Proforma XTRAC Recurring Revenue Growth of 16.1% in CY 2015
Achieved Positive Non-GAAP Adjusted EBIDTA for Second Consecutive Quarter
HORSHAM, Pa., March 10, 2016 (GLOBE NEWSWIRE) -- STRATA Skin Sciences, Inc. (NASDAQ:SSKN) (“STRATA”) a medical technology company dedicated to developing and commercializing innovative products for the treatment and diagnosis of serious dermatological disorders, today reported financial results for the fourth quarter ended December 31, 2015. These results include the June 2015 acquisition of the XTRAC and VTRAC businesses.
Fourth Quarter and Recent Corporate Highlights
- Fourth quarter recurring XTRAC revenue of $7.5 million, sequential growth of 6.4%.
- Proforma YOY recurring XTRAC revenue growth of 16.1% as compared to and including periods prior to the June 22, 2015 acquisition.
- Achieved positive Non-GAAP adjusted EBITDA for second consecutive quarter of operations.
- Installed base of XTRAC systems in the U.S. expands to 718 systems placed, up from 620 at the end of the fourth quarter 2014.
- Refinanced $10 million short-term bridge loan with $12 million long-term debt facility with interest only payments for the first 18 months.
The operating results of the Company for the three months ended December 31, 2015 include activity from the XTRAC and VTRAC businesses for the entire period. The operating results of the Company for the year ended December 31, 2015 include activity from the XTRAC and VTRAC businesses from June 23, 2015 through December 31, 2015. As a result of purchase accounting rules, the operating results of the XTRAC and VTRAC businesses for the three months and the year ended December 31, 2014 are not included in consolidated statements of operations, including revenue amounts discussed in this release, for the periods ended December 31, 2014.
Commenting on the fourth quarter, Michael R. Stewart, President and CEO of the Company stated: “The XTRAC business in the fourth quarter continues to make solid progress with increases in both recurring procedure revenues from utilization and our installed base of placed systems. Our total fourth quarter revenues of $9.5 million were up 13.9% sequentially from the third quarter 2015, and we generated positive Non-GAAP adjusted EBITDA of $0.5 million.”
Mr. Stewart added: “The re-branding of the company to STRATA Skin Sciences, reflecting our commitment to serving the broader clinical dermatology market, has been well received by our customers, the broader dermatology marketplace and our employees.”
Reported Financial Results
Revenues for the fourth quarter of 2015 were $9.5 million compared with revenues for the fourth quarter of 2014 of $0.4 million.
Net loss for the fourth quarter of 2015 was $0.6 million or ($0.06) per share, which included other income of $2.5 million for the change in fair value of warrant liability, $1.5 million in interest expense; $1.7 million in depreciation and amortization expenses and $0.1 million for income tax expense. This compares with net loss attributable to common shareholders for the fourth quarter of 2014 of $6.4 million or ($1.09) per share, which included a deemed dividend of $1.9 million, other income of $1.0 million for the change in fair value of warrant liability, $1.8 million in interest expense and $0.4 million in depreciation and amortization expenses.
Revenues for the year 2015 were $18.5 million compared with revenues for the year 2014 of $0.9 million.
Net loss attributable to common shareholders for the year 2015 was $27.9 million or ($3.27) per share, which included a deemed dividend of $3.0 million, other income of $1.8 million for the change in fair value of warrant liability, $4.8 million in inventory obsolescence charges; $10.2 million in interest expense; $0.5 million in acquisition costs, $4.0 million in depreciation and amortization expenses and $0.1 million for income taxes. This compares with net loss attributable to common shareholders for the year 2014 of $16.0 million or ($3.03) per share, which included other income of $8.1 million for the change in fair value of warrant liability, $3.4 million in registration rights liquidated damages, $2.4 million in interest expense and $1.8 million in depreciation and amortization expenses.
As of December 31, 2015 the Company had cash, cash equivalents and short-term investments of $3.3 million, compared with $11.4 million of unrestricted cash as of December 31, 2014.
In order to provide information that is helpful to investors relating to the historical and current growth of the XTRAC recurring revenues, the Company is providing the following table, including information obtained from the predecessor company’s disclosures of previous period results.
|Q4 2015 Supplemental Proforma Financial Information|
|As of December 31, 2015, Q4 Earnings Report|
|(dollar amounts in thousands)|
|Qtr. 1||Qtr. 2||Qtr. 3||Qtr. 4||YTD|
|XTRAC Recurring Revenue||$||22,871||*||$||5,376||*||$||6,678||**||$||7,032||$||7,479||$||26,565||***|
|*As reported by PhotoMedex, Inc.|
|**$104 reported by the Company; balance reported by PhotoMedex, Inc.|
|***$14,615 reported by the Company; balance reported by PhotoMedex, Inc.|
Mr. Stewart stated: “The table above presents the results of the Company’s recently acquired XTRAC recurring revenue business. The recurring business generated sequential growth of 6.4% in the fourth quarter and generated 2015 year-over-year growth of 16.1%."
To supplement the Company’s consolidated financial statements, prepared in accordance with GAAP, the Company provides certain Non-GAAP measures of financial performance. These Non-GAAP measures include Non-GAAP adjusted income.
The Company’s reference to these Non-GAAP measures should be considered in addition to results prepared under current accounting standards, but are not a substitute for, nor superior to, GAAP results. These Non-GAAP measures are provided to enhance investors' overall understanding of our current financial performance and to provide further information for comparative purposes.
Specifically, the Company believes the Non-GAAP measures provide useful information to both management and investors by isolating certain expenses, gains and losses that may not be indicative of the Company’s core operating results and business outlook. In addition, the Company believes Non-GAAP measures enhance the comparability of results against prior periods. Reconciliation to the most directly comparable GAAP measure of all Non-GAAP measures included in this press release is as follows:
|Three Months Ended |
|Year Ended |
|Net loss as reported||($||593||)||($||4,504||)||($||24,947||)||($||14,145||)|
|Depreciation and amortization expense||1,703||419||4,051||1,790|
|Interest expense, net||535||138||1,329||242|
|Non-cash interest expense||927||1,706||8,871||2,130|
|Stock-based compensation expense||270||(34||)||1,753||413|
|Change in fair value of warrants||(2,493||)||(952||)||(1,814||)||(8,103||)|
|Registration rights liquidated charges||-||-||-||3,420|
|Impairment of property and equipment||-||-||920||-|
|Inventory obsolescence charges||-||1,084||4,818||1,084|
|Non-GAAP adjusted EBITDA||$||468||($||2,143||)||($||4,444||)||($||13,169||)|
STRATA previously announced the scheduling of a conference call with investors to review the results of the Fourth quarter. Following is the pertinent information for accessing that call.
|Conference Call Detail:|
|Date:||Thursday, March 10|
|Time:||4:30pm Eastern Time|
|Replays, available through March 24, 2016|
STRATA Skin Sciences is a medical technology company focused on the therapeutic and diagnostic dermatology market. Its products include the XTRAC® laser and VTRAC® excimer lamp systems utilized in the treatment of psoriasis, vitiligo and various other skin conditions, and the MelaFind® system used to assist in the identification and management of melanoma skin cancer.
This press release includes "forward-looking statements" within the meaning of the Securities Litigation Reform Act of 1995. These statements include but are not limited to the Company’s plans, objectives, expectations and intentions and may contain words such as “will,” “may,” “seeks,” and “expects,” that suggest future events or trends. These statements, including the Company’s ability to generate the anticipated revenue stream, the Company’s ability to generate sufficient cash flow to fund the Company’s ongoing operations beginning at any time in the future, and the Company’s ability to build a leading franchise in medical dermatology, are based on the Company’s current expectations and are inherently subject to significant uncertainties and changes in circumstances. Actual results may differ materially from the Company’s expectations due to financial, economic, business, competitive, market, regulatory and political factors or conditions affecting the Company and the medical device industry in general, as well as more specific risks and uncertainties set forth in the Company’s SEC reports on Forms 10-Q and 10-K. Given such uncertainties, any or all of these forward-looking statements may prove to be incorrect or unreliable. The Company assumes no duty to update its forward-looking statements and urges investors to carefully review its SEC disclosures available at www.sec.gov and www.strataskinsciences.com.
|STRATA SKIN SCIENCES, INC. AND SUBSIDIARY|
|CONDENSED CONSOLIDATED BALANCE SHEETS|
|December 31, 2015||December 31, 2014|
|Cash and cash equivalents||$||3,303||$||11,434|
|Accounts receivable, net||4,068||220|
|Other current assets||465||274|
|Property and equipment, net||13,851||1,961|
|Goodwill and other intangible assets||24,155||37|
|Other non-current assets, net||1,387||869|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Long-term debt and other notes payable||$||10,478||$||-|
|Accounts payable and accrued current liabilities||6,607||2,144|
|Current portion of deferred revenues||173||43|
|Senior secured convertible debentures, net||10,804||5,001|
|Other long-term liabilities||181||107|
|Total liabilities and stockholders’ equity||$||51,372||$||20,070|
|STRATA SKIN SCIENCES, INC. AND SUBSIDIARY|
|CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS|
|(In thousands, except share and per share amounts)|
|For the Three Months Ended|
|For the Year Ended |
|Cost of revenues||3,493||1,180||13,719||4,935|
|Gross profit (loss)||5,987||(806||)||4,776||(4,020||)|
|Engineering and product development||598||218||2,029||1,641|
|Selling and marketing||3,695||774||9,194||3,140|
|General and administrative||3,209||1,833||10,028||7,821|
|Operating loss before other income (expense), net||(1,515||)||(3,631||)||(16,475||)||(16,622||)|
|Other income (expense), net:|
|Interest expense, net||(1,462||)||(1,844||)||(10,200||)||(2,372||)|
|Change in fair value of warrant liability||2,493||952||1,814||8,103|
|Registrations rights liquidated damages||-||-||-||(3,420||)|
|Gain on sale of assets||-||-||-||16|
|Other (expense) income, net||10||19||33||150|
|Loss before income taxes||( 474||)||( 4,504||)||( 24,828||)||( 14,145||)|
|Income tax expense||(119||)||-||(119||)||-|
|Net loss||( 593||)||( 4,504||)||( 24,947||)||( 14,145||)|
|Net loss attributable to common stockholders||($||593||)||($||6,380||)||($||27,909||)||($||16,032||)|
|Basic and diluted net loss per share||($||0.06||)||($||1.09||)||($||3.27||)||($||3.03||)|
|Shares used in computing basic and diluted net loss per share||10,147,066||5,852,348||8,536,699||5,295,929|
|STRATA SKIN SCIENCES, INC. AND SUBSIDIARY|
|CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS|
|(In thousands, unaudited)|
|For the Year Ended December 31,|
|Cash Flows From Operating Activities:|
|Adjustments to reconcile net loss to net cash used in operating activities:|
|Depreciation and amortization||4,051||1,790|
|Impairment of long-lived assets||920||-|
|Amortization of debt discount||8,479||1,943|
|Amortization of deferred financing costs||391||191|
|Change in fair value of warrant liability||(1,814||)||(8,103||)|
|Changes in operating assets and liabilities:|
|Net cash used in operating activities||(6,585||)||(17,709||)|
|Cash Flows From Investing Activities:|
|Lasers placed-in-service, net||(1,689||)||-|
|Acquisition costs, net of cash received||(42,500||)||-|
|Net cash (used in) provided by investing activities||(44,224||)||17|
|Cash Flows From Financing Activities:|
|Proceeds from convertible debentures||32,500||15,000|
|Repayment of convertible debentures||(103||)||-|
|Proceeds from term debt||10,500||-|
|Proceeds from credit facilities||-||11,458|
|Other financing activities||(227||)||(1,115||)|
|Net cash provided by financing activities||42,670||25,343|
|Effect of exchange rate changes on cash||8||-|
|Net (decrease)/increase in cash and cash equivalents||(8,131||)||7,651|
|Cash and cash equivalents, beginning of period||11,434||3,783|
|Cash and cash equivalents, end of period||$||3,303||$||11,434|
|Cash paid for interest||$||1,188||$||116|
|Supplemental information of non-cash investing and financing activities:|
|Conversion of convertible preferred stock into common stock||$||5,282||$||513|
|Conversion of senior secured convertible debentures into common stock||$||4,815||$||1,589|
|Modification of warrants recorded as a deemed dividend||$||2,962||$||-|
|Beneficial conversion feature recorded as a deemed dividend||$||-||$||1,887|
|Exchange of series A convertible preferred stock for series B convertible preferred stock||$||-||$||12,300|
|Recognition of debt discount and beneficial conversion feature on long-term debt||$||27,300||$||10,353|
|Recognition of warrants issued in connection with financings||$||2,958||$||5,585|
|Reclassification of property and equipment to inventory, net||$||107||$||-|
|Reclassification of warrant liability from stockholders’ equity||$||(5,399||)||$||-|
|Recognition of warrants issued as debt discount||$||321||$||-|
|Proceeds of notes payable for prepaid insurance||$||334||$||-|
Source:STRATA Skin Sciences, Inc.