BURLINGTON, Mass., Feb. 5 /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, 2008. Revenues for the quarter ended December 31, 2008 were $17.2 million, of which $13.3 million were product revenues, $2.2 million were royalty revenues, $0.5 million were funded development revenues, and $1.25 million were other revenues. Fourth quarter gross margin from product revenues was 58 percent. Loss before taxes for the fourth quarter ended December 31, 2008 was $0.6 million, which included approximately $0.6 million in litigation expenses and a $0.8 million non-cash FAS 123R stock-based compensation expense.
Revenues for the year ended December 31, 2008 were $87.6 million, of which $69.4 million were product revenues, $10.5 million were royalty revenues, $2.4 million were funded development revenues, and $5.3 million were other revenues. Gross margin from product revenues was 64 percent for the year ended December 31, 2008. Loss before taxes for the year ended December 31, 2008 was $0.1 million, which included approximately $9.4 million in litigation expenses and a $5.9 million non-cash FAS 123R stock-based compensation expense.
The Company reported net loss of $0.4 million, or $0.02 per diluted share for the fourth quarter of 2008 and net loss of $68,000, or $0.00 per diluted share for the year ended December 31, 2008. Non-GAAP net income for the quarter ended December 31, 2008, which includes adjustments for the non-cash FAS 123R compensation expense and non-cash taxes, resulted in $0.2 million, or $0.01 per diluted share. Non-GAAP net income for the year ended December 31, 2008, which includes adjustments for back-owed royalties, trade dress infringement fees, cost of back-owed royalty revenues, investment banking fees related to an international distributor agreement, non-cash FAS 123R compensation expense, interest on back-owed royalties, and non-cash taxes, resulted in $5.9 million, or $0.32 per diluted share. Please refer to the financial statements included in this news release for a reconciliation of GAAP to non-GAAP results for the three and twelve months ended December 31, 2008 and 2007.
The Company's balance sheet continues to be strong and includes $123 million in cash and cash equivalents.
Chief Executive Officer Joseph P. Caruso commented, "The downturn in the global economy continues to affect the aesthetic laser industry. The decrease in revenue across the sector has been swift and severe driven by the inability of many prospective customers to obtain financing and prompting others to delay their capital equipment purchases until economic conditions improve. We are responding to these challenging economic times by taking actions to reduce our cost structure to be more in line with current sales levels in all areas of the company, including reductions in headcount and operating expense. Our flexible business model enables us to lower expenses to respond to lower current revenue levels while still investing a higher than industry average on fundamental research and new product development. During the quarter, we were also able to balance sales price, volume and operating expenses which resulted in a close to breakeven bottom line and positive cash flows from operations."
Mr. Caruso continued, "We have built a diversified business model that does not rely solely on high-priced capital equipment sales. During the fourth quarter, 42% of our revenue was generated from sources not related to our capital equipment sales. These are volatile economic times, but we feel confident that we have the resources needed to navigate through them, continue as an industry leader, and when the economy recovers, emerge as a stronger company."
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 income before taxes, non-GAAP provision for income 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) 597-0339 or listen to the webcast in the Investor Relations section of the Company's website at www.palomarmedical.com. The telephone replay will be available one hour after the call at (888) 286-8010 passcode 52026952 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 granted The Procter & Gamble Company a non-exclusive License Agreement to certain patents, technology and FDA documents related to the home-use, light-based hair removal field for women. In addition, Palomar has an exclusive development and license 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 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. 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, 2007 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
Consolidated Statements of Income (Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2008 2007 2008 2007
Revenues:
Product revenues $13,260,047 $24,468,273 $69,378,948 $103,220,932
Royalty revenues 2,225,921 2,421,193 10,520,132 13,005,459
Funded product
development revenues 484,451 1,263,563 2,434,395 6,698,063
Other revenues 1,250,000 - 5,247,625 894,189
Total revenues 17,220,419 28,153,029 87,581,100 123,818,643
Costs and expenses:
Cost of product
Revenues 5,528,354 6,594,776 25,217,638 33,390,942
Cost of royalty
revenues 890,369 968,478 4,208,054 5,202,184
Research and
Development 3,539,604 4,430,197 17,692,888 16,673,191
Selling and
Marketing 4,968,017 6,279,118 23,339,759 24,885,695
General and
Administrative 3,231,927 5,839,838 20,516,522 17,495,400
Total costs and
Expenses 18,158,271 24,112,407 90,974,861 97,647,412
(Loss) income
from operations (937,852) 4,040,622 (3,393,761) 26,171,231
Interest income 594,268 1,597,468 3,652,324 6,398,805
Other (expense)
income (255,641) (11,642) (316,805) 513,142
(Loss) income
before income
taxes (599,225) 5,626,448 (58,242) 33,083,178
(Benefit) provision for
income taxes (179,109) 2,141,959 9,923 12,575,516
Net (loss) income $(420,116) $3,484,489 $(68,165) $20,507,662
Net (loss) income
per share:
Basic $(0.02) $0.19 $0.00 $1.12
Diluted $(0.02) $0.18 $0.00 $1.07
Weighted average number
of shares outstanding:
Basic 18,087,847 18,295,748 18,160,700 18,277,324
Diluted 18,087,847 18,960,555 18,160,700 19,254,023
Non-GAAP data:
(Loss) income before
income taxes $(599,225) $5,626,448 $(58,242) $33,083,178
Royalty revenues:
Back-owed royalty - - (682,380) (3,105,710)
Other revenues: Trade
dress infringement fees - - (247,625) (894,189)
Cost of product
revenues: Royalty
adjustment (1,493,394) (662,636)
Cost of royalty
revenues: Back-owed
royalty - - 272,952 1,242,284
General and administrative:
Royalty settlement
legal reimbursement - - - (227,355)
General and administrative:
Investment banking fee for
international distributor
agreement - - 1,013,899 -
FAS 123R stock-based
Compensation 818,404 323,306 5,922,741 489,546
Interest income:
Interest on back-owed
royalty - - (52,409) (259,166)
Non-GAAP income before
income taxes 219,179 4,456,360 6,168,936 29,665,952
(Benefit) provision for
income taxes (179,109) 2,141,959 9,923 12,575,516
Provision for income
taxes - non-cash 221,131 (1,804,372) (12,282) (10,590,525)
Tax effect related
to one-time
events - cash (33,145) (70,205) 252,201 (205,034)
Non-GAAP provision for
income taxes 8,877 267,382 249,842 1,779,957
Non-GAAP net income $210,302 $4,188,978 $5,919,094 $27,885,995
Non-GAAP diluted net
income per share $0.01 $0.22 $0.32 $1.45
Diluted weighted
average number of
shares outstanding 18,246,401 18,960,555 18,406,357 19,254,023
Consolidated Balance Sheets (Unaudited)
December 31, December 31,
2008 2007
Assets
Current assets:
Cash and cash equivalents $122,601,139 $90,460,350
Available-for-sale investments, at
fair market value - 41,910,000
Accounts receivable, net 6,395,364 16,037,475
Inventories 16,045,725 12,896,154
Deferred tax assets 5,347,459 3,811,873
Other current assets 538,987 1,129,300
Total current assets 150,928,674 166,245,152
Marketable securities, at fair value 4,486,834 -
Property and equipment, net 14,225,397 1,250,437
Other assets 7,515 111,074
Total assets $169,648,420 $167,606,663
Liabilities and Stockholders' Equity
Liabilities:
Note payable $6,000,000 $-
Accounts payable 3,247,051 1,987,579
Accrued liabilities 4,614,121 12,606,422
Deferred revenue 6,166,246 5,789,936
Total current liabilities 20,027,418 20,383,937
Deferred taxes 2,815,577 2,533,220
Total liabilities $22,842,995 $22,917,157
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 - 18,479,345 and
18,442,846 shares, respectively 184,794 184,429
Additional paid-in capital 205,306,957 199,988,081
Accumulated other comprehensive
(loss) income (542,443) 12,590
Accumulated deficit (52,547,173) (52,479,008)
Treasury stock, at cost - 413,255
and 105,000 shares, respectively (5,596,710) (3,016,586)
Total stockholders' equity $146,805,425 $144,689,506
Total liabilities and stockholders'
equity $169,648,420 $167,606,663
