EX-99.1 2 d575501dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

Contacts:

 

Timothy Baker    Scott Solomon
EVP, COO and CFO    Vice President
Cynosure, Inc.    Sharon Merrill
978-256-4200    617-542-5300
TBaker@cynosure.com    CYNO@investorrelations.com

 

Cynosure Reports Second-Quarter 2013 Financial Results

 

   

Record Revenue of $50.1 Million, Up 27% From Q2 of 2012

   

Adjusted EPS of $0.29, Excluding Acquisition Costs

   

GAAP Net Loss Per Share of $0.54, Including Acquisition Costs

   

Integration of Palomar’s North American Sales Force Completed

   

Acquisition Remains on Track to be Accretive in 2014

   

Cash, Short Term Investments and Marketable Securities of $106 Million at June 30

WESTFORD, MA, July 31, 2013 – Cynosure, Inc. (NASDAQ: CYNO), which develops and markets laser and light-based aesthetic treatment systems for high-volume applications, today announced financial results for the three months ended June 30, 2013.

Palomar Acquisition

“The completion of the Palomar acquisition in June marked a major milestone for our Company, enhancing our aesthetic industry leadership through the addition of complementary products, technology and distribution capabilities,” said Chairman and CEO Michael Davin. “Five weeks since the transaction received shareholder approval, the integration process is well underway. In fact, we’ve already finished the integration of the North American sales forces, and the combined group of more than 70 sales reps is now operating as one team.”

Financial Highlights

Revenues for the second quarter rose 27% to a record $50.1 million, from $39.6 million for the same period of 2012. The increase reflected higher laser product sales across Cynosure’s distribution channels as well as $5.1 million in revenue from five days of sales attributable to the Palomar acquisition, which was completed on June 24, 2013.

Operating expenses were $42.4 million for the second quarter of 2013, which included $20.4 million of expenses related to the acquisition of Palomar. Operating expenses for the second quarter of 2012 were $19.3 million.


Second-quarter 2013 adjusted net income, which excludes expenses related to the purchase accounting effects of the Palomar acquisition as well as integration and severance costs, was $5.0 million, or $0.29 per diluted share. On a GAAP (Generally Accepted Accounting Principles) basis, the Company reported a net loss for the second quarter of 2013 of $9.0 million, or $0.54 per basic share, compared with net income of $2.7 million, or $0.20 per diluted share, for the same period a year earlier. GAAP net loss for the second quarter of 2013 reflects a $5.8 million one-time income tax benefit associated with the purchase accounting effects of the Palomar acquisition.

Gross margin on an adjusted basis excluding non-cash charges related to the purchase accounting effects of the Palomar acquisition was 58.3% for the second quarter of 2013. Gross margin on a GAAP basis for the three months ended June 30, 2013 was $27.8 million, or 55.5%, compared with $23.0 million, or 58.2% of revenue, for the same period of 2012.

Cynosure concluded the second quarter of 2013 with cash, short-term investments and marketable securities of $106 million. The Company continues to have no long-term debt.

Comments on the Second Quarter

“Laser product revenue increased 31% in the second quarter to $43.0 million from $32.9 million for the same period of 2012, with year over year double-digit percentage gains across each of our distribution channels – North America, Europe, Asia and our third-party international distributors,” Davin said. “PicoSure, our new laser workstation to remove tattoos and benign pigmented lesions, performed well in its first full quarter on the U.S. market, and contributed to our results in Europe ahead of schedule as we began shipping product to Europe in the quarter. From a regional perspective, our overall revenue mix remains nicely diversified, with business outside of North America representing 52% of our laser sales in the quarter, two percentage points higher than the same period in 2012.”

Business Outlook

“We believe our acquisition of Palomar combines two outstanding companies, creating an aesthetic industry leader with good momentum and exciting growth opportunities,” Davin said. “We have already made measurable progress in bringing Cynosure and Palomar together as one organization, and expect to complete the integration in the next several quarters. With our planned implementation of $8 million to $10 million in synergies, we continue to expect the acquisition to be accretive in 2014.”

Second-Quarter Financial Results Conference Call

In conjunction with the announcement of its second-quarter 2013 financial results, Cynosure will host a conference call for investors and analysts at 9:00 a.m. ET today. On the call, Michael Davin and Timothy Baker, the Company’s Executive Vice President, Chief Operating Officer and Chief Financial Officer, will discuss Cynosure’s financial results and provide a business overview. Those who wish to listen to the conference call webcast should visit the “Investor Relations” section of the Company’s website at www.cynosure.com. The live call can also be


accessed by dialing (877) 709-8155 or (201) 689-8881. If you are unable to listen to the live call, the webcast will be archived on the Company’s website.

About Cynosure, Inc.

Cynosure develops and markets aesthetic treatment systems that enable plastic surgeons, dermatologists and other medical practitioners to perform non-invasive and minimally invasive procedures to remove hair, treat vascular and benign pigmented lesions, remove multi-colored tattoos, revitalize the skin, liquefy and remove unwanted fat through laser lipolysis, reduce cellulite, treat toe fungus and ablate sweat glands. Cynosure’s product portfolio is composed of a broad range of energy sources including Alexandrite, diode, Nd: YAG, picosecond, pulse dye, Q-switched lasers and intense pulsed light. Cynosure sells its products globally under the Cynosure, Palomar and ConBio brand names through a direct sales force in the United States, Canada, Mexico, France, Germany, Spain, the United Kingdom, Australia, China, Japan and Korea, and through international distributors in approximately 100 other countries. For corporate or product information, visit Cynosure’s website at www.cynosure.com.

Forward-Looking Statements

Any statements in this press release about future expectations, plans and prospects for Cynosure, Inc., as well as other statements containing the words “believes,” “anticipates,” “plans,” “expects,” “will” and similar expressions, constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including levels of demand for procedures performed with Cynosure products and for Cynosure products themselves, Cynosure’s ability to achieve anticipated synergies in calendar 2014, competition in the aesthetic laser industry, general business and economic conditions, effects of acquisitions that Cynosure has made or may make, Cynosure’s ability to develop and commercialize new products, Cynosure’s reliance on sole source suppliers, the inability to accurately predict the timing or outcome of regulatory decisions, and economic, market, technological and other factors discussed in Cynosure’s most recent Annual Report on Form 10-K and subsequently filed Quarterly Report on Form 10-Q for the first quarter of 2013, which are filed with the Securities and Exchange Commission. In addition, the forward-looking statements included in this press release represent Cynosure’s views as of the date of this press release. Cynosure anticipates that subsequent events and developments will cause its views to change. However, although Cynosure may elect to update these forward-looking statements at some point in the future, it specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Cynosure’s views as of any date subsequent to the date of this press release.


 

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Consolidated Statements of Income (Unaudited)

 

(In thousands, except per share data)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2013     2012     2013     2012  

Revenues

   $ 50,091      $ 39,573      $ 90,781      $ 73,741   

Cost of revenues

     22,304        16,533        39,307        31,193   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     27,787        23,040        51,474        42,548   

Operating expenses

        

Selling and marketing

     14,231        11,878        26,834        23,429   

Research and development

     3,536        3,460        7,317        6,699   

Amortization of intangible assets acquired

     283        342        497        684   

General and administrative

     24,376        3,667        29,477        7,185   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     42,426        19,347        64,125        37,997   

(Loss) income from operations

     (14,639     3,693        (12,651     4,551   

Interest income, net

     23        13        55        23   

Other expense, net

     (46     (298     (403     (89
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income before income taxes

     (14,662     3,408        (12,999     4,485   

Income tax (benefit) provision

     (5,708     728        (5,284     986   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income

   $ (8,954   $ 2,680      $ (7,715   $ 3,499   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted net (loss) income per share

   $ (0.54   $ 0.20      $ (0.47   $ 0.27   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted weighted average shares outstanding

     16,636        13,278        16,412        13,141   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic net (loss) income per share

   $ (0.54   $ 0.21      $ (0.47   $ 0.28   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic weighted average shares outstanding

     16,636        12,605        16,412        12,591   
  

 

 

   

 

 

   

 

 

   

 

 

 


 

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Condensed Consolidated Balance Sheet

 

(In thousands)

 

     June 30,
2013
     December 31,
2012
 
     (Unaudited)         

Assets:

     

Cash, cash equivalents and marketable securities

   $ 55,395       $ 86,057   

Short-term investments and related financial instruments

     37,259         40,617   

Accounts receivable, net

     37,816         17,970   

Inventories

     56,407         32,906   

Deferred tax asset, current portion

     2,304         783   

Prepaid expenses and other current assets

     5,595         5,149   
  

 

 

    

 

 

 

Total current assets

     194,776         183,482   

Property and equipment, net

     37,864         8,207   

Long-term marketable securities

     13,486         20,071   

Goodwill and intangibles, net

     152,302         21,748   

Other noncurrent assets

     1,331         1,061   
  

 

 

    

 

 

 

Total assets

   $ 399,759       $ 234,569   
  

 

 

    

 

 

 

Liabilities and stockholders’ equity:

     

Accounts payable and accrued expenses

   $ 49,636       $ 25,547   

Amounts due to related parties

     1,433         1,896   

Deferred revenue

     7,425         6,319   

Capital lease obligations

     307         322   
  

 

 

    

 

 

 

Total current liabilities

     58,801         34,084   

Capital lease obligations, net of current portion

     297         432   

Deferred revenue, net of current portion

     1,071         281   

Other long-term liabilities

     6,622         2,265   

Total stockholders’ equity

     332,968         197,507   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 399,759       $ 234,569   
  

 

 

    

 

 

 


 

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To supplement our consolidated financial statements presented in accordance with GAAP, Cynosure uses non-GAAP gross profit, non-GAAP income from operations, non-GAAP net income and non-GAAP EPS. 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. The non-GAAP financial measures included in this press release exclude costs associated with the acquisition of Palomar, for the three and six months ended June 30, 2013. This exclusion may be different from, and therefore not comparable to, similar measures used by other companies.

Cynosure’s management believes that the non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding the acquisition-related costs that may not be indicative of our core business operating results. Cynosure believes that both management and investors benefit from referring to the non-GAAP financial measures in assessing Cynosure’s performance and when planning, forecasting and analyzing future periods. The non-GAAP financial measures also facilitate management’s internal comparisons to Cynosure’s historical performance and our competitors’ operating results. Cynosure believes that the non-GAAP measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in our financial and operational decision making.

Reconciliation of GAAP Income Statement Measures to Non-GAAP Income Statement Measures (Unaudited)

 

(In thousands, except per share data)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2013     2012     2013     2012  

Gross profit

   $ 27,787      $ 23,040      $ 51,474      $ 42,548   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP adjustments to gross profit:

        

Costs associated with the acquisition of Palomar

     1,412        —          1,412        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Non-GAAP adjustments to gross profit

     1,412        —          1,412        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross profit dollars

   $ 29,199      $ 23,040      $ 52,886      $ 42,548   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross profit percentage

     58.3     58.2     58.3     57.7
     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2013     2012     2013     2012  

(Loss) income from operations

   $ (14,639   $ 3,693      $ (12,651   $ 4,551   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP adjustments to (loss) income from operations:

        

Costs associated with the acquisition of Palomar

     21,859        —          23,004        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Non-GAAP adjustments to (loss) income from operations

     21,859        —          23,004        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP income from operations

   $ 7,220      $ 3,693      $ 10,353      $ 4,551   
  

 

 

   

 

 

   

 

 

   

 

 

 
     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2013     2012     2013     2012  

Net (loss) income

   $ (8,954   $ 2,680      $ (7,715   $ 3,499   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP adjustments to net (loss) income:

        

Costs associated with the acquisition of Palomar

     21,859        —          23,004        —     

Income tax effect of Non-GAAP adjustments

     (7,867     —          (8,173     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Non-GAAP adjustments to net (loss) income

     13,992        —          14,831        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net income

   $ 5,038      $ 2,680      $ 7,116      $ 3,499   
  

 

 

   

 

 

   

 

 

   

 

 

 
     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2013     2012     2013     2012  

Diluted net (loss) income per share

   $ (0.54   $ 0.20      $ (0.47   $ 0.27   
  

 

 

   

 

 

   

 

 

   

 

 

 

Costs associated with the acquisition of Palomar

     1.27        —          1.35        —     

Income tax effect of Non-GAAP adjustments

     (0.44     —          (0.46     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Non-GAAP adjustments to net (loss) income

     0.83        —          0.89        —     

Non-GAAP diluted net income per share

   $ 0.29      $ 0.20      $ 0.42      $ 0.27   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares used to compute basic and diluted net income per share

     16,636        13,278        16,412        13,141   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares used to compute Non-GAAP diluted net income per share

     17,221        13,278        17,041        13,141