STRATA Skin Sciences Reports First Quarter 2016 Financial Results
Conference call and webcast, today at 4:30 pm Eastern Time
HORSHAM, Pa., May 12, 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 quarter ended March 31, 2016.
First Quarter and Recent Corporate Highlights
- First quarter total revenues of $7.6 million, which included recurring XTRAC revenue of $5.5 million, accounting for 72.5% of total revenues
- Installed base of XTRAC systems in the U.S. expands to 730 systems placed, up 14.1% from 640 at the end of the first quarter 2015
The operating results of the Company for the three months ended March 31, 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 March 31, 2015 are not included in consolidated statements of operations, including revenue amounts discussed in this release, for the period ended March 31, 2015.
“We continued to make solid progress with the XTRAC business in the first quarter of 2016,” said Michael R. Stewart, President and CEO of the Company. “As we anticipated, first quarter procedure volume and system placements were seasonally soft as patients respond to deductible and co-pay resets which occur in the first quarter of the year for many healthcare plans. New marketing initiatives planned for the second quarter and the rest of the year include broadcasting a new TV commercial with greater direct-to-patient appeal, enhanced radio spots, a greater social media presence for XTRAC and an improved XTRAC website for patients.”
“We are excited about the opportunity for growth of the XTRAC system in the near- and long-term as dermatologists and their patients look for highly effective, less costly treatment options,” added Mr. Stewart.
Reported Financial Results
Revenues for the first quarter of 2016 were $7.6 million compared with revenues for the first quarter of 2015 of $0.8 million.
Net loss for the first quarter of 2016 was $1.4 million or ($0.26) per diluted share, which included other income of $2.0 million for the change in fair value of warrant liability, $1.2 million in interest expense, $1.7 million in depreciation and amortization expenses and $0.1 million for income tax expense. This compares with a net loss for the first quarter of 2015 of $7.3 million or ($1.12) per diluted share, which included other expense of $1.3 million for the change in fair value of warrant liability, $2.3 million in interest expense and $0.3 million in depreciation and amortization expenses.
As of March 31, 2016 the Company had cash, cash equivalents and short-term investments of $3.1 million, compared with $3.3 million of unrestricted cash 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.
| Q1 2016 Supplemental Proforma Financial Information | ||||||||||||||||||||||||||
| As of March 31, 2016, Q1 Earnings Report | ||||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| 2015 | 2016 | |||||||||||||||||||||||||
| Qtr. 1 | Qtr. 2 | Qtr. 3 | Qtr. 4 | YTD | Qtr. 1 | |||||||||||||||||||||
| XTRAC Recurring Revenue |
$ | 5,376 | * | $ | 6,678 | ** | $ | 7,032 | $ | 7,479 | $ | 26,565 | *** | $ | 5,528 | |||||||||||
*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.
Non-GAAP Measures
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 March 31, |
|||||||||||||||
| 2016 | 2015 | ||||||||||||||
| (in thousands) (Unaudited) |
|||||||||||||||
| Net loss as reported | $ | (1,437 | ) | $ | (7,272 | ) | |||||||||
| Adjustments: | |||||||||||||||
| Depreciation and amortization expense | 1,684 | 316 | |||||||||||||
| Interest expense, net | 532 | 139 | |||||||||||||
| Non-cash interest expense | 686 | 2,185 | |||||||||||||
| Income taxes | 66 | - | |||||||||||||
| EBITDA | 1,531 | (4,632 | ) | ||||||||||||
| Stock-based compensation expense | 170 | 230 | |||||||||||||
| Change in fair value of warrants | (1,985 | ) | 1,334 | ||||||||||||
| Non-GAAP adjusted EBITDA | $ | (284 | ) | $ | (3,068 | ) | |||||||||
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, May 12 | |
| Time: | 4:30 pm Eastern Time | |
| Toll Free: | 888-576-4387 | |
| International: | 719-457-2697 | |
| Passcode: | 3418132 | |
| Webcast: | www.strataskinsciences.com | |
Replays available through May 26, 2016:
| Toll Free: | 877-870-5176 | |
| International: | 858-384-5517 | |
| Passcode: | 3418132 | |
| Webcast: | www.strataskinsciences.com | |
About STRATA Skin Sciences, Inc.
(www.strataskinsciences.com)
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.
Safe Harbor
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 | ||||||||
| (In thousands) | ||||||||
| March 31, 2016 | December 31, 2015 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 3,120 | $ | 3,303 | ||||
| Restricted cash | - | 15 | ||||||
| Accounts receivable, net | 3,247 | 4,068 | ||||||
| Inventories, net | 4,152 | 4,128 | ||||||
| Other current assets | 377 | 465 | ||||||
| Property and equipment, net | 12,818 | 13,851 | ||||||
| Goodwill and other intangible assets | 23,701 | 24,155 | ||||||
| Other non-current assets, net | 94 | 94 | ||||||
| Total assets | $ | 47,509 | $ | 50,079 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Long-term debt and other notes payable | $ | 11,539 | $ | 10,150 | ||||
| Accounts payable and accrued current liabilities | 5,142 | 6,607 | ||||||
| Current portion of deferred revenues | 225 | 173 | ||||||
| Senior secured convertible debentures, net | 10,308 | 9,839 | ||||||
| Warrant liability | 5,057 | 7,042 | ||||||
| Other long-term liabilities | 206 | 181 | ||||||
| Stockholders' equity | 15,032 | 16,087 | ||||||
| Total liabilities and stockholders’ equity | $ | 47,509 | $ | 50,079 | ||||
| STRATA SKIN SCIENCES, INC. AND SUBSIDIARY | |||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||
| (In thousands, except share and per share amounts) | |||||||||
| (Unaudited) | |||||||||
| For the Three Months Ended March 31, |
|||||||||
| 2016 | 2015 | ||||||||
| Revenues | $ | 7,620 | $ | 81 | |||||
| Cost of revenues | 3,422 | 711 | |||||||
| Gross profit (loss) | 4,198 | (630 | ) | ||||||
| Operating expenses: | |||||||||
| Engineering and product development | 525 | 239 | |||||||
| Selling and marketing | 3,710 | 1,027 | |||||||
| General and administrative | 2,101 | 1,736 | |||||||
| 6,336 | 3,002 | ||||||||
| Operating loss before other income (expense), net | (2,138 | ) | (3,632 | ) | |||||
| Other income (expense), net: | |||||||||
| Interest expense, net | (1,218 | ) | (2,324 | ) | |||||
| Change in fair value of warrant liability | 1,985 | (1,334 | ) | ||||||
| Other (expense) income, net | - | 18 | |||||||
| 767 | (3,640 | ) | |||||||
| Loss before income taxes | (1,371 | ) | (7,272 | ) | |||||
| Income tax expense | (66 | ) | - | ||||||
| Net loss | $ | (1,437 | ) | $ | (7,272 | ) | |||
| Net loss per share: | |||||||||
| Basic | $ | (0.14 | ) | $ | (1.12 | ) | |||
| Diluted | $ | (0.26 | ) | $ | (1.12 | ) | |||
| Shares used in computing net loss per share: | |||||||||
| Basic | 10,339,657 | 6,471,906 | |||||||
| Diluted | 13,307,923 | 6,471,906 | |||||||
| STRATA SKIN SCIENCES, INC. AND SUBSIDIARY | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (In thousands, unaudited) | ||||||||
| For the Three Months Ended March 31, |
||||||||
| 2016 | 2015 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net loss | $ | (1,437 | ) | $ | (7,272 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 1,684 | 316 | ||||||
| Stock-based compensation | 170 | 230 | ||||||
| Amortization of debt discount | 639 | 2,015 | ||||||
| Amortization of deferred financing costs | 48 | 180 | ||||||
| Change in fair value of warrant liability | (1,985 | ) | 1,334 | |||||
| Other | 100 | 1 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Current assets | 846 | 251 | ||||||
| Current liabilities | (1,461 | ) | (155 | ) | ||||
| Net cash used in operating activities | (1,396 | ) | (3,201 | ) | ||||
| Cash Flows From Investing Activities: | ||||||||
| Lasers placed-in-service, net | (197 | ) | - | |||||
| Other | 15 | (100 | ) | |||||
| Net cash used in investing activities | (182 | ) | (100 | ) | ||||
| Cash Flows From Financing Activities: | ||||||||
| Proceeds from term debt | 1,500 | - | ||||||
| Other financing activities | (105 | ) | - | |||||
| Net cash provided by financing activities | 1,395 | - | ||||||
| Net decrease in cash and cash equivalents | (183 | ) | (3,201 | ) | ||||
| Cash and cash equivalents, beginning of period | 3,303 | 11,434 | ||||||
| Cash and cash equivalents, end of period | $ | 3,120 | $ | 8,233 | ||||
| Supplemental information: | ||||||||
| Cash paid for interest | $ | 442 | $ | 139 | ||||
| Supplemental information of non-cash investing and financing activities: | ||||||||
| Conversion of convertible preferred stock into common stock | $ | - | $ | 1,508 | ||||
| Conversion of senior secured convertible debentures into common stock | $ | 165 | $ | 2,308 | ||||
| Reclassification of property and equipment to inventory, net | $ | - | $ | 26 | ||||
| Recognition of warrants issued as debt discount | $ | 47 | $ | - | ||||
Investor Contacts: Christina L. Allgeier, Chief Financial Officer STRATA Skin Sciences, Inc. 215-619-3267 callgeier@strataskin.com Bob Yedid, Managing Director LifeSci Advisors, LLC 646-597-6989 Bob@LifeSciAdvisors.com
