Cynosure Reports First-Quarter 2013 Financial Results

            Cynosure Reports First-Quarter 2013 Financial Results

- Revenue of $40.7 Million, Up 19% From Q1 2012;

- Adjusted EPS of $0.12 Excluding Acquisition-Related Costs;

- GAAP EPS of $0.07 Including Acquisition-Related Costs;

- Palomar Acquisition Expected to Close by the End of June 2013

PR Newswire

WESTFORD, Mass., April 30, 2013

WESTFORD, Mass., April 30, 2013 /PRNewswire/ --Cynosure, Inc. (NASDAQ: CYNO)
today announced financial results for the three months ended March 31, 2013.

Financial Highlights
Revenues for the first quarter of 2013 increased 19% to $40.7 million from
$34.2 million for the same period of 2012, reflecting top-line growth across
all geographic regions.

On an adjusted basis, excluding costs associated with the Company's pending
acquisition of Palomar Medical Technologies, Inc., net income for the first
quarter of 2013 was $2.1 million, or $0.12 per diluted share. Net income
under GAAP (Generally Accepted Accounting Principles), which includes the
acquisition-related costs, was $1.2 million, or $0.07 per diluted share, for
the first quarter of 2013, compared with $0.8 million, or $0.06 per diluted
share, for the first quarter of 2012.

"Higher revenue, a favorable product mix and strong operating leverage
contributed to a positive first quarter for Cynosure," said Cynosure's
President and Chief Executive Officer Michael Davin. "Laser product revenue
increased 21 percent to $34.1 million from $28.1 million for the same period
of 2012. Each of our distribution channels posted year-over-year gains, with
particularly robust growth coming from our North American direct sales
channel, our Asian subsidiaries and third-party distributors. These results
speak to the success of both new product introductions in the United States
and a number of recent marketing clearances we have received in key
international territories."

The first quarter of 2013 was highlighted by Cynosure's U.S. launch of its
newest flagship product, the non-invasive PicoSure™ Picosecond Laser
Workstation, at the American Academy of Dermatology (AAD) Annual Meeting in
March. PicoSure is the world's first picosecond laser indicated for the
removal of tattoos and benign pigmented lesions.

"Coming off of the successful introduction at AAD, demand for PicoSure has
been positive, with the revenue ramp slightly steeper than we had anticipated
at this early point after the launch," Davin said. "While we do not break out
revenue by individual product, PicoSure is on pace to achieve the $10 million
sales target we have historically established for the introduction of our
flagship laser systems in their first full year on the market."

Gross profit margin on a GAAP basis for the three months ended March 31, 2013
increased to 58.2%, compared with 57.1% for the same period of 2012,
reflecting a favorable product mix and greater efficiency in the 2013 period.

On an adjusted basis, excluding the acquisition-related costs, the Company's
total operating expenses for the first quarter of 2013 were $20.6 million, or
51% of revenues. On a GAAP basis, including costs related to the acquisition,
total operating expenses for the first quarter of 2013 were $21.7 million, or
53% of revenues, compared with $18.7 million, or 55% of revenues, for the
first quarter of 2012. The increase in operating expenses, exclusive of
acquisition costs, was primarily due to higher selling and marketing expenses
to support sales growth, research and development costs associated with
PicoSure, and clinical research development.

Recent Highlights

  oIn March, Cynosure and Palomarannounced the signing of a definitive
    agreement pursuant to which Cynosure will acquire Palomar in a cash and
    stock transaction valued at approximately $294 million, creating one of
    the world's premier aesthetic laser and light-based companies.The
    transaction is expected to close by the end of June 2013.
  oIn April, Cynosure's technology was showcased in 16 scientific abstracts
    presented at LASER 2013, the 33rd Annual Scientific Conference of the
    American Society for Laser Medicine and Surgery. The clinical research
    included four abstracts intended to demonstrate the safety and efficacy of
    the Company's PicoSure picosecond Alexandrite laser technology.
  oCynosure recently received several international marketing clearances as
    well European CE marking for PicoSure. The Company expects to begin
    marketing PicoSure in the European Union through direct offices beginning
    in thesecond quarter. Other recent marketing clearances include:
    Cellulaze™ Cellulite Laser Workstation (Colombia, Saudi Arabia and
    Singapore); Elite+™ and Apogee+™ (Korea and Saudi Arabia); SmoothShapes®
    XV (Hong Kong and Korea); Elite MPX™ (Taiwan) and the RevLite® and
    MedLite® C6 (Australia).

Business Outlook
"We are off to a strong start in 2013 and optimistic about maintaining our
forward momentum as we progress through this year and beyond," Davin said. "We
have several catalysts on the horizon, including the first full quarter of
PicoSure."

"In addition, we expect our pending acquisition of Palomar Medical
Technologies to close by the end of June 2013," Davin said. "The transaction
would complement and broaden our product lineup with the addition of Palomar's
Diode and Intense Pulsed Light fractional aesthetic systems, would double the
number of patents in our portfolio and would enhance our global distribution
network."

First-Quarter Financial Results Conference Call
In conjunction with the announcement of its first-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 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
Cynosure develops and markets aesthetic treatment systems that are used by
physicians and other practitioners to perform non-invasive and minimally
invasive procedures to remove hair, treat vascular and pigmented lesions,
remove multi-colored tattoos, rejuvenate the skin, liquefy and remove unwanted
fat through laser lipolysis, reduce cellulite and treat onychomycosis.
Cynosure's products include a broad range of laser and other light-based
energy sources, including Alexandrite, pulse dye, Q-switched, Nd:YAG and diode
lasers, as well as intense pulsed light. Cynosure was founded in 1991. 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., including statements about the growth of
Cynosure's business, market acceptance of PicoSure, and expected first-year
revenue from sales of PicoSure, 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 maintain its profitability, 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, which is 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.

This press release also contains a forward-looking statement relating to the
expected closing of the merger transaction between Cynosure and Palomar. This
forward-looking statement is neither a promise nor a guarantee, but involves
risks 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 statement. These risk factors include, but are not
limited to, failure to receive approval from the stockholders of Palomar or
Cynosure or to satisfy other conditions to the parties' obligations to
complete the merger, the risk that competing offers for Palomar will be made
and/or other factors, which are detailed from time to time in Cynosure's and
Palomar's SEC reports, including their reports on Form 10-K for the year ended
December 31, 2012, any subsequently filed quarterly reports on Form 10-Q and
the Cynosure Registration Statement on Form S-4 (File No. 333-187895). Readers
are cautioned not to place undue reliance on this forward-looking statement,
which speaks only as of the date hereof. Neither Cynosure nor Palomar
undertakes any obligation to release publicly the result of any revisions to
the forward-looking statement that may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.

Additional Information about the Proposed Transaction and Where to Find It
In connection with the proposed transaction between Cynosure and Palomar,
Cynosure filed a Registration Statement on Form S-4 (File No. 333-187895) with
the Securities and Exchange Commission ("SEC") on April 12, 2013. The
Registration Statement includes a joint proxy statement of Cynosure and
Palomar that also constitutes a prospectus of Cynosure. Palomar and Cynosure
also plan to file other relevant documents with the SEC regarding the proposed
transaction. INVESTORS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS
AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC (IF AND WHEN THEY BECOME
AVAILABLE) BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION. You may
obtain a free copy of the joint proxy statement/prospectus and other relevant
documents filed by Cynosure and Palomar with the SEC (if and when they become
available) at the SEC's website at www.sec.gov. You may also obtain these
documents by contacting Cynosure's Investor Relations Department at (617)
542-5300 or CYNO@investorrelations.com, or by contacting Palomar's Investor
Relations Department at (781) 993-2411 or ir@palomarmedical.com.

Cynosure and Palomar and their respective directors and executive officers and
other members of management and employees may be deemed to be participants in
the solicitation of proxies in respect of the proposed transaction.
Information about Cynosure's directors and executive officers is available in
the joint proxy statement/prospectus under the heading "Information About
Cynosure's Directors, Officers and 5% Stockholders." As of April 5, 2013,
Cynosure's directors and executive officers beneficially owned approximately
2.9 million shares, or 17.1%, of Cynosure's Class A common stock. Information
about Palomar's directors and executive officers is available in Palomar's
proxy statement dated April 4, 2012 for its 2012 Annual Meeting of
Stockholders and in the joint proxy statement/prospectus. As of March 15,
2013, Palomar's directors and executive officers beneficially owned
approximately 2.7 million shares, or 13.1%, of Palomar's common stock.
Additional information regarding the interests of Palomar's directors and
executive officers in the proposed transaction, including information relating
to the acceleration of Palomar equity awards; the election of Joseph P.
Caruso, Palomar's President, Chief Executive Officer and Chairman of the Board
of Directors, as Cynosure's President and Vice Chairman of the Board of
Directors; amendments to existing Palomar employment agreements; a new
employment agreement between Cynosure and Mr. Caruso; indemnification and
insurance matters relating to Palomar directors and executive officers; and
golden parachute compensation, can be found in the joint proxy
statement/prospectus under the heading "Interests of Directors and Executive
Officers of Palomar in the Merger." Investors should read the joint proxy
statement/prospectus carefully before making any voting or investment
decisions. You may obtain free copies of any documents described above from
Cynosure or Palomar using the sources indicated above.

This document shall not constitute an offer to sell or the solicitation of an
offer to buy any securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the U.S. Securities Act
of 1933, as amended.



Consolidated Statements of Income (Unaudited)
(In thousands, except per
share data)
                             Three Months Ended March
                             31,
                             2013          2012
Revenues                     $        $     
                             40,690        34,168
Cost of revenues            17,003        14,660
Gross profit                 23,687        19,508
Operating expenses
 Selling and marketing      12,603        11,551
 Research and development  3,781         3,239
 Amortization of intangible  214           342
 assets acquired
 General and administrative 5,101         3,518
Total operating expenses     21,699        18,650
Income from operations       1,988         858
 Interest income, net        32            10
 Other (expense) income, net (357)         209
Income before income taxes   1,663         1,077
 Income tax provision       424           258
Net income                   $        $     
                             1,239          819
Diluted net income per       $       $     
share                       0.07          0.06
Diluted weighted average     16,860        13,037
shares outstanding
Basic net income per share  $       $     
                             0.08          0.07
Basic weighted average       16,185        12,578
shares outstanding





Condensed Consolidated Balance Sheet
(In thousands)
                                                  March 31,     December 31,
                                                  2013           2012
                                                  (Unaudited)
Assets:
           Cash, cash equivalents and marketable  $        $      
           securities                             89,237         86,057
           Short-term investments and related     43,770         40,617
           financial instruments
           Accounts receivable, net               20,945         17,970
           Inventories                            32,866         32,906
           Deferred tax asset, current portion    779            783
           Prepaid expenses and other current     5,075          5,149
           assets
Total current assets                              192,672        183,482
           Property and equipment, net            8,688          8,207
           Long-term marketable securities        13,637         20,071
           Goodwill and intangibles, net          21,376         21,748
           Other noncurrent assets                1,016          1,061
Total assets                                      $         $     
                                                  237,389        234,569
Liabilities and stockholders' equity:
           Accounts payable and accrued expenses  $        $      
                                                  27,764         25,547
           Amounts due to related parties         1,701          1,896
           Deferred revenue                       5,112          6,319
           Capital lease obligations              311            322
Total current liabilities                         34,888         34,084
Capital lease obligations, net of current         349            432
portion
Deferred revenue, net of current portion          343            281
Other long-term liabilities                       2,227          2,265
Total stockholders' equity                        199,582        197,507
Total liabilities and stockholders' equity        $         $     
                                                  237,389        234,569



To supplement our consolidated financial statements presented in accordance
with GAAP, Cynosure uses non-GAAP net income and non-GAAP EPS. The
presentation of this financial information is not intended to be considered in
isolation or as asubstitute for the financial information prepared and
presented in accordance with GAAP. The non-GAAP financial measures includedin
this press release exclude $1.1 million of costs associated with the
acquisition of Palomar, or $839 thousand, net of tax. Thisexclusion 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 ourperformance by excluding the
acquisition-related costs that may not be indicative of our core business
operating results. Cynosurebelieves that both management and investors
benefit from referring to the non-GAAP financial measures in assessing
Cynosure'sperformance and when planning, forecasting and analyzing future
periods. The non-GAAP financial measures also facilitates
management'sinternal 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 inourfinancial 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 March 31,
                                           2013              2012
Net income                                 $          $        
                                           1,239             819
Non-GAAP adjustment to net income:
 Costs associated with the acquisition of  839               -
 Palomar, net of tax
 Total Non-GAAP adjustment to net income   839               -
Non-GAAP net income                        $          $        
                                           2,078             819
                                           Three Months Ended March 31,
                                           2013              2012
Diluted net income per share               $         $        
                                           0.07             0.06
 Costs associated with the acquisition of  0.05              -
 Palomar, net of tax
 Total Non-GAAP adjustments to net income  0.05              -
Non-GAAP diluted net income per share      $         $        
                                           0.12             0.06
Weighted average shares used to compute
 diluted net income per share              16,860            13,037
Weighted average shares used to compute
 Non-GAAP diluted net income per share     16,860            13,037





Timothy Baker                  Scott Solomon
Executive VP, Treasurer and CFO Vice President
Cynosure, Inc.                  Sharon Merrill
978.256.4200                    617.542.5300
TBaker@cynosure.com             CYNO@investorrelations.com

SOURCE Cynosure, Inc.

Website: http://www.cynosure.com
 
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