuvenation, and providing a new growth opportunity in EMEA."
Financial Highlights for the First Quarter Ended March 31, 2017:
GAAP Gross Margin for the first quarter 2017 was 51.2%, compared to 51.8% in the first quarter 2016. Non-GAAP gross margin for the first quarter 2017 was 52.3%, compared to 53.2% in the first quarter 2016. This reflects lower total revenue, a higher mix of distributor revenue, and differences in product mix, compared to the first quarter 2016.
GAAP Operating Loss for the first quarter 2017 was $(3.9) million, compared to GAAP operating loss of $(0.3) million in the first quarter 2016. Non-GAAP operating loss for the first quarter 2017 was $(0.5) million, compared to non-GAAP operating income of $1.8 million in the first quarter 2016. GAAP operating margin for the first quarter 2017 was (5.8)%, compared to GAAP operating margin of (0.4)% for the first quarter 2016. Non-GAAP operating margin for the first quarter 2017 was (0.7)%, compared to Non-GAAP operating margin of 2.6% in the first quarter 2016. This decrease reflects lower total revenue, lower gross margin, and the reorganization of the Company's North America sales and marketing team, partially offset by cost efficiencies, and revenue growth from several of the Company's existing international distribution channels.
GAAP Net Loss in the first quarter 2017 was $(4.8) million, or $(0.14) per share, compared to GAAP net loss of $(0.5) million, or $(0.01) per share, in the first quarter 2016. Non-GAAP net loss in the first quarter 2017 was $(1.6) million, or $(0.05) per share, compared to non-GAAP net income of $1.3 million, or $0.04 per share, in the first quarter 2016.
Cash Position As of March 31, 2017, the Company's overall cash position, including cash and cash equivalents, short-term bank deposits and marketable securities, was $78.8 million, compared to $86.4 million as of December 31, 2016, with no debt.
Subsequent Events
On April 2, 2017, Syneron Candela and Apax Partners, a leading global private equity advisory firm, entered into a definitive agreement under which an affiliate of funds advised by Apax Partners will acquire all of the outstanding shares of Syneron Candela for $11.00 per share in cash in a transaction valued at approximately $397 million.
Syneron Candela will hold a Special General Meeting of its shareholders to vote on the adoption and approval of the merger proposal. The Special General Meeting will take place on Thursday, June 15, 2017 at 3:00 p.m. (Israel time), at the Company's executive offices located at Industrial Zone, Tavor Building, P.O.B. 550, Yokneam Illit 20692, Israel. The acquisition is expected to be completed during the third quarter of 2017, subject to Syneron Candela shareholder approval and the satisfaction of other customary closing conditions.
Syneron Candela will not be hosting a first quarter 2017 conference call due to the definitive agreement to be acquired by an affiliate of funds advised by Apax Partners.
Important Additional Information about This Transaction and Where to find it
In connection with the proposed transaction, Syneron Candela filed a definitive proxy statement on Form 6-K with the SEC on May 15, 2017 and mailed the definitive proxy statement and proxy card to its shareholders on or about the same date. Shareholders of Syneron Candela are urged to read the definitive proxy statement, including any document incorporated therein by reference and the attachments thereto, because they contain important information about Syneron Candela, Apax Partners, the proposed transaction and related matters. Shareholders are urged to carefully read the definitive proxy statement and other relevant materials before making any voting or investment decision with respect to the proposed transaction. The definitive proxy statement may be obtained for free at the SEC's website at www.sec.gov. In addition, the definitive proxy statement is available, without charge, at Syneron Candela's website at http://www.syneron-candela.com.
Use of Non-GAAP Measures:
This press release provides financial measures for gross margin, operating income (loss), operating margin, net income (loss) and net income (loss) per share, which exclude expenses related to stock-based compensation expense, amortization of acquired intangible assets, Apax Partner's deal related costs, and tax benefit, and are therefore not calculated in accordance with Generally Accepted Accounting Principles (GAAP).
Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance because it reflects our ongoing operational results, operating income (loss), net income (loss) and net income (loss) per share, and exclude the impact of items or trends that are not considered core influences on the results of operations, financial position or cash flows. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for or superior to the financial information prepared and presented in accordance with GAAP. Management uses non-GAAP measures to make operational and investment decisions and to evaluate the Company's performance and, therefore, believes it important to make these non-GAAP adjustments available to investors. A reconciliation of each GAAP to non-GAAP financial measure discussed in this press release is contained in the accompanying financial tables.
About Syneron Candela:
Syneron Candela is a leading global aesthetic device company with a comprehensive product portfolio and a global distribution footprint. The Company's technology enables physicians to provide advanced solutions for a broad range of medical-aesthetic applications including body contouring, hair removal, wrinkle reduction, tattoo removal, women's intimate wellness treatments, improving the skin's appearance through the treatment of superficial benign vascular and pigmented lesions, and the treatment of acne, leg veins and cellulite. The Company has a wide portfolio of trusted, leading products including UltraShape, VelaShape, GentleLase, VBeam Perfecta, PicoWay, CO(2)RE, CO(2)RE Intima, Profound and el?s Plus.
Founded in 2000, the company markets, services and supports its products in 86 countries. It has offices in North America, France, Germany, Italy, Portugal, Spain, UK, Australia, China, Japan, and Hong Kong and distributors worldwide.
Syneron, the Syneron logo, UltraShape, eMatrix and elos are trademarks of Syneron Medical Ltd. and may be registered in certain jurisdictions. The elos (Electro-Optical Synergy) technology is a proprietary technology of Syneron Medical Ltd. All other names are the property of their respective owners.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties, including the statement about the anticipated closing of the proposed acquisition of the Company by an affiliate of funds advised by Apax Partners. Such "forward looking statements" involve known and unknown risks, uncertainties and other factors that may cause actual results or performance to differ materially from those projected. Achievement of these results by the Company may be affected by many factors, including, but not limited to, risks and uncertainties regarding the ability to close the proposed transaction on the proposed terms and within the anticipated time period, or at all, which is dependent on the parties' ability to satisfy certain closing conditions, including shareholder and regulatory approvals? the risk that the benefits of the potential transaction may not be fully realized or may take longer to realize than expected? disruption from the transaction making it more difficult to maintain relationships with customers, employees or suppliers; the risk that the Company's business may not perform as expected; as well as general economic conditions. Additional information regarding these and other factors is contained in the Company's filings with the SEC, including those described in the Company's most recent Annual Report on Form 20-F. The statements made by the Company are based upon management's current expectations and the Company undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this release except as required by law.
(1) Emerging Products, which represent the Company's strategic growth drivers, include product and consumable revenue from UltraShape, VelaShape, PicoWay, Profound and CO(2)RE Intima
Syneron Medical Ltd.
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share data)
For the three-months ended
--------------------------
March 31, March 31,
2017 2016
---- ----
Revenues $66,880 $68,696
Cost of revenues 32,661 33,081
------ ------
Gross profit 34,219 35,615
Operating expenses:
Sales and marketing 24,020 22,698
General and administrative 6,080 7,498
Research and development 6,205 5,714
Other expenses, net 1,765 -
Total operating expenses 38,070 35,910
------ ------
Operating loss (3,851) (295)
Financial income (expenses), net (742) 85
Net loss before taxes on income (4,593) (210)
Taxes on income 236 272
--- ---
Net loss $(4,829) $(482)
======= =====
Net loss per share:
Basic and diluted
Net loss per share $(0.14) $(0.01)
Weighted average shares outstanding:
Basic and diluted 34,899 34,842
Syneron Medical Ltd.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
March 31, December 31,
2017 2016 (*)
---- -------
Assets
Current assets:
Cash and cash equivalents $44,373 $56,756
Short-term bank deposits 331 326
Available-for-sale marketable securities 8,543 10,817
Trade receivable, net 55,105 57,337
Other accounts receivables and prepaid expenses 14,213 12,587
Inventories 55,388 47,376
Total current assets 177,953 185,199
------- -------
Long-term assets:
Severance pay fund 446 479
Long-term deposits and others 296 312
Long-term available-for-sale marketable securities 25,518 18,522
Investment in affiliated company 16,709 15,730
Property and equipment, net 12,835 12,529
Deferred tax assets, net 17,868 17,640
Intangible assets, net 7,655 8,516
Goodwill 18,258 18,258
Total long-term assets 99,585 91,986
------ ------
Total assets $277,538 $277,185
======== ========
Liabilities and stockholders' equity
Current liabilities:
Trade payable $22,445 $22,659
Deferred revenues 13,789 12,838
Other accounts payable and accrued expenses 30,209 28,976
Total current liabilities 66,443 64,473
------ ------
Long-term liabilities:
Deferred revenues 2,730 2,939
Warranty accruals 1,810 1,794
Accrued severance pay 496 559
Total long-term liabilities 5,036 5,292
----- -----
Stockholders' equity: 206,059 207,420
------- -------
Total liabilities and stockholders' equity $277,538 $277,185
======== ========
(*) Derived from audited financial statements
Syneron Medical Ltd.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
For the three-months ended
--------------------------
March 31, March 31,
2017 2016
---- ----
Cash flows from operating activities:
Net loss $(4,829) $(482)
Adjustments to reconcile net loss to net cash
used in operating
activities:
Share-based compensation 757 933
Depreciation and amortization 2,305 2,003
Realized loss, changes in accrued interest and
amortization 73 334
of premium on marketable securities
Changes in operating assets and
liabilities:
--------------------------------
Trade receivable, net 2,856 (4,914)
Inventories (7,758) (1,001)
Other accounts receivables and prepaid
expenses (1,246) 928
Deferred taxes (171) (125)
Trade payable (921) (414)
Deferred revenues 569 377
Accrued warranty accruals (361) (542)
Other accounts payable and accrued expenses 1,390 (5,026)
----- ------
Net cash used in operating activities (7,336) (7,929)
------ ------
Cash flows from investing activities:
Purchases of property and equipment (1,027) (994)
Purchases of Intangible asset - (150)
Proceeds from the sale or maturity of marketable
securities 5,702 13,279
Purchase of marketable securities (10,504) (6,531)
Proceeds from short-term bank deposits, net (5) 15
Investment in affiliated company (980) (1,088)
Other investing activities 16 9
--- ---
Net cash provided by (used in) investing activities (6,798) 4,540
------ -----
Cash flows from financing activities:
Repurchase of shares from shareholders - (3,925)
Proceeds from exercise of stock options 1,755 -
----- ---
Net cash provided by (used in) financing activities 1,755 (3,925)
----- ------
Effect of exchange rates on cash and cash equivalents (4) (222)
--- ----
Net decrease in cash and cash equivalents (12,383) (7,536)
Cash and cash equivalents at beginning of period 56,756 56,330
------ ------
Cash and cash equivalents at end of period $44,373 $48,794
======= =======
Syneron Medical Ltd.
Reconciliation of unaudited GAAP to Non GAAP financial measures
(in thousands, except per share data)
For the three-months ended
--------------------------
March 31, March 31,
2017 2016
---- ----
GAAP gross profit $34,219 $35,615
Stock-based compensation 67 47
Amortization of intangible assets 724 900
Non-GAAP gross profit $35,010 $36,562
======= =======
GAAP operating loss $(3,851) $(295)
Stock-based compensation 757 933
Amortization of intangible assets 866 1,173
APAX's deal related costs 1,765 -
Non-GAAP operating income (loss) $(463) $1,811
===== ======
before non-controlling interest
GAAP net loss $(4,829) $(482)
Stock-based compensation 757 933
Amortization of intangible assets 866 1,173
APAX's deal related costs 1,765 -
Tax benefit (170) (298)
Non-GAAP net income (loss) $(1,611) $1,326
======= ======
Net income (Loss) per share:
Basic
GAAP net loss per share $(0.14) $(0.01)
Stock-based compensation 0.02 0.03
Amortization of intangible assets 0.03 0.03
APAX's deal related costs 0.05 -
Tax benefit (0.01) (0.01)
Non-GAAP net income (loss) per share $(0.05) $0.04
====== =====
Diluted
GAAP net loss per share $(0.14) $(0.01)
Stock-based compensation 0.02 0.03
Amortization of intangible assets 0.03 0.03
APAX's deal related costs 0.05 -
Tax benefit (0.01) (0.01)
Non-GAAP net income (loss) per share $(0.05) $0.04
====== =====
Weighted average shares outstanding:
Basic 34,899 34,842
Diluted 34,899 35,021
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SOURCE Syneron Medical Ltd.
