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InMode Reports First Quarter 2020 Financial Results; Quarterly Revenues of $40.4 Million Represent 32% Year over Year Growth

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YOKNEAM, Israel, May 6, 2020 /PRNewswire/ -- InMode Ltd. (Nasdaq: INMD) ("InMode"), a leading global provider of innovative medical technologies, today announced financial results for its first quarter ended March 31, 2020.

InMode Logo
InMode Logo

First Quarter 2020 Highlights:

  • Quarterly revenue of $40.4 million, an increase of 32% compared to the first quarter in 2019.
    In the first quarter of 2020, we derived approximately 61% of our U.S. revenues from our proprietary surgical technology platforms engaged in minimally invasive and subdermal ablative treatments, 37% of our U.S. revenues from our recently introduced Hands-Free platforms and only 2% of our U.S. revenues from traditional laser and non-invasive RF platforms.

  • GAAP net income of $6.4 million, compared to $10.1 million in the first quarter in 2019; *non-GAAP net income of $12.6 million, compared to $10.5 million in the first quarter in 2019

  • GAAP diluted earnings per share of $0.15 and *non-GAAP diluted earnings per share of $0.30

  • Total cash position of $201.7 million as of March 31, 2020, including cash and cash equivalents, marketable securities and short-term bank deposits


U.S. GAAP Results

(U.S. dollars in thousands, except for per share data)


Q1 2020

Q1 2019

Revenues

$40,441

$30,552

Gross Margins

85%

86%

Net Income

Attributable to InMode Ltd.

$6,433

$10,124

Earnings per Diluted Share

$0.15

$0.28

Non-GAAP Results
(U.S. dollars in thousands, except for per share data)


Q1 2020

Q1 2019

Net Income Attributable to InMode Ltd.

$12,559

$10,486

Earnings per Diluted Share

$0.30

$0.29

*Please refer to "Use of non-GAAP Financial Measures" below for important information about non-GAAP financial measures. A reconciliation between U.S. GAAP and non-GAAP Statement of Income is provided following the financial statements that are included in this release. Non-GAAP results exclude stock-based compensation and related tax adjustments.

Management Comments

"The first quarter of 2020 started on a positive note as we gained momentum following the launches of our unique hands-free devices, Evolve and Evoke, along with continued demand across our product portfolio," commented Moshe Mizrahy, CEO of InMode. "However, in the beginning of March, global restrictions caused by the COVID-19 pandemic led to a standstill in sales in our industry. Despite this global economic lull, we continued to strengthen our infrastructure and product portfolio through research and development investments, furthering of regulatory processes for devices and indications worldwide, and the establishment of a wholly owned subsidiary for sales and marketing in France. Additionally, we have strengthened our supply chain in an effort to ensure stability in manufacturing capacity and inventory."

"We continued to hire experienced talent and established a virtual training and demonstration center for our customers and staff through the InMode University platform," said Mr. Shakil Lakhani, President of InMode North America.

"We remain confident in InMode's current market position and ability to further our technological innovation. We believe that our breakthrough devices, Evolve and Evoke, are well-positioned to attract both physicians and patients post-crisis, as the demand for minimally invasive and hands-free alternatives will grow, opposed to historic post-crisis declines seen with invasive surgical procedures. Therefore, we believe that these technologies will be significant growth drivers in the future and will become the standard of care for facial and body reshaping in the future," added Mr. Lakhani.

"In addition, we remain confident in InMode's current and future financial position given our market leadership, innovative approach and strong balance sheet," said Mr. Yair Malca, CFO of InMode.

COVID-19 Impact on 2020

Although the COVID-19 pandemic has caused a temporary halt in elective aesthetic surgical procedures, InMode believes that this standstill will gradually end within the coming month or two. Our assumption is based on the fact that the pandemic has reached the controlled phase:

  • There is a decrease in new cases worldwide and this downward trend is continuing on a daily basis

  • Gradual return to work has already started

  • Elective surgeries are gradually being permitted in the USA and other countries

Based on these assumptions, InMode believes that starting the month of June 2020 and throughout the third quarter of 2020 – InMode's business will gradually begin to pick up and return to normal. Therefore, InMode has remained positive with regards to its business prospects and has decided not to downsize the company or lay off any of its employees. On the contrary – we hired new direct salespeople around the world, and have taken advantage of the time during which we were forced to temporarily stop sales activity in order to live stream visual training to doctors and the sales team, accelerate development of platforms that fit the new aesthetic surgical market needs post COVID-19 and prepare our infrastructure for the days after.

In addition, although we have been approached by credit providers to apply for the Paycheck Protection Program (PPP), which would enable us to get funds from the government, we decided, unlike other companies in our industry, not to take, and to leave the PPP money to stimulate the U.S economy. We believe that this is our social responsibility to our customers and vendors.

We have also developed a sales program, which we will initiate after COVID-19 subsides. This program includes packages that will motivate doctors to purchase InMode platforms as part of the recovery plan for their clinics.

Throughout this crisis we have taken good care of our employees worldwide and have followed local and regional guidelines to prioritize the health and welfare of our employees and customers.

Since visibility of the future is low, InMode management decided not to give an updated detailed guidance for 2020. Currently, based on the assumptions above - our revenue outlook for the full year of 2020 will not be significantly lower than our revenue in 2019, and we will maintain a gross margin of 84%-86%.

This outlook is not a guarantee of future performance and stockholders should not rely on such forward-looking statements. See "Forward-Looking Statements" for additional information.

First Quarter 2020 Financial Results

Total revenues for the first quarter of 2020 were $40.4 million, an increase of 32% as compared to the first quarter in 2019. This revenue represents two months of normal activity and almost no activity in March (during which the world came to an economic standstill). Additionally, InMode continued to gain traction in international markets, with international revenue growing 49% year-over-year.

Gross margin for the first quarter of 2020 was 85% compared to a gross margin of 86% in the first quarter of 2019. This decrease is primarily attributable to an increase in cost of materials due to the impact of COVID-19.

GAAP operating margin for the first quarter of 2020 was 15%, compared to 33% in the first quarter of 2019. *Non-GAAP operating margin for the first quarter of 2020 was 30%, compared to 34% in the first quarter of 2019. This decrease was primarily attributable to the fact that the sales cycle in March was interrupted by COVID-19, and as a result - the marketing expenditure did not result in sales at the quarter's end.

InMode reported GAAP net income attributable to InMode Ltd. of $6.4 million, or $0.15 per diluted share in the first quarter of 2020. This is compared with GAAP net income attributable to InMode Ltd. of $10.1 million, or $ 0.28 per diluted share, in the first quarter of 2019. On a *non-GAAP basis, InMode reported net income attributable to InMode Ltd. of $12.6 million, or $0.3 per diluted share in the first quarter of 2020 compared to $10.5 million, or $0.29 per diluted share, in the first quarter of 2019.

*Please refer to "Use of non-GAAP Financial Measures" below for important information about non-GAAP financial measures. A reconciliation between U.S. GAAP and non-GAAP Statement of Income is provided following the financial statements that are included in this release. Non-GAAP results exclude stock-based compensation and related tax adjustments.

Use of Non-GAAP Financial Measures

In addition to InMode's operating results presented in accordance with GAAP, this release includes certain non-GAAP financial measures including non-GAAP net income, non-GAAP fully diluted earnings per share and non-GAAP operating margin. Because these measures are used in InMode's internal analysis of financial and operating performance, management believes that they provide greater transparency to investors of management's view of InMode's economic performance. Management also believes the presentation of these measures, when analyzed in conjunction with InMode's GAAP operating results, allows investors to more effectively evaluate and compare the performance of InMode to that of its peers, although InMode's presentation of its non-GAAP measures may not be comparable to other similarly-titled measures of other companies. Schedules reconciling each of these non-GAAP financial measures are provided as a supplement to this release. We have not provided a reconciliation of non-GAAP financial measures included in "COVID-19 Impact on 2020" to the corresponding GAAP financial measure on a forward-looking basis due to the potential variability, limited visibility and unpredictability.

Conference Call Information

Mr. Moshe Mizrahy, Chairman and Chief Executive Officer, and Mr. Yair Malca, Chief Financial Officer, will host a conference call that same day, May 6, 2020, at 8:30 a.m. Eastern Time.

To attend the conference call, please dial one of the following teleconferencing numbers. Please begin by placing your call five minutes before the conference call commences. If you are unable to connect using the toll-free number, please try the international dial-in number.

U.S. Toll-Free Dial-in Number: 1-866-777-2509
Israel Toll- Free Dial-in Number: 1-80-921-2373
International Dial-in Number: 1-412-317-5413
At:
8:30 a.m. Eastern Time
5:30 a.m. Pacific Time
3:30 p.m. Israel Time

The conference call will also be webcast live from a link on InMode's website at https://inmodemd.com/investors/. A replay of the conference call will be available from May 6, 2020 at 12 p.m. Eastern Time to May 20, 2020 at 11:59 p.m. Eastern Time. To access the replay, please dial one of the following numbers:

Replay Dial-in U.S TOLL-FREE: 1-877-344-7529
Replay Dial-in Canada TOLL-FREE: 855-669-9658
Replay Dial-in TOLL/INTERNATIONAL: 1-412-317-0088
Replay Pin Number: 10141879

A replay will also be available for 90 days on InMode's website at https://inmodemd.com/investors/

About InMode

InMode is a leading global provider of innovative medical technologies. InMode develops, manufactures, and markets devices harnessing novel radio-frequency ("RF") technology. InMode strives to enable new emerging surgical procedures as well as improve existing treatments. InMode has leveraged its medically-accepted minimally-invasive RF technologies to offer a comprehensive line of products across several categories for plastic surgery, gynecology, dermatology, otolaryngology, and ophthalmology. For more information about InMode, please visit www.inmodemd.com.

Forward-Looking Statements

The information in this press release includes forward-looking statements within the meaning of the federal securities laws. These statements generally relate to future events or InMode's future financial or operating performance, including the future performance described above under the heading titled "COVID-19 Impact on 2020". Actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. In some cases, you can identify these statements because they contain words such as "anticipate," "believe," "estimate," "expect," "intend," "may," "plan," "predict," "project," "will," "would" and similar expressions that concern our expectations, strategy plans or intentions. Forward-looking statements are based on management's current expectations and assumptions, and are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict, including with respect to the impact of the COVID-19 global outbreak. As a result, actual results could differ materially from those indicated in these forward-looking statements. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements included in InMode's Annual Report on Form F-20 filed with the Securities and Exchange Commission on February 18, 2020, risk factors relating to the COVID-19 global outbreak and our future public filings. InMode undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after this press release. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release.

INMODE LTD.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(U.S. dollars in thousands, except for per share data)

(Unaudited)


Three months ended
March 31,


2020

2019

REVENUES

40,441

30,552

COST OF REVENUES

6,184

4,271

GROSS PROFIT

34,257

26,281

OPERATING EXPENSES:



Research and development

3,432

1,199

Sales and marketing

22,999

14,097

General and administrative

1,823

1,053

TOTAL OPERATING EXPENSES

28,254

16,349

INCOME FROM OPERATIONS

6,003

9,932

Finance income, net

629

403

INCOME BEFORE TAXES

6,632

10,335

INCOME TAXES

141

177

NET INCOME

6,491

10,158

Less: Net income attributable to non-controlling interests

58

34

NET INCOME ATTRIBUTABLE TO INMODE LTD.

6,433

10,124




NET INCOME PER SHARE (1):



Basic

0.19

0.38

Diluted

0.15

0.28

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
USED IN COMPUTATION OF NET INCOME PER SHARE (1)



Basic

33,963

26,818

Diluted

41,688

35,458

(1) The number shares have been adjusted retroactively for a 1-for-1.789 stock split of InMode shares by way of an issuance
of bonus shares, that occurred pursuant to a resolution of our board of directors dated July 24, 2019.

INMODE LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands, except for per share data)

(Unaudited)


March 31,

2020

December 31,

2019

Assets



CURRENT ASSETS:



Cash and cash equivalents

45,138

44,727

Marketable securities

126,101

120,144

Short-term bank deposits

30,470

28,491

Accounts receivable, net of allowance for doubtful accounts

5,769

6,628

Other receivables

5,410

3,810

Inventories

12,086

9,408

TOTAL CURRENT ASSETS

224,974

213,208

NON-CURRENT ASSETS:



Accounts receivable

337

374

Deferred income taxes, net

1,370

1,899

Operating lease right-of-use assets

1,480

1,369

Property and equipment, net

940

935

Other investments

600

600

TOTAL NON-CURRENT ASSETS

4,727

5,177

TOTAL ASSETS

229,701

218,385




Liabilities and shareholders' equity



CURRENT LIABILITIES:



Accounts payable

4,716

3,702

Contract liabilities

13,249

15,587

Other liabilities

11,309

13,205

TOTAL CURRENT LIABILITIES

29,274

32,494

NON-CURRENT LIABILITIES:



Contract liabilities

3,206

3,813

Other liabilities

1,679

1,494

Operating lease liabilities

709

744

Deferred income taxes, net

-

37

TOTAL NON-CURRENT LIABILITIES

5,594

6,088

TOTAL LIABILITIES

34,868

38,582




TOTAL SHAREHOLDERS' EQUITY

194,833

179,803

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

229,701

218,385


INMODE LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands, except for per share data)

(Unaudited)



Three months ended
March 31,


2020

2019

CASH FLOWS FROM OPERATING ACTIVITIES:



Net income

6,491

10,158

Adjustments required to reconcile net income to net cash provided by operating activities:



Depreciation and amortization

94

63

Share-based compensation expenses

6,050

402

Allowance for doubtful accounts

306

59

Gains on marketable securities, net

(6)

-

Finance expenses (income), net

189

(183)

Deferred income taxes, net

368

(66)

Changes in operating assets and liabilities:



Decrease in accounts receivable

590

147

Decrease (increase) in other receivables

(1,560)

873

Increase in inventories

(2,678)

(129)

Increase (decrease) in accounts payable

1,014

(1,015)

Decrease in other liabilities

(1,793)

(449)

Increase (decrease) in contract liabilities

(2,945)

2,911

Decrease in accrued contingencies

-

(10,000)

Net cash provided by operating activities

6,120

2,771

CASH FLOWS FROM INVESTING ACTIVITIES:



Investment in short-term deposit

(16,519)

(11,000)

Proceeds from short-term deposit

14,500

5,000

Purchase of fixed assets

(99)

(378)

Purchase of marketable securities

(43,933)

(4,918)

Proceeds from sale of marketable securities

38,574

2,603

Net cash (used in) investing activities

(7,477)

(8,693)

CASH FLOWS FROM FINANCING ACTIVITIES:



Exercise of options

2,001

122

Net cash provided by financing activities

2,001

122

EFFECT OF EXCHANGE RATE CHANGES ON CASH

(233)

30

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

411

(5,770)




CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

44,727

24,721

CASH AND CASH EQUIVALENTS AT END OF PERIOD

45,138

18,951


INMODE LTD.

CONDENSED CONSOLIDATED FINANCIAL HIGHLIGHTS

(U.S. dollars in thousands, except for per share data)

(Unaudited)


Three months ended
March 31,

2020

2019

Revenues by Geography:



United States

30,823

24,085

International

9,618

6,467

Total Net Revenue

40,441

30,552

U.S. as percentage of total revenue

76%

79%

INMODE LTD.

RECONCILIATION OF GAAP CONDENSED CONSOLIDATED STATEMENTS OF
INCOME TO NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(U.S. dollars in thousands, except for per share data)

(Unaudited)


Three months ended March 31, 2020

Three months ended March 31, 2019

GAAP

Stock Based
Compensation

Non-GAAP

GAAP

Stock Based
Compensation

Non-GAAP

REVENUES

40,441

-

40,441

30,552

-

30,552

COST OF REVENUES

6,184

(76)

6,108

4,271

(19)

4,252

GROSS PROFIT

34,257

76

34,333

26,281

19

26,300

OPERATING EXPENSES:







Research and development

3,432

(1,886)

1,546

1,199

(52)

1,147

Sales and marketing

22,999

(3,838)

19,161

14,097

(308)

13,789

General and administrative

1,823

(250)

1,573

1,053

(23)

1,030

TOTAL OPERATING
EXPENSES

28,254

(5,974)

22,280

16,349

(383)

15,966

INCOME FROM OPERATIONS

6,003

6,050

12,053

9,932

402

10,334

Finance income, net

629

-

629

403

-

403

INCOME BEFORE TAXES

6,632

6,050

12,682

10,335

402

10,737

INCOME TAXES

141

(76)

65

177

40

217

NET INCOME

6,491

6,126

12,617

10,158

362

10,520

Less: Net income attributable
to non-controlling interests

58

-

58

34

-

34

NET INCOME
ATTRIBUTABLE TO
INMODE LTD.

6,433

6,126

12,559

10,124

362

10,486








NET INCOME PER
SHARE (1):







Basic

0.19


0.37

0.38


0.39

Diluted

0.15


0.30

0.28


0.29

WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING USED IN
COMPUTATION OF NET
INCOME PER SHARE (1)







Basic

33,963


33,963

26,818


26,818

Diluted

41,688


41,809

35,458


35,409

(1) The number of shares have been adjusted retroactively for a 1-for-1.789 stock split of InMode shares by way of
an issuance of bonus shares, that occurred pursuant to a resolution of our board of directors dated July 24, 2019

Company Contact:

Yair Malca

Chief Financial Officer

Phone: (949) 305-0108

Email: Yair.Malca@inmodemd.com

Investor Relations Contact:

Miri Segal

MS-IR LLC

Phone: (917) 607-8654

Email: ir@inmodemd.com

Cision
Cision

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SOURCE InMode Ltd.