BIOLASE Reports 2013 First Quarter Results

BIOLASE Reports 2013 First Quarter Results 
Net Revenue Increases 19% to $14.6 Million, Quarter Over Quarter;
Laser System Revenue Increases 9%, Quarter Over Quarter; Imaging
Revenue Increases 619%, Quarter Over Quarter; 2013 Annual Revenue
Guidance Reiterated at $68 Million to $72 Million; Expects to
Generate Cash From Operations for 2013 Overall; Gross Profit of 40%
in Q1; Projected to Return to Normalized Levels of 44% to 46% 
IRVINE, CA -- (Marketwired) -- 05/07/13 --  BIOLASE, Inc. (NASDAQ:
BIOL), the world's leading dental laser manufacturer and distributor,
today reported unaudited financial results for the first quarter
ended March 31, 2013.  
Financial Highlights of the 2013 First Quarter: 


 
--  Net revenue of $14.6 million for Q1 2013, a 19% increase over $12.3
    million for Q1 2012, and above the midpoint of the Company's guidance
    of $14.0 million to $15.0 million.
--  Non-GAAP net loss of $1.9 million, or a loss of $0.06 per share, as
    compared to a non-GAAP net loss of $873,000, or a loss of $0.03 per
    share, for Q1 2012.
--  Revenues from the sale of laser systems increased $814,000, or 9%, as
    compared to Q1 2012 levels.
--  Revenues from the sale of digital imaging and CAD/CAM systems
    increased $885,000, or 619%, as compared to Q1 2012 levels.

  
Operating Highlights of the 2013 First Quarter: 


 
--  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.
--  Launched a website to showcase BIOLASE's wholly-owned subsidiary
    OCCULASE and to expand the multiple applications of its proprietary
    WaterLase(R) technology into ophthalmology.
--  Awarded "Best AEEDC Dubai Booth Activities" at the UAE International
    Dental Conference & Arab Dental Exhibition ("AEEDC Dubai") held
    from February 5-7, 2013, in Dubai, United Arab Emirates. Organizers
    estimate that this year's exhibition had over 1,000 dental equipment
    suppliers from 70 countries and over 28,000 attendees.
--  Joined the Organization for Safety, Asepsis and Prevention ("OSAP") as
    a member of its prestigious Super Sponsor partnership as advocates for
    safe and infection-free dentistry.
--  Attended the 35th IDS International Dental Show in Cologne, Germany,
    from March 10-14, 2013, which had over 100,000 in attendance, where we
    also held our annual international distributor meeting.
--  Hosted the World Clinical Laser Institute(R) (the "WCLI(R)")
    Super Symposium in Huntington Beach, California, from March 21-24,
    2013.

  
Clinical highlights of the 2013 First Quarter include: 


 
--  Received U.S. Food and Drug Administration ("FDA") clearance for the
    Diolase 10(TM) diode soft-tissue laser, and subsequently the
    EPIC(TM) 10S, for a broad spectrum of medical procedures; includes
    clearance for over 80 procedures in 19 additional medical markets.
--  Launched the EPIC V-Series veterinary soft-tissue diode laser.
--  Issued broad new patent for treating eye conditions, including
    Presbyopia, Cataracts, and Glaucoma; provides additional support for
    ophthalmic applications.
--  Collected 24 new articles regarding our WaterLase(R) technology
    published in the English language during the 2013 first quarter.

  
Federico Pignatelli, Chairman and CEO, said, "While our overall revenue
growth was slightly above the midpoint of our guidance, it is to be
noted that certain domestic product revenues generated from our WCLI
Super Symposium held March 21-24 were not recognized until after the
close of the first quarter. The 2013 first quarter was also heavily
geared toward international revenues as a result of the AEEDC Dubai
held in February and the bi-annual International Dental Show held in
early March. Our international revenues have grown as a result of
these efforts and BIOLASE(R) now has distributors in 71 countries
around the world. We are confident that these efforts will continue
to increase our international business throughout 2013 and beyond." 
"Domestically we focused on expanding our efforts as the premier
total technology provider in dentistry by intensifying our efforts in
selling digital imaging and CAD/CAM intra oral scanners, which is
evidenced by the 619% growth for our imaging revenues quarter over
quarter. Our Total Technology Solution(R) is a key component in our
strategy to push forward the adoption of lasers as high-tech
dentistry and lasers become the standard of care in dentistry versus
traditional conventional methods, along with leveraging our
significant installed base of diode lasers. We believe that BIOLASE
is the only company in North America that currently provides a full
line of high-tech products, which includes a full range of all-tissue
lasers and diode soft-tissue laser products; CBCT digital imaging
products; and CAD/CAM intraoral scanners. We are pleased with the
level of laser sales so far this year and we expect the aggressive
marketing efforts we undertook in the first quarter to begin to pay
off further as we move forward in the second quarter and the rest of
2013," continued Pignatelli. 
First Quarter Financial Results
 Net revenue for the 2013 first
quarter totaled $14.6 million, compared with $12.3 million in the
2012 first quarter. The increase of $2.3 million, or 19%, was driven
by increased sales of the Company's core laser systems and imaging
products. 
Laser system net revenue increased by approximately $814,000, or 9%
in the 2013 first quarter as compared to the prior year quarter.  
Fred Furry, CFO and COO said, "We are very pleased that the Company
obtained FDA clearance for the EPIC soft-tissue diode laser platform
for over 80 indications in 19 additional medical markets in April
2013. We expect that the EPIC 10 platform will continue to be a
strong contributor to revenue in the second quarter and beyond. It is
gratifying to have obtained this clearance so quickly." 
Imaging revenues, which included both cone beam and CAD/CAM, totaled
approximately $1.0 million, or 7% of net revenue, during the 2013
first quarter as compared to $143,000, or 1% of net revenue, for the
prior year quarter. 
Pignatelli commented, "We added cone beam digital imaging to our
product offerings in late 2011, and further expanded our imaging
product offerings with the addition of CAD/CAM intra-oral scanning in
late 2012. It is promising to see these product lines continue to
grow and we expect this positive trend to continue throughout the
year as we gain traction in the market and increase our imaging
product offerings. We believe that digital imaging is a tremendous
market opportunity and is an excellent complement to our core
internally developed laser products." 
Gross profit as a percentage of net revenue was 40% as compared to
47% for the prior year quarter. This quarter-over-quarter decrease
was primarily due to higher sales of WaterLase and diode systems
internationally, which generally carry a lower margin than our direct
sales in North America, and the increase in sales of our licensed
imaging systems as a proportion of revenue, which also carries lower
margins than our laser products. 
"Based on our projected revenues and expenditures, we expect that our
gross margin will return to historical levels in the range of 44% to
46% for the second quarter and 2013 overall," Furry continued. 
Operating expenses totaled $8.6 million, or 59% of net revenues, as
compared to $7.4 million, or 60% of net revenues, in the 2012 first
quarter. The increase of $1.2 million was primarily driven by a
substantial investment in our sales and marketing efforts during the
2013 first quarter and increased legal expenses related to enforcing
and protecting our intellectual property ("IP") portfolio.  
Sales and marketing expenses totaled $5.3 million for the 2013 first
quarter, an increase of $1.3 million, or 30%, as compared to $4.0
million for the prior year quarter. The increase was primarily due to
significantly increased convention costs as well as continued
development of the Company's direct sales force and increased media
and advertising costs. 
"Although we expect sales and marketing expenses to decrease overall
as a percentage of revenue for 2013 as compared to 2012, many of the
dental industry's largest and most important trade shows occur during
the first quarter of the year," said Pignatelli. "Attending these
shows places an additional burden on BIOLASE because our first
quarter is traditionally our slowest and these events require a
substantial investment. In addition to our standard trade shows, we
attended the International Dental Show in Cologne, Germany, March
10-14, which is the largest dental show in the world and occurs every
other year, we attended the 85th Western Veterinary Conference, and
we hosted the WCLI Super Symposium, which was held March 21-24. We
believe that investing in these additional marketing activities will
result in increased revenues throughout the remainder of the year." 
General and administrative expenses totaled $2.2 million during the
2013 first quarter, essentially in line with the prior year quarter,
despite significantly increased legal expenses primarily related to
the enforcement and defense of the Company's IP portfolio.  
Pignatelli concluded, "Our IP portfolio is the cornerstone of laser
technology in dentistry and a valuable asset of BIOLASE. Several of
our competitors currently license our IP in their own laser products.
We will not hesitate to enforce and protect our valuable IP
portfolio." 
Engineering and development totaled $1.0 million during the 2013
first quarter, essentially in line with the prior year quarter.  
As a result, the net loss for the 2013 first quarter totaled $2.6
million, or a loss of $0.08 per share, compared to a net loss of $1.7
million, or a loss of $0.05 per share, for the 2012 first quarter.  
After removing interest expense of $87,000, non-cash depreciation and
amortization expenses of $145,000, and non-cash stock-based, other
equity instruments, and other non-cash compensation expense of
$494,000, the 2013 first quarter resulted in non-GAAP net loss of
$1.9 million, or $0.06 per share, compared with a non-GAAP net loss
of $873,000, or a loss of $0.03 per share, for the 2012 first
quarter.  
Liquidity and Capital Resources
 As of March 31, 2013, BIOLASE had
approximately $5.2 million in working capital. Cash and cash
equivalents totaled approximately $1.2 million at March 31, 2013,
compared to $2.5 million at December 31, 2012.  
Accounts receivable totaled $10.6 million at March 31, 2013, compared
to $11.7 million at December 31, 2012. At March 31, 2013, the Company
had two revolving credit facilities totaling $8.0 million, with $4.7
million of available borrowings, in excess of the $3.3 million
outstanding. In May 2013, the total of the revolving credit
facilities was increased to $10 million. 
Financial Outlook
 For the year ending December 31, 2013, the Company
is reiterating its revenue expectation 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 reiterates that it 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:             Tuesday, May 7, 2013                                    
Time:             4:30pm EDT                                              
Dial-in numbers:  1-877-407-4019 (toll-free/U.S. & Canada)                
                  1-201-689-8337 (toll/international)                     
Live webcast:     www.biolase.com, under 'Investors'                      

 
The archived webcast will be available for 90 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 lasers in dentistry and medicine
and also markets and distributes dental imaging equipment; products
that are focused on technologies that advance the practice of
dentistry and medicine. The Company's laser products incorporate over
340 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 22,500 lasers.  
Other products under development address ophthalmology and other
medical and consumer markets. 
For updates and information on WaterLase and laser dentistry, find
BIOLASE online at www.biolase.com, Facebook at
www.facebook.com/biolaseinc, Twitter at www.twitter.com/biolaseinc,
Pinterest at www.pinterest.com/biolase, Linkedin at
www.linkedin.com/company/biolase, Instagram at
www.instagram.com/biolaseinc and YouTube at
www.youtube.com/biolasevideos.  
BIOLASE(R), WaterLase(R), iPlus(R), EPIC(TM), Diolase 10(TM), World
Clinical Laser Institute(R), and WCLI(R) are all registered
trademarks or trademarks of BIOLASE, Inc. 
NewTom is a trademark of QR S.r.l., a wholly-owned subsidiary of
Cefla Capital Services, S.p.A., and Trios is a trademark of 3Shape
A/S. 
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 7 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     
                                                          March 31,         
                                                 -------------------------- 
                                                     2013          2012     
                                                 ------------  ------------ 
                                                                            
                                                                            
Products and services revenue                    $     14,489  $     12,312 
License fees and royalty revenue                          108             8 
                                                 ------------  ------------ 
  Net revenue                                          14,597        12,320 
Cost of revenue                                         8,803         6,513 
                                                 ------------  ------------ 
Gross profit                                            5,794         5,807 
                                                 ------------  ------------ 
Operating expenses:                                                         
  Sales and marketing                                   5,252         4,028 
  General and administrative                            2,247         2,211 
  Engineering and development                           1,005         1,190 
  Excise tax                                              107            -- 
                                                 ------------  ------------ 
    Total operating expenses                            8,611         7,429 
                                                 ------------  ------------ 
Loss from operations                                   (2,817)       (1,622)
                                                 ------------  ------------ 
                                                                            
Loss on foreign currency transactions                     (99)          (17)
Interest expense                                          (87)           (4)
                                                 ------------  ------------ 
Non-operating loss, net                                  (186)          (21)
                                                 ------------  ------------ 
Loss before income tax (benefit) provision             (3,003)       (1,643)
Income tax (benefit) provision                           (372)           29 
                                                 ------------  ------------ 
Net income (loss)                                $     (2,631) $     (1,672)
                                                 ============  ============ 
                                                                            
Net income (loss) per share:                                                
  Basic                                          $      (0.08) $      (0.05)
                                                 ============  ============ 
  Diluted                                        $      (0.08) $      (0.05)
                                                 ============  ============ 
                                                                            
Shares used in the calculation of net income                                
 (loss) per share:                                                          
  Basic                                                31,473        31,358 
                                                 ============  ============ 
  Diluted                                              31,473        31,358 
                                                 ============  ============ 
                                                                            
 * Shares used in calculation of net loss per share reflect the impact of   
stock dividends.                                                            
                                                                            
                                                                            
                                                                            
                               BIOLASE, INC.                                
                                                                            
                        CONSOLIDATED BALANCE SHEETS                         
              (unaudited, in thousands, except per share data)              
                                                                            
                                                   March 31,   December 31, 
                                                     2013          2012     
                                                 ------------  ------------ 
                     ASSETS                                                 
                                                                            
Current assets:                                                             
  Cash and cash equivalents                      $      1,229  $      2,543 
  Accounts receivable, less allowance of $289 in                            
   2013 and $304 in 2012                               10,644        11,680 
  Inventory, net                                       11,921        11,142 
  Prepaid expenses and other current assets             1,637         1,552 
                                                 ------------  ------------ 
    Total current assets                               25,431        26,917 
Property, plant and equipment, net                      1,616         1,509 
Intangible assets, net                                    254           300 
Goodwill                                                2,926         2,926 
Deferred tax asset                                         15            16 
Other assets                                              282           305 
                                                 ------------  ------------ 
    Total assets                                 $     30,524  $     31,973 
                                                 ============  ============ 
                                                                            
 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                             
Current liabilities:                                                        
  Lines of credit                                $      3,261  $      1,637 
  Accounts payable                                      8,708         7,663 
  Accrued liabilities                                   4,879         6,267 
  Customer deposits                                       278           582 
  Deferred revenue, current portion                     3,131         3,226 
                                                 ------------  ------------ 
    Total current liabilities                          20,257        19,375 
Deferred tax liabilities                                  556           663 
Other liabilities, long-term                               34           141 
                                                 ------------  ------------ 
    Total liabilities                                  20,847        20,179 
                                                 ------------  ------------ 
                                                                            
Commitments and contingencies                                               
Stockholders' equity (deficit):                                             
  Preferred stock, par value $0.001                        --            -- 
  Common stock, par value $0.001                           34            34 
  Additional paid-in capital                          141,317       140,747 
  Accumulated other comprehensive loss                   (376)         (320)
  Accumulated deficit                                (114,899)     (112,268)
                                                 ------------  ------------ 
                                                       26,076        28,193 
  Treasury stock (cost of 1,964 shares                                      
   repurchased)                                       (16,399)      (16,399)
                                                 ------------  ------------ 
    Total stockholders' equity                          9,677        11,794 
                                                 ------------  ------------ 
    Total liabilities and stockholders' equity   $     30,524  $     31,973 
                                                 ============  ============ 
                                                                            
                                                                            
                                                                            
                               BIOLASE, INC.                                
  Reconciliation of GAAP Financial Results to Non-GAAP Financial Measures   
              (unaudited, in thousands, except per share data)              
                                                                            
                                                     Three months ended     
                                                          March 31,         
                                                 -------------------------- 
                                                     2013          2012     
                                                 ------------  ------------ 
                                                                            
GAAP net loss                                    $     (2,631) $     (1,672)
Adjustments:                                                                
  Interest expense                                         87             4 
  Depreciation and amortization expense                   145           125 
  Stock-based, other equity instruments, and                                
   other non-cash compensation expense                    494           670 
                                                 ------------  ------------ 
Non-GAAP net loss                                $     (1,905) $       (873)
                                                 ============  ============ 
                                                                            
                                                                            
                                                                            
GAAP net loss per share:                                                    
  Basic and diluted                              $      (0.08) $      (0.05)
Adjustments:                                                                
  Interest expense                                       0.00          0.00 
  Depreciation and amortization expense                  0.00          0.00 
  Stock-based, other equity instruments, and                                
   other non-cash compensation expense                   0.02          0.02 
                                                 ------------  ------------ 
Non-GAAP net loss per share:                                                
  Basic and Diluted                              $      (0.06) $      (0.03)
                                                 ============  ============ 

  
For further information, please contact: 
Michael Porter 
Porter, LeVay & Rose, Inc. 
212-564-4700 
 
 
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