HAYWARD, Calif., Aug. 6, 2013 /PRNewswire/ -- Solta Medical,
Inc. (NASDAQ: SLTM), a global leader in the medical aesthetics
market, today announced results for the second quarter ended
June 30, 2013. In addition, the
Company announced the resignation of Stephen J. Fanning, effective today, as a member
of the Board of Directors and President and CEO. Mr. Fanning
has been replaced on an interim basis by current Chairman of the
Board Mark Sieczkarek and a search for the President and CEO
position has been initiated by the Board.
Second Quarter Financial Metrics
Revenue for the second quarter was $43.2
million, an increase of 16% over revenue in the second
quarter of 2012. The year-over-year revenue increase was primarily
attributable to sales of VASER systems and products from the recent
acquisition of Sound Surgical Technologies. International revenue
for the quarter rose year-over-year by 30% to $23.3 million. North
America revenue increased 3% year-over-year to $19.9 million. Revenue from treatment tips and
consumables for the quarter was $22.3
million, an increase of 23% from the second quarter of 2012.
Revenue in North America reflected
a 9% increase in sales of treatment tips, however system sales,
excluding the VASER product line, decreased by approximately 40%
primarily due to the Company's decision to match competitive
pricing which resulted in lower average selling prices.
GAAP net income for the quarter was $3.8
million as compared to GAAP net loss of $26.3 million reported for the second quarter of
2012. Non-GAAP net income for the quarter was $1.3 million, or $0.02 per diluted share, as compared to non-GAAP
net income of $2.7 million, or
$0.04 per diluted share for same
period last year. Non-GAAP adjusted EBITDA for the quarter was
$3.2 million compared to $4.2 million for the same period last year.
The Company's GAAP results for the quarter include $3.7 million of amortization and other
acquisition related charges, $1.2
million of non-cash stock based compensation charges, and a
$9.5 million credit for the fair
value reassessment of the expected earn out payments associated
with the acquisitions of Liposonix and Sound Surgical Technologies.
The results for the quarter also include a $2.1 million non-cash income tax expense related
to the reduction of tax deductible contingent consideration. The
Company provides non-GAAP financial measures that exclude these
charges and adjustments. A reconciliation of GAAP to non-GAAP
results is provided in the tables included in this release.
The Company's cash balance at June 30,
2013 totaled $16.3 million and
additional cash resources of $4
million were available to the Company through a revolving
credit facility with Silicon Valley Bank. At June 30, 2013, approximately $23 million of term debt was outstanding.
Yesterday, the Company executed a commitment letter to restructure
and expand its credit facility with Silicon Valley Bank to a total
of $42 million. The terms of the
revised credit facility expands the amount of term debt by
approximately $6 million to $27
million. The Company has the opportunity to increase the
term debt component of the facility by an additional $3 million to a total of $30 million if certain profitability criteria are
met prior to June 30, 2014. The first
year of the term debt calls for interest only payments after which
the debt will be amortized over a period of 30 months. Funds
available through the revolving credit facility with the bank are
to remain unchanged at a total of $12
million.
Financial Outlook for 2013
The Company provided an update to its financial outlook for 2013 as
follows:
- Revenue for the full year 2013 is now expected to be
approximately $165 million,
representing year-over-year revenue growth of approximately
$20 million, or 14%, compared to full
year 2012 revenue of $144.5 million.
The Company's previous revenue outlook for 2013 was $180 million.
- Non-GAAP gross margin is now expected to be approximately 65%
for the full year 2013. The Company's previous non-GAAP gross
margin outlook for 2013 was a range of 65% to 68%. Non-GAAP gross
margin excludes non-cash amortization charges, non-cash stock based
compensation charges, severance costs, and acquisition related
adjustments. Non-GAAP gross margin for the first six months of 2013
was 66%.
- Non-GAAP operating income is expected to be approximately
$10 million for the full year 2013
representing a year-over-year increase of approximately
$1.6 million, or 20%, as compared to
$8.4 million for full year 2012. The
Company's previous non-GAAP operating income outlook was a range of
$13 million to $16 million for 2013.
Non-GAAP operating income excludes non-cash amortization charges,
non-cash stock based compensation charges, severance costs, and
acquisition related adjustments. Non-GAAP operating income for the
first six months of 2013 was $2.4
million.
Mark Sieczkarek Appointment
Mr. Sieczkarek has served on the Solta Medical Board since
2006. He was appointed lead director in 2008 and Chairman in
June 2013. He has more than 18 years of executive experience
in the medical device industry and served as President and CEO of
Conceptus, Inc. from 2003 to 2011.
"Our second quarter results were disappointing with revenue
below our expectations attributable in large part to the
competitive environment in North
America, and the outlook for the remainder of the year was
not acceptable to the Board," Mr. Sieczkarek commented.
"North America revenue was
negatively impacted by competitive pricing pressures on system
sales, especially on Liposonix systems where ASPs fell
approximately 25% as we matched the aggressive pricing practices of
the competition. On a worldwide basis, combined unit placements for
Thermage, Clear + Brilliant and Liposonix systems rose
year-over-year by over 25%."
"Throughout 2013, the Board of Directors has analyzed Solta's
product offering, competitive position in the market, and
operational execution," added Mr. Sieczkarek. "We remain
optimistic about the outlook for the Company given that Solta has
one of the broadest and best product lines in the industry as well
as a unique business model allowing us to generate the majority of
our revenue from high margin recurring tip and disposable sales. We
have a strong international operation with an excellent opportunity
for continued growth."
"As we entered the year and were completing our acquisition
phase, the business emphasis was shifting to a focus on leveraging
our synergistic brands and infrastructure to improvement of the
bottom line results. The disappointing results to date and
our revised outlook for 2013 illustrate the need for a different
approach.
"My focus in the immediate months ahead will be on aggressively
altering our sales strategy to reinvigorate our North American
systems business. If we execute this strategy, we will be
positioned to further enhance growth of our high margin treatment
tips and disposables. During the first half of the year, we
implemented operating cost reductions which are expected to have a
positive impact on second half profitability. At the same
time, we need to realign our spending in North America toward improved sales execution,
especially system sales. We believe the best and fastest way to
build returns for our shareholders is by increasing the strategic
value of our assets. At the same time, the Board of Directors has
the mechanisms in place to evaluate credible strategic
alternatives," continued Mr. Sieczkarek.
"On behalf of the Board, I would like to thank Steve Fanning for his numerous contributions to
the development of Solta Medical during the past seven years. Under
his leadership, Solta has emerged as a leader in the medical
aesthetics industry recognized for its strong brands and global
presence. We wish Steve well in his future endeavors,"
concluded Mr. Sieczkarek.
Non-GAAP Presentation
To supplement the condensed consolidated financial information
presented on a GAAP basis, management has provided non-GAAP gross
margin, non-GAAP operating income (loss), non-GAAP adjusted EBITDA,
non-GAAP net income (loss) and non-GAAP earnings (loss) per share
measures that exclude the impact of acquisition related
adjustments, severance costs, acquisition related costs, and
stock-based compensation expenses. 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 the measures management 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
The Company will host a conference call and webcast today,
Tuesday, August 6, 2013, 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 877-941-6009 for domestic participants and
480-629-9818 for international participants.
To access the live webcast of the call, go to Solta Medical's
website at www.solta.com and click on Investor Relations. An
archived webcast will also be available at www.solta.com.
About Solta Medical, Inc.
Solta Medical, Inc. is a global leader in the medical aesthetics
market providing innovative solutions with proven efficacy and
safety backed by over 10 years of clinical study and research. The
company offers aesthetic energy devices for skin resurfacing and
rejuvenation, acne reduction, body contouring and skin tightening,
as well as tools and accessories to optimize the latest liposuction
techniques. The Solta Medical portfolio includes the well-known
brands Thermage®, Fraxel®,
Clear + Brilliant®, Liposonix®,
Isolaz®, CLARO®,
VASERlipo™, VASERshape™,
VASERsmooth™, VentX®,
PowerX®, TouchView®, and
Origins™, which collectively make up a
comprehensive platform to address a range of aesthetic skin and
body issues. More than two and a half million procedures have been
performed with Solta Medical's products around the world. Solta
Medical is headquartered in Hayward,
CA with field teams and regional offices worldwide.
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 the ability to improve
operating leverage and the financial outlook for 2013.
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 risk that physician
adoption of our systems does not grow, the risk that customers do
not continue to purchase treatment tips, the possibility that the
market for the sale of new products does not develop as expected,
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, 2012, 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. Solta Medical
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.
Web Site: http://www.Solta.com
Solta Medical,
Inc.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(in thousands
of dollars, except share and per share data)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
Net
revenue
|
$43,197
|
|
$37,262
|
|
$77,720
|
|
$69,716
|
Cost of
revenue
|
17,095
|
|
13,714
|
|
29,939
|
|
25,925
|
|
|
|
|
|
|
|
|
Gross
margin
|
26,102
|
|
23,548
|
|
47,781
|
|
43,791
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Sales and
marketing
|
16,856
|
|
13,673
|
|
31,063
|
|
27,619
|
Research and
development
|
5,442
|
|
5,013
|
|
10,777
|
|
10,318
|
General and
administrative
|
6,428
|
|
4,615
|
|
13,405
|
|
9,275
|
Remeasurement of
contingent consideration liability
|
(9,500)
|
|
26,000
|
|
(12,600)
|
|
30,700
|
|
|
|
|
|
|
|
|
Total operating
expenses
|
19,226
|
|
49,301
|
|
42,645
|
|
77,912
|
|
|
|
|
|
|
|
|
Income (loss) from
operations
|
6,876
|
|
(25,753)
|
|
5,136
|
|
(34,121)
|
Interest
income
|
18
|
|
2
|
|
27
|
|
5
|
Interest
expense
|
(803)
|
|
(350)
|
|
(1,495)
|
|
(701)
|
Other expense,
net
|
(150)
|
|
(121)
|
|
(245)
|
|
(147)
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes
|
5,941
|
|
(26,222)
|
|
3,423
|
|
(34,964)
|
Income tax
provision
|
2,118
|
|
64
|
|
2,195
|
|
121
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$3,823
|
|
($26,286)
|
|
$1,228
|
|
($35,085)
|
|
|
|
|
|
|
|
|
Net income (loss) per
share:
|
|
|
|
|
|
|
|
Basic
|
$0.05
|
|
($0.43)
|
|
$0.02
|
|
($0.57)
|
Diluted
|
$0.05
|
|
($0.43)
|
|
$0.02
|
|
($0.57)
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding used in calculating net income (loss) per
share:
|
|
|
|
|
|
|
|
Basic
|
79,526,311
|
|
61,719,575
|
|
75,840,137
|
|
61,536,050
|
Diluted
|
80,244,296
|
|
61,719,575
|
|
76,998,224
|
|
61,536,050
|
Solta Medical,
Inc.
|
NON-GAAP RECONCILIATION OF GROSS MARGIN, OPERATING INCOME (LOSS),
EBITDA, NET INCOME (LOSS) AND NET INCOME (LOSS) PER
SHARE
|
(in
thousands, except share and per share data)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
GAAP Gross
margin
|
$26,102
|
|
$23,548
|
|
$47,781
|
|
$43,791
|
GAAP gross margin as
% of sales
|
60%
|
|
63%
|
|
61%
|
|
63%
|
Non-GAAP adjustments
to gross margin:
|
|
|
|
|
|
|
|
GAAP Gross
margin
|
$26,102
|
|
$23,548
|
|
$47,781
|
|
$43,791
|
Amortization and
other non-cash acquisition related charges
|
1,781
|
|
1,375
|
|
3,219
|
|
3,033
|
Stock-based
compensation
|
144
|
|
127
|
|
280
|
|
239
|
Non-GAAP gross
margin
|
$28,027
|
|
$25,050
|
|
$51,280
|
|
$47,063
|
Non-GAAP gross margin
as % of sales
|
65%
|
|
67%
|
|
66%
|
|
68%
|
|
|
|
|
|
|
|
|
GAAP income (loss)
from operations
|
$6,876
|
|
($25,753)
|
|
$5,136
|
|
($34,121)
|
Non-GAAP adjustments
to net income (loss) from operations:
|
|
|
|
|
|
|
|
Amortization and
other non-cash acquisition related charges
|
2,874
|
|
1,729
|
|
4,870
|
|
3,746
|
Remeasurement of
contingent consideration liability
|
(9,500)
|
|
26,000
|
|
(12,600)
|
|
30,700
|
Acquisition-related
expenses
|
510
|
|
58
|
|
1,904
|
|
151
|
Severance expenses
(credits)
|
303
|
|
(11)
|
|
616
|
|
19
|
Stock-based
compensation
|
1,238
|
|
1,209
|
|
2,438
|
|
2,349
|
Non-GAAP income from
operations
|
$2,301
|
|
$3,232
|
|
$2,364
|
|
$2,844
|
Depreciation
expenses
|
854
|
|
937
|
|
1,833
|
|
1,875
|
Non-GAAP Adjusted
EBITDA
|
$3,155
|
|
$4,169
|
|
$4,197
|
|
$4,719
|
|
|
|
|
|
|
|
|
GAAP net income
(loss)
|
$3,823
|
|
($26,286)
|
|
$1,228
|
|
($35,085)
|
Non-GAAP adjustments
to net income (loss):
|
|
|
|
|
|
|
|
Amortization and
other non-cash acquisition related charges
|
2,874
|
|
1,729
|
|
4,870
|
|
3,746
|
Remeasurement of
contingent consideration liability
|
(9,500)
|
|
26,000
|
|
(12,600)
|
|
30,700
|
Acquisition-related
expenses
|
510
|
|
58
|
|
1,904
|
|
151
|
Severance expenses
(credits)
|
303
|
|
(11)
|
|
616
|
|
19
|
Stock-based
compensation
|
1,238
|
|
1,209
|
|
2,438
|
|
2,349
|
Acquisition-related
income tax expense
|
2,080
|
|
—
|
|
2,080
|
|
—
|
Non-GAAP net
income
|
$1,328
|
|
$2,699
|
|
$536
|
|
$1,880
|
|
|
|
|
|
|
|
|
GAAP basic net
(income) loss per share
|
$0.05
|
|
($0.43)
|
|
$0.02
|
|
($0.57)
|
Non-GAAP adjustments
to basic income (loss) per share:
|
|
|
|
|
|
|
|
Amortization and
other non-cash acquisition related charges
|
$0.04
|
|
$0.03
|
|
$0.06
|
|
$0.06
|
Remeasurement of
contingent consideration liability
|
($0.12)
|
|
$0.42
|
|
($0.17)
|
|
$0.50
|
Acquisition-related
expenses
|
$0.01
|
|
$0.00
|
|
$0.03
|
|
$0.00
|
Severance expenses
(credits)
|
$0.00
|
|
($0.00)
|
|
$0.01
|
|
$0.00
|
Stock-based
compensation
|
$0.01
|
|
$0.02
|
|
$0.03
|
|
$0.04
|
Acquisition-related
income tax expense
|
$0.03
|
|
$0.00
|
|
$0.03
|
|
$0.00
|
Non-GAAP basic net
income per share
|
$0.02
|
|
$0.04
|
|
$0.01
|
|
$0.03
|
|
|
|
|
|
|
|
|
Non-GAAP diluted net
income per share
|
$0.02
|
|
$0.04
|
|
$0.01
|
|
$0.03
|
|
|
|
|
|
|
|
|
GAAP weighted average
shares outstanding used in calculating basic net income (loss) per
share
|
79,526,311
|
|
61,719,575
|
|
75,840,137
|
|
61,536,050
|
|
|
|
|
|
|
|
|
GAAP weighted average
shares outstanding used in calculating diluted net income (loss)
per share
|
80,244,296
|
|
61,719,575
|
|
76,998,224
|
|
61,536,050
|
Adjustments for
dilutive potential common stock
|
2,718,994
|
|
5,245,087
|
|
2,289,776
|
|
5,053,439
|
Weighted average
shares outstanding used in calculating non-GAAP diluted net income
per share
|
82,963,290
|
|
66,964,662
|
|
79,288,000
|
|
66,589,489
|
Solta Medical,
Inc.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(in thousands
of dollars, except share and per share data)
|
(unaudited)
|
|
|
|
|
|
June
30,
|
|
December
31,
|
|
2013
|
|
2012
|
|
|
|
|
ASSETS
|
Current
assets:
|
|
|
|
Cash and
cash equivalents
|
$16,296
|
|
$38,097
|
Accounts
receivable, net
|
24,521
|
|
20,570
|
Inventories
|
21,805
|
|
16,611
|
Prepaid
expenses and other current assets
|
5,215
|
|
8,476
|
|
|
|
|
Total current assets
|
67,837
|
|
83,754
|
Property and
equipment, net
|
7,149
|
|
6,401
|
Purchased intangible
assets, net
|
58,629
|
|
42,428
|
Goodwill
|
103,705
|
|
96,620
|
Other
assets
|
1,008
|
|
520
|
|
|
|
|
Total assets
|
$238,328
|
|
$229,723
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
Liabilities:
|
|
|
|
Accounts
payable
|
$8,440
|
|
$7,283
|
Accrued
liabilities
|
14,168
|
|
17,343
|
Current
portion of contingent consideration liability
|
11,145
|
|
21,400
|
Current portion of deferred
revenue
|
3,862
|
|
3,985
|
Short-term borrowings
|
18,638
|
|
8,345
|
Customer
deposits
|
1,062
|
|
637
|
|
|
|
|
Total current
liabilities
|
57,315
|
|
58,993
|
Deferred
revenue, net of current portion
|
781
|
|
683
|
Term
loan, net of current portion
|
12,642
|
|
18,063
|
Non-current tax liabilities
|
4,586
|
|
2,478
|
Contingent consideration liability
|
26,900
|
|
38,500
|
Other liabilities
|
1,480
|
|
899
|
|
|
|
|
Total liabilities
|
103,704
|
|
119,616
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
Common
stock, $0.001 par value:
|
|
|
|
100,000,000 shares authorized
|
|
|
|
79,757,664 and 68,795,987 shares issued and outstanding at
June
30, 2013 and December 31, 2012
|
80
|
|
69
|
Additional paid-in capital
|
243,767
|
|
220,489
|
Accumulated deficit
|
(109,223)
|
|
(110,451)
|
|
|
|
|
Total stockholders' equity
|
134,624
|
|
110,107
|
|
|
|
|
Total liabilities and stockholders'
equity
|
$238,328
|
|
$229,723
|
SOURCE Solta Medical, Inc.