Published:
Thermage Announces First Quarter 2008 Financial Results
HAYWARD, Calif., May 8 /PRNewswire-FirstCall/ -- Thermage, Inc.
(Nasdaq: THRM), a leader in non-invasive tissue tightening in the aesthetic
industry, reported today its financial results for the first quarter ended
March 31, 2008.
Revenue for the first quarter of 2008 was $16.2 million, up 7% from
$15.2 million for the first quarter of 2007. Domestic revenue increased 8%
and international revenue was up 6% compared with the prior year's first
quarter. Gross profit for the first quarter of 2008 was $11.9 million,
representing 73.2% of revenue, compared with $11.0 million, or 72.6% of
revenue, for the same quarter of 2007.
The Company reported a net loss of $2.2 million, or $(0.09) per share,
versus net income of $0.1 million, or breakeven earnings per share, for the
same quarter of the prior year. Non-GAAP (1) net loss for the first quarter
of 2008 was $1.3 million, or $(0.05) per share, compared to net income of
$1.3 million, or $0.05 per diluted share, for the prior year period. Included
in the first quarter 2008 net loss were approximately $1.0 million of expenses
for business development activities that were terminated during the quarter.
"We grew revenue both in the U.S. and internationally, despite a softening
aesthetics market," said Stephen J. Fanning, Chairman, President and Chief
Executive Officer. "Revenue from both treatment tips and systems increased
during the quarter. Our systems sales during the quarter included a high
percentage of upgrades for existing customers, the second highest quarter for
upgrade units since the NXT system was introduced in the first quarter of
2007. The growth in upgrades demonstrates the continued commitment by our
customers to Thermage procedures."
"Thermage is focused on a strategy that includes organic growth, as well
as complementary acquisitions that add value for our customers and
shareholders," continued Mr. Fanning. "One of the primary reasons behind our
IPO was to raise funds that would allow us to pursue this strategy. During
the first quarter, we reached an advanced stage of negotiations with a
potential acquisition target and had performed significant due diligence on
the project before negotiations were terminated. We incurred approximately
$1.0 million in outside advisory fees pursuing this acquisition. We remain
committed to our strategy to build our presence in the aesthetics market, both
organically and through acquisitions that will allow us to expand our product
offerings to our customer base and leverage our operating infrastructure."
"Looking at the remainder of 2008, the recent bifurcation of our domestic
salesforce, innovative sales strategies such as our Infinity program, and
recently introduced tips and procedures, we believe we are positioned for
continued revenue growth. While we anticipate that economic conditions will
remain challenging throughout the year, we will continue our focus to drive
revenue, expand market share, and build upon our reputation as a leader in
safe, effective skin tightening and contouring procedures," concluded Mr.
Fanning.
Guidance:
Management currently expects 2008 revenue to be in a range of $67 million
to $70 million. With the revised revenue guidance, as well as the business
development expenses incurred during the first quarter, the Company expects
net income for the full year 2008 on a GAAP basis to be between breakeven and
$0.03 per diluted share. Non-GAAP (1) net income for the full year 2008,
which excludes estimated stock based compensation charges of approximately
$4.6 million, is expected to be in a range of $0.18 to $0.21 per diluted
share. The per share earnings amounts are based on weighted average shares of
26 million.
Non-GAAP Presentation:
(1) To supplement the condensed financial information presented on a GAAP
basis, management has provided non-GAAP net income and loss, and
non-GAAP earnings per share measures that exclude the impact of all
stock-based compensation expenses, 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 measure, which
it uses to measure the performance of ongoing operating results,
against prior periods and against our internally developed targets. A
table reconciling the GAAP financial measures to the non-GAAP measures
is included in the condensed financial information attached to this
release.
Conference Call
The conference call is scheduled to begin at 1:30 p.m. PDT (4:30 p.m. EDT)
on May 8, 2008. The call will be broadcast live over the Internet hosted at
the Investor Relations section of the Company's website at
http://www.thermage.com. In addition, you may call to listen to the live
broadcast: 866-249-5225 for domestic participants and 303-262-2006 for
international participants. Participating in the call will be Stephen J.
Fanning, Chairman, President and Chief Executive Officer, and Jack Glenn,
Chief Financial Officer.
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 11113200#. An archived webcast will also be
available at http://www.thermage.com.
About Thermage, Inc.
Thermage's innovative technology provides a unique non-invasive procedure
designed to tighten and contour skin, significantly expanding the non-invasive
aesthetic applications physicians can offer to the rapidly growing
"anti-aging" market. For more information, call 1-510-259-7117 or visit
http://www.thermage.com.
This press release contains forward-looking statements within the meaning
of the U.S. Private Securities Litigation Reform Act of 1995. Specifically,
statements concerning Thermage's ability to continue to grow demand for
Thermage procedures and financial guidance for fiscal year 2008 are
forward-looking statements within the meaning of the Safe Harbor.
Forward-looking statements are based on management's current, preliminary
expectations and are subject to risks and uncertainties, which may cause
Thermage's actual results to differ materially from the statements contained
herein including but not limited to market acceptance and demand of current
and future products among physicians and patients, the potential impact of
general economic conditions on the demand for our products, risks inherent
with third-party supply and distribution networks, risks inherent to future
sales growth, and the ability to execute proposed initiatives. Further
information on potential risk factors that could affect Thermage's business
and its financial results are detailed in its Form 10-K for the year ended
December 31, 2007, as filed 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.
Thermage, Inc.
NON-GAAP RECONCILIATION OF NET INCOME PER SHARE
(unaudited)
Range of Estimates
From To
2008 GAAP diluted net income per share (a) $0.00 $0.03
Stock-based compensation (b) 0.18 0.18
2008 Non-GAAP diluted net income per share (a) $0.18 $0.21
(a) Reflects weighted average outstanding used in calculating diluted net
income per share of 26 million.
(b) Represents the Company's estimate of stock-based compensation
charges, net of taxes
Thermage, Inc.
CONDENSED STATEMENTS OF OPERATIONS
(in thousands of dollars, except share and per share data)
(unaudited)
Three Months Ended
March 31,
2008 2007
Net revenue $16,231 $15,155
Cost of revenue 4,358 4,152
Gross margin 11,873 11,003
Operating expenses
Sales and marketing 7,422 6,374
Research and development 2,731 2,466
General and administrative 4,552 2,683
Total operating expenses 14,705 11,523
Loss from operations (2,832) (520)
Interest and other income 603 586
Income (loss) before income taxes (2,229) 66
Provision for income taxes (8) (7)
Net income (loss) $(2,237) $59
Net income (loss) per share - basic &
diluted $(0.09) $0.00
Weighted average shares outstanding
used in calculating net income
(loss) per common share:
Basic 23,630,842 22,978,331
Diluted 23,630,842 24,792,543
Thermage, 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
March 31,
2008 2007
GAAP loss from operations $(2,832) $(520)
Non-GAAP adjustments to loss from operations:
Stock-based compensation (c) 979 1,261
Non-GAAP income (loss) from operations $(1,853) $741
GAAP net income (loss) $(2,237) $59
Non-GAAP adjustments to net income (loss):
Stock-based compensation (c) 979 1,261
Non-GAAP net income (loss) $(1,258) $1,320
GAAP basic net income (loss) per share $(0.09) $0.00
Non-GAAP adjustments to basic income
(loss) per share:
Stock-based compensation (c) 0.04 0.06
Non-GAAP basic net income (loss) per share $(0.05) $0.06
Non-GAAP diluted net income (loss) per share $(0.05) $0.05
GAAP weighted average shares
outstanding used in calculating
basic net income (loss) per common
share 23,630,842 22,978,331
Adjustments to GAAP weighted average
shares outstanding - -
Weighted average shares outstanding
used in calculating non-GAAP basic
net income (loss) per common share 23,630,842 22,978,331
GAAP weighted average shares
outstanding used in calculating
diluted net income (loss) per common
share 23,630,842 24,792,543
Adjustments for dilutive potential
common stock - 498,184
Weighted average shares outstanding
used in calculating non-GAAP diluted
net income (loss) per common share 23,630,842 25,290,727
(c) Includes all employee and non-employee stock-based compensation
charges
Thermage, Inc.
CONDENSED BALANCE SHEETS
(in thousands of dollars, except share and per share data)
(Unaudited)
March 31, December 31,
2008 2007
ASSETS
Current assets:
Cash and cash equivalents $9,691 $13,650
Marketable investments 40,520 38,707
Accounts receivable, net 6,630 4,809
Inventories, net 6,069 6,639
Prepaid expenses and other current assets 1,870 1,782
Total current assets 64,780 65,587
Property and equipment, net 3,070 3,000
Other assets 139 140
Total assets $67,989 $68,727
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable $1,808 $1,341
Accrued liabilities 6,628 6,850
Current portion of deferred revenue 1,582 1,544
Customer deposits 12 18
Total current liabilities 10,030 9,753
Deferred revenue, net of current portion 563 601
Other liabilities 308 255
Total liabilities 10,901 10,609
Stockholders' equity:
Common stock, $0.001 par value:
100,000,000 shares authorized
23,695,617 and 23,605,415 shares issued
and outstanding at March 31, 2008 and
December 31, 2007, respectively 24 24
Additional paid-in capital 100,670 99,588
Deferred stock-based compensation (3) (4)
Accumulated other comprehensive income 143 19
Accumulated deficit (43,746) (41,509)
Total stockholders' equity 57,088 58,118
Total liabilities and stockholders'
equity $67,989 $68,727
SOURCE Thermage, Inc.
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