PhotoMedex Reports First Quarter 2013 Financial Results

  PhotoMedex Reports First Quarter 2013 Financial Results

Revenues increased 14% over the same period in 2012, diluted EPS increased 31%
                                   to $0.34

Business Wire

MONTGOMERYVILLE, Pa. -- May 08, 2013

PhotoMedex, Inc. (NASDAQ: PHMD) today reported financial results for the three
months ended March 31, 2013. Financial highlights of the 2013 first quarter
include:

  *Revenues of $57.2 million, an increase of 14% compared with the prior-year
    first quarter and an increase of 4% sequentially
  *Consumer revenues of $49.0 million, an increase of 16% compared with the
    prior-year first quarter and an increase of 6% sequentially
  *Direct-to-consumer channel revenues of $31.7 million, an increase of 1%
    compared with the prior-year first quarter and an increase of 6%
    sequentially
  *Global retail and home shopping channel revenues of $12.0 million, an
    increase of 101% compared with the prior-year first quarter and a decrease
    of 3% sequentially
  *Distributor consumer channel revenues of $5.3 million, an increase of 13%
    compared with the prior-year first quarter and an increase of 41%
    sequentially
  *XTRAC® adjusted treatment revenues of $3.2 million, an increase of 73%
    compared with the prior-year first quarter and an increase of 22%
    sequentially
  *XTRAC® recurring revenue U.S. installed base of 401 at quarter end, an
    increase of 51 placements during the quarter, including 27 on the Comeback
    program of previously sold systems
  *NEOVA® skin care revenues of $2.2 million, an increase of 3% compared with
    the prior-year first quarter and an increase of 14% sequentially
  *Gross profit of $45.4 million, an increase of 16% compared with the first
    quarter of 2012
  *Gross margin of 79.3% compared with 77.7% in the prior-year first quarter
  *Pre-tax income of $9.7 million, an increase of 91% compared with the
    prior-year first quarter and an increase of 45% sequentially
  *Earnings per diluted share of $0.34, an increase of 31%, compared with the
    prior-year first quarter and an increase of 21% sequentially
  *Non-GAAP adjusted income of $12.5 million or $0.59 per diluted share,
    representing increases of 49% and 34%, respectively, compared with the
    prior-year first quarter and increases of 31% and 31%, respectively,
    sequentially

Reported Financial Results

Revenues for the first quarter of 2013 were $57.2 million, an increase of 14%
compared with revenues for the first quarter of 2012 of $50.3 million.

Net income for the first quarter of 2013 was $7.2 million, or $0.34 per
diluted per share, which included $1.3 million in stock-based compensation
expense and $1.4 million in depreciation and amortization expenses. This
compares with net income for the first quarter of 2012 of $4.9 million, or
$0.26 per diluted share, which included $1.8 million in stock-based
compensation expense and $1.3 million in depreciation and amortization
expenses.

PhotoMedex repurchased no shares of its common stock during the first quarter
of 2013.

As of March 31, 2013 the Company had cash and cash equivalents of $63.5
million or $3.00 per diluted share, compared with $62.3 million as of December
31, 2012. Current assets included $24.3 million in accounts receivable,
compared with $19.1 million as of December 31, 2012. The increase in accounts
receivables was largely related to the impact of the timing of shipments
related to a television home shopping special event in the first quarter,
which were collected in the second quarter.

Management expects revenues for the second quarter of 2013 to exceed $59
million.

Dr. Dolev Rafaeli, PhotoMedex CEO, commented, “The rapid growth we have
achieved the past few years continued during the first quarter and,
importantly, featured an improvement in gross margin led by a 16% increase in
consumer revenues, particularly from our no!no!™ products. No!no! is now
available in most every Bed Bath and Beyond store across the U.S. and we are
pleased with the initial sales ramp. We have also had strong responses to our
Spanish-language advertisements in the U.S. and our marketing of no!no! Men.
In addition we achieved substantial sales increases in Neova® skin care
products from upselling no!no! customers at our call centers.

“Geographic expansion holds particular promise for PhotoMedex as we prepare to
launch no!no! in Brazil and further develop the German and Korean markets. We
are very excited about the sales potential in these geographies going into the
second half of the year.”

Dr. Rafaeli added, “XTRAC adjusted treatment revenues were up 73% compared
with the first quarter of 2012 as our direct-to-patient advertising is having
a clear impact. We’ve initiated television and radio advertising in six new
areas of the country and we plan additional rollouts of advertising in new
markets throughout the year.”

A reconciliation of non-GAAP financial measures to GAAP financial measures,
and a presentation of the most directly comparable GAAP financial measures are
included below.

Non-GAAP Measures

To supplement PhotoMedex’s consolidated financial statements presented in
accordance with GAAP, PhotoMedex provides certain non-GAAP measures of
financial performance. These non-GAAP measures include non-GAAP adjusted
income and non-GAAP adjusted income per share.

PhotoMedex’s reference to these non-GAAP measures should be considered in
addition to results prepared under current accounting standards, but are not a
substitute for, nor superior to, GAAP results. These non-GAAP measures are
provided to enhance investors' overall understanding of PhotoMedex’s current
financial performance and to provide further information for comparative
purposes.

Specifically, the Company believes the non-GAAP measures provide useful
information to both management and investors by isolating certain expenses,
gains and losses that may not be indicative of the Company’s core operating
results and business outlook. In addition, PhotoMedex believes non-GAAP
measures enhance the comparability of results against prior periods.
Reconciliation to the most directly comparable GAAP measure of all non-GAAP
measures included in this press release is as follows:

                                               
(Unaudited)
                                                   
                                                   Three Months Ended Mar 31,
(ooo's) except per share amounts                   2013           2012
                                                                   
Net income as reported                             $   7,212       $  4,857
Adjustments:
Depreciation and amortization expense                  1,443          1,332
Interest expense, net                                  5              189
Income tax expense                                    2,511         240
                                                                   
EBITDA                                             $   11,171      $  6,618
                                                                   
Stock-based compensation expense                      1,290         1,753
                                                                   
Non-GAAP adjusted income                           $   12,461      $  8,371
Fully diluted shares outstanding at March 31           21,148         18,876
Non-GAAP adjusted income per share                 $   0.59        $  0.44
                                                                   

Conference Call

PhotoMedex will hold a conference call to discuss the Company's first quarter
2013 results and answer questions today, May 8, 2013 beginning at 11:00 a.m.
Eastern time.

To participate in the conference call, dial toll free 888-686-9681 or
International/toll 913-312-1467 (and confirmation code # 7662001)
approximately five to 10 minutes prior to the scheduled start time. For the
convenience of our Israeli participants, a local/toll free number
(1-80-925-8350) has been set up (the confirmation code remains the same #
7662001). If you are unable to participate, a digital replay of the call will
be available from Wednesday, May 8, 2013 from 2:00 p.m. ET to Wednesday, May
22, 2013 at 2:00 p.m. ET, by dialing toll free 888-203-1112 or
International/toll 719-457-0820 (Israeli participants may dial 1-80-924-6038)
and using confirmation code # 7662001.

The live broadcast of PhotoMedex, Inc.'s quarterly conference call will be
available online by going to www.photomedex.com and clicking on the link to
Investor Relations, and at www.streetevents.com. The online replay will be
available shortly after the conclusion of the call at those sites.

About PhotoMedex

PhotoMedex is a global skin health company providing integrated disease
management and aesthetic solutions to dermatologists, professional
aestheticians and consumers. The company provides proprietary products and
services that address skin diseases and conditions including psoriasis,
vitiligo, acne, actinic keratosis (a precursor to certain types of skin
cancer) and photo damage. Its experience in the physician market provides the
platform to expand its skin health solutions to spa markets, as well as
traditional retail, online and infomercial outlets for home-use products. As a
result of its December 2011 merger with Radiancy Inc., PhotoMedex has added a
range of home-use devices under the no!no!™ brand, for various indications
including hair removal, acne treatment and skin rejuvenation. The company also
offers a professional product line for acne clearance, skin tightening,
psoriasis care and hair removal sold to physician clinics and spas.

SAFE HARBOR STATEMENT

Some portions of the conference call, particularly those describing
PhotoMedex' strategies, operating expense reductions and business plans will
contain “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995 that are subject to risks,
uncertainties and other factors. All statements other than statements of
historical fact are statements that could be deemed forward-looking
statements, including any statements of the plans, strategies and objectives
of management for future operations; any statements regarding product
development, product extensions, product integration or product marketing; any
statements regarding continued compliance with government regulations,
changing legislation or regulatory environments; any statements of expectation
or belief and any statements of assumptions underlying any of the foregoing.
In addition, there are risks and uncertainties related to successfully
integrating the products and employees of the Company and Radiancy, as well as
the ability to ensure continued regulatory compliance, performance and/or
market growth. These risks, uncertainties and other factors, and the general
risks associated with the businesses of the Company described in the reports
and other documents filed with the SEC, could cause actual results to differ
materially from those referred to, implied or expressed in the forward-looking
statements. The Company cautions readers not to rely on these forward-looking
statements. All forward-looking statements are based on information currently
available to the Company and are qualified in their entirety by this
cautionary statement. The Company anticipates that subsequent events and
developments will cause its views to change. The information contained in this
conference call speaks as of the date hereof and the Company has or undertakes
no obligation to update or revise these forward-looking statements, whether as
a result of new information, future events or otherwise.

                                              
PHOTOMEDEX, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
                                                  
                                                  Three Months Ended March 31,
(ooo's) except per share amounts                  2013            2012
                                                                   
Revenues                                          $  57,216        $  50,273
                                                                   
Cost of revenues                                    11,866         11,234 
                                                                             
Gross profit                                        45,350         39,039 
                                                                   
Operating expenses:
Selling and marketing                                29,326           25,835
General and administrative                           5,659            7,119
Research and development and engineering            773            758    
                                                     35,758           33,712
Operating income                                     9,592            5,327
Interest and other financing income                 131            (230   )
(expense), net
                                                                   
Income before taxes expense                          9,723            5,097
                                                                   
Income tax (expense) benefit                        (2,511  )       (240   )
                                                                   
Net income ^1                                     $  7,212        $  4,857  
                                                                   
Net income per share:
Basic                                             $  0.35          $  0.26
Diluted                                           $  0.34          $  0.26
                                                                   
Shares used in computing net income per
share:
Basic                                                20,678           18,340
Diluted                                              21,148           18,876
                                                                   
^1 Includes: depreciation and amortization           1,443            1,332
                                                                             
Share-based compensation expense                     1,290            1,753
                                                                   


PHOTOMEDEX, INC.
CONSOLIDATED STATEMENTS OF REVENUES
(UNAUDITED)
                                                          
                                For the three months ended:
                                March 31, 2013   December 31,   March 31, 2012
                                                 2012
Consumer:
Direct                          $   31,722       $   29,997     $   31,516
Distributors                        5,291            3,763          4,693
Retailer and home                  12,047         12,362        5,992   
shopping channels
sub-total                           49,060           46,122         42,201
                                                                
Physician Recurring
XTRAC treatments                    3,159            2,583          1,824
Less: XTRAC incremental             (590    )        29             (145    )
deferred revenue
Skin care                           2,226            1,949          2,165
Other                              1,160          1,255         1,229   
sub-total                           5,955            5,816          5,073
                                                                
Professional                        2,201            2,852          2,999
                                                              
Total Revenues                  $   57,216      $   54,790     $   50,273  
                                                                

                                        
PHOTOMEDEX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
                                                           
                                                             
                                            March 31, 2013   December 31, 2012
Assets
Cash, cash equivalents, and                 $    63,509      $     62,348
short-term investments
Accounts receivable, net                         24,281            19,064
Inventories                                      21,483            22,467
Other current assets                             28,155            32,294
Property and equipment, net                      7,744             6,759
Other non-current assets                        66,358           68,958
Total Assets                                $    211,530     $     211,890
                                                             
Liabilities and Stockholders' Equity
Accounts payable and accrued                $    26,432      $     34,618
liabilities
Other current liabilities                        6,648             5,259
Bank and lease notes payable                     593               619
Other liabilities                                3,828             4,067
Stockholders' equity                            174,029          167,327
Total Liabilities and Stockholders'         $    211,530     $     211,890
Equity
                                                                   

                                               
PHOTOMEDEX, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
                                                   
                                                   For the Three Months
                                                   Ended
                                                   March 31,
                                                   2013  2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                         $  7,212       $  4,857
                                                                  
Adjustments to reconcile net income to net
cash provided by operating activities--
Depreciation and amortization                         1,443          1,332
Provision for doubtful accounts                       1,046          714
Deferred income taxes                                 523            2,027
Stock-based compensation                              1,290          1,753
Changes in assets and liabilities:
(Increase) decrease in--
Current Assets                                        (1,596  )      (8,598  )
Current liabilities                                  (6,854  )     6,063   
Net cash provided by operating activities            3,064        8,148   
                                                                  
CASH FLOWS FROM INVESTING ACTIVITIES:
Lasers placed in service                              (1,220  )      (366    )
Purchases of PP&E, net                                (211    )      (96     )
Other                                                (58     )     (70     )
Net cash used in investing activities                (1,489  )     (532    )
                                                                  
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of options/issuance            13             125
of securities
Repayments of debt                                   (213    )     (737    )
Net cash used in financing activities                (200    )     (612    )
                                                                             
Effect of exchange rate changes on cash              (214    )     (5      )
NET INCREASE IN CASH AND CASH EQUIVALENTS            1,161        6,999   
CASH AND CASH EQUIVALENTS, BEGINNING OF              44,348       16,549  
PERIOD
CASH AND CASH EQUIVALENTS, END OF PERIOD           $  45,509     $  23,548  
                                                                             
Supplemental information:
Cash paid for income taxes                         $  3,941       $  56
Cash paid for interest                             $  7           $  59
                                                                             

Contact:

LHA
Kim Sutton Golodetz, 212-838-3777
Kgolodetz@lhai.com
or
Bruce Voss, 310-691-7100
Bvoss@lhai.com
@LHA_IR_PR
or
PhotoMedex, Inc.
Dennis McGrath, 215-619-3287
Chief Financial Officer
info@photomedex.com
 
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