Lumenis Ltd. Reports First Quarter Financial Results

Lumenis Ltd. Reports First Quarter Financial Results 
Positive Momentum Continues With 9.5% Revenue Growth, Improved
Profitability and Multiple New Product Approvals Across Business
Portfolio 
YOKNEAM, ISRAEL -- (Marketwired) -- 05/12/14 --  Lumenis Ltd.
(NASDAQ: LMNS), the world's largest medical laser company for
surgical, ophthalmic and aesthetic applications, today announced
first quarter 2014 financial results. 
First Quarter 2014 Summary: 


 
--  Revenues of $65.8 million, up 9.5% year-over-year
--  Gross Margin of 52.6%, up 151 basis points year-over-year
--  Adjusted EBITDA of $4.8 million, up 37.9% year-over-year
--  Non-GAAP Net Income of $2.2 million, up 154.0% year-over-year. GAAP
    Net Loss of $3.1 million
--  $3.1 million net cash flow generated from ongoing business activities
    (1)

  
"We are pleased with our operating performance and financial results,
highlighted by strong revenue growth of 9.5% and continued
improvement in gross margins and profitability," said Tzipi
Ozer-Armon, Chief Executive Officer. "I am particularly excited about
the introduction of our new LightSheer(R) line and the Lumenis
Pulse(TM)120H, our advanced innovative Urology platform, that we
believe will enhance our future growth as they increase our
addressable market and improve our position in the industry. The
proceeds from our IPO have further solidified our balance sheet and
provided capital to further invest in our business."   
First Quarter 2014 Financial Results
 Total revenue in the first
quarter of 2014 was $65.8 million, an increase of 9.5% compared to
revenue of $60.1 million last year. Product revenue was $52.6
million, an increase of 11.5% compared to product revenue of $47.2
million last year. Total revenue growth was driven primarily by our
two largest business segments, Surgical and Aesthetic and product
revenues posted growth in all geographical regions, with particular
strength in Europe, the Middle East and Africa (EMEA) and Asia
Pacific (APAC).  
First quarter 2014 gross profit was $34.6 million, an increase of
$3.9 million, or 12.7%, compared to $30.7 million last year. First
quarter 2014 gross margin was 52.6%, compared to 51.1% last year, an
increase of 151 basis points.  
On a GAAP Basis: 
First quarter 2014 GAAP oper
ating expenses were $33.0 million, an
increase of $4.1 million, or 14%, compared to operating expenses of
$28.9 million last year. The increase was mainly driven by investment
in sales and marketing, increased investment in R&D as well as
one-time IPO related expenses.  
First quarter 2014 GAAP operating income was $1.6 million, a decrease
of $0.1 million, or 8.7%, compared to GAAP operating income of $1.7
million last year. First quarter 2014 GAAP operating margin was 2.4%,
compared to 2.9% last year.  
First quarter 2014 GAAP net loss was $3.1 million, a decrease of $3.1
million, compared to near breakeven last year. GAAP net loss per
share was $0.10 in the first quarter of 2014 compared to breakeven
last year, based on 30.9 million and 29.0 million diluted shares
outstanding respectively. 
On a Non-GAAP Basis:  
First quarter of 2014, Non-GAAP results exclude a $4.9 million
one-time items related to our IPO. Of these expenses, $4.0 million
were a one-time payment to Bank Hapoalim B.M. triggered by the
completion of the Company's IPO, as defined in the Company's loan
agreement with Bank Hapoalim B.M. Non-GAAP results also exclude stock
based compensation expense of approximately $0.8 million and the
revaluation income of embedded derivative of approximately $0.3
million.  
First quarter 2014 Non-GAAP operating income was $3.3 million, an
increase of $1.0 million, or 44.0%, compared to Non-GAAP operating
income of $2.3 million last year. First quarter 2014 Non-GAAP
operating margin was 5.0%, compared to 3.8% last year.  
First quarter 2014 Adjusted EBITDA was $4.8 million, an increase of
$1.3 million, or 37.9%, compared to $3.5 million last year. Adjusted
EBITDA margin was 7.4% compared to 5.8% last year.  
First quarter 2014 Non-GAAP net income was $2.2 million, an increase
of $1.3 million, or 154.0%, compared to $0.9 million last year.
Non-GAAP net income per diluted share was $0.07 in the first quarter
of 2014 compared to $0.03 last year based on 32.4 million and 29.6
million diluted shares outstanding respectively. 
Cash and cash equivalents were $114.9 million as of March 31, 2014
compared to $42.8 million as of December 31, 2013. This increase is
primarily due to the successful completion of our initial public
offering in March 2014. 
New Product Introductions and Approvals 


 
--  Surgical: In March, the Company received FDA clearance and CE mark for
    the "Lumenis Pulse 120H", the new high-power Holmium platform, offers
    an unrivaled combination of power, speed, safety and versatility. This
    single platform provides a superior offering for four major urological
    procedures -- Enucleation, Flexible Ureteroscopy, Vaporization and
    PCNL. The Company is planning over 30 physician training courses
    worldwide this year to drive the adoption of this product.
    
    
--  Aesthetics: The Company announced two new additions to the
    Lightsheer(R) family of hair removal products. The
    "Lightsheer(R) Infinity(TM)" is Lumenis' most advanced laser hair
    removal system which is an optimal solution for all skin types,
    including tanned and dark skin types. The "Lightsheer(R)
    Desire(TM)" is a compact, portable and upgradable system with an
    advanced user interface, which allows easy treatment delegation and a
    quick learning curve. Both systems are up to 75 percent faster than
    other currently available devices and have received very positive
    feedback from physicians and patients in recent American and European
    tradeshows.
    
    
--  Ophthalmic: The Company received both an FDA approval and a Japanese
    MHLW clearance for the Array(TM) LaserLink(TM) pattern scanning
    device for multi-spot laser photocoagulation at the end of calendar
    2013, and began commercialization in Japan in the first quarter. The
    early market response in Japan for this new scanning device has been
    very positive, where Ophthalmologists have expressed enthusiasm
    particularly about the shorter treatment time and reduced patient
    discomfort.

  
Full Year 2014 Financial Guidance  
For the full year ended December 31, 2014, we expect to report: 


 
--  Revenue in a range of $282 to $285 million, representing an increase
    of 6.3% to 7.4% year-over-year
--  Adjusted EBITDA in a range of $28.6 to $30.2 million, representing an
    increase of 10% to 16% year-over-year
--  Non-GAAP Net Income in a range of $17.6 to $19.2 million, representing
    an increase of 18% to 29% year-over-year, and Non-GAAP EPS of $0.50 to
    $0.54

  
(1): Net cash flow generated from ongoing business activities includes
cash flow from operating and investing activities as well as foreign
currency translation adjustments related to cash and cash equivalents
in the period. 
Conference Call 
Lumenis will host a conference call on Monday, May 12, 2014 at 5:00
p.m. Eastern Time to discuss its first quarter 2014 financial
results. The call will be concurrently webcast. To listen to the
conference call on your telephone, please dial the following numbers
approximately ten minutes prior to the start of the call:
888-389-5988 for callers based in the United States, 1-80-924-5906
for callers based in Israel and 719-325-2432 for callers 
based in all
other countries. The reservation code for the call is 9972028. Please
dial in approximately ten minutes prior to start time. To access the
live audio webcast or subsequent archived recording, visit the
Investor Relations section of Lumenis' website at
http://www.lumenis.com. The replay will be available on the Company's
website for approximately 90 days. 
About Lumenis
 Lumenis is a global leader in the field of
minimally-invasive clinical solutions for the Surgical, Ophthalmology
and Aesthetic markets, and is a world-renowned expert in developing
and commercializing innovative energy-based technologies, including
Laser, Intense Pulsed Light (IPL) and Radio-Frequency (RF). For
nearly 50 years, Lumenis' ground-breaking products have redefined
medical treatments and have set numerous technological and clinical
gold-standards. Lumenis has successfully created solutions for
previously untreatable conditions, as well as designed advanced
technologies that have revolutionized existing treatment methods in
each and every one of the verticals we operate in. Our drive for
innovation stems from an uncompromising commitment to improving the
health and well-being of our patients; addressing new and growing
needs of aging populations; and in offering medical professionals
cutting-edge solutions that fit seamlessly into the health-economics
environment of the 21st century. The world over, we bring Energy to
Healthcare. For more information visit: www.lumenis.com 
Forward-Looking Statements 
Information provided in this press release may contain statements
relating to current expectations, estimates, forecasts and
projections about future events that are "forward-looking statements"
as defined in the Private Securities Litigation Reform Act of 1995.
These forward-looking statements may include but are not limited to
the Company's plans, objectives and expectations for future
operations, including its projected results of operations.
Forward-looking statements are often characterized by the use of
forward-looking terminology such as "may," "will," "expect,"
"anticipate," "estimate," "continue," "believe," "should," "intend,"
"plan," "project" or other similar words, but are not the only way
these statements are identified. These forward-looking statements are
based upon management's current estimates and projections of future
results or trends. Actual results may differ materially from those
projected as a result of certain risks and uncertainties, including
those risks discussed under the heading "Risk Factors" in our most
recent Annual Report on Form 20-F filed with the Securities and
Exchange Commission. These forward-looking statements are made only
as of the date hereof, and the Company undertakes no obligation to
update or revise the forward-looking statements, whether as a result
of new information, future events or otherwise. 


 
                                                                            
                                LUMENIS LTD.                                
                                (Unaudited)                                 
                                                                            
                     Consolidated Revenue, by Geography                     
--------------------------------------------------------------------------- 
                                       Three         Three                  
                                    Months Ended  Months Ended              
                                     March 31,     March 31,     % Change   
                                   ------------- -------------              
                                                                Year-over-  
U.S. dollars in thousands               2014          2013         Year     
                                   ------------- ------------- ------------ 
Revenues:                                                                   
  Americas                         $      21,545 $      20,579          4.7%
  APAC                                    18,755        16,610         12.9%
  EMEA                                    14,260        11,403         25.1%
  Japan                                   11,244        11,519        -2.4*%
                                   ------------- ------------- ------------ 
Total Revenues                     $      65,804 $      60,111          9.5%
(*) +2% on a constant currency basis                                        
                                                                            
                                                                            
                      Consolidated Revenue, by Segment                      
--------------------------------------------------------------------------- 
                                       Three         Three                  
                                    Months Ended  Months Ended              
                                     March 31,     March 31,     % Change   
                                   ------------- -------------              
                                                                Year-over-  
U.S. dollars in thousands               2014          2013         Year     
                                   ------------- ------------- ------------ 
Revenues:                                                                   
  Aesthetic                        $      26,564 $      21,611         22.9%
  Surgical                                24,345        23,202          4.9%
  Ophthalmic                              14,895        15,298       -2.6**%
                                   ------------- ------------- ------------ 
Total Revenues                     $      65,804 $      60,111          9.5%
(**) -0.8% on a constant currency basis                                     
                                                                            
                                                                            
                                                                            
                                                                            
                                LUMENIS LTD.                                
              Condensed Consolidated Statements of Operations               
                                (Unaudited)                                 
                                                   Three          Three     
                                                Months Ended   Months Ended 
                                                 March 31,      March 31,   
                                               -------------  ------------- 
U.S. dollars in thousands (except per share         2014           2013     
 data)                                                                      
                                               -------------  ------------- 
                                                                            
Revenues:                                                                   
                                                                            
  Products                                     $      52,606  $      47,198 
  Services                                            13,198         12,913 
                                               --------
-----  ------------- 
Total Revenues                                 $      65,804  $      60,111 
                                                                            
Cost of Revenues                                                            
  Products                                            24,688         22,457 
  Services                                             6,529          6,968 
                                               -------------  ------------- 
Total Cost of Revenues                                31,217         29,425 
                                                                            
                                               -------------  ------------- 
Gross Profit                                   $      34,587  $      30,686 
                                                                            
Operating Expenses:                                                         
  Research and development, net                        6,268          5,052 
  Selling and marketing                               20,861         19,010 
  General and administrative (*)                       5,872          4,886 
                                               -------------  ------------- 
Total Operating Expenses                              33,001         28,948 
                                                                            
                                               -------------  ------------- 
Operating Income                               $       1,586  $       1,738 
                                                                            
  Financial expenses, net                                 59            966 
  IPO related Bank Cash Fee                            4,000              - 
                                                                            
                                               -------------  ------------- 
Total Financial Expenses                               4,059            966 
                                                                            
                                               -------------  ------------- 
Pre-Tax Income (Loss)                          $      (2,473) $         772 
                                                                            
  Tax expenses                                           664            814 
                                                                            
                                               -------------  ------------- 
Net Loss                                       $      (3,137) $         (42)
                                               =============  ============= 
                                                                            
Net loss per common shares:                                                 
  Basic                                        $       (0.10) $       (0.00)
                                               =============  ============= 
                                                                            
  Diluted                                      $       (0.10) $       (0.00)
                                               =============  ============= 
                                                                            
Weighted-average common shares outstanding:                                 
  Basic                                           30,865,773     28,981,858 
                                               =============  ============= 
                                                                            
  Diluted                                         30,865,773     28,981,858 
                                               =============  ============= 
                                                                            
(*) General and administrative expenses for the three months ended March    
 31, 2014, include IPO related compensation expenses in the amount of $880. 
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                LUMENIS LTD.                                
                    CONDENSED CONSOLIDATED BALANCE SHEETS                   
                                                                            
                                                                            
                                                     March 31,  December 31,
                                                    ----------- ------------
(U.S. dollars in thousands)                             2014        2013    
                                                    ----------- ------------
                                                    (Unaudited)             
ASSETS                                                                      
Cash and cash equivalents                           $   114,869 $     42,811
Trade receivables (net of allowance for doubtful                            
 accounts of $2,484 and $2,690 at March 31, 2014                            
 and December 31, 2013 respectively)                     40,896       42,867
Prepaid Expenses and other receivables                    9,770       10,194
Inventories                                              38,058       36,075
                                                    ----------- ------------
Total Current Assets                                    203,593      131,947
                                                                            
Finished goods used in operations, net                    4,756        4,793
Property and equipment, net                               8,795        8,094
Goodwill                                                 50,217       50,217
Severance pay fund                                        3,452        3,875
Other assets                                              7,213        7,519
                                                    ----------- ------------
Total Long-Term Assets                                   74,433       74,498
                                                    ----------- ------------
TOTAL ASSETS                                        $   278,026 $    206,445
                                                    =========== ============
                                                                            
LIABILITIES AND SHAREHOLDERS' EQUITY                                        
Restructured debt                                        17,335       17,493
Trade payables                                           27,095       24,553
Other accounts payable and accrued expenses              43,185       39,413
Deferred revenues and customers advances                 21,312       19,057
                                                    ----------- ------------
Total Current Liabilities                               108,927      100,516
                                                                            
Restructured debt                                        51,489       52,024
Accrued post-employment benefits                          8,428        8,906
Deferred revenues                                         7,765        8,144
Other liabilities                                        19,090       19,155
                                                    ----------- ------------
Total Long-Term Liabilities                              86,772       88,229
                                                    ----------- ------------
                                                                            
TOTAL LIABILITIES                                       1
95,699      188,745
                                                    =========== ============
                                                                            
SHAREHOLDERS' EQUITY                                     82,327       17,700
                                                    ----------- ------------
                                                                            
                                                    ----------- ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY          $   278,026 $    206,445
                                                    =========== ============
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                LUMENIS LTD.                                
                   Consolidated Statements of Cash Flows                    
                                (Unaudited)                                 
                                                     Three         Three    
                                                 Months Ended  Months Ended 
                                                   March 31,     March 31,  
                                                 ------------  ------------ 
(U.S. dollars in thousands)                          2014          2013     
                                                 ------------  ------------ 
                                                                            
Cash flows from operating activities:                                       
Net Loss                                         $     (3,137) $        (42)
Adjustments required to reconcile loss to net                               
 cash provided by operating activities:                                     
Depreciation and amortization                           1,588         1,252 
Compensation related to employees stock option                              
 plan                                                     794           405 
Adjustments related to restructured debt                3,127          (733)
Revaluation of financial assets and other, net            296           215 
Deferred income taxes, net                                591           655 
                                                                            
Decrease (increase) in trade receivables, net           2,094        (3,172)
Decrease (increase) in inventories and finished                             
 goods used in operations                              (2,700)          864 
Increase in prepaid expenses and other                                      
 receivables                                             (653)          (29)
Increase in trade payables                              1,797         4,695 
Increase (decrease) in other accounts payables                              
 and accrued expenses (including short and long-                            
 term deferred revenues and customer advances)            435           (65)
Increase in accrued post-employment benefits,                               
 net                                                       38           146 
Increase (decrease) in other long term                                      
 liabilities                                             (267)          499 
                                                                            
                                                 ------------  ------------ 
Net cash provided by operating activities               4,003         4,690 
                                                                            
Cash flows from investing activities:                                       
Purchase of property and equipment                       (919)         (638)
                                                 ------------  ------------ 
Net cash used in investing activities                    (919)         (638)
                                                                            
Cash flows from financing activities:                                       
Issuance of share capital, net                         68,852             - 
Proceeds from exercise of share options                    35            12 
                                                 ------------  ------------ 
Net cash provided by financing activities              68,887            12 
                                                                            
Foreign currency translation adjustments related                            
 to Cash and cash equivalents                              87          (321)
                                                                            
Increase in cash and cash equivalents                  72,058         3,743 
Cash and cash equivalents at the beginning of                               
 the period                                            42,811        27,103 
                                                                            
Cash and cash equivalents at the end of the                                 
 period                                          $    114,869  $     30,846 
                                                 ============  ============ 
                                                                            
Supplemental information and disclosures of non-                            
 cash investing and financing activities:                                   
  Issuance costs by utilizing prepayments        $        311             - 
                                                 ============  ============ 
  Accrued issuance costs                         $      1,557             - 
                                                 ============  ============ 
  Purchase of property and equipment             $        650             - 
                                                 ============  ============ 

 
Use of Non-GAAP Financial Measures:  
The Company has presented the following non-GAAP financial measures
in this press release: non-GAAP operating income, non-GAAP operating
margin, non-GAAP net income, adjusted EBITDA and adjusted EBITDA
margin. The Company defines non-GAAP operating income as its reported
operating income (GAAP) excluding stock-compensation expense,
one-time charges and other non-recurring operating costs and
expenses. The Company defines adjusted EBITDA as its non-GAAP net
income before financial expenses, net, taxes on income, and excluding
depreciation and amortization expense. The Company defines its
non-GAAP net income to e
xclude non-recurring or unusual expenses,
specifically, in the first quarter of 2014: (i.) stock based
compensation of $0.8 million, (ii.) IPO compensation-related expenses
of approximately $0.9 million, (iii.) one-time payment to Bank
Hapoalim of approximately $4.0 million triggered by the completion of
the Company's IPO and (iv.) embedded derivative revaluation income of
approximately $0.3 million in the first quarter of fiscal year 2014.  


 
                                                                            
                                LUMENIS LTD.                                
                 Reconciliation of GAAP to Non-GAAP results                 
                                (Unaudited)                                 
                                                     Three         Three    
                                                 Months Ended  Months Ended 
                                                   March 31,     March 31,  
                                                 ------------  ------------ 
(U.S. dollars in thousands)                          2014          2013     
                                                 ------------  ------------ 
Reconciliation from GAAP Gross Profit to Non-GAAP Gross Profit              
                                                                            
GAAP Gross Profit                                $     34,587  $     30,686 
  Stock-based compensation                                 46            38 
                                                 ------------  ------------ 
Non-GAAP Gross Profit                            $     34,633  $     30,724 
                                                 ============  ============ 
                                                                            
Reconciliation from GAAP Operating Income to Non-GAAP Operating Income and  
 Adjusted EBITDA                                                            
                                                                            
GAAP Operating Income                            $      1,586  $      1,738 
  Total stock-based compensation                          793           405 
  Legal settlements                                         -           120 
  IPO compensation expenses                               880             - 
                                                 ------------  ------------ 
Non-GAAP Operating Income                               3,259         2,263 
  Depreciation and Amortization                         1,588         1,252 
                                                 ------------  ------------ 
Adjusted EBITDA                                  $      4,847  $      3,515 
                                                 ============  ============ 
                                                                            
Reconciliation from GAAP Net Loss to Non-GAAP Net Income                    
                                                                            
GAAP Net Loss                                    $     (3,137) $        (42)
  Total stock-based compensation                          793           405 
  Legal settlements                                         -           120 
  IPO compensation expenses                               880             - 
  One-time payment to Bank Hapoalim BM                  4,000             - 
  Revaluation of embedded derivative and other                              
   non- recurring items                                  (339)          382 
                                                 ------------  ------------ 
Non-GAAP Net Income                              $      2,197  $        865 
                                                 ============  ============ 
                                                                            
Reconciliation from GAAP Diluted Net Loss Per Common Share to Non-GAAP      
 Diluted Net Income Per Common Share                                        
                                                                            
GAAP diluted net loss per common share           $      (0.10) $      (0.00)
                                                 ============  ============ 
Non-GAAP diluted net income per common share     $       0.07  $       0.03 
                                                 ============  ============ 
                                                                            
Shares used in computing GAAP diluted net income                            
 per common share                                  30,865,773    28,981,858 
                                                 ============  ============ 
                                                                            
Shares used in computing Non-GAAP diluted net                               
 income per common share                           32,356,961    29,604,696 
                                                 ============  ============ 

  
CONTACTS: 
For Investor Inquiries:
Westwicke Partners 
Mark Klausner or Mike Piccinino
Tel: +1 (443) 213-0500
lumenis@westwicke.com 
 
 
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