Product Revenues Increase 31 Percent
BURLINGTON, Mass., July 26 /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 second quarter ended June 30, 2007. Revenues for the
quarter ended June 30, 2007 were $32.8 million as compared to $36.7 million
in the second quarter of 2006. Excluding back-owed royalties received from
Cutera of $13.6 million in the second quarter of 2006 through a patent
license agreement, revenues for the second quarter of 2006 were $23.0
million, resulting in a 42 percent increase in revenues for the second
quarter of 2007. Product revenues increased to $28.3 million, a 31 percent
increase over the $21.6 million in the second quarter of 2006. Gross margin
from product revenues was 64 percent for the second quarter of 2007 as
compared to 71 percent for the second quarter of 2006. Gross margin this
quarter was affected by several factors. As a percentage of worldwide
product revenues, expansion efforts outside North America resulted in
product revenues at distributor transfer prices increasing over the same
quarter last year. Gross margin was also affected by a decrease in average
selling prices, an increase in trade-ups of StarLux 300s to StarLux 500s,
and the sale of StarLux 300 demonstration units due to our recent
introduction of the StarLux 500. Income before taxes for the second quarter
of this year was $9.4 million as compared to the $18.1 million reported in
the second quarter of last year. Excluding other income in the second
quarter of 2007 and back-owed royalties and reimbursement of legal fees
received from Cutera in the second quarter of 2006, income before taxes for
the second quarter of 2007 was $8.9 million as compared to $5.8 million for
the same quarter last year, resulting in a 54 percent increase. The Company
also strengthened its balance sheet since the second quarter of last year,
including increasing its cash and investments from $74 million to $121
million.
The Company had a cash tax rate of 6 percent and an effective book tax
rate of 38 percent for financial statement purposes for the second quarter
of 2007 versus a cash tax rate of 3 percent and an effective book tax rate
of 4 percent for the prior year's second quarter. The Company reported net
income of $5.8 million, or $0.30 per diluted share for the second quarter
of this year, versus net income of $17.4 million, or $0.86 per diluted
share for the second quarter of 2006. Non-GAAP net income for the second
quarter of 2007, which excludes other income and non-cash taxes, resulted
in $8.4 million, or $0.43 per diluted share. Non-GAAP net income for the
second quarter of 2006, which includes adjustments to royalty revenue, cost
of royalty revenue, general and administrative and interest income and
excludes non-cash taxes, resulted in $5.6 million, or $0.28 per diluted
share. Please refer to the financial statements included in this news
release for a reconciliation of GAAP results to non-GAAP results for the
three and six months ended June 30, 2007 and 2006.
Chief Executive Officer Joseph P. Caruso commented, "We are again
pleased with our financial performance and revenue growth this quarter.
Awareness and acceptance of light-based cosmetic treatments are becoming a
standard for consumers worldwide. Our plans for expansion in markets
outside North America are moving along well. This expansion strategy is
increasingly important as the market develops. Our recent introduction of
our newest technology, the StarLux 500, continues to gain acceptance and a
reputation as the technology of choice."
Use of Non-GAAP Financial Measures
To supplement Palomar's consolidated financial statements presented in
accordance with GAAP, this news release uses the following measures defined
as non-GAAP financial measures by the SEC: non-GAAP revenue, non-GAAP
income before taxes, non-GAAP net income and non-GAAP diluted earnings per
share. The presentation of this financial information is not intended to be
considered in isolation or as a substitute for the financial information
prepared and presented in accordance with GAAP. In addition, the non-GAAP
financial measures included in this news release may be different from, and
therefore not comparable to, similar measures used by other companies. For
more information on these non-GAAP financial measures, please see the
non-GAAP data included below. This data has more details of the GAAP
financial measures that are most directly comparable to non-GAAP financial
measures and the related reconciliations between these financial measures.
Palomar's management believes that these non-GAAP financial measures
provide meaningful supplemental information regarding our performance by
excluding certain items that may not be indicative of our core business
operating results. Palomar believes that both management and investors
benefit from referring to these non-GAAP financial measures in assessing
Palomar's performance and when planning, forecasting and analyzing future
periods. These non-GAAP financial measures also facilitate management's
internal comparisons to Palomar's historical performance and our
competitors' operating results. Palomar believes that these non-GAAP
measures are useful to investors in allowing for greater transparency with
respect to supplemental information used by management in its financial and
operational decision making.
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 (800) 659-2032 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 88967141 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 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.
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, 2006 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 Six Months Ended
June 30, June 30,
2007 2006 2007 2006
Revenues:
Product revenues $28,280,653 $21,617,074 $55,679,198 $42,006,844
Royalty revenues 2,073,621 14,151,941 4,758,175 14,796,942
Funded product
development
revenues 2,414,218 887,583 3,849,298 2,307,357
Total revenues 32,768,492 36,656,598 64,286,671 59,111,143
Costs and expenses:
Cost of product
revenues 10,308,578 6,337,968 18,926,966 11,653,451
Cost of royalty
revenues 829,448 5,660,773 1,903,270 5,918,773
Research and
development 3,752,093 3,620,741 8,055,435 7,165,947
Selling and
marketing 6,358,629 5,642,755 12,634,617 11,080,390
General and
administrative 4,150,911 (877,823) 7,295,001 1,142,915
Total costs and
expenses 25,399,659 20,384,414 48,815,289 36,961,476
Income from
operations 7,368,833 16,272,184 15,471,382 22,149,667
Interest income 1,533,077 1,868,939 2,899,376 2,444,964
Other income 500,000 - 500,000 -
Income before
income taxes 9,401,910 18,141,123 18,870,758 24,594,631
Provision for
income taxes -
cash 564,115 525,367 1,132,246 712,261
Provision for
income taxes -
non-cash 3,008,611 248,679 6,038,642 271,524
Net income $5,829,184 $17,367,077 $11,699,870 $23,610,846
Net income per share:
Basic $0.32 $ 1.00 $0.64 $1.36
Diluted $0.30 $ 0.86 $0.60 $1.18
Weighted average number
of shares outstanding:
Basic 18,333,091 17,397,750 18,306,598 17,334,577
Diluted 19,418,394 20,171,377 19,493,964 20,037,545
Non-GAAP data:
Income before income
taxes $9,401,910 $18,141,123 $18,870,758 $24,594,631
Royalty revenue:
Back-owed
royalty - (13,620,571) - (13,620,571)
Cost of product
revenue:
Royalty
adjustment - - - (762,000)
Cost of product
revenue:
Inventory
write-down - - - 145,000
Cost of royalty
revenue:
Back-owed royalty - 5,448,228 - 5,448,228
Selling and
marketing:
Demo inventory
write-off - - - 230,000
General and
administrative:
Additional legal
expense related to
trial preparation - 750,000 - 750,000
General and
administrative:
Royalty settlement
legal expense
reimbursement - (3,760,000) - (3,760,000)
Interest income:
Interest on back-owed
royalties - (1,164,212) - (1,164,212)
Other income:
Expiration of
standstill
agreement (500,000) - (500,000) -
Non-GAAP Income before
income taxes 8,901,910 5,794,568 18,370,758 11,861,076
Provision for income
taxes 3,572,726 774,046 7,170,888 983,785
Provision for income
taxes -
non-cash (3,008,611) (248,679) (6,038,642) (271,524)
Tax effect related
to one-time events (30,000) (357,556) (30,000) (368,764)
Non-GAAP Provision
for income taxes 534,115 167,811 1,102,246 343,497
Non-GAAP Net
income $8,367,795 $5,626,757 $17,268,512 $11,517,579
Non-GAAP Diluted
net income per share $0.43 $0.28 $0.89 $0.57
Diluted weighted
average number
of shares
outstanding 19,418,394 20,171,377 19,493,964 20,037,545
Consolidated Balance Sheets (Unaudited)
June 30, December 31,
2007 2006
Assets
Current assets:
Cash and cash equivalents $27,782,417 $36,817,257
Available-for-sale investments, at
market value 93,224,721 67,351,822
Accounts receivable, net 20,924,259 15,443,053
Inventories 13,929,752 11,011,710
Deferred tax asset 3,944,405 7,595,000
Other current assets 3,381,305 1,702,263
Total current assets 163,186,859 139,921,105
Property and equipment, net 1,362,126 1,129,985
Other assets 111,074 111,074
Total assets $164,660,059 $141,162,164
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $2,959,579 $2,263,029
Accrued liabilities 15,165,840 15,798,076
Deferred revenue 11,668,210 5,969,397
Total current liabilities 29,793,629 24,030,502
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 - 18,380,156 and 18,063,103
shares, respectively 183,802 180,631
Additional paid-in capital 195,969,428 189,937,701
Accumulated deficit (61,286,800) (72,986,670)
Total stockholders' equity 134,866,430 117,131,662
Total liabilities and stockholders' equity $164,660,059 $141,162,164
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,
ir@palomarmedical.com
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