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InMode Reports Second Quarter 2020 Financial Results; Quarterly Revenues of $30.8 Million, GAAP and *Non-GAAP Diluted Earnings per Share of $0.21 and $0.24

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YOKNEAM, Israel, Aug. 5, 2020 /PRNewswire/ -- InMode Ltd. (Nasdaq: INMD) ("InMode"), a leading global provider of innovative medical technologies, today announced consolidated financial results for its second quarter ended June 30, 2020.

InMode logo
InMode logo

Second Quarter 2020 Highlights:

  • Quarterly revenue of $30.8 million, a decrease of 21% compared to the second quarter of 2019; approximately 53% of U.S. quarterly revenues derived from our proprietary surgical technology platforms engaged in minimally invasive and subdermal ablative treatments, approximately 46% of U.S. quarterly revenues derived from our recently introduced hands-free platforms and approximately 1% derived from our traditional laser and non-invasive RF platforms

  • GAAP net income of $8.6 million, compared to $15.8 million in the second quarter of 2019; *non-GAAP net income of $10.1 million, compared to $16.1 million in the second quarter of 2019

  • GAAP diluted earnings per share of $0.21 compared to $0.45 in the second quarter of 2019; *non-GAAP diluted earnings per share of $0.24 compared to $0.45 in the second quarter of 2019

  • Total cash position of $203.4 million as of June 30, 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)


Q2 2020

Q2 2019

Revenues

$30,765

$38,797

Gross Margins

85%

87%

Net Income Attributable to InMode Ltd.

$8,588

$15,797

Earnings per Diluted Share

$0.21

$0.45

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


Q2 2020

Q2 2019

Net Income Attributable to InMode Ltd.

$10,096

$16,081

Earnings per Diluted Share

$0.24

$0.45


*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 share-based compensation and related tax
adjustments.

Management Comments

"The second quarter of 2020 was both challenging and encouraging. In June, after three months of global shutdowns relating to the global COVID-19 pandemic, elective surgeries began to come back throughout the United States and internationally, and aesthetic surgeons re-opened their clinics, which allowed for one month of sales and marketing operation in the quarter. Our continued commitment to the welfare of employees and customers, and our decision not to downsize our sales and marketing organization during the shutdown, unlike some of our competitors, proved to be instrumental in allowing us to act quickly and continue to capture market share," commented Moshe Mizrahy, InMode's CEO.

"During the quarter, we leveraged our InMode University platform for securing customer relationships, strengthening our brand, training our experienced sales team and physicians on InMode's hands-free technology and platforms, and ultimately generating sales as restrictions loosened. Given our commitment to the future, we continued to invest in our direct marketing and sales organization," commented Shakil Lakhani, President of North America.

"In addition, we made progress in our clinical and regulatory processes internationally. In June, we were excited to receive the Health Canada certification for Evolve Tone, which is Canada's first and only all-in-one hands-free device consisting of three unique body remodeling technologies- Tite, Trim and Tone. Furthermore, in July, we received clearance from the China National Medical Products Administration (NMPA) for two proprietary InMode RF platforms, which we believe is a significant milestone as we continue to expand our global footprint," noted Dr. Spero Theodorou, InMode's Chief Medical Officer.

"As we continue to build out our organization in a safe and conscientious manner, we believe our unique and innovative R&D pipeline for our product portfolio will attract both physicians and patients post-crisis, as the desire for minimally invasive and hands-free alternatives is expected to move to the forefront of consumer decision-making," added Dr. Michael Kreindel, InMode's Chief Technology Officer.

2020 Guidance

We expect that our revenue for the full year of 2020 will be between $156-$160 million, and we intend to 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.

Second Quarter 2020 Financial Results

Total revenues for the second quarter of 2020 were $30.8 million, a decrease of 21% as compared to the second quarter of 2019. The decrease in revenue was primarily due to the impact of the global COVID-19 pandemic, in which the U.S. market had significantly reduced activity during the economic standstill and shutdowns in April and May. Nonetheless, InMode continued to gain traction in international markets, with international revenue growing 10% year-over-year.

Gross margin for the second quarter of 2020 was 85% compared to a gross margin of 87% in the second quarter of 2019. This decrease is primarily attributable to the expansion of our operations team, as well as an increase in the cost of certain parts and materials due to the impact of the global COVID-19 pandemic.

GAAP operating margin for the second quarter of 2020 was 26%, compared to 41% in the second quarter of 2019. *Non-GAAP operating margin for the second quarter of 2020 was 30%, compared to 42% in the second quarter of 2019. This decrease was primarily attributable to the sales cycle in April and May being interrupted by the global COVID-19 pandemic, and as a result, marketing expenditure did not translate into sales during those months.

InMode reported GAAP net income attributable to InMode Ltd. of $8.6 million, or $0.21 per diluted share in the second quarter of 2020 compared to $15.8 million, or $0.45 per diluted share, in the second quarter of 2019. On a *non-GAAP basis, InMode reported net income attributable to InMode Ltd. of $10.1 million, or $0.24 per diluted share in the second quarter of 2020 compared to $16.1 million, or $0.45 per diluted share, in the second quarter of 2019.

"Our strong balance sheet, profitable business model and positive cashflow, which continued to be present throughout the COVID-19 crisis, has been one of InMode's main strengths and competitive advantages, and has allowed us to continue our growth momentum in the United States and internationally," noted Yair Malca, InMode's CFO.

*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 share-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 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.

Conference Call Information

Mr. Moshe Mizrahy, Chairman and Chief Executive Officer, Dr. Michael Kreindel, co-founder and Chief Technology Officer, Mr. Yair Malca, Chief Financial Officer, Mr. Shakil Lakhani, President of North America, and Dr. Spero Theodorou, Chief Medical Officer, will host a conference call today, August 5, 2020, at 8:30 a.m. Eastern Time to discuss the second quarter 2020 financial results.

The Company encourages participants to pre-register for the conference call using the following link: http://dpregister.com/10145846. Callers will receive a unique dial-in upon registration, which enables immediate access to the call. Participants may pre-register at any time, including up to and after the call start time.

For callers that opt out of pre-registration, please dial one of the following teleconferencing numbers. Please begin by placing your call ten 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/events-presentations/. A replay of the conference call will be available from August 5, 2020 at 12 p.m. Eastern Time to August 12, 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: 10145846

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 "2020 Guidance". 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.

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

INMODE LTD.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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

(Unaudited)



Three months ended

June 30,

Six months ended

June 30,


2020

2019

2020

2019

REVENUES

30,765

38,797

71,206

69,349

COST OF REVENUES

4,695

4,875

10,879

9,146

GROSS PROFIT

26,070

33,922

60,327

60,203

OPERATING EXPENSES:





Research and development

1,816

1,584

5,248

2,783

Sales and marketing

14,536

15,898

37,535

29,995

General and administrative

1,613

713

3,436

1,766

TOTAL OPERATING EXPENSES

17,965

18,195

46,219

34,544

INCOME FROM OPERATIONS

8,105

15,727

14,108

25,659

Finance income, net

636

382

1,265

785

INCOME BEFORE TAXES

8,741

16,109

15,373

26,444

INCOME TAXES

161

274

302

451

NET INCOME

8,580

15,835

15,071

25,993

Add: Loss (net income) attributable to non-controlling interests

8

(38)

(50)

(72)

NET INCOME ATTRIBUTABLE TO INMODE LTD.

8,588

15,797

15,021

25,921






NET INCOME PER SHARE (1):





Basic

0.24

0.58

0.43

0.96

Diluted

0.21

0.45

0.36

0.73

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





Basic

35,943

26,963

34,956

26,891

Diluted

41,733

35,344

41,709

35,334


(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)



June 30,

2020

December 31,

2019

Assets



CURRENT ASSETS:



Cash and cash equivalents

64,767

44,727

Marketable securities

106,668

120,144

Short-term bank deposits

31,971

28,491

Accounts receivable, net of allowance for doubtful accounts

8,608

6,628

Other receivables

5,327

3,810

Inventories

16,227

9,408

TOTAL CURRENT ASSETS

233,568

213,208

NON-CURRENT ASSETS:



Accounts receivable

383

374

Deferred income taxes, net

993

1,899

Operating lease right-of-use assets

1,413

1,369

Property and equipment, net

1,061

935

Other investments

600

600

TOTAL NON-CURRENT ASSETS

4,450

5,177

TOTAL ASSETS

238,018

218,385




Liabilities and shareholders' equity



CURRENT LIABILITIES:



Accounts payable

4,026

3,702

Contract liabilities

10,283

15,587

Other liabilities

13,503

13,205

TOTAL CURRENT LIABILITIES

27,812

32,494

NON-CURRENT LIABILITIES:



Contract liabilities

2,447

3,813

Other liabilities

1,836

1,494

Operating lease liabilities

660

744

Deferred income taxes, net

107

37

TOTAL NON-CURRENT LIABILITIES

5,050

6,088

TOTAL LIABILITIES

32,862

38,582




TOTAL SHAREHOLDERS' EQUITY

205,156

179,803

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

238,018

218,385

INMODE LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

(Unaudited)




Three months ended

June 30,

Six months ended

June 30,


2020

2019

2020

2019

CASH FLOWS FROM OPERATING ACTIVITIES:





Net income

8,580

15,835

15,071

25,993

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





Depreciation and amortization

105

74

199

137

Share-based compensation expenses

1,160

412

7,210

814

Allowance for doubtful accounts

160

19

466

78

Gains on marketable securities, net

(3)

-

(9)

-

Finance expenses (income), net

79

(126)

268

(309)

Deferred income taxes, net

458

(77)

826

(143)

Changes in operating assets and liabilities:





Decrease (increase) in accounts receivable

(3,045)

1,580

(2,455)

1,727

Decrease (increase) in other receivables

63

291

(1,497)

1,164

Increase in inventories

(4,141)

(524)

(6,819)

(653)

Increase (decrease) in accounts payable

(690)

1,085

324

70

Increase in other liabilities

2,323

465

530

16

Increase (decrease) in contract liabilities

(3,725)

(533)

(6,670)

2,378

Decrease in accrued contingencies

-

-

-

(10,000)

Net cash provided by operating activities

1,324

18,501

7,444

21,272

CASH FLOWS FROM INVESTING ACTIVITIES:





Investment in short-term deposit

(15,090)

(6,090)

(31,609)

(17,090)

Proceeds from short-term deposit

13,590

5,000

28,090

10,000

Purchase of fixed assets

(226)

(86)

(325)

(464)

Purchase of marketable securities

(34,376)

(9,421)

(78,309)

(14,339)

Proceeds from sale of marketable securities

53,712

2,000

92,286

4,603

Net cash provided by (used in) investing activities

17,610

(8,597)

10,133

(17,290)

CASH FLOWS FROM FINANCING ACTIVITIES:





Exercise of options

549

15

2,550

137

Net cash provided by financing activities

549

15

2,550

137

EFFECT OF EXCHANGE RATE CHANGES ON CASH

146

7

(87)

37

NET INCREASE IN CASH AND CASH EQUIVALENTS

19,629

9,926

20,040

4,156






CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD

45,138

18,951

44,727

24,721

CASH AND CASH EQUIVALENTS AT END OF PERIOD

64,767

28,877

64,767

28,877

INMODE LTD.

CONDENSED CONSOLIDATED FINANCIAL HIGHLIGHTS

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

(Unaudited)



Three months ended

June 30,

Six months ended

June 30,

2020

2019

2020

2019

Revenues by Geography:





United States

24,060

32,721

54,883

56,806

International

6,705

6,076

16,323

12,543

Total Net Revenue

30,765

38,797

71,206

69,349

U.S. as percentage of total revenue

78%

84%

77%

82%

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 June 30, 2020

Three months ended June 30, 2019

GAAP

Share Based

Compensation

Non-GAAP

GAAP

Share Based

Compensation

Non-GAAP

REVENUES

30,765

-

30,765

38,797

-

38,797

COST OF REVENUES

4,695

(149)

4,546

4,875

(22)

4,853

GROSS PROFIT

26,070

149

26,219

33,922

22

33,944

OPERATING EXPENSES:







Research and development

1,816

(122)

1,694

1,584

(56)

1,528

Sales and marketing

14,536

(757)

13,779

15,898

(309)

15,589

General and administrative

1,613

(132)

1,481

713

(25)

688

TOTAL OPERATING

EXPENSES

17,965

(1,011)

16,954

18,195

(390)

17,805

INCOME FROM
OPERATIONS

8,105

1,160

9,265

15,727

412

16,139

Finance income, net

636

-

636

382

-

382

INCOME BEFORE TAXES

8,741

1,160

9,901

16,109

412

16,521

INCOME TAXES (TAX
BENEFIT)

161

(348)

(187)

274

128

402

NET INCOME

8,580

1,508

10,088

15,835

284

16,119

Add: Loss (net income)
attributable to non-controlling
interests

8

-

8

(38)

-

(38)

NET INCOME
ATTRIBUTABLE TO
INMODE LTD.

8,588

1,508

10,096

15,797

284

16,081








NET INCOME PER

SHARE (1):







Basic

0.24


0.28

0.58


0.59

Diluted

0.21


0.24

0.45


0.45

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







Basic

35,943


35,943

26,963


26,963

Diluted

41,733


42,009

35,344


35,429


(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

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)



Six months ended June 30, 2020

Six months ended June 30, 2019

GAAP

Share Based

Compensation

Non-GAAP

GAAP

Share Based

Compensation

Non-GAAP

REVENUES

71,206

-

71,206

69,349

-

69,349

COST OF REVENUES

10,879

(225)

10,654

9,146

(41)

9,105

GROSS PROFIT

60,327

225

60,552

60,203

41

60,244

OPERATING EXPENSES:







Research and development

5,248

(2,008)

3,240

2,783

(108)

2,675

Sales and marketing

37,535

(4,595)

32,940

29,995

(617)

29,378

General and administrative

3,436

(382)

3,054

1,766

(48)

1,718

TOTAL OPERATING

EXPENSES

46,219

(6,985)

39,234

34,544

(773)

33,771

INCOME FROM
OPERATIONS

14,108

7,210

21,318

25,659

814

26,473

Finance income, net

1,265

-

1,265

785

-

785

INCOME BEFORE TAXES

15,373

7,210

22,583

26,444

814

27,258

INCOME TAXES (TAX
BENEFIT)

302

(424)

(122)

451

168

619

NET INCOME

15,071

7,634

22,705

25,993

646

26,639

Add: Loss (net income)
attributable to non-controlling
interests

(50)

-

(50)

(72)

-

(72)

NET INCOME
ATTRIBUTABLE TO
INMODE LTD.

15,021

7,634

22,655

25,921

646

26,567








NET INCOME PER

SHARE (1):







Basic

0.43


0.65

0.96


0.98

Diluted

0.36


0.54

0.73


0.75

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







Basic

34,956


34,956

26,891


26,891

Diluted

41,709


41,922

35,334


35,423


(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

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