BIOLASE Reports 2012 Fourth Quarter, Year-End Results

BIOLASE Reports 2012 Fourth Quarter, Year-End Results 
Net Revenue Increases 45.0% to $19.1 Million, Quarter Over Quarter;
Core WaterLase Unit Sales Increase 42.0%, Quarter Over Quarter; Net
Income of $1.0 Million -- $0.03 per share -- in Q4 2012; Non-GAAP Net
Income of $1.7 Million -- $0.05 per Share -- in Q4 2012; 2013 Q1
Revenue Guidance of $14 Million to $15 Million; 2013 Annual Revenue
Guidance of $68 Million to $72 Million 
IRVINE, CA -- (Marketwire) -- 03/06/13 --  BIOLASE, Inc. (NASDAQ:
BIOL), the world's leading dental laser manufacturer and distributor,
today reported unaudited financial results for the fourth quarter and
year ended December 31, 2012.  
Financial Highlights of the 2012 Fourth Quarter: 


 
--  Net revenue of $19.1 million for Q4 2012, a 45.0% increase over $13.2
    million for Q4 2011, and a 12.4% increase over the midpoint o
f the
    Company's guidance of $16.5 million to $17.5 million.
--  Net income of $1.0 million, or $0.03 per share, as compared to a net
    loss of $2.0 million or a loss of $0.06 per share for Q4 2011.
--  Non-GAAP net income of $1.7 million, or $0.05 per share, as compared
    to a non-GAAP net loss of $1.3 million, or a loss of $0.04 per share,
    for Q4 2011.
--  Unit sales of WaterLase(R) systems increased by 42.0% as compared
    to Q4 2011 levels.
--  Revenues from the sale of WaterLase systems increased $2.6 million, or
    29.2%, as compared to Q4 2011 levels.
--  Revenues from the sale of diode laser systems increased $1.3 million,
    or 79.9%, as compared to Q4 2011 levels.

  
2012 Financial Highlights: 


 
--  Net revenue of $57.4 million, as compared to $48.9 million in the
    prior year. Excluding the effects of the $1.1 million inventory
    repurchase in Q2 2012 and one-time prepaid purchase orders from Henry
    Schein, Inc. (NASDAQ: HSIC)‎ ("Schein") in 2011 totaling $5.9
    million, non-GAAP adjusted revenue for 2012 increased $15.5 million,
    or 36.1%, over 2011, which was in line with our guidance of 36%.
--  Revenues from the sale of WaterLase systems increased $6.8 million, or
    23.1%, as compared to the prior year. Excluding the effects of the
    $1.1 million inventory repurchase in Q2 2012, and one-time prepaid
    purchase orders of WaterLase systems from Schein in 2011 totaling $2.3
    million, non-GAAP adjusted revenue for WaterLase systems in 2012
    increased $10.2 million, or 37.7%, over 2011.
--  Net loss improved to $3.1 million, or a loss of $0.10 per share, as
    compared to a net loss of $4.5 million, or a loss of $0.15 per share,
    for 2011.
--  Non-GAAP net loss improved to $431,000 for 2012, as compared to a
    non-GAAP net loss of $1.4 million in 2011.

  
Operating highlights of and subsequent to the 2012 fourth quarter
include: 


 
--  Received U.S. Food and Drug Administration ("FDA") clearance for the
    EPIC 10(TM) diode laser.
--  Received FDA clearance for 940nm Diolase 10(TM) diode soft-tissue
    laser for a broad spectrum of medical procedures; includes clearance
    for over 80 procedures in 19 additional medical markets.
--  Launched the EPIC(TM) V-Series(TM) veterinary soft-tissue diode
    laser.
--  Launched a website to showcase BIOLASE's wholly-owned subsidiary
    OCCULASE and to expand the multiple applications of its proprietary
    WaterLase technology into ophthalmology.
--  Issued broad new patent for treating eye conditions, including
    Presbyopia, Cataracts, and Glaucoma; provides additional support for
    ophthalmic applications.
--  Appointed Samir Chowdhury, Ph.D., as General Manager and Colleen
    Boswell as Vice President, Regulatory Affairs.
--  Declared a one-half percent stock dividend payable on March 29, 2013,
    to stockholders of record as of March 15, 2013.

  
Federico Pignatelli, Chairman and CEO, said, "For the past two years,
BIOLASE has undergone a radical restructuring, which was
substantially completed at year-end 2012. Now we can concentrate on
continued execution and the meaningful expansion of our business in
2013 and beyond."  
"Overall 2012 was a year of execution where we met or exceeded our
guidance throughout the year and went on to generate cash from
operations in the fourth quarter. We have expanded our offerings of
internally developed lasers and in-licensed cone beam and CAD/CAM
imaging products while significantly strengthening our intellectual
property and patent portfolio. As a result of these efforts, our
annual revenue for 2012 increased significantly over 2011 and more
than doubled that of 2010," noted Pignatelli. "With a number of solid
initiatives in place, including new product launches, the recent
approval of over 80 new procedures in 19 additional medical markets,
and the launch of EPIC V-Series in to the veterinary market, we
expect BIOLASE to continue to grow strongly in 2013." 
Fourth Quarter Financial Results
 Net revenue for the 2012 fourth
quarter totaled $19.1 million, compared with $13.2 million in the
2011 fourth quarter. The increase of $5.9 million, or 45.0%, was
primarily driven by increased sales of the Company's all-tissue
WaterLase systems, diode soft-tissue laser systems, and imaging
systems. 
The number of WaterLase systems sold increased by 42.0% in the 2012
fourth quarter as compared to the prior year quarter. Such growth was
the result of successful efforts of our direct sales force in North
America. Revenues from the sale of WaterLase systems increased $2.6
million, or 29.2%, to $11.7 million in the 2012 fourth quarter as
compared to $9.1 million in the prior year quarter. WaterLase system
sales comprised approximately 61.5% of net revenues for the 2012
fourth quarter compared to 69.0% for the prior year quarter. The
majority of these WaterLase revenues in both quarters were from sales
of the Company's flagship WaterLase iPlus all-tissue laser system.  
"The number of WaterLase systems sold increased by a larger
percentage than WaterLase revenues quarter over quarter because of
our strategy to offer systems of varying capabilities at multiple
price points. The iPlus is our flagship product and our primary
revenue driver, and we expect this to continue in 2013. By offering
multiple product configurations across a range of price points, we
believe we can attract more customers, drive adoption, and generate
more significant product and consumables revenue," said Fred Furry,
Chief Operating Officer and Chief Financial Officer. 
Revenues from the sale of diode laser systems increased $1.3 million,
or 79.9%, to $2.8 million in the 2012 fourth quarter as compared to
$1.5 million in the prior year quarter. Diode laser system sales
comprised approximately 14.4% of net revenues for the 2012 fourth
quarter compared to 11.6% for the prior year quarter. BIOLASE
received the CE Mark for the EPIC 10 in the final days of September
2012, and received notice of its regulatory clearance from the FDA on
October 1, 2012. 
Furry added, "As expected, sales of diode laser systems increased
significantly in the fourth quarter, and we anticipate that the EPIC
10 will continue to be a strong contributor to revenue in 2013 and
beyond. We also believe that the low price point of our EPIC diode
soft-tissue laser system will continue to broaden the demand for
lasers and create an up-sell opportunity for our more expensive,
all-tissue WaterLase systems." 
Imaging revenues, which included both cone beam and CAD/CAM, totaled
approximately $1.6 million, or 8.6% of net revenue, during the 2012
fourth quarter as compared to $138,000, or 1.0% of net revenue, for
the prior year quarter. 
Gross profit as a percentage of net revenue was 46.6% as compared to
42.2% for the prior year quarter. This quarter-over-quarter increase
was primarily due to higher unit sales of WaterLase systems, diode
laser systems, and imaging systems, increased consumables, and
increased license fees and royalty revenue, combined with decreased
costs of revenues as service and warranty expenses continue to
decline as manufacturing processes and quality continue to improve.  
Operating expenses totaled $7.7 million, or 40.4% of net sales, as
compared to $7.5 million, or 56.9% of net sales, in the 2011 fourth
quarter. The increased sales and marketing expense is primarily a
result of sales commissions accrued on higher system revenues as well
as higher payroll and consulting costs associated with the
development of our direct sales force in North America and an
increase in convention costs, which were offset by a decrease in the
cost of supplies. 
General and administrative expenses decreased to $1.8 million during
the 2012 fourth quarter as compared to $2.0 million for the prior
year quarter.  
Engineering and development totaled $1.0 million during the 2012
fourth quarter, essentially flat with the prior year quarter.  
As a result, net income for the 2012 fourth quarter totaled $1.0
million, or $0.03 per share, compared
 to a net loss of $2.0 million,
or a loss of $0.06 per share, for the 2011 fourth quarter.  
After removing interest expense of $99,000, non-cash depreciation and
amortization expenses of $140,000, and non-cash stock-based, other
equity instruments, and other non-cash compensation expense of
$383,000, the 2012 fourth quarter resulted in non-GAAP net income of
$1.7 million, or $0.05 per share, compared with a non-GAAP net loss
of $1.3 million, or ($0.04) per share, for the 2011 fourth quarter.  
2012 Financial Results
 GAAP net revenue for the year ended December
31, 2012, totaled $57.4 million, compared with net revenue of $48.9
million in the prior year. Domestic revenues were $40.6 million, or
70.7% of net revenue, for 2012 compared to $32.8 million, or 67.1% of
net revenue, for 2011. International revenues for 2012 were $16.8
million, or 29.3% of net revenue compared to $16.1 million, or 32.9%
of net revenue for 2011. 
Adjusting for the inventory re-purchased in connection with the
Schein termination agreement, non-GAAP adjusted revenue for 2012 was
$58.5 million, which was the midpoint of our initial annual revenue
guidance for 2012. This represents an increase of $9.6 million, or
19.7% as compared to net revenue of $48.9 million for 2011. When
excluding both the 2012 inventory re-purchased in connection with the
Schein termination agreement, which was offset against our 2012
second quarter, and the 2011 non-recurring event of equipment sales
to Schein for irrevocable purchase orders of $5.9 million; non-GAAP
adjusted revenue for 2012 represents a 36.1% increase over non-GAAP
adjusted revenue for the prior year, which was in line with our
guidance of 36%. 
The number of WaterLase systems sold during 2012 increased by 37.1%
as compared to the prior year, primarily due to increased sales of
WaterLase iPlus systems and sales of MD Turbo(TM) systems, including
100% of the equipment that the Company re-purchased in connection
with the Schein termination agreement.  
Net revenues from the sale of WaterLase systems, including the effect
of the $1.1 million inventory repurchase from Schein during the 2012
second quarter, increased $6.8 million, or 23.1%, for 2012 as
compared to the prior year. Excluding the effect of the Schein
inventory re-purchase and the 2011 non-recurring event of equipment
sales to Schein for irrevocable purchase orders of $2.3 million;
non-GAAP adjusted net revenue from the sales of our WaterLase systems
for 2012 increased by $10.2 million, or 37.7%, compared to 2011. 
WaterLase system sales comprised approximately 62.8% of gross
revenues for 2012 compared to 59.9% for the prior year. The majority
of these WaterLase revenues were from sales of the Company's flagship
WaterLase iPlus all-tissue laser system.  
Revenues from the sale of diode laser systems decreased $2.9 million,
or 31.2%, to $6.3 million for 2012 as compared to $9.2 million for
2011. Diode laser system sales comprised approximately 11.0% of net
revenues for 2012 compared to 18.8% for the prior year. Excluding the
effect of the 2011 non-recurring diode sales to Schein for
irrevocable purchase orders of $3.6 million, non-GAAP adjusted net
revenue from the sales of our diode systems for 2012 increased by
$729,000, or 13.1%, compared to 2011. Diode laser system sales were
negatively impacted during 2012 due to market anticipation of new
EPIC 10 diode laser system which was cleared by the FDA in October
2012.  
Imaging system net revenue, which included our in-licensed cone beam
and CAD/CAM products, totaled approximately $3.4 million, or 5.9% of
net revenue, in 2012, as compared to $238,000, or 0.5% of net
revenue, in 2011. 
Pignatelli commented, "We added cone beam digital imaging to our
product offerings in late 2011, and further enhanced our imaging
products with the addition of CAD/CAM intra-oral scanning in late
2012. These in-licensed imaging systems are expected to generate
greater revenue growth while increasing awareness in our core
internally developed laser products."  
Gross profit as a percentage of net revenue was 46.2% for 2012 as
compared to 43.6% for the prior year. The year-over-year increase was
primarily due to increased sales of WaterLase systems and increased
sales of ancillary consumables, coupled with lower costs of revenues,
reflecting lower service and warranty expenses due to ongoing
improvements in manufacturing processes and quality.  
Operating expenses totaled $29.0 million for 2012, or 50.6% of net
sales, as compared to $25.3 million, or 51.8% of net sales, for 2011.
The increase was primarily due to increased sales commission earned
on higher revenues, increased convention costs associated with the
imaging product lines, increased payroll and consulting fees related
to further development of the Company's direct sales force, and
increased media and advertising costs. 
The net loss for 2012 was $3.1 million, or a loss of $0.10 per share,
compared with a
 net loss of $4.5 million, or a loss of $0.15 per
share, for 2011. 
After removing interest expense of $239,000, non-cash depreciation
and amortization expenses of $513,000, and non-cash stock-based,
other equity instruments, and other non-cash compensation expense of
$1.9 million, the non-GAAP net loss for 2012 was $431,000, or a loss
of $0.01 per share, compared with a non-GAAP net loss of $1.4
million, or a loss of $0.05 per share, for 2011.  
Liquidity and Capital Resources
 As of December 31, 2012, BIOLASE had
approximately $7.5 million in working capital. Cash and cash
equivalents totaled approximately $2.5 million at December 31, 2012,
compared to $1.3 million at September 30, 2012, and $3.3 million at
December 31, 2011.  
Accounts receivable totaled $11.7 million at December 31, 2012,
compared to $10.3 million at September 30, 2012, and $8.9 million at
December 31, 2011. Stockholders' equity was $11.8 million at December
31, 2012. In addition, the Company had two revolving credit
facilities totaling $8.0 million, with $6.4 million of available
borrowings, in excess of the $1.6 million outstanding, at December
31, 2012. 
Financial Outlook
 For the 2013 first quarter, BIOLASE expects net
revenue of approximately $14.0 million to $15.0 million. The midpoint
of $14.5 million reflects expected growth of approximately 18% as
compared to the 2012 first quarter. After the 2013 first quarter the
Company does not plan to provide quarterly guidance for the rest of
2013. 
For the year ending December 31, 2013, the Company expects net
revenue of approximately $68 million to $72 million. The midpoint of
$70 million represents a 22% increase over 2012 net revenue and would
also represent record revenue for the Company. The Company also
expects to generate cash from operations for the year ending December
31, 2013.  
Conference Call
 As previously announced, BIOLASE will hold a
conference call to discuss these financial results as follows: 


 
                                                                            
Date:             Wednesday, March 6, 2013                                  
Time:             4:30pm EST                                                
Dial-in numbers:  1-877-941-1428 (toll-free/U.S. & Canada)                  
                  1-480-629-9665 (toll/international)                       
Live webcast:     www.biolase.com, under 'Investors'                        

 
The archived webcast will be available for 30 days on the Company's
website, www.biolase.com, in the 'Investors' section under 'Audio
Archive'.  
About BIOLASE, Inc.
 BIOLASE, Inc. is a biomedical company that
develops, manufactures and markets dental lasers and also distributes
and markets dental imaging equipment and CAD/CAM systems; products
that are focused on technologies that advance the practice of
dentistry and medicine. The Company's laser products incorporate
approximately 314 patented and patent-pending technologies designed
to provide biologically clinically superior performance with less
pain and faster recovery times. Its imaging products provide
cutting-edge technology at competitive prices to deliver the best
results for dentists and patients. BIOLASE's principal products are
dental laser systems that perform a broad range of dental procedures,
including cosmetic and complex surgical applications, and a full line
of dental imaging equipment. BIOLASE has sold more than 22,000 lasers
worldwide. Other products under development address ophthalmology and
other medical and consumer markets. 
WaterLase(R), WaterLase MD(R), iPlus(R), WaterLase MD Turbo(TM), and
EPIC(TM) are trademarks of BIOLASE, Inc. 
TRIOS(R) is a registered trademark of 3Shape A/S. 
For updates and information on WaterLase a
nd laser dentistry, find
BIOLASE online at www.biolase.com, Facebook at
www.facebook.com/biolaseinc, Twitter at twitter.com/biolaseinc, and
YouTube at www.youtube.com/biolasevideos.  
Non-GAAP Financial Measures
 The non-GAAP financial measures
contained herein are a supplement to the corresponding financial
measures prepared in accordance with generally accepted accounting
principles ("GAAP"). The non-GAAP financial measures presented
exclude the items summarized in the table on page 10 of this press
release. Management believes that adjustments for these items assist
investors in making comparisons of period-to-period operating results
and that these items are not indicative of the Company's on-going
core operating performance.  
Management uses non-GAAP net income (loss) and non-GAAP net income
(loss) per basic and diluted share in its evaluation of the Company's
core after-tax results of operations and trends between fiscal
periods and believes that these measures are important components of
its internal performance measurement process. Management believes
that providing these non-GAAP financial measures allows investors to
view the Company's financial results in the way that management views
the financial results.  
The non-GAAP financial measures presented herein have certain
limitations in that they do not reflect all of the costs associated
with the operations of the Company's business as determined in
accordance with GAAP. Therefore, investors should consider non-GAAP
financial measures in addition to, and not as a substitute for, or as
superior to, measures of financial performance prepared in accordance
with GAAP. The non-GAAP financial measures presented by the Company
may be different from the non-GAAP financial measures used by other
companies.  
Safe Harbor Statement under the Private Securities Litigation Reform
Act of 1995
 Statements contained in this press release that refer to
BIOLASE's estimated or anticipated future results or other
non-historical facts are forward-looking statements, as are any
statements in this press release concerning prospects related to
BIOLASE's strategic initiatives, product introductions and
anticipated financial performance. Forward-looking statements can
also be identified through the use of words such as "anticipates,"
"expects," "intends," "plans," "believes," "seeks," "estimates,"
"may," "will," and variations of these words or similar expressions.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which reflect BIOLASE's current
perspective of existing trends and information and speak only as of
the date of this release. Actual results may differ materially from
BIOLASE's current expectations depending upon a number of factors
affecting BIOLASE's business. These factors include, among others,
adverse changes in general economic and market conditions,
competitive factors including but not limited to pricing pressures
and new product introductions, uncertainty of customer acceptance of
new product offerings and market changes, risks associated with
managing the growth of the business, and those other risks and
uncertainties that may be detailed, from time-to-time, in BIOLASE's
reports filed with the SEC. BIOLASE does not undertake any
responsibility to revise or update any forward-looking statements
contained herein.  
(financial tables follow) 


 
                                                                            
                               BIOLASE, INC.                                
                                                                            
                   CONSOLIDATED STATEMENTS OF OPERATIONS                    
              (unaudited, in thousands, except per share data)              
                                                                            
                                  Three Months Ended    Twelve Months Ended 
                                     December 31,          December 31,     
                                 --------------------  -------------------- 
                                    2012       2011       2012       2011   
                                 ---------  ---------  ---------  --------- 
                                                                            
Products and services revenue    $  19,044  $  13,137  $  58,332  $  48,419 
Non-recurring event                     --         --     (1,141)        -- 
License fees and royalty revenue        36         20        165        439 
                                 ---------  ---------  ---------  --------- 
  Net revenue                       19,080     13,157     57,356     48,858 
                                 ---------  ---------  ---------  --------- 
Cost of revenue                     10,190      7,609     32,019     27,540 
Non-recurring event                     --         --     (1,141)        -- 
                                 ---------  ---------  ---------  --------- 
  Net cost of revenue               10,190      7,609     30,878     27,540 
                                 ---------  ---------  ---------  --------- 
Gross profit                         8,890      5,548     26,478     21,318 
                                 ---------  ---------  ---------  --------- 
Operating expenses:                                                         
  Sales and marketing                4,867      4,395     16,250     13,075 
  General and administrative         1,804      2,023      8,075      7,936 
  Engineering and development        1,027      1,073      4,684      4,311 
                                 ---------  ---------  ---------  --------- 
    Total operating expenses         7,698      7,491     29,009     25,322 
                                 ---------  ---------  ---------  --------- 
Income (loss) from operations        1,192     (1,943)    (2,531)    (4,004)
                                 ---------  ---------  ---------  --------- 
                                                                            
Loss on foreign currency                                                    
 transactions                          (38)       (78)      (175)       (88)
Interest expense                       (99)         1       (239)      (305)
                                 ---------  -----
----  ---------  --------- 
Non-operating loss, net               (137)       (77)      (414)      (393)
                                 ---------  ---------  ---------  --------- 
Income (loss) before income tax                                             
 provision                           1,055     (2,020)    (2,945)    (4,397)
Income tax provision                    14         10        111         89 
                                 ---------  ---------  ---------  --------- 
Net income (loss)                $   1,041  $  (2,030) $  (3,056) $  (4,486)
                                 =========  =========  =========  ========= 
                                                                            
Net income (loss) per share:                                                
  Basic                          $    0.03  $   (0.06) $   (0.10) $   (0.15)
                                 =========  =========  =========  ========= 
  Diluted                        $    0.03  $   (0.06) $   (0.10) $   (0.15)
                                 =========  =========  =========  ========= 
                                                                            
Shares used in the calculation                                              
 of net income (loss) per share:                                            
  Basic                             31,284     31,248     31,308     29,907 
                                 =========  =========  =========  ========= 
  Diluted                           31,406     31,248     31,308     29,907 
                                 =========  =========  =========  ========= 
                                                                            
                                                                            
                                                                            
                               BIOLASE, INC.                                
                                                                            
                        CONSOLIDATED BALANCE SHEETS                         
              (unaudited, in thousands, except per share data)              
                                                                            
                                                        December 31,        
                                                 -------------------------- 
                                                     2012          2011     
                                                 ------------  ------------ 
                     ASSETS                                                 
                                                                            
Current assets:                                                             
  Cash and cash equivalents                      $      2,543  $      3,307 
  Accounts receivable, less allowance of $304                               
   and $289 in 2012 and 2011, respectively             11,680         8,899 
  Inventory, net                                       11,142        11,312 
  Prepaid expenses and other current assets             1,552         1,808 
                                                 ------------  ------------ 
    Total current assets                               26,917        25,326 
Property, plant and equipment, net                      1,509         1,148 
Intangible assets, net                                    300           212 
Goodwill                                                2,926         2,926 
Deferred tax asset                                         16             8 
Other assets                                              305           187 
                                                 ------------  ------------ 
    Total assets                                 $     31,973  $     29,807 
                                                 ============  ============ 
                                                                            
 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                             
Current liabilities:                                                        
  Lines of credit                                $      1,637  $         -- 
  Accounts payable                                      7,663         7,804 
  Accrued liabilities                                   6,267         6,177 
  Customer deposits                                       582           165 
  Deferred revenue, current portion                     3,226         2,136 
                                                 ------------  ------------ 
    Total current liabilities                          19,375        16,282 
Deferred tax liabilities                                  663           594 
Deferred revenue, long-term                                 3            25 
Other liabilities, long-term                              138           337 
                                                 ------------  ------------ 
    Total liabilities                                  20,179        17,238 
                                                 ------------  ------------ 
                                                                            
Commitments and contingencies                                               
Stockholders' equity (deficit):                                             
  Preferred stock, par value $0.001                        --            -- 
  Common stock, par value $0.001                           34            33 
  Additional paid-in capital                          140,747       138,507 
  Accumulated other comprehensive loss                   (320)         (360)
  Accumulated deficit                                (112,268)     (109,212)
                                                 ------------  ------------ 
                                                       28,193        28,968 
  Treasury stock (cost of 1,964 shares                                      
   repurchased)                                       (16,399)      (16,399)
                                                 ------------  ------------ 
    Total stockholders' equity                         11,794        12,569 
                                                 ------------  ------------ 
    Total liabilities and stockholders' equity   $     31,973  $     29,807 
                                                 ============  ============ 
                                                                            
                                                                            
                                                                            
                               BIOLASE, INC.                                
  Reconciliation of GAAP Financial Results to Non-GAAP Financial Measures   
              (unaudited, in thousands, e
xcept per share data)              
                                                                            
                                  Three months ended    Twelve months ended 
                                     December 31,          December 31,     
                                ---------------------  -------------------- 
                                   2012        2011       2012       2011   
                                ----------  ---------  ---------  --------- 
                                                                            
GAAP net revenue                $   19,080  $  13,157  $  57,356  $  48,858 
Add: inventory re-purchase in                                               
 connection with Schein                                                     
 Termination Agreement                  --         --      1,141         -- 
Less: equipment sales to Schein                                             
 for irrevocable purchase                                                   
 orders                                 --         --         --     (5,877)
                                ----------  ---------  ---------  --------- 
Non-GAAP adjusted revenue       $   19,080  $  13,157  $  58,497  $  42,981 
                                ==========  =========  =========  ========= 
                                                                            
                                                                            
                                                                            
GAAP net income (loss)          $    1,041  $  (2,030) $  (3,056) $  (4,486)
Adjustments:                                                                
  Interest expense                      99         (1)       239        305 
  Depreciation and amortization                                             
   expense                             140        133        513        695 
  Stock-based, other equity                                  
               
   instruments, and other non-                                              
   cash compensation expense           383        638      1,873      2,051 
                                ----------  ---------  ---------  --------- 
Non-GAAP net income (loss)      $    1,663  $  (1,260) $    (431) $  (1,435)
                                ==========  =========  =========  ========= 
                                                                            
                                                                            
                                                                            
GAAP net income (loss) per                                                  
 share:                                                                     
  Basic and diluted             $     0.03  $   (0.06) $   (0.10) $   (0.15)
Adjustments:                                                                
  Interest expense                    0.00       0.00       0.01       0.01 
  Depreciation and amortization                                             
   expense                            0.00       0.00       0.02       0.02 
  Stock-based, other equity                                                 
   instruments, and other non-                                              
   cash compensation expense          0.02       0.02       0.06       0.07 
                                ----------  ---------  ---------  --------- 
Non-GAAP net income (loss) per                                              
 share:                                                                     
  Basic and Diluted             $     0.05  $   (0.04) $   (0.01) $   (0.05)
                                ==========  =========  =========  ========= 

  
For further information, please contact: 
Lisa Wilson 
In-Site Communications, Inc. 
212-759-3929 
 
 
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