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

Marketwired

YOKNEAM, ISRAEL--(Marketwired - May 12, 2014) - 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® line and the Lumenis Pulse™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 operating 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® family of hair removal products. The "Lightsheer® Infinity™" 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® Desire™" 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™ LaserLink™ 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  
U.S. dollars in thousands   2014   2013   Year-over-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  
U.S. dollars in thousands   2014   2013   Year-over-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 data)   2014     2013  
                 
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     195,699     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 exclude 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  
                 
                 

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