Product Revenues Increase 37 Percent; Net Income Quadruples
BURLINGTON, Mass., July 27 /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, 2006. The Company's second
quarter product revenues increased by 37 percent as compared to the second
quarter in 2005. The Company's second quarter total revenues increased by
101 percent and net income increased by 333 percent, including the Cutera
settlement, as compared to the second quarter in 2005. The Company also
strengthened its balance sheet since the second quarter of last year,
including increasing its cash and investments from $34 million to $74
million.
Revenues for the quarter ended June 30, 2006 were $36.7 million, up
from $18.2 million in the second quarter of 2005. Product revenues
increased to $21.6 million from $15.8 million and gross profit from product
revenues increased to $15.3 million or 71 percent, up from $10.5 million or
67 percent in the year-earlier quarter. The Company reported net income of
$17.4 million, or $0.86 per diluted share, for the second quarter of this
year, versus net income of $4.0 million, or $0.21 per diluted share, for
the second quarter of last year.
Revenues for the six months ended June 30, 2006 were $59.1 million, up
from $35.3 million in the six months ended June 30, 2005. Product revenues
increased to $42.0 million from $30.1 million and gross profit from product
revenues increased to $30.4 million or 72 percent, up from $20.3 million or
68 percent in the first half of 2006 as compared to the first half of 2005.
The Company reported net income of $23.6 million, or $1.18 per diluted
share, for the first half of this year, versus net income of $7.5 million,
or $0.40 per diluted share, for the first half of last year.
On June 5, 2006, Palomar announced the resolution of its on-going
patent infringement lawsuits against Cutera, Inc. (Nasdaq: CUTR). Cutera
admitted that their products infringe the Anderson Patents (U.S. Patent
No.s 5,595,568 & 5,735,844) and that these patents are valid and
enforceable. In addition, Cutera agreed not to challenge the infringement,
validity and enforceability of the Anderson Patents in the future. Cutera
paid Palomar $22 million as an estimated payment for royalties of 8.5% due
on past sales of their laser- and lamp-based hair removal systems beginning
with their initial sales in 2000 through March 31, 2006, interest and
reimbursement of Palomar's legal costs. Cutera recently provided an updated
estimate of $19.6 million, versus the actual payment of $22 million. The
differential of $2.4 million was recorded as deferred revenue to be applied
against future amounts owed. The final amounts due Palomar are subject to
audit by an independent accounting firm which is scheduled to be completed
by the end of the third quarter. Following the audit, the amounts owed may
be higher or lower than the estimated $19.6 million. Under Palomar's
license agreement with the General Hospital Corporation, Palomar pays to
the General Hospital Corporation 40% of all royalty and interest payments
from Cutera. Beginning April 1, 2006, Cutera will pay Palomar a 7.5%
royalty on sales of light-based hair removal systems. Based on Cutera's
current estimate of $19.6 million and net of the General Hospital
Corporation portion, included in the Consolidated Statements of Income for
the three and six months ended June 30, 2006 is $13.6 million in royalty
revenue, $5.4 million in cost of royalties, a $3.76 million credit in
general & administrative expense, $1.2 million in interest income and
$524,000 in income taxes. For more information, please see the Settlement
Agreement, the License Agreement, the Consent Judgments and Stipulations of
Dismissal filed as Exhibits 99.1, 99.2, 99.3 and 99.4 to a Current Report
on Form 8-K filed June 5, 2006.
Patricia Davis, Senior Vice President and General Counsel of Palomar,
commented in the June 5, 2006 press release, "The Court's rulings
throughout this lawsuit, including the Markman Ruling and the Summary
Judgment ruling, confirmed the breadth and validity of Palomar's patent
position. This favorable resolution with Cutera further substantiates the
strength of these patents. Palomar intends to continue its strategy of
vigorously enforcing our patent position."
Under Palomar's development program with Gillette, Palomar submitted a
510(k) application for an over-the-counter (OTC) clearance to the United
States Food and Drug Administration (FDA) for a home-use, light-based hair
removal device. Palomar has heard from the FDA in response to its
submission and is in the process of answering the FDA's questions. As is
always the case, the FDA, as a government entity, has considerable
discretion with respect to review and timing.
Chief Executive Officer Joseph P. Caruso commented, "This has been
another exciting and rewarding quarter for Palomar. We continue to enjoy
increased market acceptance of our new product offerings, and we believe we
are maintaining our leadership position as an innovator in our markets. Our
reputation for leading-edge technology and product reliability has resulted
in increased revenue for Palomar over the past four years in the expanding
market for light-based cosmetic procedures; a trend we think will continue
throughout 2006."
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) 299-7928 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 64086316 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. 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 (please note that in October 2005, Procter & Gamble Company completed
its acquisition of Gillette. Under the Development and License Agreement,
Procter & Gamble, as the acquiring party, assumed all of Gillette's rights
and obligations.) 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,
development and introduction of new products, and financial projections
that 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, 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.
Palomar Financial Summary:
Consolidated Statements of Income (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
Revenues:
Product revenues $21,617,074 $15,780,556 $42,006,844 $30,063,972
Royalty revenues 14,151,941 1,130,435 14,796,942 2,512,719
Funded product
development
revenues 887,583 1,311,827 2,307,357 2,691,431
Total revenues 36,656,598 18,222,818 59,111,143 35,268,122
Costs and expenses:
Cost of product
revenues 6,337,968 5,236,389 11,653,451 9,757,185
Cost of royalty
revenues 5,660,773 452,173 5,918,773 1,005,087
Research and
development 3,804,722 2,870,050 7,484,067 6,056,214
Selling and
marketing 5,750,802 4,352,348 11,221,467 8,176,990
General and
administrative (1,169,851) 1,469,638 683,718 3,020,350
Total costs and
expenses 20,384,414 14,380,598 36,961,476 28,015,826
Income from
operations 16,272,184 3,842,220 22,149,667 7,252,296
Interest income 1,868,939 247,949 2,444,964 426,017
Income before
income taxes 18,141,123 4,090,169 24,594,631 7,678,313
Provision for income
taxes 774,046 81,803 983,785 153,566
Net income $17,367,077 $4,008,366 $23,610,846 $7,524,747
Net income per share:
Basic $1.00 $0.24 $1.36 $0.45
Diluted $0.86 $0.21 $1.18 $0.40
Weighted average
number of shares
outstanding:
Basic 17,397,750 16,856,271 17,334,577 16,776,925
Diluted 20,171,377 18,832,447 20,037,545 19,037,599
Consolidated Balance Sheets (Unaudited)
June 30, December 31,
2006 2005
Assets
Current assets:
Cash and cash equivalents $18,000,129 $10,536,144
Available-for-sale investments,
at market value 55,657,793 38,757,575
Accounts receivable, net 10,720,931 8,686,227
Inventories 8,972,641 6,753,110
Other current assets 1,918,782 582,074
Total current assets 95,270,276 65,315,130
Property and equipment, net 1,032,721 909,676
Other assets 111,074 111,074
Total Assets $96,414,071 $66,335,880
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $1,718,279 $1,278,823
Accrued liabilities 9,580,679 11,465,100
Deferred revenue 5,417,002 1,725,849
Total current liabilities 16,715,960 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 and outstanding --
17,543,591 and 17,126,467
shares, respectively 175,436 171,265
Additional paid-in capital 181,875,121 177,658,135
Accumulated deficit (102,352,446) (125,963,292)
Total stockholders' equity 79,698,111 51,866,108
Total liabilities and stockholders' equity $96,414,071 $66,335,880
Contacts: Kayla Castle
Investor Relations Manager
Palomar Medical Technologies, Inc.
781-993-2411
ir@palomarmedical.com
SOURCE Palomar Medical Technologies, Inc.
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Related links:
http://www.palmed.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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