HORSHAM, Pa., Aug. 11, 2016 (GLOBE NEWSWIRE) -- STRATA Skin Sciences, Inc. (“STRATA”) (NASDAQ:SSKN) 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 quarter ended June 30, 2016.
Second Quarter and Recent Corporate Highlights
- Second quarter revenues were $7.7 million.
- Recurring XTRAC revenues were $6.1 million, down 8.8% year-over-year and up 10.2% sequentially.
- Installed base of XTRAC systems in the U.S. expanded to 748 systems placed, up 12.7% from 664 at the end of the second quarter 2015.
The operating results of the Company for the three months ended June 30, 2016 include activity from the XTRAC and VTRAC businesses for the entire period. As a result of purchase accounting rules, the operating results of the XTRAC and VTRAC businesses for the three months ended June 30, 2015 are included for the period of June 23 through June 30 in consolidated statements of operations.
“As we work to drive further market penetration of XTRAC we are continuing to implement improvements to our marketing and awareness campaigns aimed at expanding patient awareness and better facilitating the patient’s XTRAC experience. Over the coming quarters, we expect to see greater efficiencies from our newly revamped website coupled with new creatives and more targeted approach in television, radio and social media. In addition, our team has implemented a new process to work with dermatology practices with newly placed XTRAC systems in an effort to ramp revenues more quickly and maintain a consistent and growing level of procedures,” said Michael R. Stewart, President and CEO of the Company.
Continuing, Mr. Stewart added, “We are seeing a greater consolidation of individual dermatology practices in the marketplace through corporate buyouts. Over time, we believe this is an important growth opportunity for the XTRAC as our sales approach adapts to addressing the needs of these corporate entities, including the potential expansion of the deployment of XTRAC into a greater number of owned practices. Separately, as patients face the reset of their deductible and co-pays at the start of each year, and as insurers are raising these deductible limits for many consumers, we believe this appears to have been reflected in fewer patient visits to dermatologists during the past quarter than in the same quarter a year ago.”
“We are excited about the opportunity for growth of the XTRAC system. We continue to pursue R&D projects that may deliver a more effective treatment using a higher dose of light, increasing the appeal of the XTRAC system to dermatologists and patients. In addition to accelerating our revenue growth, we are also engaged in several engineering and R&D projects to help lower Strata’s costs of installing and maintaining the XTRAC systems in place,” added Mr. Stewart.
Reported Financial Results
Revenues for the second quarter of 2016 were $7.7 million compared with revenues for the second quarter of 2015 of $0.6 million.
Net income for the second quarter of 2016 was $0.5 million or ($0.23) per diluted share, which included other income of $3.2 million for the change in fair value of warrant liability, $1.2 million in interest expense, $1.6 million in depreciation and amortization expenses and $0.1 million for income tax expense. This compares with a net loss for the second quarter of 2015 of $7.8 million or ($1.01) per diluted share, which included other income of $2.0 million for the change in fair value of warrant liability, $0.8 million in interest expense and $0.3 million in depreciation and amortization expenses.
Revenues for the six months of 2016 were $15.4 million compared with revenues for the six months of 2015 of $0.7 million.
Net loss for the six months of 2016 was $0.9 million or ($0.55) per diluted share, which included other income of $5.2 million for the change in fair value of warrant liability, $2.4 million in interest expense, $3.3 million in depreciation and amortization expenses and $0.1 million for income tax expense. This compares with a net loss for the six months of 2015 of $15.1 million or ($2.08) per diluted share, which included other income of $0.7 million for the change in fair value of warrant liability, $4.8 million in inventory obsolescence charges; $3.2 million in interest expense, $0.5 million in acquisition costs and $0.6 million in depreciation and amortization expenses.
As of June 30, 2016 the Company had cash, cash equivalents and short-term investments of $2.8 million, compared with $3.3 million as of December 31, 2015.
In order to provide information that is helpful to investors relating to the historical and current growth of the XTRAC recurring revenues, the Company is providing the following table, including information obtained from the predecessor company’s disclosures of previous period results.
|Q2 2016 Supplemental Proforma Financial Information|
|As of June 30, 2016, Q2 Earnings Report|
|Qtr. 1||Qtr. 2||Qtr. 3||Qtr. 4||YTD|
|XTRAC Recurring Revenue||$||5,376||*||$||6,678||**||$||7,032||$||7,479||$||26,565||***|
|Qtr. 1||Qtr. 2||Qtr. 3||Qtr. 4||YTD|
|XTRAC Recurring Revenue||$||5,528||$||6,093||$||11,621|
*As reported by PhotoMedex, Inc.
**$104 reported by the Company; balance reported by PhotoMedex, Inc.
***$14,615 reported by the Company; balance reported by PhotoMedex, Inc.
To supplement the Company’s consolidated financial statements, prepared in accordance with GAAP, the Company provides certain non-GAAP measures of financial performance. These non-GAAP measures include non-GAAP adjusted EBITDA.
The Company’s reference to these non-GAAP measures should be considered in addition to results prepared under current accounting standards, but are not a substitute for, nor superior to, GAAP results. These non-GAAP measures are provided to enhance investors' overall understanding of our current financial performance and to provide further information for comparative purposes.
Specifically, the Company believes the non-GAAP measures provide useful information to both management and investors by isolating certain expenses, gains and losses that may not be indicative of the Company’s core operating results and business outlook. In addition, the Company believes non-GAAP measures enhance the comparability of results against prior periods. Reconciliation to the most directly comparable GAAP measure of all non-GAAP measures included in this press release is as follows:
|Three Months Ended |
|Six Months Ended |
|Net income (loss) as reported||$||498||$||(7,847||)||$||(939||)||$||(15,120||)|
|Depreciation and amortization expense||1,640||322||3,323||641|
|Interest expense, net||535||151||1,067||290|
|Non-cash interest expense||643||687||1,329||2,872|
|Stock-based compensation expense||116||246||286||476|
|Change in fair value of warrants||(3,199||)||(1,985||)||(5,184||)||(651||)|
|Impairment of property and equipment||-||920||-||920|
|Inventory valuation reserves||-||4,818||-||4,818|
|Non-GAAP adjusted EBITDA||$||294||$||(2,232||)||$||9||$||(5,298||)|
STRATA previously announced the scheduling of a conference call with investors to review the results of the second quarter. Following is the pertinent information for accessing that call.
Conference Call Detail:
|Date:||Thursday, August 11, 2016|
|Time:||4:30 pm Eastern Time|
Replays available through August 25, 2016:
About STRATA Skin Sciences, Inc.
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, the public’s reaction to the Company’s new advertisements and marketing campaign, 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|
|June 30, 2016||December 31, 2015|
|Cash and cash equivalents||$||2,841||$||3,303|
|Accounts receivable, net||2,708||4,068|
|Other current assets||252||465|
|Property and equipment, net||11,635||13,851|
|Goodwill and other intangible assets||23,122||24,155|
|Other non-current assets, net||94||94|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Accounts payable and accrued current liabilities||4,097||6,607|
|Current portion of deferred revenues||204||173|
|Senior secured convertible debentures, net||10,824||9,839|
|Long-term debt, net||11,345||9,851|
|Other long-term liabilities||254||181|
|Total liabilities and stockholders’ equity||$||44,406||$||50,079|
|STRATA SKIN SCIENCES, INC. AND SUBSIDIARY|
|CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS|
|(In thousands, except share and per share amounts)|
|For the Three Months Ended |
|For the Six Months Ended |
|Cost of revenues||3,139||6,474||6,561||7,185|
|Gross profit (loss)||4,600||(5,863||)||8,798||(6,493||)|
|Engineering and product development||634||282||1,159||521|
|Selling and marketing||3,523||910||7,233||1,937|
|General and administrative||1,901||1,950||4,002||3,686|
|Operating loss before other income (expense), net||(1,458||)||(9,005||)||(3,596||)||(12,637||)|
|Other income (expense), net:|
|Interest expense, net||(1,178||)||(838||)||(2,396||)||(3,162||)|
|Change in fair value of warrant liability||3,199||1,985||5,184||651|
|Other (expense) income, net||(4||)||11||(4||)||28|
|Net income (loss) before income taxes||559||(7,847||)||(812||)||(15,120||)|
|Income tax expense||(61||)||-||(127||)||-|
|Net income (loss)||$||498||$||(7,847||)||$||(939||)||$||(15,120||)|
|Net income (loss) per share:|
|Shares used in computing net income (loss) per share:|
|STRATA SKIN SCIENCES, INC. AND SUBSIDIARY|
|CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS|
|(In thousands, unaudited)|
|For the Six Months Ended|
|Cash Flows From Operating Activities:|
|Adjustments to reconcile net loss to net cash used in operating activities:|
|Depreciation and amortization||3,323||641|
|Amortization of debt discount||1,239||2,662|
|Amortization of deferred financing costs||91||219|
|Change in fair value of warrant liability||(5,184||)||(651||)|
|Impairment of long-lived assets||-||920|
|Changes in operating assets and liabilities:|
|Net cash used in operating activities||(1,574||)||(5,555||)|
|Cash Flows From Investing Activities:|
|Lasers placed-in-service, net||(328||)||(123||)|
|Acquisition costs, net of cash received||-||(42,500||)|
|Net cash used in investing activities||(188||)||(42,723||)|
|Cash Flows From Financing Activities:|
|Proceeds from convertible debentures||-||32,500|
|Proceeds from senior notes||-||10,000|
|Proceeds from term debt||1,500||-|
|Other financing activities||(207||)||(105||)|
|Net cash provided by financing activities||1,293||42,395|
|Effect of exchange rate changes on cash||7||2|
|Net decrease in cash and cash equivalents||(462||)||(5,881||)|
|Cash and cash equivalents, beginning of period||3,303||11,434|
|Cash and cash equivalents, end of period||$||2,841||$||5,553|
|Cash paid for interest||$||980||$||250|
|Supplemental information of non-cash investing and financing activities:|
|Conversion of convertible preferred stock into common stock||$||-||$||5,283|
|Conversion of senior secured convertible debentures into common stock||$||248||$||2,308|
|Reclassification of property and equipment to inventory, net||$||-||$||107|
|Reclassification of warrants to equity||$||1,541||$||-|
|Recognition of warrants issued as debt discount||$||47||$||-|
Investor Contacts: Christina L. Allgeier, Chief Financial Officer STRATA Skin Sciences, Inc. 215-619-3267 firstname.lastname@example.org Bob Yedid, Managing Director LifeSci Advisors, LLC 646-597-6989 Bob@LifeSciAdvisors.com
Source:STRATA Skin Sciences, Inc.