BURLINGTON, Mass., Oct. 30 /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 third quarter ended September 30, 2008. Revenues for the quarter
ended September 30, 2008 were $24.2 million, of which $19.2 million were
product revenues, $2.8 million were royalty revenues, $1.0 million were funded
development revenues, and $1.25 million were other revenues. Third quarter
gross margin from product revenues was 65 percent. Income before taxes for
the third quarter ended September 30, 2008 was $0.9 million, which included
approximately $3.5 million in litigation expenses and a $1.2 million non-cash
FAS 123R stock-based compensation expense.
The Company reported net income of $0.6 million, or $0.03 per diluted
share for the third quarter of 2008 versus net income of $5.3 million, or
$0.28 per diluted share for the third quarter of 2007. Non-GAAP net income
for the quarter ended September 30, 2008, which includes adjustments for the
non-cash FAS 123R compensation expense and non-cash taxes, resulted in $2.0
million, or $0.11 per diluted share. Non-GAAP net income for the quarter
ended September 30, 2007, which includes adjustments for back-owed royalties
and other revenues, cost of royalty revenues, legal expense reimbursement,
non-cash FAS 123R compensation expense, interest on back-owed royalties and
fees, and non-cash taxes, resulted in $5.2 million, or $0.27 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 nine months
ended September 30, 2008 and 2007.
The Company's balance sheet continues to be strong and includes $128
million in cash and cash equivalents.
Chief Executive Officer Joseph P. Caruso commented, "We were able to
achieve many of the milestones we set for ourselves this quarter even in the
face of a downturn in the global economy. Total revenues were up as compared
to the previous quarter with stable pricing and gross margin. During the
quarter, we also started shipping our newest platform system, the Aspire with
the laser lipolysis SlimLipo body sculpting system. Some of these first
systems were shipped to training sites established around the world. The
feedback has been excellent and we expect to benefit greatly from these
sites."
Mr. Caruso continued, "We were also pleased with the victory of the
Candela lawsuit in Texas. The jury found in our favor against Candela and
also invalidated all of the claims of their patent at issue in the case. This
was a very expensive suit for us and we are glad to have the costs associated
with it behind us."
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 (866) 356-4123 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 48448084 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 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. 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
Palomar Financial Summary:
Consolidated Statements of Income (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
Revenues:
Product revenues $19,223,597 $23,073,461 $56,118,901 $78,752,659
Royalty revenues 2,777,627 5,826,091 8,294,211 10,584,266
Funded product
development revenues 954,907 1,585,202 1,949,944 5,434,500
Other revenues 1,250,000 894,189 3,997,625 894,189
Total revenues 24,206,131 31,378,943 70,360,681 95,665,614
Costs and expenses:
Cost of product
revenues 6,764,284 7,869,200 19,689,284 26,796,166
Cost of royalty
revenues 1,111,051 2,330,436 3,317,685 4,233,706
Research and
development 4,219,677 4,187,559 14,153,284 12,242,994
Selling and
marketing 5,946,025 5,971,960 18,371,742 18,606,577
General and
administrative 5,952,934 4,360,561 17,284,595 11,655,562
Total costs and
expenses 23,993,971 24,719,716 72,816,590 73,535,005
Income (loss)
from operations 212,160 6,659,227 (2,455,909) 22,130,609
Interest income 798,522 1,926,745 3,058,056 4,826,121
Other (expense)
income (68,908) - (61,164) 500,000
Income before
income taxes 941,774 8,585,972 540,983 27,456,730
Provision for income
taxes 345,300 3,262,669 189,032 10,433,557
Net income $596,474 $5,323,303 $351,951 $17,023,173
Net income per share:
Basic $0.03 $0.29 $0.02 $0.93
Diluted $0.03 $0.28 $0.02 $0.88
Weighted average number
of shares
outstanding:
Basic 18,091,419 18,348,424 18,175,772 18,271,116
Diluted 18,289,995 19,325,562 18,450,464 19,383,122
Non-GAAP data:
Income before income
taxes $941,774 $8,585,972 $540,983 $27,456,730
Royalty revenues:
Back-owed royalty - (3,105,710) (682,380) (3,105,710)
Other revenues: Trade
dress infringement
fees - (894,189) (247,625) (894,189)
Cost of royalty
revenues: Back-owed
royalty - 1,242,284 272,952 1,242,284
General and
administrative: Royalty
settlement legal
reimbursement - (227,355) - (227,355)
General and
administrative:
Investment banking
fee for international
distributor agreement - - 1,013,899 -
FAS 123R
stock-based
compensation 1,238,244 180,213 5,104,337 166,240
Interest income:
Interest on back-
owed royalty - (259,166) (52,409) (259,166)
Other income:
Expiration of
standstill agreement - - - (500,000)
Non-GAAP income before
income taxes 2,180,018 5,522,049 5,949,757 23,878,834
Provision for income
taxes 345,300 3,262,669 189,032 10,433,557
Provision for income
taxes - non-cash (255,831) (2,747,511) (165,060) (8,786,153)
Tax effect related
to one-time events
- cash 117,633 (183,835) 568,552 (214,674)
Non-GAAP provision for
income taxes 207,102 331,323 592,524 1,432,730
Non-GAAP net income $1,972,916 $5,190,726 $5,357,233 $22,446,104
Non-GAAP diluted net
income per share $0.11 $0.27 $0.29 $1.16
Diluted weighted
average number of
shares outstanding 18,289,995 19,325,562 18,450,464 19,383,122
Consolidated Balance Sheets (Unaudited)
September 30, December 31,
2008 2007
Assets
Current assets:
Cash and cash equivalents $127,790,810 $90,460,350
Available-for-sale investments,
at market value - 41,910,000
Accounts receivable, net 10,939,812 16,037,475
Inventories 15,949,050 12,896,154
Deferred tax assets 5,997,259 3,811,873
Other current assets 1,005,678 1,129,300
Total current assets 161,682,609 166,245,152
Marketable securities, at
market value 5,319,297 -
Property and equipment, net 1,625,256 1,250,437
Other assets 119,568 111,074
Total assets $168,746,730 $167,606,663
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable $4,346,811 $1,987,579
Accrued liabilities 8,160,158 12,606,422
Deferred revenue 5,911,994 5,789,936
Total current liabilities 18,418,963 20,383,937
Deferred taxes 2,533,220 2,533,220
Total liabilities $20,952,183 $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 205,040,113 199,988,081
Accumulated other comprehensive (loss)
income (95,421) 12,590
Accumulated deficit (52,127,057) (52,479,008)
Treasury stock, at cost - 331,534 and
105,000 shares, respectively (5,207,882) (3,016,586)
Total stockholders' equity $147,794,547 $144,689,506
Total liabilities and stockholders'
equity $168,746,730 $167,606,663
