HAYWARD, Calif., Feb. 23 /PRNewswire-FirstCall/ -- Solta Medical,
Inc. (NASDAQ:SLTM), a global leader in the medical aesthetics
market, today announced financial results for the fourth quarter
and full year ended December 31, 2008. Revenue for the fourth
quarter was $9.5 million and includes revenue from the sale of
Fraxel products post-acquisition of Reliant Technologies, Inc. on
December 23, 2008. On a pro forma combined basis as if the
acquisition of Reliant Technologies was effective as of October 1,
2008, revenue for the fourth quarter would have been $20.1 million,
which is based on Thermage standalone revenue of $8.7 million and
Reliant standalone revenue of $11.4 million. This compares to
revenue for both companies of $35.5 million in the fourth quarter
of 2007 on a pro forma combined basis. On a pro forma combined
basis, domestic revenue decreased 42% and international revenue
fell 46% from the fourth quarter of 2007. Gross margin for the
quarter was $6.1 million, or 64.4% of revenue. The gross margin
includes charges for excess and obsolete inventory of $355,000,
loss on disposal of assets of $211,000, purchase price related
adjustments from the Reliant acquisition of $263,000, and severance
expense of $54,000. Fourth quarter operating expenses were $21.7
million and includes a charge for acquired in-process R&D from
the Reliant acquisition of $9.1 million, severance and merger
related integration expenses of $1.3 million, stock based
compensation charges of $0.9 million, and loss on disposal of
assets of $157,000. The fourth quarter non-GAAP loss before
interest, taxes, depreciation and amortization (EBITDA) and
excluding the charges related to the Reliant acquisition and stock
based compensation was approximately $3.5 million. "Our fourth
quarter results were in-line with the preliminary results provided
in late January and illustrate the impact of the overall economic
environment on our industry," said Stephen J. Fanning, Chairman of
the Board, President and CEO of Solta Medical. "At the same time,
we are constantly evaluating ways to maximize our opportunities in
the marketplace and have implemented a number of initiatives. For
example, we have responded to the tight worldwide credit market by
expanding our partner program to include new customer rental
programs for both Thermage and Fraxel systems. In addition, with
the successful integration of Reliant Technologies and Thermage
operations, we have expanded the partner program to include Fraxel
consumables and we're offering incentives to doctors who become
both Fraxel and Thermage customers. We're also executing on our new
product road map and continue to generate a strong market response
to the new Body Tip 16.0 for the Thermage NXT." "As we look forward
to 2009, while we expect the current market environment to remain
quite challenging, we are confident about the potential of Solta
Medical," continued Mr. Fanning. "By combining the two companies,
we remain on track to realize approximately $19 million in cost
synergies. Additionally, we continue to achieve strong average
selling prices on systems and disposables. We believe that with our
cost cutting initiatives, we have the financial resources needed to
execute our operating plans and achieve our financial goals for
2009. As a result, we believe we are very well positioned to
capitalize on any improvement in market conditions," Mr. Fanning
concluded. Financial Goals for 2009 The Company reiterated the
following financial goals for 2009: -- Realize approximately $19
million in cost synergies as a result of the acquisition of Reliant
Technologies, Inc. -- Generate positive cash flow from operations
and positive EBITDA for the full year -- Achieve a non-GAAP gross
margin of 70% for the year excluding non-cash amortization charges
Non-GAAP Presentation To supplement the condensed consolidated
financial information presented on a GAAP basis, management has
provided non-GAAP operating income (loss), non-GAAP EBITA, non-GAAP
net income (loss) and non-GAAP earnings (loss) per share measures
that exclude the impact of acquired in-process R&D, purchase
price related adjustments, severance costs, merger related
integration expense, stock-based compensation expenses and loss on
investments, all net of income taxes. The Company believes that
these non-GAAP financial measures provide investors with insight
into what is used by management to conduct a more meaningful and
consistent comparison of the Company's ongoing operating results
and trends, compared with historical results. This presentation is
also consistent with management's internal use of the measures,
which it uses to measure the performance of ongoing operating
results, against prior periods and against our internally developed
targets. There are limitations in using these non-GAAP financial
measures because they are not prepared in accordance with GAAP and
may be different from non-GAAP financial measures used by other
companies. These non-GAAP financial measures should not be
considered in isolation or as a substitute for GAAP financial
measures. Investors and potential investors should consider
non-GAAP financial measures only in conjunction with the Company's
consolidated financial statements prepared in accordance with GAAP
and the reconciliation of non-GAAP financial measures attached to
this release. Conference Call Information Solta Medical will host a
conference call and webcast today, Monday, February 23, 2009, at
4:30 p.m. Eastern Time (1:30 p.m. Pacific) to discuss the financial
results and current corporate developments. The dial-in number for
the conference call is 800-218-0204 for domestic participants and
303-228-2960 for international participants. A taped replay of the
conference call will also be available beginning approximately one
hour after the call's conclusion and will remain accessible for
seven days. This replay can be accessed by dialing 800-405-2236 for
domestic callers and 303-590-3000 for international callers. Both
callers will need to use the Passcode 11125653#. To access the live
webcast of the call, go to Solta Medical's website at
http://www.solta.com/ and click on Investor Relations. An archived
webcast will also be available at http://www.solta.com/. About
Solta Medical, Inc. Solta Medical, Inc. is a global leader in the
medical aesthetics market providing innovative, safe, and effective
anti-aging solutions for patients that enhance and expand the
practice of medical aesthetics for physicians. The company offers
products to address aging skin under the industry's two premier
brands: Thermage(R) and Fraxel(R). Thermage is an innovative,
non-invasive radiofrequency procedure for tightening and contouring
skin. As the leader in fractional laser technology, Fraxel delivers
minimally invasive clinical solutions to resurface aging and sun
damaged skin. Since 2002, over one million Thermage and Fraxel
procedures have been performed in nearly 80 countries. Thermage and
Fraxel are the perfect complement for any aesthetic practice. For
more information about Solta Medical, call 1-877-782-2286 or log on
to http://www.solta.com/. Forward-Looking Statements This press
release contains forward-looking statements within the meaning of
the U.S. Private Securities Litigation Reform Act of 1995,
including statements regarding our expectations regarding the
market environment, our positioning to capitalize on improvements
in the market environment, the adequacy of our financial resources
and our financial goals for 2009. Forward-looking statements are
based on management's current, preliminary expectations and are
subject to risks and uncertainties, which may cause Solta Medical's
actual results to differ materially from the statements contained
herein. Factors that might cause such a difference include the
possibility that the development and release of new products and
initiatives do not proceed as anticipated, the market for the sale
of these new products and initiatives does not develop as expected,
the remaining risks and uncertainties with the integration process,
the risks related to our future liquidity if we fail to achieve
adequate levels of revenue or sustained profitability, if
unanticipated expenses or other uses of cash arise or if we are not
able to maintain compliance with borrowing facility covenants and
the risks relating to Solta Medical's ability to achieve its stated
financial goals as a result of, among other things, economic
conditions and consumer and physician confidence causing changes in
consumer and physician spending habits that affect demand for our
products and treatments. Further information on potential risk
factors that could affect Solta Medical's business and its
financial results are detailed in its Form 10-K for the year ended
December 31, 2007, its Form 10-Q for the quarter ended September
30, 2008 and other reports as filed from time to time with the
Securities and Exchange Commission. Undue reliance should not be
placed on forward-looking statements, especially guidance on future
financial performance, which speaks only as of the date they are
made. Thermage undertakes no obligation to update publicly any
forward-looking statements to reflect new information, events or
circumstances after the date they were made, or to reflect the
occurrence of unanticipated events. Solta Medical, Inc. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands of dollars,
except share and per share data) (unaudited) Three Months Ended
Twelve Months Ended December 31, December 31, 2008 2007 2008 2007
Net revenue $9,549 $16,582 $56,681 $63,101 Cost of revenue 3,404
3,895 15,066 15,976 Gross margin 6,145 12,687 41,615 47,125
Operating expenses: Sales and marketing 6,671 6,990 27,001 26,195
Research and development 2,448 2,119 9,502 9,099 Acquired
in-process R&D 9,060 - 9,060 - General and administrative 3,489
3,138 13,662 11,300 Total operating expenses 21,668 12,247 59,225
46,594 Income (loss) from operations (15,523) 440 (17,610) 531
Interest and other income 553 674 2,334 2,520 Interest expense (15)
- (15) - Loss on investments (225) - (1,088) - Income (loss) before
income taxes (15,210) 1,114 (16,379) 3,051 Provision for income
taxes 166 (124) (9) (271) Net income (loss) $(15,044) $990
$(16,388) $2,780 Net income (loss) per share - basic $(0.57) $0.04
$(0.67) $0.12 Net income (loss) per share - diluted $(0.57) $0.04
$(0.67) $0.11 Weighted average shares outstanding used in
calculating net income (loss) per share: Basic 26,393,189
23,508,356 24,506,673 23,241,031 Diluted 26,393,189 24,847,858
24,506,673 24,884,458 Solta Medical, Inc. NON-GAAP RECONCILIATION
OF OPERATING INCOME (LOSS), NET INCOME (LOSS) AND NET INCOME (LOSS)
PER SHARE (in thousands, except share and per share data)
(unaudited) Three Months Ended Twelve Months Ended December 31,
December 31, 2008 2007 2008 2007 Income (loss) from operations
$(15,523) $440 $(17,610) $531 Non-GAAP adjustments to income (loss)
from operations: Acquired in-process R&D 9,060 - 9,060 -
Purchase price related adjustments 222 - 222 - Severance expenses
977 - 977 - Merger related costs 353 - 1,434 - Stock-based
compensation 891 1,093 3,680 4,798 Non-GAAP income from operations
$(4,020) $1,533 $(2,237) $5,329 Non-GAAP income from operations
$(4,020) $1,533 $(2,237) $5,329 Depreciation expenses 407 318 1,405
1,386 Non-GAAP EBITDA $(3,613) $1,851 $(832) $6,715 GAAP net income
(loss) $(15,044) $990 $(16,388) $2,780 Non-GAAP adjustments to net
income (loss): Acquired in-process R&D, net of taxes 9,060 -
9,060 - Purchase price related adjustments, net of taxes 222 - 222
- Severance expenses, net of taxes 977 - 977 - Merger related
costs, net of taxes 353 - 1,428 - Stock-based compensation, net of
taxes 891 1,093 3,680 4,798 Loss on investments, net of taxes 39 -
902 - Non-GAAP net income (loss) $(3,502) $2,083 $(119) $7,578 GAAP
basic net income (loss) per share $(0.57) $0.04 $(0.67) $0.12
Non-GAAP adjustments to basic income (loss) per share: Acquired
in-process R&D 0.34 - 0.37 - Purchase price related adjustments
0.01 - 0.01 - Severance 0.04 - 0.04 - Merger related costs 0.01 -
0.06 - Stock-based compensation 0.03 0.05 0.15 0.21 Loss on
investments 0.00 - 0.04 - Non-GAAP basic net income (loss) per
share $(0.13) $0.09 $(0.00) $0.33 Non-GAAP diluted net income
(loss) per share $(0.13) $0.08 $(0.00) $0.30 GAAP weighted average
shares outstanding used in calculating basic net income (loss) per
share 26,393,189 23,508,356 24,506,673 23,241,031 Adjustments for
dilutive potential common stock - 1,867,695 2,136,613 2,198,587
Weighted average shares outstanding used in calculating non-GAAP
diluted net income. (loss) per share 26,393,189 25,376,051
26,643,286 25,439,618 Solta Medical, Inc. CONDENSED CONSOLIDATED
BALANCE SHEETS (in thousands of dollars, except share and per share
data) (Unaudited) December 31, December 31, 2008 2007 ASSETS
Current assets: Cash and cash equivalents $7,555 $13,650 Marketable
investments 17,870 38,707 Accounts receivable, net 5,119 4,809
Inventories, net 18,304 6,639 Prepaid expenses and other current
assets 2,900 1,782 Total current assets 51,748 65,587 Property and
equipment, net 6,841 3,000 Purchased intangible assets, net 40,999
- Goodwill 48,088 - Other assets 247 140 Total assets $147,923
$68,727 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Accounts
payable $8,064 $1,341 Accrued liabilities 14,629 6,850 Current
portion of deferred revenue 3,658 1,544 Current portion of notes
payable and other obligations 12,404 - Customer deposits 288 18
Total current liabilities 39,043 9,753 Deferred revenue, net of
current portion 688 601 Long-term debt, less current portion 33 -
Other liabilities 330 255 Total liabilities 40,094 10,609
Stockholders' equity: Common stock, $0.001 par value: 100,000,000
shares authorized 47,758,823 and 23,605,415 shares issued and
outstanding at December 31, 2008 and December 31, 2007,
respectively 48 24 Additional paid-in capital 165,680 99,588
Deferred stock-based compensation (2) (4) Accumulated other
comprehensive income (loss) - 19 Accumulated deficit (57,897)
(41,509) Total stockholders' equity 107,829 58,118 Total
liabilities and stockholders' equity $147,923 $68,727 DATASOURCE:
Solta Medical, Inc. CONTACT: Jack Glenn, Chief Financial Officer of
Solta Medical, Inc., +1-510-786-6890; or investors, Doug Sherk, or
Jenifer Kirtland, , both of EVC Group, +1-415-896-6820, for Solta
Medical, Inc. Web Site: http://www.solta.com/
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