UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM 8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of
report (Date of earliest event reported): March 16, 2015
PhotoMedex, Inc.
(Exact
Name of Registrant Specified in Charter)
Nevada | 0-11635 | 59-2058100 | ||
(State or Other |
(Commission File |
(I.R.S. Employer Identification No.) |
100 Lakeside Drive, Suite 100, Horsham, Pennsylvania |
19044 |
(Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: 215-619-3600
Not Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On March 16, 2015, PhotoMedex, Inc. (the “Company”) issued a press release announcing its results of operations for the three months and 12 months ended December 31, 2014. The full text of such press release is furnished as Exhibit 99.1 to this report.
The Company makes reference to non-GAAP financial information in the press release furnished herewith. Specifically, these non-GAAP measures include non-GAAP adjusted net (loss) income and non-GAAP adjusted (loss) income per share. There are limitations in using these non-GAAP financial measures because they are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. The Company’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 the Company’s current financial performance and to provide further information for comparative purposes.
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 the Company’s core operating results and business outlook. In addition, the Company believes non-GAAP measures that exclude stock-based compensation expense and other non-cash or non-recurring expenses enhance the comparability of results against prior periods. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is contained in the press release.
The information set forth under this Item 2.02, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in any such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
The following press release is furnished as an exhibit to this Current Report on Form 8-K pursuant to Item 2.02 and shall not be deemed to be “filed”:
99.1 Press Release dated March 16, 2015 issued by PhotoMedex, Inc.
SIGNATURE
Pursuant to
the requirements of the Securities Exchange Act of 1934, the Company has
duly caused this current report to be signed on its behalf by the
undersigned hereunto duly authorized.
PHOTOMEDEX, INC. |
||||
|
||||
Date: | March 16, 2015 | By: |
/s/ Dolev Rafaeli |
|
Dolev Rafaeli |
||||
Chief Executive Officer |
EXHIBIT INDEX
Exhibit No. |
Description of Exhibit |
99.1 |
Press Release dated March 16, 2015 issued by PhotoMedex, Inc. |
Exhibit 99.1
PhotoMedex Reports 2014 Fourth Quarter and Full Year Financial Results
HORSHAM, Pa.--(BUSINESS WIRE)--March 16, 2015--PhotoMedex, Inc. (NASDAQ and TASE: PHMD) today announced financial results for the three and 12 months ended December 31, 2014.
Financial highlights of the fourth quarter of 2014 include the following (all comparisons are with the fourth quarter of 2013 and all figures quoted are GAAP, unless stated otherwise):
Financial highlights of the year ended December 31, 2014 include the following (all comparisons are with the year ended December 31, 2013 and all figures quoted are GAAP, unless stated otherwise):
Management Commentary
Dr. Dolev Rafaeli, PhotoMedex CEO, commented, “The second half of 2014 was a challenging time for PhotoMedex as we first worked to comply with our debt covenants and then to pay down and restructure those obligations. Last month we completed the sale of LCA-Vision for net proceeds of $36.5 million and used the proceeds from that sale to pay down portions of our outstanding line of credit and term loan. We continue to pursue a satisfactory resolution with our creditors, and earlier this month entered into a second amended forbearance agreement whereby PhotoMedex will not have to comply with certain covenants, yet we will have to meet certain minimum EBITDA targets for each quarter in 2015.”
“Our XTRAC physician recurring business continued to be a bright spot during the fourth quarter, with revenue increasing 48% over the prior year. We added 30 XTRAC systems during the fourth quarter and exited the year with an installed base of 620 XTRAC systems, compared with 501 at the end of 2013. Our consumer sales were $26.7 million during the fourth quarter. Although down from $53.7 million a year ago, this compares favorably with sales of $24.9 million in the third quarter of 2014, helped by a successful home shopping Today’s Special event and continued growth with Kyrobak,” Dr. Rafaeli added.
Reported Financial Results
Revenues for the fourth quarter of 2014 were $38.9 million, a decrease of 39% compared with revenues for the fourth quarter of 2013 of $63.5 million.
Gross profit for the fourth quarter of 2014 was $28.1 million, or 72% of total revenues, compared with gross profit of $50.8 million, or 80% of total revenues, in the fourth quarter of 2013.
Net loss for the fourth quarter of 2014 was $98.7 million or ($5.18) per share, which included $10.5 million loss on discontinued operations, $44.6 million estimated loss on the sale of discontinued operations, $1.0 million in stock-based compensation expense and $1.8 million in depreciation and amortization expenses. This compares with net income for the fourth quarter of 2013 of $3.2 million or $0.16 per diluted share, which included $1.2 million in stock-based compensation expense and $1.6 million in depreciation and amortization expenses.
Revenues for the year ended December 31, 2014 were $163.5 million, a decrease of 27% compared with revenues for the year ended December 31, 2013 of $224.7 million.
Gross profit for 2014 was $124.9 million, or 76% of total revenues, compared with gross profit of $179.6 million, or 80% of total revenues, for 2013.
Net loss for 2014 was $121.5 million or $6.41 per share, which included $15.2 million loss on discontinued operations, $44.6 million estimated loss on the sale of discontinued operations, $4.9 million in stock-based compensation expense and $6.9 million in depreciation and amortization expenses. This compares with net income for 2013 of $18.4 million or $0.89 per diluted share, which included $5.0 million in stock-based compensation expense and $6.1 million in depreciation and amortization expenses.
As of December 31, 2014, the Company had cash, cash equivalents and short-term investments of $10.6 million, compared with $59.5 million as of December 31, 2013.
Non-GAAP Financial Measures
To supplement PhotoMedex’s consolidated financial statements presented in accordance with GAAP, PhotoMedex provides certain non-GAAP measures of financial performance. These non-GAAP measures include non-GAAP adjusted (loss) income and non-GAAP adjusted (loss) income per share.
PhotoMedex’s reference to these non-GAAP measures should be considered in addition to results prepared under current accounting standards, but are not a substitute for, nor superior to, GAAP measures. These non-GAAP measures are provided to enhance investors' overall understanding of PhotoMedex’s current financial performance and to provide further information for comparative purposes.
Specifically, the Company believes the non-GAAP measures provide useful information to management and investors by isolating certain expenses, gains and losses that may not be indicative of the Company’s core operating results and business outlook. In addition, PhotoMedex believes non-GAAP measures enhance the comparability of results against prior periods. Reconciliation to the most directly comparable GAAP measure of all non-GAAP measures included in this press release is as follows:
(Unaudited) |
||||||||||||
Three Months Ended Dec. 31, | For the Year Ended Dec. 31, | |||||||||||
(000's) except per share amounts | 2014 | 2013 | 2014 | 2013 | ||||||||
Net (loss) income as reported |
($ 98,724 | ) | $ | 3,185 | ($ 121,496 | ) | $ | 18,377 | ||||
Adjustments: |
||||||||||||
Depreciation and amortization expense | 1,811 | 1,609 | 6,912 | 6,119 | ||||||||
Interest expense, net | 796 | - | 2,979 | 10 | ||||||||
Income tax expense | 37,012 | 1,298 | 36,312 | 4,370 | ||||||||
EBITDA |
($ 59,105 | ) | $ | 6,092 | ($ 75,293 | ) | $ | 28,876 | ||||
Stock-based compensation expense | 994 | 1,190 | 4,938 | 4,985 | ||||||||
Acquisition and transaction costs | 126 | - | 2,879 | - | ||||||||
Non-ordinary course litigation expenses | 605 | - | 2,974 | - | ||||||||
Extraordinary non-recurring bad debt and debt costs | 635 | - | 2,812 | - | ||||||||
Loss on discontinued operations | 10,496 | - | 15,155 | - | ||||||||
Estimated loss on sale of discontinued operations | 44,598 | - | 44,598 | - | ||||||||
Non-GAAP adjusted (loss) income |
($ 1,651 | ) | $ | 7,282 | ($ 1,937 | ) | $ | 33,861 | ||||
Fully diluted shares outstanding at December 31 | 19,041 | 19,603 | 19,041 | 19,603 | ||||||||
Non-GAAP adjusted (loss) income per share | ($0.09 | ) | $ | 0.37 | ($0.10 | ) | $ | 1.73 | ||||
PhotoMedex will file a Form 10-K, including 2014 consolidated financial statements, with the Securities and Exchange Commission on or by March 16, 2015.
About PhotoMedex
PhotoMedex is a global skin health company providing integrated disease management and aesthetic solutions to dermatologists, professional aestheticians and consumers. The company provides proprietary products and services that address skin diseases and conditions including psoriasis, vitiligo, acne, actinic keratosis (a precursor to certain types of skin cancer) and photo damage. Its experience in the physician market provides the platform to expand its skin health solutions to spa markets, as well as traditional retail, online and infomercial outlets for home-use products. As a result of its merger with Radiancy Inc., PhotoMedex has added a range of home-use devices under the no!no!™ brand, for various indications including hair removal, acne treatment and skin rejuvenation. The company also offers a professional product line for acne clearance, skin tightening, psoriasis care and hair removal sold to physician clinics and spas.
SAFE HARBOR STATEMENT
This press release contains forward-looking statements, including, but not limited to, statements relating to PhotoMedex’s future financial performance, strategies, potential sales and earnings growth, and some portions of the conference call, particularly those describing PhotoMedex' strategies, operating expense reductions and business plans will also contain “forward-looking statements”, each within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks, uncertainties and other factors. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including any statements of the plans, strategies and objectives of management for future operations; any statements regarding product development, product extensions, product integration or product marketing; any statements regarding continued compliance with government regulations, changing legislation or regulatory environments; any statements of expectation or belief and any statements of assumptions underlying any of the foregoing. In addition, there are risks and uncertainties related to the ability to ensure continued regulatory compliance, performance and/or market growth. These risks, uncertainties and other factors, and the general risks associated with the businesses of the Company described from time-to-time under the caption “Risk Factors” and elsewhere in the Company’s SEC filings and reports and other documents filed with the SEC, could cause actual results to differ materially from those referred to, implied or expressed in the forward-looking statements. The Company cautions readers not to rely on these forward-looking statements. All forward-looking statements are based on information currently available to the Company, inherently involve significant risks and uncertainties and are qualified in their entirety by this cautionary statement. The Company anticipates that subsequent events and developments will cause its views to change. The information contained in this press release speaks as of the date hereof and the Company has or undertakes no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.
-- Financial Statements follow --
PHOTOMEDEX, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) |
||||||||||||||
Three Months Ended
Dec. 31, |
Year Ended
Dec. 31, |
|||||||||||||
(000's) except per share amounts | 2014 | 2013 | 2014 | 2013 | ||||||||||
Revenues: | ||||||||||||||
Product sales | $ | 31,987 | $ | 58,794 | $ | 140,670 | $ | 209,175 | ||||||
Services | 6,891 | 4,696 | 22,871 | 15,489 | ||||||||||
38,878 | 63,490 | 163,541 | 224,664 | |||||||||||
Cost of revenues: | ||||||||||||||
Product sales | 9,072 | 10,716 | 31,400 | 38,229 | ||||||||||
Services | 1,718 | 1,997 | 7,219 | 6,806 | ||||||||||
10,790 | 12,713 | 38,619 | 45,035 | |||||||||||
Gross profit | 28,088 | 50,777 | 124,922 | 179,629 | ||||||||||
Operating expenses: | ||||||||||||||
Selling and marketing | 23,731 | 36,761 | 107,169 | 127,528 | ||||||||||
General and administrative | 8,791 | 8,851 | 35,711 | 26,750 | ||||||||||
Research and development and engineering | 747 | 914 | 3,086 | 3,306 | ||||||||||
33,269 | 46,526 | 145,966 | 157,584 | |||||||||||
(Loss) income from continuing operations before interest and other financing income (expense), net | (5,181 | ) | 4,251 | (21,044 | ) | 22,045 | ||||||||
Interest and other financing income (expense), net | (1,437 | ) | 232 | (4,387 | ) | 702 | ||||||||
(Loss) income from continuing operations before income taxes | (6,618 | ) | 4,483 | (25,431 | ) | 22,747 | ||||||||
Income tax expense (benefit) | 37,012 | 1,298 | 36,312 | 4,370 | ||||||||||
(Loss) profit from continuing operations | (43,630 | ) | 3,185 | (61,743 | ) | 18,377 | ||||||||
Discontinued operations: | ||||||||||||||
Loss from discontinued operations | (10,496 | ) | - | (15,155 | ) | - | ||||||||
Estimated loss on sale from discontinued operations | (44,598 | ) | - | (44,598 | ) | - | ||||||||
Net (loss) income1 | ($ 98,724 | ) | $ | 3,185 | ($ 121,496 | ) | $ | 18,377 | ||||||
Basic net (loss) income per share: | ||||||||||||||
Continuing operations | ($ 2.32 | ) | $ | 0.16 | ($ 3.25 | ) | $ | 0.90 | ||||||
Discontinued operations | ( 2.86 | ) | 0.00 | ( 3.16 | ) | 0.00 | ||||||||
($ 5.18 | ) | $ | 0.16 | ($ 6.41 | ) | $ | 0.90 | |||||||
Diluted net (loss) income per share: | ||||||||||||||
Continuing operations | ($ 2.32 | ) | $ | 0.16 | ($ 3.25 | ) | $ | 0.89 | ||||||
Discontinued operations | ( 2.86 | ) | 0.00 | ( 3.16 | ) | 0.00 | ||||||||
($ 5.18 | ) | $ | 0.16 | ($ 6.41 | ) | $ | 0.90 | |||||||
Shares used in computing net income per share: | ||||||||||||||
Basic | 19,041 | 19,400 | 18,940 | 20,455 | ||||||||||
Diluted | 19,041 | 19,603 | 18,940 | 20,657 | ||||||||||
1 Includes: depreciation and amortization | 1,811 | 1,609 | 6,912 | 6,119 | ||||||||||
Share-based compensation expense | 992 | 1,190 | 4,938 | 4,985 | ||||||||||
Three Months ended Dec. 31, | Year ended Dec 31, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
Consumer: | |||||||||||||
Direct | $ | 17,038 | $ | 39,392 | $ | 86,709 | $ | 130,785 | |||||
Distributors | 122 | 595 | 1,865 | 15,553 | |||||||||
Retailer and home shopping channels | 9,508 | 13,629 | 32,357 | 41,921 | |||||||||
sub-total | 26,668 | 53,616 | 120,931 | 188,259 | |||||||||
Physician Recurring | |||||||||||||
XTRAC treatments | 6,891 | 4,696 | 22,871 | 15,489 | |||||||||
Skin care | 1,365 | 1,993 | 6,795 | 8,243 | |||||||||
Other | 1,335 | 1,170 | 4,574 | 4,816 | |||||||||
sub-total | 9,591 | 7,859 | 34,240 | 28,548 | |||||||||
Professional | 2,619 | 2,016 | 8,370 | 7,857 | |||||||||
Total Revenues | $ | 38,878 | $ | 63,491 | $ | 163,541 | $ | 224,664 | |||||
PHOTOMEDEX, INC. |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
(UNAUDITED) |
||||||||
Dec. 31, 2014 | Dec. 31, 2013 | |||||||
Assets | ||||||||
Cash, cash equivalents and short-term investments | $ | 10,692 | $ | 59,501 | ||||
Accounts receivable, net | 21,977 | 27,218 | ||||||
Inventories | 19,380 | 27,547 | ||||||
Other current assets | 9,109 | 25,638 | ||||||
Assets held for sale, net | 70,855 | - | ||||||
Property and equipment, net | 13,802 | 10,489 | ||||||
Other non-current assets | 41,948 | 69,715 | ||||||
Total Assets | $ | 187,763 | $ | 220,108 | ||||
Liabilities and Stockholders' Equity | ||||||||
Accounts payable and accrued liabilities | $ | 28,063 | $ | 40,047 | ||||
Other current liabilities | 4,480 | 5,961 | ||||||
Bank and lease notes payable | 77,229 | 10,920 | ||||||
Liabilities held for sale | 34,497 | - | ||||||
Other liabilities | 1,229 | 2,819 | ||||||
Stockholders' equity | 42,265 | 160,361 | ||||||
Total Liabilities and Stockholders' Equity | $ | 187,763 | $ | 220,108 | ||||
PHOTOMEDEX, INC. CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) |
||||||||
For the Year Ended Dec. 31, | ||||||||
2014 | 2013 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net (loss) income | ($ 121,496 | ) | $ | 18,377 | ||||
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ||||||||
Depreciation and amortization | 6,912 | 6,119 | ||||||
Provision for doubtful accounts | 7,661 | 5,958 | ||||||
Deferred income taxes | 35,699 | 2,589 | ||||||
Stock-based compensation | 4,938 | 4,985 | ||||||
Amortization of bank debt issue costs and discount | 2,358 | - | ||||||
Loss on disposal of disposal of property and equipment | (10 | ) | - | |||||
Changes in assets and liabilities: | ||||||||
(Increase) decrease in: | ||||||||
Current assets | 7,627 | (18,068 | ) | |||||
Current liabilities | (14,754 | ) | 5,077 | |||||
Net cash (used in) provided by operating activities – continuing activities | (71,065 | ) | 25,037 | |||||
Net cash provided by operating activities – discontinued operations | 46,894 | - | ||||||
Net cash (used in) provided by operating activities | (24,171 | ) | 25,037 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Acquisition, net of cash received | (77,510 | ) | 84 | |||||
Lasers placed in service | (6,746 | ) | (5,476 | ) | ||||
Purchases of PP&E, net | (251 | ) | (943 | ) | ||||
Other | 14,046 | 3,887 | ||||||
Net cash used in investing activities – continuing operations | (70,461 | ) | (2,448 | ) | ||||
Net cash used in investing activities – discontinued operations | (5,2180 | - | ||||||
Net cash used in investing activities | (75,679 | ) | (2,448 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from exercise of options/issuance (share-purchase) of securities, net | 514 | (31,006 | ) | |||||
Proceeds from issuance of debt, net of repayments | 65,662 | 9,334 | ||||||
Net cash provided by (used in) financing activities – continuing operations | 66,176 | (21,672 | ) | |||||
Net cash (used in) financing activities – discontinued operations | (523 | ) | - | |||||
Net cash (used in) provided by financing activities | 65,653 | (21,672 | ) | |||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH | (586 | ) | 123 | |||||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (34,783 | ) | 1,040 | |||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 45,388 | 44,348 | ||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 10,605 | $ | 45,388 |
CONTACT:
LHA
Kim Sutton Golodetz, 212-838-3777
Kgolodetz@lhai.com
or
Bruce
Voss, 310-691-7100
Bvoss@lhai.com
@LHA_IR_PR
or
PhotoMedex,
Inc.
Dennis McGrath, 215-619-3287
Chief Financial Officer
info@photomedex.com