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Thermage Announces First Quarter 2008 Financial Results

Systems and Tip Revenue Up Domestically and Internationally

U.S. Sales Increase 8% Year-Over-Year

U.S. ThermaCool NXT System Sales Grow 29% Year-Over-Year

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.


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


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 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

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

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.



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.


(in thousands of dollars, except share and per share data)


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.



(in thousands, except share and per share data)


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


Thermage, Inc.


(in thousands of dollars, except share and per share data)


March 31, December 31,

2008 2007


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



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.
Copyright©2008 PR Newswire.
All rights reserved

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