Product Revenues Increased 39 Percent; Income Before Taxes Increased 162
Percent
BURLINGTON, Mass., Feb. 8 /PRNewswire-FirstCall/ -- Palomar Medical
Technologies, Inc. (Nasdaq: PMTI), a leading researcher and developer of
light-based systems for cosmetic treatments, today announced financial
results for the fourth quarter and year ended December 31, 2006. Revenues
for the quarter ended December 31, 2006 were $39.4 million, which
represents an 82 percent increase over the $21.6 million reported in the
fourth quarter of 2005. The increase in revenues for the quarter ended
December 31, 2006 compared to 2005 includes back-owed royalty revenues of
$10.6 million comprised of $10.0 million from the execution of a patent
license agreement with Cynosure, Inc. in the fourth quarter of 2006 and
$595,000 in additional back-owed royalties resulting from the completion of
a royalty audit of Cutera, Inc.'s settlement payment. Product revenues
increased to $26.5 million, a 39 percent increase over the $19.0 million in
the fourth quarter of 2005. Gross margin from product revenues remained
constant at 69 percent for both the 2006 and 2005 fourth quarters. The
Company reported income before income taxes of $14.6 million for the fourth
quarter of this year, a 162 percent increase over the $5.6 million for the
fourth quarter of last year. The Company reported net income of $21.0
million, or $1.03 per diluted share for the fourth quarter of this year,
including a non-cash benefit from income taxes of $6.8 million, versus net
income of $5.3 million, or $0.27 per diluted share for the fourth quarter
of 2005. The Company also strengthened its balance sheet since December 31,
2005, including increasing its cash and investments from $49 million to
$104 million.
Revenues for the year ended December 31, 2006 were $126.5 million,
which represents a 66 percent increase over the $76.2 million reported for
the year ended December 31, 2005. The increase in revenues for the year
ended December 31, 2006 compared to 2005 includes back-owed royalty
revenues of $26.2 million comprised of approximately $14 million resulting
from our settlement of a patent infringement lawsuit against Cutera in the
second quarter of 2006, $2.2 million from Laserscope in the third quarter
of 2006 and $10 million from the execution of a patent license agreement
with Cynosure in the fourth quarter of 2006. Product revenues increased to
$92.2 million, a 40 percent increase over the $65.8 million for the fiscal
year ended December 31, 2005. Gross margin from product revenues increased
to 71 percent, up from 68 percent in the year- earlier period. The Company
reported income before taxes of $48.0 million for the year ended December
31, 2006, a 168 percent increase over the $17.9 million for the same period
in 2005. The Company reported net income of $53.0 million, or $2.62 per
diluted share for the year ended December 31, 2006, including a non-cash
benefit from income taxes of $6.4 million, versus net income of $17.5
million, or $0.91 per diluted share for the same period in 2005.
With 2006 income having exceeded expectations, and as a result of an
assessment after the Company's 2006 fiscal year end of the treatment of net
operating loss ("NOL") carryforwards, the Company utilized $48.0 million in
NOLs to offset taxable income in 2006. As of December 31, 2006, the Company
believes that it has an additional $71.6 million of NOL carryforwards that
may result in $25 million in future potential tax benefits that will be
recorded as additional paid in capital if realized. This utilization of
NOLs will result in a 2007 estimated cash tax rate of 3 percent to 6
percent and an estimated effective book tax rate of 38 percent for
financial statement purposes. The amount of the NOLs and the amounts
realized from those NOLs are subject to review by the Internal Revenue
Service. Because comparison of 2007 financial results to previous periods
will not correlate directly, the Company will provide non-GAAP financial
statements in 2007 that exclude the non-cash provision for income taxes and
back-owed royalty payments. Management believes this non-GAAP presentation
will aid investors by presenting the Company's current and historical
results in a form that will be more comparable.
Chief Executive Officer Joseph P. Caruso commented, "I am pleased with
Palomar's continued progress during the fourth quarter of 2006 and the full
fiscal year, in which many milestones were accomplished. Especially
encouraging is the fact that our revenues continued to increase during the
period at a rapid rate, allowing us to further expand our sales, marketing,
research and development efforts. Palomar has worked hard to maintain our
reputation with customers for providing leading-edge technology to address
major market opportunities in the light-based cosmetic market. Though these
markets have grown at a fast pace, we believe this is still only the
beginning of a shift toward light based treatments for cosmetic
applications, and our goal is to capitalize on the popularity of these new
procedures by extending our technology's applications. The strength of our
balance sheet should allow us to continue as a powerful force in this
dynamic market."
During fiscal year 2006, the Company announced the following events:
- In December, Palomar announced that it had become the first company
to receive a 510(k) over-the-counter (OTC) clearance from the United States
Food and Drug Administration (FDA) for a new, patented, home use,
light-based hair removal device. OTC clearance allows the product to be
marketed and sold directly to consumers without a prescription. This
consumer device was initially developed by Palomar and is being completed
and commercialized together with The Gillette Company, part of The Procter
& Gamble Company, under a Development and License Agreement executed by
Palomar and Gillette in February 2003. Earlier in the year, Palomar had
announced that it would move forward to the next phase of this agreement
with Gillette. Designed specifically for use in the home and based on over
a decade of research, this consumer device represents a major breakthrough
in the aesthetic device industry.
- In June, Palomar announced the successful conclusion of two patent
infringement lawsuits it had brought against Cutera, Inc. Cutera admitted
to the validity and enforceability of U.S. Patent Nos. 5,595,568 and
5,735,844 (the "Anderson Patents") and that Cutera's laser- and lamp-based
hair removal products infringe the Anderson Patents. Under the terms of the
settlement, Cutera paid Palomar approximately $14 million in back-owed
royalties, representing an 8.5 percent royalty on sales of their laser- and
lamp-based hair removal systems beginning with their initial sales in 2000
through March 31, 2006, approximately $2.0 million in interest on past
sales, and $4 million to cover Palomar's legal costs incurred while
enforcing these patents. For sales made after April 1, 2006, Cutera is
required to pay Palomar a 7.5 percent royalty on their current and any new
light-based hair removal systems later developed.
- In October, Palomar announced that as a result of a royalty audit of
Laserscope, Inc.'s product sales from January 1, 2001 through June 30,
2006, Laserscope paid Palomar $2.2 million in back-owed royalties. Also in
October, Palomar and Laserscope entered into a new license agreement and
terminated the prior license agreement. Under the new license agreement,
Laserscope agreed to pay Palomar a 7.5 percent royalty on sales of its
current as well as any future-developed laser- and lamp-based hair removal
systems.
- In November, Palomar announced execution of a patent license
agreement with Cynosure, Inc. Under this agreement, Cynosure paid Palomar
$10 million in back-owed royalties, representing a 7.5 percent royalty on
sales of their laser- and lamp-based hair removal systems made before
October 1, 2006. For sales made after October 1, 2006, Cynosure agreed to
pay Palomar a 7.5 percent royalty on sales of their current as well as any
future developed light-based hair removal systems, excluding the Apogee
Elite System. In return for a non- royalty bearing (fully paid up),
non-exclusive license to eight Cynosure patents and patent applications,
including counterparts, Palomar granted Cynosure a two year reduction in
royalty rate for the Apogee Elite System only. Specifically, from October
1, 2006 to September 30, 2007, Cynosure agreed to pay a 5 percent royalty
on sales of the Apogee Elite System and from October 1, 2007 to September
30, 2008, Cynosure agreed to pay Palomar a 6.5 percent royalty on sales of
the Apogee Elite System. The full 7.5 percent royalty shall apply to sales
of all Cynosure light-based hair removal products, including the Apogee
Elite System, after October 1, 2008.
- In May, Palomar was ranked number three in BusinessWeek's Annual List
of 100 "Hot Growth Companies." This honor represents the second consecutive
appearance for Palomar in BusinessWeek's top 100, with a fourth place
finish in 2005.
- In September, Palomar was ranked number six in Fortune Magazine's
Annual List of 100 "Fastest-Growing Companies."
Conference Call: As previously announced, Palomar will conduct a
conference call and webcast today at 11:30 AM Eastern Time. Management will
discuss financial results and strategic matters. If you would like to
participate, please call (866) 383-8108 or listen to the webcast in the
Investor Relations section of the Company's website at
http://www.palomarmedical.com. The telephone replay will be available one hour
after the call at (888) 286- 8010 passcode 97600501 and will be available
for fourteen days. A webcast replay will also be available.
About Palomar Medical Technologies Inc: Palomar is a leading researcher
and developer of light-based systems for cosmetic treatments. Palomar
pioneered the optical hair removal field, when, in 1997, it introduced the
first high-powered laser hair removal system. Since then, many of the major
advances in light-based hair removal have been based on Palomar technology.
In December 2006, Palomar became the first company to receive a 510(k)
over-the- counter (OTC) clearance from the United States Food and Drug
Administration (FDA) for a new, patented, home use, light-based hair
removal device. OTC clearance allows the product to be marketed and sold
directly to consumers without a prescription. There are now millions of
light-based cosmetic procedures performed around the world every year in
physician offices, clinics, spas and salons. Palomar is testing many new
and exciting applications to further advance the hair removal market and
other cosmetic applications. Palomar is uniquely focused on developing
proprietary light- based technology for introduction to the mass markets.
Palomar has an agreement with The Gillette Company to develop and
potentially commercialize a patented home-use, light-based hair removal
device for women. Palomar also has an agreement with Johnson & Johnson
Consumer Companies to develop and potentially commercialize home-use,
light-based devices for reducing or reshaping body fat including cellulite,
reducing the appearance of skin aging, and reducing or preventing acne, and
was awarded a contract by the Department of the Army to develop a
light-based, self-treatment device for Pseudofolliculitis Barbae ("PFB").
For more information on Palomar and its products, visit Palomar's
website at http://www.palomarmedical.com. To continue receiving the most
up-to-date information and latest news on Palomar as it happens, sign up to
receive automatic e-mail alerts by going to the Investor Relations' section
of the website.
With the exception of the historical information contained in this
release, the matters described herein contain forward-looking statements,
including but not limited to statements relating to new markets, future
royalty amounts due from third parties, development and introduction of new
products, and financial and operating projections (including future tax
benefit from the Company's NOLs and future effective tax rates). These
forward-looking statements are neither promises nor guarantees, but involve
risk and uncertainties that may individually or mutually impact the matters
herein, and cause actual results, events and performance to differ
materially from such forward-looking statements. These risk factors
include, but are not limited to, results of future operations,
technological difficulties in developing or introducing new products, the
results of future research, lack of product demand and market acceptance
for current and future products, the effect of economic conditions,
challenges in managing joint ventures and research with third parties and
government contracts, the impact of competitive products and pricing,
governmental regulations with respect to medical devices, including whether
FDA clearance will be obtained for future products and additional
applications, the results of litigation, difficulties in collecting
royalties, potential infringement of third-party intellectual property
rights, factors affecting the Company's future income and resulting ability
to utilize its NOLs, and/or other factors, which are detailed from time to
time in the Company's SEC reports, including the report on Form 10-K for
the year ended December 31, 2005 and the Company's quarterly reports on
Form 10-Q. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. The
Company undertakes no obligation to release publicly the result of any
revisions to these forward-looking statements that may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence
of unanticipated events.
Contacts: Kayla Castle
Investor Relations Manager
Palomar Medical Technologies, Inc.
781-993-2411
ir@palomarmedical.com
Palomar Financial Summary:
Consolidated Statements of Income (Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2006 2005 2006 2005
Revenues:
Product revenues $26,544,261 $19,034,346 $92,222,660 $65,824,336
Royalty revenues 12,042,143 1,196,809 30,481,498 4,921,075
Funded product
development revenues 825,115 1,375,897 3,840,286 5,408,436
Total revenues 39,411,519 21,607,052 126,544,444 76,153,847
Costs and expenses:
Cost of
product revenues 8,206,874 5,974,724 26,896,839 20,952,179
Cost of
royalty revenues 4,816,856 478,724 12,192,598 1,968,430
Research and
development (1) 3,586,655 3,237,074 14,055,616 11,338,945
Selling and
marketing (1) 5,858,978 4,747,410 22,467,161 17,234,103
General and
administrative (1) 3,611,757 2,031,125 7,645,081 7,906,463
Total costs
and expenses 26,081,120 16,469,057 83,257,295 59,400,120
Income from
operations 13,330,399 5,137,995 43,287,149 16,753,727
Interest income 1,242,190 431,610 4,718,684 1,172,743
Income before
income taxes 14,572,589 5,569,605 48,005,833 17,926,470
Provision for
income taxes - cash 421,263 91,093 1,390,033 293,195
Provision (benefit)
from income taxes -
non-cash (6,846,785) 137,924 (6,360,822) 180,065
Net income $20,998,111 $5,340,588 $52,976,622 $17,453,210
Net income per share:
Basic $1.18 $0.31 $3.02 $1.04
Diluted $1.03 $0.27 $2.62 $0.91
Weighted average number
of shares outstanding:
Basic 17,759,601 17,040,995 17,519,242 16,831,185
Diluted 20,484,623 19,612,092 20,208,687 19,158,338
(1) Certain reclassifications have been made to 2005 amounts to be
consistent with the 2006 presentation.
Consolidated Balance Sheets (Unaudited)
December 31, December 31,
2006 2005
Assets
Current assets:
Cash and cash equivalents $36,817,257 $10,536,144
Available-for-sale investments,
at market value 67,351,822 38,757,575
Accounts receivable, net of allowance
of $950,000 and $984,392 respectively 15,443,053 8,686,227
Inventories 11,011,710 6,753,110
Deferred tax asset 7,595,000 -
Other current assets 1,702,263 582,074
Total current assets 139,921,105 65,315,130
Property and equipment, net 1,129,985 909,676
Other assets 111,074 111,074
Total Assets $141,162,164 $66,335,880
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $2,263,029 $1,278,823
Accrued liabilities 15,798,076 11,465,100
Deferred revenue 5,969,397 1,725,849
Total current liabilities 24,030,502 14,469,772
Stockholders' equity:
Preferred stock, $.01 par value-
Authorized - 1,500,000 shares
Issued - none - -
Common stock, $.01 par value-
Authorized - 45,000,000 shares
Issued - 18,063,103 and
17,126,467 shares, respectively 180,631 171,265
Additional paid-in capital 189,937,701 177,658,135
Accumulated deficit (72,986,670) (125,963,292)
Total stockholders' equity 117,131,662 51,866,108
Total liabilities and stockholders' equity $141,162,164 $66,335,880
SOURCE Palomar Medical Technologies, Inc.
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Related links:
http://www.palomarmedical.com
http://www.prnewswire.com/comp/107555.html /
CONTACT:
Kayla Castle, Investor Relations Manager of
Palomar Medical Technologies, Inc., +1-781-993-2411, or
ir@palomarmedical.com
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